Duco Buijze examines how third party logistics providers have responded to the need for ultra-efficient supply chains.
Third party logistics providers are a crucial link in the supply chain – connecting the areas of production and retail and encompassing a number of services such as storage, transport and value-added services. In the past, many of these logistics providers have specialised in a single supply chain management function. However, with significant changes to the supply chain over the last few years as a result of consumer demand, greater efficiencies and an increased focus on sustainability, there has been an emergence in logistics providers adding more and more services to their portfolio. This expansion is often in response to requests from customers who are recognising the potential of integrated logistics and concern that outsourcing each separate supply chain function results in growing management overheads and less time to focus on core areas of their business. Companies typically want to focus attention on functions such as marketing and sales so it’s beneficial for them to leave the responsibility of all, or at least a larger part, of their logistics in the safe hands of an experienced third party provider.
By offering multiple services under one roof, third party logistics providers can be flexible to adapt to changes in demand as well as having the opportunity to develop and optimise their role to ensure that their customers have the most streamlined and efficient supply chain operation. Manufacturers and producers often have an increasingly complex supply chain and by working with an integrated logistics provider they can simplify this – improving service levels and shortening lead times for retailers. Additionally, they only receive one invoice and have one point of contact which means that should any issues arise, they can be dealt with swiftly and efficiently without time being wasted in managing and liaising with different providers. Cost savings are an important driver in any integrated logistics provider’s strategy. By working closely with customers and building a solid partnership, progressive logistics providers can proactively identify weak spots in the supply chain and provide solutions to streamline the process and ultimately save money. Many third party providers have also adapted to incorporate a number of value-added logistics services into their portfolio such as re-packaging, cross docking and inverting pallets which can all be part of creating a tailored plan that adds real value and helps their customers to meet supply chain objectives whilst saving on costs.
Synergies in the network, consolidation, load optimisation and efficient utilisation of logistics resources all then contribute to a supply chain that can become world class and extremely cost-efficient. With increasing pressure to hit sustainability targets and have the greenest supply chain, integrated logistics providers are supporting their customers in driving down carbon emissions. By having control over all supply chain management functions it gives them the opportunity to analyse their customers’ supply chain, both upstream and downstream, to see where energy savings can be made and offer tailored solutions which will reduce their carbon footprint. At Partner Logistics, we are developing and facilitating projects where our customers can work together to optimise complete supply chain flow, yielding far more synergy than they do individually. For example, one of these projects is ‘horizontal collaboration’, which works in the same way as car-pooling. If one of our customers is delivering five pallets to a retailer in London at 8am and another customer is delivering 10 pallets to the same retailer at 9am then we can liaise with both parties and the retailer, to arrange one delivery at 8.30am.
By combining shipments, we can reduce carbon emissions through reducing the amount of freezer trailers on the road, whilst also reducing operating costs. Consumer demand for frozen food is increasing significantly year-on-year across Europe and this will affect the way in which the supply chain operates in the future. However, innovative third party logistics providers are already proving that they have the flexibility and adaptability to take on these challenges and are well equipped to take on a bigger role within the supply chain.