Businesses that outsource control of their supply chain function to specialist third party logistics (3PL) companies are increasingly forced to look to replace their 3PL – often within months of the start of their contract period – due to shortcomings in the quality and range of services that the chosen logistics company is able to provide.
That is the view of Bob Montague, managing director of Berkshire-based fulfilment solutions specialist, Walker Logistics.
“The days when firms renewed their contracts automatically are, of course, long gone but we find we are increasingly approached to pick up the pieces after a company has awarded a logistics contract to a 3PL that turns out to be unable to meet the organisation’s supply chain needs,” says Mr Montague.
The situation often arises, Mr Montague believes, due to some companies’ unrealistic price expectations.
He explains: “On a number of occasions Walker Logistics has been invited to tender for a contract which requires a bespoke supply chain service involving, say, multiple storage options, piece picking and a range of value added services only to find that the client puts the business with a ‘transport shed’ that offers the lowest pallet storage price.
“Invariably – sooner rather than later – the company realises that their chosen partner is unable to adequately provide the range of services they require and the whole process of seeking a 3PL partner starts again,” he adds.
Mr Montague advises logistics or supply chain directors working across all industry sectors to look beyond ‘pounds per pallet stored’ comparisons when considering their 3PL needs.
“It is well known that there is a lot of overcapacity in the logistics market and many of the larger multinational providers operating in the arena are adding to the challenges the industry faces with aggressive pricing policies.
“However, companies should be aware that while many 3PL operators are great at moving pallets around, they’re not interested in things like breaking down cartons and other aspects of a contract where lots of transactional activity is involved and can’t provide the sort of value-added services that, for example, retailers – particularly internet retailers – need.”
Walker Logistics was established in 1999 to offer a comprehensive range of bespoke logistics services. The company offers over 250,000 square feet of high quality storage and fulfilment facilities to a broad range of clients.