Innovation, innovation, innovation.
Every industry has certain elements that create problems in their operations. They can originate from a variety of market factors. A major cause of pain for many companies today is order fulfillment and distribution. With the rise of online ordering and omni-channel distribution, the opportunity to grow market share has never been greater or more competitive. The Ivey Business Journal reports that customers who shop online spend more on repeat visits than they do on their initial purchase. This means the companies that are receiving multiple return visits from loyal customers are experiencing higher margins and long term profitability.
The landscape of the logistics industry continued to evolve in 2013. The growing demands from consumers and the expansion of platforms available to place and receive orders posed new challenges for distribution centers everywhere. With these changes and expansions in the industry, fulfillment centers are developing more efficient methods to get product from point A to point B. Being a third party logistics company, Barrett Distribution has been able to devise our own processes to provide accurate, quality distribution services for our clients and their customers.
Several years ago, I developed what I felt were ten sound principles for the outsourcing of logistics services. I certainly was not the first to do so, nor have I been the last. Recently however, some of the suggestions I have read seem to place more responsibility on the providers than on the outsourcers themselves. Outsourcing is a two way street, and for the arrangements to be successful, the client must bear a significant part of the burden. Certainly conditions have changed dramatically in the industry, but in reviewing my earlier document, I have concluded that the suggestions I made then bear repeating.
With the continued rising cost of real estate, material handling equipment, information systems, trucks, fuel and just about every resource, it makes more sense than ever for companies to outsource their logistics needs to a competent 3rd-party logistics provider (3PL).
Every time a logistics service provider announces its imminent expansion-whether it’s growing organically or through acquisition-the pundits wonder aloud whether there is a future for the small to mid-sized company. That question came up again in August, when Exel acquired Tibbett & Britten. With that acquisition, Exel’s annual revenues will soar into the general area of $8 billion, making it bigger than J.B. Hunt, Swift and Yellow Roadway combined. And though it may be the biggest player in the industry, Exel isn’t the only logistics provider out there with revenues in the billions of dollars.
Globally, and certainly here at home, companies continue to rely on 3rd party logistics providers to perform core services. In North America, the 3rd party industry is realizing an annual growth rate of 20%. It is estimated that approximately 20% of all logistics activity in the U.S. is provided by 3PL’S, which is up from only 10% in 1992. Companies are moving towards outsourcing for a variety of reasons, including: