How third-party logistics partners can enhance efficiency in turbulent times.
The direct selling landscape has changed dramatically over the last decade. Sellers have taken on technological advancements; adjusted to changes in consumer behavior; and dealt with regulatory shifts. And this industry continues to face changes and often turbulence due to global dynamics.
When it comes to logistics, in the last year alone, we’ve seen possible carrier strikes, escalating rates and an increasingly complex supply chain. In turn, businesses have been compelled to seek solutions that help enhance efficiencies while controlling costs. That’s where reputable third-party logistics (3PL) partners come in.
By offering specialized expertise and comprehensive resources that go beyond basic logistical services, the right 3PL provider can help companies navigate these types of complex changes with greater agility and foresight.
Current Shipping Challenges
The shipping industry is going through a number of changes that can significantly affect logistics and operations. For instance, the UPS contract negotiations earlier this year highlighted the potential for carrier strikes and the dramatic disruption a strike could lead to. The potential economic impact and the scale of disruption were jaw-dropping, with estimates suggesting a mere 10-day work stoppage could have resulted in up to $7 billion in economic losses.
Labor disputes aren’t the only concern. Rate increases throughout the industry have also had a significant impact on logistics. Major carriers—including FedEx and UPS—have announced general rate increases of approximately 5.9 percent for this year. 3PLs, direct sellers and other industry players have had to adjust to these increased operational costs and changing market conditions.
It goes without saying that rate hikes and market disruptions like these can add a significant financial burden to businesses, especially those that rely on efficient and cost-effective shipping solutions. They can also lead to frustration and fear within your company as you navigate significant changes and adjust how you do business.
Fortunately, some sought-after 3PL providers have been instrumental in helping mitigate the financial and emotional impact of these industry-wide challenges. By leveraging extensive networks and using their expertise, some 3PLs have been able to negotiate better rates and offer more flexible shipping solutions. They can also provide solutions to increase efficiencies. Thus, businesses can adapt more swiftly to market changes.
Partnerships with the right 3PL can reduce overhead costs associated with logistics. In addition, they can enhance overall operational agility. Some providers have been able to negotiate more favorable terms with several carriers to help shield clients from the brunt of sudden rate increases. This buffer against market volatility can help businesses weather turbulent times. By providing expertise, guidance and business insights, the right 3PL partner can help your business become more resilient during both good times (such as sales surges) and bad (like shipping disruptions).
Shipping Optimization Techniques
There are several ways a reputable 3PL can help optimize shipping. The dual-node strategy, for example, is a sophisticated logistics approach that uses two strategic warehouse locations to optimize the supply chain. This method not only speeds delivery times by positioning inventory closer to end consumers, but it can also significantly reduce shipping costs by decreasing the distance packages need to travel to land on your customers’ doorsteps.
3PLs that are able to effectively use this strategy can ensure faster, more cost-effective deliveries across different regions. This can enhance customer satisfaction. Plus, it can reduce your company’s carbon footprint, which many consumers find appealing.
Zone skipping is another effective logistics technique. In short, shipments are consolidated and sent directly to a carrier’s regional hub. This helps bypass several sorting steps for a more efficient operation. For example, it reduces handling, which can significantly lower the chances of shipping errors and delays. It can be particularly effective for businesses that ship larger volumes of packages across wide geographical areas.
By integrating zone skipping into a broader logistic strategy, your company may enjoy substantial savings as well as improved delivery efficacies, which is crucial for direct sellers in today’s fast-paced environment.
The best providers use both dual-node and zone-skipping strategies with various clients, leading to marked improvements in both delivery speed and reduced costs. For example, one major brand chose to restructure their logistics operations to use a dual-node strategy. This single change led to a 20 percent decrease in delivery times and a 15 percent reduction in shipping costs. Ultimately, this resulted in increased customer satisfaction and improved competitiveness in the market for this retailer.
Is Your Business Up for the Challenge?
As a direct seller, you’re no stranger to change. You understand the importance of being proactive and adaptable. Can your current 3PL keep up with these changes?
Collaborating with a knowledgeable 3PL provider can help businesses not only overcome challenges related to carrier strikes, rate increases and other unexpected challenges, but they can also gain a competitive edge by optimizing shipping and logistics strategies. This adaptability ensures your business can remain resilient in the face of supply chain uncertainties, changing market forces and other unforeseen challenges.
Irene Scharmack is an esteemed leader and CEO of QuickBox Fulfillment. With a wealth of industry experience spanning over 25 years, Irene’s strong operations background has been instrumental in establishing QuickBox as a trusted name in the fulfillment industry. Under her guidance, the company excels in delivering seamless and efficient services to clients worldwide.
From the June 2024 issue of Direct Selling News magazine.
