Logistical Lowdown- compliments of your True Blue Logistics Crew

Understanding the Value of Dedicated Operations

Posted by Nate Schaublin on 8/10/18 2:14 PM
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Understanding Value of Dedicated Operations - Focus, Expertise, Scale, Service Level Agreements

The topic of dedicated logistics operations, whether in transportation or warehousing and distribution, typically elicits an array of responses ranging from “why wouldn’t we just do it ourselves” to “I can’t imagine trying to do this ourselves”.

Truth is, dedicated operations aren’t for everyone, but for many small and mid-size manufacturers outsourcing these logistics functions to a 3PL allows the manufacturer to work on growing its core business and increasing the value provided to their customers.

One way in which outsourcing a logistics function can provide value is the focus that a 3PL can bring to a specific discipline. For example, a dedicated transportation management partnership allows the 3PL to leverage its relationships with thousands of motor carriers and understanding of market dynamics to ensure the capacity to move your freight when it needs to move. Oftentimes, a shipping manager is also wearing many other hats and doesn’t have the time or the tools available to make the optimal decision. A good 3PL partner will also have tools that can lead to more efficient distribution and order fulfillment operations than can be had with insourced operations.

A 3PL can leverage the expertise gleaned from years of operations with different customers to develop custom solutions spanning a range of logistics functions. A Warehouse Management System (WMS) with features such as slotting, lot trace/recall, directed pick/put features, and live inventory may not be part of an ERP system, but the 3PL can use this and other tools in its arsenal to create meaningful Business Intelligence data allowing the manufacturer to optimize their core business.

A 3PL will also use its overall scale in order to provide value in a dedicated operations partnership. An example would be a manufacturer putting together a private transportation fleet. The 3PL can more easily procure the necessary assets (drivers, tractors, trailers) to provide the dedicated capacity, as well as the larger overall network to possibly offset empty miles.

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Finally, a dedicated operations partnership is nothing without identifying what is of the most value to the customer and how the 3PL is to provide it. The Service Level Agreement (SLA) should clearly spell out the expectations of the manufacturer and 3PL relationship in terms of capacity, quality, and responsibility. This agreement typically defines any gainshare/pain share if either party fails to live up to their commitments and should define a regular cadence of communication in order to drive waste out of the system.

Dedicated operations through either all or part of a small to mid-size manufacturer’s logistics functions will provide value in operational efficiency, knowledge & expertise, advanced technology, improved customer service.

Allowing your 3PL to serve as a trusted partner to manage the day-to-day and strategic operations of your logistics will springboard your business' growth and profitability. Let's get the conversation started about how working with a 3PL can help excel your business, contact Keller today.

 

Topics: Transportation, Warehousing