The Cost of Poorly Performing Processes – Need for Six Sigma
Prior to the introduction of Six Sigma philosophy, there was a debate as to whether Six Sigma is a goal worth pursuing. Many experts in the area of quality believed that wastage was a way of life. Trying to eliminate wastage would cause more wastage. They believed that it was possible to eliminate waste but […]
What Is China’s Deleveraging Strategy?
China has been the fastest growing economy in the world for the past few decades. The Chinese economy continued to grow even during the recession period. Many economists believe that a growing Chinese economy was a gift to other countries during the slowdown. Since the Chinese economy was growing, international trade was flourishing, and other […]
Who are HNIs and why they Matter in Both Positive and Negative Ways
Who are HNIs and Why They are Valuable to Businesses We often hear the term HNIs or High Net-worth Individuals mentioned in a wide variety of contexts. Whether it is bankers launching a new product aimed at these individuals, media outlets reporting on their private lives and covering the weddings and other events, or for […]
The Changing Face of Business Environment
Introduction The last decade has shown rapid development in the information technology and its application. This has helped changed the way we look at the world as well as the way business is conducted. Both business and trade have gained under the wave of information technology with improvement in efficiency, productivity and bottom line. Productivity […]
Different types of Data and its Importance
Data can be described as the backbone of any six sigma project. This is because the whole idea of six sigma and operations is to use statistics to manage operations in the factory workshop. Hence, for a six sigma team to understand the types of data and when and how to use them is of […]
Global business models are rapidly changing. Shorter life cycles of products and new business need exert pressure on Supply Chain managers to keep pace with the new scenarios. They are often faced with the target to reduce logistical costs and establish new supply networks.
It has now become a common practice to outsource all logistical activities to third party vendors both in procurement side of logistics as well as finished goods, spare parts and reverse logistics areas too.
Today the 3PL service providers market is filled with players of all sizes and competencies, from single owner driven local service provider to multi national companies. Most of the companies have traditionally been transporters or freight forwarders and over the years have acquired warehousing and contract management capabilities keeping in line with the growing needs.
Selecting a 3PL service provider to provide warehousing services needs careful considerations on the part of the SCM manager responsible for the decision. The right partner selection is important because you are handing over the companies assets to someone else’s custody and secondly any performance hindrance can seriously affect the sales and revenues of the company in case of FG Supply chain or effect the plant production in case of Raw Material supplies.
The business volumes and size of the project will determine the selection of the Service Provider. Most of the Multi National Companies can offer integrated logistics services to manage the entire supply chain including freight, transportation and warehousing; you will also find companies at regional or local levels that offer warehousing as a core competency area.
The size of the company is important as a key parameter as one would not want to deal with a small company that does not have the capability to invest or a fly by night operator. The Management structure of the company holds a clue to their focus on the various businesses and customers. This will enable you to find out the kind of management focus that the service provider has in warehousing or CL as a product.
A multi national company being able to invest into your business does not necessarily make the best choice. They can more often turn out to be expensive. Besides the availability of CL expertise in another location or country does not necessarily ensure competence locally. However Multi nationals are preferred as partners most of the times due to many other advantages like integrated services, global standards, ability to invest, etc.
Responsiveness measures the quality and speed with which the service provider company responds to your bid request and engages with you to offer a solution. The nature of response and interaction hold key to the company’s culture and enables us to evaluate options of investing into a relationship or partnership possibility.
A vendor should be able to demonstrate the competency regarding its experience in managing functions for other customers and products. Besides the competency can be demonstrated and seen in the solution building process or document prepared and presented by the vendor.
A company with experience in managing distribution center operations would have the team comprising of people with sufficient experience in the operations at management level, supervisory and staff levels.
The company needs have to have a strong IT management and functional operational competence and capability in managing the IT system at site as well as being able to support the site with IT administration at management level.
The capability, interest and attitude of the vendor would help you to choose the vendor who is interested in your business with long term prospect and is willing to invest time, money and effort and not somebody who is chasing business as a sales target and doesn’t have the required interest, organizational and operational capability to service your business.
Lastly the cost drivers play a major role in vendor selection for the project. An RFQ document should seek information on above criteria from the vendor, and the process of selection should be based on evaluation, demonstration coupled with site visits to vendor’s site to assess overall suitability.
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