I talked to two executives from Americold – Kevin Van Belle, the VP of IT Applications, and Daniel Cooke, the Director of Marketing – on the topic of selecting a 3PL with robust IT capabilities. Americold is a global leader in temperature-controlled warehousing.
I gave these two gentlemen a stiff challenge; I told them I was operationally oriented, as are most of my readers. The goal is to discuss this topic without going so far into the weeds on IT interfacing, standards and so forth, that my readers’ eyes would glaze over.
The further challenge was to focus on IT capabilities that would differentiate a 3PL. Every 3PL, for example, should be using a warehouse management system (WMS). That would not be a differentiator.
One key point was that metrics equal management. Thus, it is absolutely critical to understand not just what types of metrics a 3PL uses internally, but what metrics they can provide their customers. From an internal perspective, some 3PLs are big enough that they can use the operational metrics from across their own network of warehouses to benchmark themselves. For example, is the warehouse in Fort Smith Arkansas generating significantly more picks per hour than the norm? Why? And can that be replicated? Is the warehouse in Nampa, Idaho performing significantly below norm? Again why and how can that be rectified? In Americold’s case, they have standardized on a warehouse management system (WMS) from JDA (RedPrairie), which makes it much easier to have the metrics defined and reported in a standard manner.
Metrics can also be generated from a labor management system (LMS). Implementing a LMS that makes use of engineered labor standards is still differentiating. Americold uses LMS at most of their sites. They also use JDA for their LMS.
When it comes to the metrics that can be shared with customers, a potential customer really needs to understand how that data is collected, how data elements will be assembled to provide metrics the customer wants, how it is provided to customers, and how close to real time the data is. The customer could take it a step further and consider what logistical data they need to provide to their customer and can the 3PL contribute to those too?
The provision of real time metrics, to both customers and to the 3PL’s operational team, is better if it goes beyond the exchange of standard EDI message sets and is augmented with real time interfaces. I did not want to dive too deeply into interfacing. But Kevin did make an interesting point. 3PLs that want to achieve operational excellence are interfacing to more customer systems than they use to and accessing data earlier in planning cycles than they use to. For example, integrating to a customer’s forecasting system and having visibility to a coming promotion, helps their warehouses perform better.
Potential customers also need to think about brand protection when analyzing a 3PL’s IT capabilities. A failed recall can kill a business. The shipper should ask a 3PL how their recall and hold processes work. If inventory is put on hold, how is that inventory segregated from the rest of the inventory and how quickly can that take affect? How can the 3PL guaranty that inventory put on hold is not picked and shipped? If a customer wants to put certain inventory on hold, they should be able to log on and do that remotely.
Another thing related to brand protection that many shippers may not think about in assessing a 3PL is disaster recovery. What emergency plans does the provider have in place for minor and major disruptions from power or communications outages (relatively sort downtime) to natural disasters or catastrophes (longer downtime)? Solutions should include an immediate power or communication restoration process, access to additional space in alternative facilities in the vicinity, power generation, and access to backup power generation. In the event of mass flooding, for example, there will only be so many rental generators available. Some utilities offer tiered access to power generation equipment. A shipper needs to know where their warehouse provider is on that list. Finally, in rare instances it will become necessary to abandon a warehouse and relocate operations. What sort of options can a 3PL make available if the worst happens? The more facilities a 3PL has within a region then the greater the ability to relocate a customer’s operation and the shorter the downtime of the product.
Warehousing and transportation assets are major users of resources. More and more, shippers prefer to work with Green 3PLs. IT can help 3PLs improve sustainability. Does the 3PL provide power consumption statistics? Can the 3PL show a downtrend in consumption when capacity growth is being taken into consideration? What projects are in place to reduce consumption? Is the 3PL investing in the latest high tech options such as motion sensing LED lighting, solar panels, gas generators, and efficient material handling equipment?
Americold, for example, has targets set per facility, per type and volume of product. With a sophisticated technological system in place it benefits from live power consumption monitoring and its control center is alerted immediately should a facility fall out of performance thresholds for power consumption. Americold can then implement solutions to ensure the most efficient use of power. These are benefits that a customer can then promote to its consumers.=
In conclusion, selecting a 3PL with robust IT capabilities is a must. And clearly, when selecting a 3PL, a shipper’s IT department needs to be part of the process. But the supply chain team cannot fully cede control on these issues to their IT executives, there is a role for operational managers in assessing a 3PL’s IT capabilities.