Our guest columnist is Norman H. Adriano. He is another past president of the Supply Chain Management Association of the Philippines(1995-96, DMAP days). An Industrial Engineer, he has more than 25 years’ experience in end-to-end supply chain management. He is now connected with a logistics company that he helped set up. Email him at email@example.com – Ed Sanchez, Executive Director
For many companies choosing a 3rd party logistics (3PL) partner, their decision is generally influenced by a 3PL’s price and quality of service.
Given that there are a lot of local and multinational 3PL companies to choose from, how then does a 3PL company differentiate itself from the others? How would it market its value proposition?
One way is to highlight its strengths derived from years of experience in the industry and how that strength enables it to offer the best service at competitive (read: reduced) rates. This is their value proposition.
For example, a 3PL, because of its long experience in serving its client base, could offer multi-user warehousing as well as cross-docked delivery service at low rates as a result of the synergy created by its current critical mass.
Multi-user warehousing – simply implies that the warehouse serves several clients, thus the management, facility, equipment and IT costs could be spread among the users and the result is lower cost for each of the served companies versus when the individual companies operate their own warehouse.
Cross-docked delivery service – basically, a sizeable quantity of goods loaded in a big truck are delivered to a cross dock warehouse facility and immediately loaded on to several smaller trucks for delivery to several final destinations. No storage is done and the goods just “cross” the warehouse for their delivery to multiple stores.
This synergized business model is very attractive to companies always on the lookout to reduce their total logistics cost. A 3PL company that can transform fixed costs into variable costs are heaven sent to cost-conscious companies looking for a 3PL partner. Remember: Price AND quality of service are what companies are looking for and a 3PL that could deliver both is a keeper.
The business model mentioned above is not a secret. Any 3PL company who can leverage on its current client base can copy the model. The model is just that, a model. It is a means by which the 3PL could deliver superior value to a partner company. What will set a 3PL company from the rest of the pack is the quality of the delivery of its services that it claims it has perfected throughout its years of experience.
Excellent execution of service promises is the key. The purported strength due to years of experience should shine through and must be felt, acknowledged and praised by the customer. And the service must be consistent throughout the contract period to ensure a delighted customer and a continuous business partnership.
(Norman Adriano will tackle the topic of excellent execution in a future article.)
Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email firstname.lastname@example.org. For more information please go to SCMAP website: www.scmap.org.