Conventional wisdom tells you not to put all your eggs in one basket. In the logistics industry, however, this isn’t always good advice. By leaning on one third-party logistics provider (3PL) for each leg of the distribution cycle, you may find greater efficiency and improved operational success than you would sourcing à la carte.
In this article, we’ll examine the benefits of an integrated logistics services approach.
Integrated logistics services benefits
Many companies have taken a siloed approach to 3PL partnering for product distribution: hiring one for drayage, one for warehousing, and several for OTR transportation. With an integrated approach, however, most or even all of these services may be performed and/or coordinated by a single provider, if that provider has the core competencies to handle all these services proficiently. The benefits of outsourcing logistics operations to an integrated 3PL include the following.
Integrated providers accept full accountability. The biggest advantage of using an integrated service provider is that this provider takes ownership of – and accountability for – all of your logistics operations. You deal with one source to get any detail on any aspect of your distribution operation, from operational execution through performance reporting. This eliminates the time and resources spent managing the efforts of multiple providers simultaneously.
It also removes any uncertainty as to who’s responsible for what and the ‘he said, she said’ finger-pointing that comes with that. For example:
- If a container is delivered to the warehouse late, was the container unavailable when the drayage provider arrived at the port? Or, did the drayage provider simply show up late?
- If there’s a detention fee applied to a container, did the warehouse not unload the container in time? Or, was the drayage provider late in picking it up?
- If an order ships late, did the warehouse fail to tender the shipment on time, or did the carrier fail to pick it up?
- If there’s a shortage on delivery, who’s at fault: the warehouse picking the item short, or the carrier losing some of the goods?
With an integrated approach, questions such as these no longer apply. Your integrated 3PL is responsible for every step and can only point the finger at itself if things fall short. And with full ownership, that 3PL partner will likely proactively fix the problem – oftentimes without it even being visible to you.
Integrated providers value your business. When you entrust your combined distribution operation to a single 3PL provider, you’re entrusting it with a good chunk of your business. It fully understands this and will go to great lengths to keep an important customer happy. This buying power also enables small-to-mid-sized companies to be treated like big fish in their chosen provider’s pond – instead of little fish in the ponds of multiple providers.
In addition to buying power, customers of integrated 3PLs enable greater efficiency. For example, it costs a warehousing provider time and resources to make appointments with external carriers bringing product into and out of the warehouse. When carriers are then late, it adds delays and disruption. By eliminating handoffs with external providers and controlling both warehousing and transportation itself, the 3PL operates much more efficiently. Speaking of which…
Integrated providers speed distribution operations. Your integrated 3PL can perform all needed tasks quickly and without delays. How? Because it owns the entire process. There is no waiting or guessing as to when the next step is going to happen.
On the inbound side, the warehouse knows when an order is going to be picked up by the 3PL’s drayage or transportation arm. It can then prepare accordingly. On the outbound side, the carrier knows what’s going to be picked up and when. It’s all coordinated in advance – with only one source of information throughout.
Similarly, for drayage, integrated providers don’t need to tie up a warehouse door waiting for an external carrier that may or may not arrive on time. Instead, the provider’s own driver can drop the container or trailer and be on his or her way. It’s yard hostling operation spots the equipment in a door and the warehouse receives it when ready.
Integrated providers simplify systems integration and data sharing. When you deal with one provider, your systems integration strategy with that provider will cover all data sharing and visibility requirements across services – order processing, inventory monitoring, track and trace. This greatly simplifies management and allows for a centralized hub for all EDI communications. It also allows for detailed reporting of KPIs from a single source.
Integrated providers offer flexibility. When you deal with individual providers that handle only trucking or warehousing, those operations will have set hours and resources that may be in conflict with one another. For instance, your warehouse may be closed when your drayage or transportation provider wants to perform delivery or pickup. These conflicts invariably lead to delays and disappointed customers, or at the very least, more cost – and someone has to pay that cost, in the end.
These concerns typically do not exist with an integrated provider. When one provider controls all phases of the supply chain, it has the flexibility to make sure these phases work in concert. If that requires staffing a warehouse to receive a container after normal hours, then the provider has the ability to make that happen seamlessly.
It is also important to note that a 3PL that can offer drayage, warehousing and transportation services is generally going to be larger than other 3PLs in terms of space, equipment and resources. This size has distinct advantages. For instance, if a warehouse is nearing capacity, products can be delivered to one of the provider’s other warehouses. Or, if one operation is experiencing high volumes, warehouse labor can be pulled from other operations to support it.
On the transportation side, an asset-based provider can pull equipment from other areas of its operation to support the task at hand. Even better, some integrated 3PLs can offer a blend of asset-based and non-asset-based transportation – while retaining total control over operations. This enables the 3PL to ensure capacity at all times, even when its own equipment is tied up.
For example, companies (especially sales leadership at those companies) are eager to ship products by the end of the month in order to hit their numbers. Often, the warehousing operation will prepare the outbound shipments only to find that the carrier is unable to handle it all. This would never happen with a blended asset-and-non-asset model. At Weber, for instance, we will line up empty trailers and bring in the trucks (whether asset or non-asset) to get all trailers loaded and moving – even if it means keeping the warehouse open and trucks running throughout the night.
Look at the big picture
By entrusting your distribution operation to a provider of integrated logistics services, you’re establishing a true partnership with that provider. With management of – and visibility into – your full supply chain, your provider can look for ways to optimize performance and troubleshoot potential issues on your behalf.
Weber Logistics is one of the leading integrated logistics providers on the West Coast – handling drayage, transportation, and warehousing services from our 11 California distribution centers and 4 transportation service centers. To learn more about the benefits of an integrated logistics approach, contact Weber today.