The current economic environment, with its volatile fuel and transportation costs and constricted credit availability, presents a mixed blessing to 3PLs. Many are thriving as businesses focus on their supply chains. But these same growth opportunities bring infrastructure and scale challenges.
Many 3PLs are "deal driven," and operate reactively based on the next customer contract. This might have been acceptable at one time, but customer expectations tend to grow exponentially and today's marketplace can get very complicated very quickly. Consider a customer that wants to expand operations from retail or catalogue to an eCommerce platform. The requirements of this transition are usually presented to a 3PL without much lead time and suddenly require a much more comprehensive infrastructure than what was suitable for simpler pallet-in/pallet-out scenarios.
As 3PL companies grow, they generally follow a combination of two different paths to help meet customer and market demands:
Naturally, as 3PL companies grow, they will squeeze as much as they possibly can from available resources before making new capital expenditures. Eventually additional warehouse space will be brought online and extra forklifts or trucks are purchased. However, they frequently continue to rely on legacy IT systems beyond their usefulness—at times even to the point of impairing efficiency.
This is when additional IT staff is hired to protect and maintain older investments and to avoid losing time implementing and launching a new one. This may, in fact, temporarily solve the problems at hand, but maintenance of this sort leads to exponential growth of IT personnel and expenses and unnecessarily complicated technical work-arounds.
In such a scenario, the company faces a cycle of bringing on new business and then scrambling to catch up. If IT capacity on hand is inadequate, there are warehouse bottlenecks and weeks-long delays while new hardware, operating systems, database servers, and additional applications, etc., are requisitioned and implemented. Ideally, the company would have a means for provisioning the additional capacity more quickly.
Even if a 3PL is so busy accommodating new business that it doesn't have time to stop and take a breath to develop a formal, long-term strategic plan, technology can help.
Server virtualisation technology can be one such solution. It works by leveraging idle server resources such as CPU, storage and memory capacity originally provisioned to other customers. Since there are always peaks and valleys in the transactional volume of any given system, the unused processing power can be aggregated and harnessed by the virtualisation technology, avoiding the need to purchase new servers for every chunk of new business that comes through the doors.
Leading 3PLs and other companies use supply chain solutions from Manhattan Associates deployed on virtual server technology as a reliable component of their IT infrastructure. Benefits include:
Virtualisation technology is a flexible solution that can be both part of a long-term plan and an alternative that provides a temporary mode of operation.
What is really needed is strategic planning that anticipates growth and customer demands. This is easier said than done, but outside vendors working in partnership with 3PLs are an excellent source of creative and comprehensive solutions that can help "future proof" IT systems. This means working with a vendor that shares a long-term perspective with the client company and builds a cohesive infrastructure whose components work together to serve the 3PL's needs. This is a different approach than point solutions that each address individual challenges as they arise. The comprehensive solution does that, but "pieces" that make up the "whole" of the infrastructure are integrated to function holistically toward the best interest and long-term goals of the company.
Utilising outside experts also gives 3PLs an opportunity to leverage the millions of pounds, euros or dollars those partners have invested to create workable solutions that address complex customer demands. In addition to covering everything from tracking multiple tenants in a warehouse environment to life-cycle management, a relationship with a packaged solution provider offers benefits like:
3PLs will always face growing customer demands and marketplace challenges. Leveraging technology such as virtualisation and partnerships with outside suppliers/vendors, are keys to making sure they remain successful without becoming victims of their own success. By integrating these elements into their operational strategies, 3PLs can maintain a better balance between client driven planning and longer-term investment in their own best interests.