Using IT to Succeed in Third Party Logistics (3PL)
In an increasingly competitive market, the best 3rd party logistics (3PL) firms capture the lion’s share of the opportunities. IT is often a key aspect of their competitiveness and profitability.
As well as the summary below, we have created a more detailed CEO’s briefing on using IT to succeed in 3PL. Click on the link to download the full CEO’s briefing.
In our experience there are 5 key areas where IT is integral to their success.
1. Cost reductions. Both in IT and across the business every cost must be scrutinised and all investments must have a well-defined ROI with a director accountable for its delivery. IT and process efficiency go hand-in-hand, and the narrow margins and competitive nature of the industry require an ongoing focus on minimising IT costs, and maximising IT’s impact on process efficiency, clarity of information, and business cost reduction.
2. Automated tracking. Key to slick operation is effective, up to the minute and consolidated visibility and tracking of consignments, both internally and externally to customers, whether they are B2B or B2C. This can be complex and may involve 3rd parties, and an array of mobile and handheld devices as well as web portals. Customer expectations are ever higher, but IT can offer ever smarter tracking.
3. Streamlined processes. Integration and standardisation of processes and IT within the company and with external partners/customers is critical for cost reduction but also to minimise errors and maximise simplicity. The focus must be on scalability, cost reduction and achieving tight connection to customers, suppliers or franchised operations.
4. Flexibility. The ability to deploy rapidly and efficiently to support quick take-on of new business, acquisitions and mergers or site start-ups is critical to win business and then deliver on planned profit. Taking down operations is an inevitable part of logistics business as well, and knowing you are able to efficiently contract occasionally whilst maintaining overall profitability not only provides financial stability, but also gives business leaders confidence to expand without fear when opportunities present themselves.
5. Strategy and points of difference. A company with a clear business strategy needs a clear IT strategy as well. That means a strategic/executive view of the current IT capabilities, the capabilities needed, and a roadmap for getting there. Streamlined and low-cost operations, automated tracking and flexibility are the pillars for finding points of difference which allow you to win business and to avoid competing purely on cost.
Already some less efficient players are beginning to struggle and more successful business are achieving greater scale and greater success as a result. Mergers and partnerships between the winners will cause further gaps to open up between winners and losers. In our experience, the 5 key areas above allow our 3PL clients to prosper.
Freeman Clarke is the UK’s largest and most experienced team of part-time (we call it “fractional”) IT leaders. We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.