This post is sponsored by Burris Logistics.
A recent survey by Boston Consulting Group and Grocery Manufacturers Association revealed that supply chain executives are facing rising costs and declining service levels in their transportation and logistics operations.
Freight costs increased by as much as 11% during the past year, the report found, while case-fill rates and on-time deliveries declined, with respondents reporting service levels falling 1% to 5%.
However, there is also evidence that companies that find the right supply chain partners to work with are seeing improvements in their metrics.
According to the 2015 19th Annual Third Party Logistics Study, shippers reported an average logistics cost reduction of 9%, an average inventory cost reduction of 5% and an average fixed logistics cost reduction of 15% when working with a 3PL partner. Shippers in the study also reported improvements in order fill rates and order accuracy when they partner with 3PL providers.
Those findings should be especially encouraging for retailers seeking to meet increasing consumer demand for a diverse, high-quality perishables offering, which requires a strong, dependable supply chain.
“The fresh supply chain is complex, given the unique requirements to ensure quality, safety and proper inventory controls to mitigate shrink,” said Pat Walsh, vice president, supply chain, and chief business development officer, Food Marketing Institute. “Today’s consumer demands freshness, product availability and variety. An effective fresh supply chain meets all those needs and requires intense focus on forecasting and replenishment.”
Michael Bargmann, a supply chain consultant and a former logistics executive at Wegmans Food Markets, said a productive collaboration between a retailer and a logistics provider can yield more than the sum of its parts, a result he calls “proactive innovation.”
“If you get two great partners working together, they are going to have proactive, innovative ideas that each partner didn’t have on their own,” he said. “The process should not be reactive, but focused on looking at the business, and saying, ‘What can we do together? What initiatives would create a win/win outcome?’”
For those shippers seeking to collaborate with a third-party logistics provider, trust is the perhaps the most important factor to consider, said Walsh of FMI.
“The best collaborative relationships begin with trust and transparency,” he said. “Ongoing systemic communications are critical to ensure agreed-to goals and expectations are realized for both parties.”
Reliability in terms of customer service is key, he said.
“Top perishables logistics providers have an intense focus on managing product availability and freshness, forecasting and on-time delivery. Logistics providers must be an extension of the companies they serve,” he said. “In other words the retailer and 3PL work in harmony with common goals and common measures.”
Bargmann, the former Wegmans executive, agreed that trust and a shared passion for superior customer service are the keys to success in collaborative logistics relationships. From a practical standpoint, it’s also important for the 3PL provider to have a knowledgeable, experienced and efficient workforce, along with best-of-breed information technology tools.
Working with a 3PL provider allows retailers to focus their time and resources on better serving their customers and building their brand.
“Today retailers are continuously being challenged with a growing number of competitors in multiple channels of trade, managing a heightened food safety focus and navigating an expanding complexity of government regulations,” said Bargmann. “This is creating the need to seek out experienced logistics partners that offer a collaboratively transparent partnership that is flexible and agile in delivering.”
“The right product at the right price, and at the right time.”
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