Is a 3PL Right for Your Business?
By David Rim and Jimmy Lee
If your company is one of the 63,000 businesses within the food wholesale or manufacturing industries, you are probably familiar with the variety of third-party logistics providers (“3PLs”), contract manufacturers (“Co-Man”) or contract packaging (“Co-Packers”) provide an abundance of options in managing your company’s supply chain.
Your business may be in a critical growth period where the scale of your operations is unable to keep up. Even if you aren’t experiencing tremendous growth, your supply chain structure and strategy may be outdated and unable to take on new cost and complexities. Further compounding these issues is the enormous amount of outside pressure on the macro-economic environment. We have seen a significant amount of pricing pressure on the labor market with the rise of e-commerce, high cost of rent and real estate, and the high wages of Amazon’s warehouse employees. These all make it difficult for small to mid-size businesses to stay competitive.
The good news is, you can take advantage of lowering logistics costs with economies of scale if you engage a third-party service provider. However, handing over the keys of a critical component of your operations to an outsider may not be something you are comfortable with. Additionally, there may be other critical factors at play. What if a 3PL’s refrigerated fleet fits your needs, but their cold storage facility is lacking? There may be components of your supply chain in which your company has a core competency that shouldn’t be outsourced. A hybrid third-party solution might be a better model for your organization.
Whether the correct approach is to invest internally to expand your facility’s footprint, outsource your supply chain, or use a hybrid model, the first step needs be an overall assessment of your supply chain needs. Once an assessment is made, a gap analysis on the current state of your supply chain can be performed to identify where your organization needs to invest or outsource.
The Mazars’ Supply Chain team can help your organization make the right distribution and warehouse management decisions, whether it is to maintain and modernizing your existing warehouse or outsourcing some or all of your inventory and warehouse management to a third party. We analyze your inventory and warehouse gaps and opportunities against your business requirements, then determine the optimal logistics model to reduce cost and improve the efficiency of your business.
We can also help identify an optimal set of vendors, and construct cost models to assist you in making the right decision for your business. And, beyond planning, we will take your firm through the Request for Proposals journey to solicit third-party solutions providers, determine key performance indicators and help define level of service to monitor costs for the long-term.