The Age of Value-Added Services in Global Logistics: Negotiating to Grow Global Capabilities.
– Global Trade | Mary Shacklett | Aug/Sept 2012
Serving a global clientele and keeping customers happy shook one e-retailerdown to the ground—where logistics made the difference. Part of the dilemma was learning how to consolidate shipments into containers, sometimes even with competitor companies, so that no container left port in one country partially filled. Then there were traditional logistics problems to grapple with. Once in port at the receiving country, should goods be shipped by truck or via inter-modal transportation? These were decisions the retailer relied on their global logistics provider to make—but that wasn’t all.
There were issues with localization in the destination countries, like ensuring that instructions on the boxes of packaged goods were printed in local languages. Providing local services and order-taking were also challenges. The company considered whether it was more efficient to have their own employees “on the ground” in these distant locales, or enlist a 3PL (third party logistics provider) that could offer value-added services like localizing package instructions, warehousing and distribution, and even order taking and customer service.
It was decided to outsource warehousing, distribution, order taking and customer service functions to the 3PL. With the help of its 3PL, the e-retailer also rerouted much of its air freight to ocean freight, because the 3PL could expeditiously manage inventory demands locally with a make-to-order approach. This resulted in a seven-figure annual savings.
“Our customers are asking us to do more and more things for them that are not even thought of in traditional supply-chain logistics,” says Mark Sell, CEO of MD Logistics, a 3PL specializing in supply-chain solutions. “The services they are asking for and that we are offering include taking orders for goods, managing order systems, invoicing customers and even managing receivables. The largest growth areas for value-added services have been in packaging, kitting and labeling. Customers want us to deliver these elements as a turnkey service to them, so what we are seeing is considerable business process outsourcing.”