The Role 3PLs and Value-Added Services Play in an Omni-Channel Retail Supply Chain

Chris DavisIn our world of technological innovation, the pressure to provide consumers with faster and more efficient levels of service is mounting, and retail manufacturers are feeling the impact. Gone are the days when consumers’ only options were limited to visiting brick-and-mortar stores to shop. Today, if they still choose to shop at a physical store, they arrive armed with a knowledge of products, prices, and services that is acquired in the comfort of their homes through mobile devices, tablets, computers, and smartphone apps representing virtually every possible retail outlet available. This concept is known as omni-channel retailing — an evolution of multi-channel retailing — and it’s the method most consumers use today to learn more about and make contact with a particular brand.

The importance of a successful omni-channel retail supply chain and an expertly managed logistical infrastructure has created a unique set of requirements for manufacturers and suppliers — one that a seasoned 3PL is more than qualified to meet. From targeted geographical shipping and distribution to product-specific value-added services, a 3PL can help its customers negotiate the complex world of an omni-channel supply chain network. Increasingly, manufacturers are availing themselves of the opportunity to team with a 3PL that has the experience and expertise to provide value-added services that complement and improve existing warehousing, distribution, and fulfillment operations.

Let’s look at the sporting goods industry, for example. The mounting demand for customized equipment and apparel associated with fans’ favorite teams continues to grow. Manufacturers are faced with the problem of building and delivering mass-customized products on demand, within a very short turnaround time. Complicating matters is the likelihood that the manufacturer isn’t located near the markets with the greatest demand, as well as the necessity to outsource some of the work to specialized craftsmen. These issues often result in the need for excessive amounts of lead time; subsequently, manufacturers may be forced to produce a products that doesn’t suit the consumers’ needs and is ultimately scrapped.

It makes sense, therefore, to outsource to an established 3PL, with multiple locations nationally and globally, that is better positioned to assign the appropriate amount of inventory to each facility, ensuring correct timing and cost efficiency. An experienced 3PL establishes a spontaneous supply chain that has the capability to keep specified parts and materials on hand in order to build and customize products to order and ship them immediately. This spontaneous supply chain depends on readily available materials and personnel. A 3PL can simply pull stock to produce specialty items near the high-source markets. As difficult as it may be to predict product demand, due to the uncertain outcome of most sporting events, the right 3PL partner will have the product knowledge and resources to handle appropriate volumes of inventory, eliminating or reducing the need for both outsourcing and “chasing stock.”

Often in the manufacture of sporting goods, programs are created in response to high-profile sporting events that require customization of unique, built-to-order equipment and apparel. A sort of “hurry-up-and-wait” period ensues, during which an experienced 3PL will implement postponement strategies that delay the point of final production. These include having crews on standby, ready to run products as fast as possible after the announcement of an expected but previously unknown outcome, then packing and shipping products to customers and retail outlets. The ability of a 3PL to mass customize these products, while applying a wide range of value-added services, simplifies the supply chain and manufacturing operations.

The right 3PL partner will have the capability to dramatically reduce inventory costs and processing times, as well as supply immediate customization — a tremendous benefit to sporting goods manufacturers. The value-added services provided by a 3PL include specific customization such as heat sealing and cresting, equipment modification, packaging, labeling, kitting, poly bagging, product bundling, branded personalization, and delivery. These value- added solutions help improve quality and customer service, reduce inventory, cut transportation costs, and decrease turnaround time. The omni-channel retailing support is done in one facility, thereby creating a smooth and seamless shipping experience.

Combining these value-added services on-site allows the manufacturer to eliminate touch-points along the way, making for quicker, cleaner and more economical delivery, reducing waste, lowering costs, and freeing the company to concentrate on the important matter of growing its business.

Chris Davis is the Director of Business Development for Menlo Logistics where he is responsible for business development and sales within the company’s Consumer and Industrial Industry Group. He has been with Menlo for 22 years and primarily focuses on supporting retail, apparel and consumer products customers — Chris works with clients to improve their global supply chain operations. He is a graduate of the University of Massachusetts Boston with a Bachelor’s degree in Economics.

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