Retailers have a difficult challenge between meeting the continuously changing shopping and purchasing demands from customers and meeting the changing demands and capabilities from their extended supply chain and especially changing parcel delivery capabilities. This is where a third party logistics provider can help to meet the delivery and store replenishment demands with a flexible network of distribution centers across the key geographic and population locations ready to meet the consumer demands for fast delivery without the requirement for the retailer to invest in real estate and labor to support these demands. The 3PL can provide these capabilities and most importantly flexibility tot meet the changing demands in a cost efficient and timely manner.
A 3PL with a network of distribution centers can provide quickly provide shared capacity in locations that can allow the retailer to meet two day delivery demands across the country without upgrading service. This in itself can be a compelling financial benefit to the retailers and then add to this ability to flex services such as customization and even store replenishment to the mix and it becomes compelling argument. The flexibility alone provided by 3PL capabilities allows the retailers to quickly offer new services without a costly investment and at a cost effective charge because these retailers not only take advantage of the 3PL capabilities but they can also take advantage of the favorable transportation rates that the most 3PLs can obtain through volume shipping. This is no small benefit in itself and then you add to the the cost of maintenance and support of software plus the costs of real estate and building maintenance and not to mention equipment maintenance and you will pretty quickly reach a compelling reason.
The reality of the landscape and capabilities now is that many of the midsize to large retailers have been focused on the consumer face and meeting the changing consumer demands in shopping and purchasing to maintain their place in the market and they have focused mainly on cost savings that can be generated by their internal supply chain. During this same time 3PL providers have been focused on improving their efficiencies by investing in software and automation along with the distribution center network in many cases. These investments by the 3PL are necessary for the 3PL to maintain their place in the market and meet their customer demands.
By this point you should also see the similarities between the retailer and the 3PL markets, they are both focused on meeting their changing customer demands and investing to meet these demands. This is now a good place for the retailer to seriously explore a partnership with a 3PL to provide the supply chain services to meet their delivery needs and allow the retailer to focus on consumer demands. The demands are changing quickly across the retail market in consumer shopping, purchasing and delivery so retailers would do well to focus on the activities and capabilities that differentiate them in the market and outsource the things, such as consumer delivery logistics, to a partner that specializes in those activities. The point here is that both the retailer and the 3PL can partner to benefit from each other’s specialties.