Rebuilding Americas Inner Cities
While America is the largest economy in the nation, there is a considerable push towards rebuilding America’s infrastructure. Many Americans believe that they are losing out globally to firms that have better infrastructure in place. Companies in China have been beating America at low-cost manufacturing for decades now. However, even if higher labor costs are […]
Masters of the Universe: A Case Study of the Global Investment Banking Sector
Introduction Most of us would have heard of the globally famous Investment Banks such as Goldman Sachs, JP Morgan, and Chase Manhattan as well as Deutsche Bank. Indeed, for aspiring and working professionals alike working in these investment banks is a dream come true not only to the handsome (some would call it obscene) pay […]
How The Chinese Slowdown Hit Apple?
Apple is a well-known brand since it is the most valuable firm in the entire world! Apple can attribute a large part of its success to being one of the few American firms that have been able to gain a significant foothold in China. However, this foothold could be the very reason that Apple is […]
The Economic Effect of the American Deep Freeze
In the beginning of 2019, America has been hit by a weather phenomenon known as the Polar Vortex. This phenomenon has brought chilly winds and freezing temperatures to the United States. In many parts of the country like Chicago, the temperatures have hit historic lows and were close to -50 degrees! The daily life of […]
ERP Service Module – Planning, Warranties and Contracts
Service Planning – Attending of unscheduled maintenance tasks arising out of breakdown and faults both for internal and external customer is an important service activity of any organization. However, bulk of service activities arise out of planned service activities. For internal customers, this may be routine maintenance of plant and equipments, arising out of preventive […]
When an Organization chooses to outsource its inventory management services, the project success hinges on choosing the right partner because the stakes in a warehouse management projects are very high. Besides the impact on the other functions like manufacturing or markets, the third party service provider is the custodian of your inventory which meaning your money is in someone else’s hands.
So the question one needs to ask for is - What are we looking for in a 3PL Partner ?
The answer to this question will take you through few of the important factors that are to be considered.
This is often a dilemma faced by SCM managers while choosing the partners. Dealing with Multi National Companies has its advantages. Normally the MNC service providers provide integrated logistics services that give you value addition besides seamless service coupled with lower costs. Strategically it makes sense to go with Multi National companies who can leverage on their competence available across the network and provide standardized processes across various locations.
However on the flip side, these companies may not have the same management focus and competence in all countries and all locations. Besides many companies have been traditionally transportation providers who have acquired warehousing competence and skill sets and are not warehouse centric or focused players.
Domestic Service providers, on the other hand, would know the laws of the land better and know how things work. They will have the local expertise and capability to manage operations and resources better. By virtue of them being local and small players, one can expect better focus and attention.
The choice is a difficult one to make. At the end it depends on the size of the project, the number of locations and the company’s policies besides any local specific situations to decide on the above.
Global companies prefer to tie up with Multi National Players to be able to leverage on their network as well as operate with a global agreement. With a lot of business in transportation and warehousing being given to an MNC, the buyer can have a better bargaining power with the 3PL provider. Contractual obligations, third party obligation, and local statutory compliances can be easily owned and managed by MNC 3PL providers.
Evaluation of a 3PL service provider involves understanding of their capabilities both regarding technical competence, operational capabilities and Management Culture.
The evaluation normally consists of Detailed Response document to RFQ from the 3PL service provider, followed by a presentation by the 3PL and subsequent site visits to the proposed location, site visits to other locations /operations of 3PL, coupled with customer references. Detailing these processes becomes important especially in the case of a bigger project depending upon the criticality of the project.
Often the face to the markets from the 3PL side is the marketing and BD teams. As contract logistics is capital intensive and operations intensive, it is important to understand the company management’s focus and commitment towards this part of the business, especially in cases where 3PL is an Integrated Service Provider with other logistics businesses. A management interested and focused on CL business is likely to invest in building a long term relationship and enhance its competence and deliver the better value proposition to the buyer. Company profile and meetings with management will enable one to assess this criterion.
The other important and relevant areas to be evaluated are the IT Backbone and capabilities of the 3PL and its experience and expertise in deploying and managing WMS systems.
Expertise in Operations and inventory management as core functions coupled with project management capability, local expertise availability and quality programs, etc. can be judged from the response document and subsequent personal discussions and site visits.
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