You Get What You Pay For
On Monday, October 26, 2009 The Wall Street Journal published the article “Beat the Clock” by Paul F. Nunes, Geoffrey Godbey and H. James Wilson. The article proposed various methods in which companies could “sell time” to consumers through their products and services. What the article suggested was that by shaving wait or commitment times, companies were recognizing the value of the consumer’s time – a commodity many people, even during the recession, are willing to pay more for.
But consumers aren’t the only ones looking for more time, companies are in need of it as well. This was evident during a recent Webinar by the Journal of Commerce where AMR Research and C.H. Robinson provided commentary regarding how outsourced 3PL services can streamline supply chains, which in turn will save companies time and money.
As the economy gets back on its feet and businesses begin to breathe more easily, a major focus is on cutting out inefficient measures. These unnecessary or outdated techniques and practices are being hit now as companies start trimming their fat, so to speak, to stave off further profit losses or impediments. For supply chain managers, there are several factors to take into consideration when recreating best practice measures.
Utilizing the services of an out-of-house logistics company, when done correctly, can lead to improved and more efficient supply chain networks. Today’s successful logistics companies have adopted the adage that “time is money” by providing their customers with highly qualified account managers and comprehensive, easy to use technology. The factors that make up a successful partnership with an outside logistics company are 1) Transparency, 2) Flexibility and 3) Control.
Transparency
During the JOC Webinar, Greg Aimi with AMR Research accurately depicted the complex and highly involved nature of a supply chain network. Many companies seek a logistics partner that can consolidate these factions. However the key to making this joint effort successful is a logistics company that also offers complete visibility into a supply chain. There is never any time where your company should be out of touch with the goings on in your supply chain. Other companies involved, such as the manufacturers, suppliers, and customers, also need access to the areas of the network that impact them. For example, the manufacturer must be fully informed of any changes to the production schedule. With greater transparency, answers will be at your fingertips and decisions will not be put on hold while you wait for someone to ask someone to ask someone.
Flexibility
Logistics companies came into existence by consolidating their customers’ workload into one or two contacts. Rather than companies reaching out to 10 or more carriers and 5 consolidators, they now have a single source that will do this work for them. But the needs of companies are constantly changing, from service requirements to cost restrictions, and a strong logistics partner is one that can shift fluidly from one need to another. Your company will spend less time trying to compensate for late orders and missed deliveries because it is the responsibility of the logistics team to provide a solution.
Control
The final, and most important factor for your company, is the need to keep control in your hands. It’s your supply chain, and no matter what they say, no one knows it better than you. A truly great logistics partnership is one that improves your overall control. Both transparency and flexibility play into this third component. Without them, your company will not have complete control over its supply chain networks.
When supply chains are performing at optimal levels, you save your company the time involved to fix problems, the cost of personnel required to address the problems and the delays it causes for your customers. With this reduction in cost you can save more money for your customers as well as for your company. You also help establish your company as a reliable entity to do business with in the industry, one that can meet promised deadlines. If time really is money, then any time wasted is like throwing money out the window.
The below image was adapted from a diagram provided by Greg Aimi during the JOC Webinar. The bullet points dictate necessary outsourcing models to achieve the different levels of supply chain efficiency.
