3PL Customer Business Objectives: How We See It
How We See It
Customers are more demanding and selective. Customers will continue to look, evaluate and shop 3PLs for the best value and not just necessarily cost. For many customers distribution center, warehousing, supply chain management will continue to be central to their revenue and profit plans. Customers are looking to logistics to gain short-term competitive advantage through customer service and improved financial performance on “Total Relationship Basis.” Several key management themes are emerging as “strategic objectives.” So here’s, The Top 5- How We See It:
- Reducing absolute inventory levels at the SKU level.
- Increasing inventory turns and flow-through to stores and consumer points.
- Accelerating cash flows (cash-to-cash cycle).
- Reducing shipping, replenishment and warehousing costs (transaction cost analysis.)
- Integrating the supply chain with VMI, demand-pull and merchandising management.
We also believe that there will be increased real estate development and financing activities for new DC and warehouse facility building and the privatization and conversion of existing facilities.
DC and Warehousing Trends and Directions: How We See It
There is “commoditization” occurring in this industry. Traditional services that involved “storing product, moving product, delivering product,” are no longer competitive competencies. As a result, competition is increasingly greater and fiercer, as shippers and DC and warehouse operators compete for many of the same customers with many of the same services.
In response, several strategic themes for DC and warehouse operators are emerging. Central to these themes will be increasing the level and quality of their services to customers. This includes, but is not limited to: understanding their customers business needs, providing cost effective solutions to their customers, developing flexible, multi-use facilities, expanding their service offerings and providing cost effective, integrated solutions. Providing the ability to rapidly absorb new business with little impact on customers and also being able to provide specialized services by product, market or season will be differentiating qualities for the 3PL.
For the new year, there will be greater investment and interest in DC and warehouse automation and WMS computer software. The investment in technology is fundamental to management’s objectives of higher productivity, lower cost and greater volume and throughput. So here’s, The Top 5- How We See It:
- Consolidating providers within the DC and warehousing industry.
- Expanding customer services and exceeding customer expectations.
- Improving DC operations and reducing DC and warehousing costs.
- Optimizing networks, traffic routes and carrier loads.
- Investing in new WMS technologies such as RF and software to provide greater operational integration and reduced costs.
The key themes for the DC and warehousing industry will be integration, productivity improvement and “customer cost performance.”
This year, WCL has increased its size, resources and capabilities. We added new professionals to our firm and also several new services.
In response to client requests we have expanded our services to include: software selection, project management, strategy and DC and WH operational improvement. Complementing these additions has been a major investment that we made in software to calculate centers of gravity and analyze and optimize freight costs, routings and carrier selection. We are confident that these additions and investments will help our clients and improve their services to customers and financial performance.
That’s “How We See It” as we the new year. We trust that when you are considering management consultants that you will contact World Class Logistics Consulting. Once again, thank you and all the best for the new year.
Very best wishes,
Jon DeCesare
jondecesare@wclconsulting.com 
