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3PL

Discussion in 'Small Business' started by Biz, 24th Jan, 2016.

  1. Biz

    Biz Well-Known Member

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    Third party logistics. Has anyone done this with their business or been involved with a business that utilises it? Would like to hear some first hand pros and cons.
     
  2. sanj

    sanj Well-Known Member

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    We have in Hong Kong and some aussie cities but we stopped a couple of years ago in the cities and just so hong kong now. It can work but we had a man on the ground who helped establish that.

    I've found a little glimmer of hope lately with logistics companies in australia, theyre still often inefficient and overpriced but I think they're slowly getting better.

    Sorry I can't give specific examples as I don't get involved in that side of this business. Have dealt a lot with freight forwarders for another business a few years ago but that was for FCLs and won't help
     
  3. The Falcon

    The Falcon Well-Known Member

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    Biz, can you be more specific with the question? Below relates to domestic 3PL

    For a lot of businesses the driver towards 3PL is to be able to access value currently tied up in owned warehouses / DCs, focus on core business (sales) or simply not to have to go down the owned / operated warehouse path, particularly where that would need to be done across multiple states for supply chain efficiency. Further benefit is that costs are incremental, and you aren't stuck with fixed overheads - having operated a largish warehouse in the past. (4000sqm) it was at various times either too big or two small. Not a concern if you employ 3PL.

    Downsides, you lose control of process and cost to an extent though can be managed.

    I have a couple of clients that employ 3PLs nationally and in Auckland for high volume products (more than 1000x40's per annum). They both run out of small offices with a handful of staff and zero overheads. Wouldn't have been possible for them to grow sales as they have with limited capital without 3PL
     
    Last edited: 25th Jan, 2016
  4. Biz

    Biz Well-Known Member

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    Hey guys,

    This is for my business domestically. Only sell in Australia. I tend to be very busy the last quarter of the year and steady through the rest. Cost wise I would save a bit, the biggest benefit would be that I would no longer be tied to a warehouse during business hours. Could almost start to count the business income as passive.

    My concerns are that the 3PL providor would be a bit hit and miss with orders. Taking too long to ship, dispatching the wrong cartons etc. This is even more of a concern in the last quarter when I do half of my turn over for the year.
     
  5. The Falcon

    The Falcon Well-Known Member

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    Yeah the key is getting the right client - provider fit. The business risk can be significant of the match isn't right.

    What is summary of your requirement ;

    - pallet positions stored
    - stock turn rate
    - skus
    - weekly picks
    - average pick size

    From this I can give you my thoughts as to whether its worthwhile, from a provider standpoint your seasonality is not particulary attractive.
     
  6. Biz

    Biz Well-Known Member

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    - pallet positions stored - average about 80-100
    - stock turn rate - 1 pallet a week Jan-June, 2-3 pallets a week July-Sep, 3 pallets a day Oct-Dec
    - skus 50x
    - weekly picks Each pallet holds about 3 of the item.
    - average pick size 2-4 cartons, 20-30kg each, each item about 0.25 m3 - 0.5 m3

    I have spoken to a 3PL warehouse near me and they would have no problem taking it on.
     
  7. The Falcon

    The Falcon Well-Known Member

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    Ok, well you have identified the risks correctly. Frankly that profile is pretty unattractive (note this is not a negative comment about your biz!) as a 3PL is looking for 12 month a year business with high turn, bugger all is made from storage. (Money is made on the ins/outs/pick and transport).

    Now that's not to say there aren't plenty of under capacity 3PLs who will take it on for you. You'll just need to understand your place in the pecking order when they reach capacity. Something to think about.
     
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  8. Truly Exotic

    Truly Exotic Well-Known Member

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    I did my masters in logistics and basically had 3pl in my head day in day out

    3pl works less the smaller the business
    As someone summarise very well.
    Lose control
    Costs
    Streamline good and bad
     
  9. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    That's a crazy difference from your quiet times to your busy times.
    What do you do with yourself in the first half of the calendar year?

    I'm not sure if I understand this right, but are you saying you hold 80-100 pallets of stock, and in the quiet period turn over just 1 pallet per week?
     
  10. Biz

    Biz Well-Known Member

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    Kind of but this niche is only half the business. The other half is more consistent but less profitable.


    With my spare time I just troll this forum. :D
     
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  11. teetotal

    teetotal Well-Known Member

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    How about creating your own 3PL business as a separate entity ??
    Lease a place big enough, Store your own inventory in it and look for opportunities to work with other businesses.
    Hire the right staff, pick misses and incorrect dispatches will happen even in your own control, that is just the nature of logistics.
    Things you'll need -
    1. Leased warehouse with good racking system and forklifts. Look out for some business that is shutting down to get a good deal.
    2. Experienced Staff.
    3. Warehouse management system.
    4. Apart from your own business, some other clients to keep it viable.
     
  12. Biz

    Biz Well-Known Member

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    Geez that sounds like hard work.
     
  13. teetotal

    teetotal Well-Known Member

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    Hahaha. The laziest option is to then sell your business and go to hawaii ;)
     
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  14. TMNT

    TMNT Well-Known Member

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    What product is it if you don't mind saying
     
  15. Nemo30

    Nemo30 Well-Known Member

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    Can anyone tell me if there is a difference between pick and pack and fulfillment? Is it the same thing?
     
  16. Scott No Mates

    Scott No Mates Well-Known Member

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    P&P is the selection of items to fulfill the order, each order differs (most likely ).

    Fulfillment leaves a smile on your face. :)