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.
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
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
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.
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.
- 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.
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.
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
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?
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.
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.
Can anyone tell me if there is a difference between pick and pack and fulfillment? Is it the same thing?
P&P is the selection of items to fulfill the order, each order differs (most likely ). Fulfillment leaves a smile on your face.
Nah still doing what I was before. I don't think you can give people excellent customer service if you outsource that part of the business. I could work for sure if there is less customer involvement but when you have phone lines etc not worth it.
@Biz What can you do better with your own warehouse vs leveraging a 3PL when it comes to customer service? Did you do a cost analysis in the end to see which is more cost effective? If not comfortable replying here, could DM please.
Still need someone on the phones so they may as well be on the phone in the warehouse. Customer services wise you'll get products dispatched faster if you do it yourself especially in the busier times also if something gets damaged in transit or goes missing you can sort it out for the customer on the spot. Some people want to pick up and pay etc so there is that too. Cost wise it wouldn't have worked out that much different.
