Understanding The Value Of Dedicated Operations

The topic of dedicated logistics operations, whether in transportation or warehousing and distribution, typically elicits an array of responses ranging from “why wouldn’t we just do it ourselves” to “I can’t imagine trying to do this ourselves”.

Truth is, dedicated operations aren’t for everyone, but for many small and mid-size manufacturers outsourcing these logistics functions to a 3PL allows the manufacturer to work on growing its core business and increasing the value provided to their customers. Imagine a well-oiled machine working seamlessly to ensure that goods are transported from point A to point B efficiently and cost-effectively. That’s essentially the essence of dedicated logistics operations. In simple terms, dedicated logistics operations involve a company or a team solely dedicated to managing and optimizing the transportation and distribution of goods.

One way in which outsourcing a logistics function can provide value is the focus that a 3PL can bring to a specific discipline. By having a dedicated team focused on logistics operations, businesses can streamline processes, reduce lead times, and ultimately improve overall efficiency. For example, a dedicated transportation management partnership allows the 3PL to leverage its relationships with thousands of motor carriers and understanding of market dynamics to ensure the capacity to move your freight when it needs to move. Oftentimes, a shipping manager is also wearing many other hats and doesn’t have the time or the tools available to make the optimal decision. A good 3PL partner will also have tools that can lead to more efficient distribution and order fulfillment operations than can be had with insourced operations. Effective logistics operations can lead to cost savings through optimized routes, reduced fuel consumption, and minimized delays, making it a financially savvy choice for businesses. A 3PL can leverage the expertise gleaned from years of operations with different customers to develop custom solutions spanning a range of logistics functions. A Warehouse Management System (WMS) with features such as slotting, lot trace/recall, directed pick/put features, and live inventory may not be part of an ERP system, but the 3PL can use this and other tools in its arsenal to create meaningful Business Intelligence data allowing the manufacturer to optimize their core business.

A 3PL will also use its overall scale in order to provide value in a dedicated operations partnership. An example would be a manufacturer putting together a private transportation fleet. The 3PL can more easily procure the necessary assets (drivers, tractors, trailers) to provide the dedicated capacity, as well as the larger overall network to possibly offset empty miles. Timely deliveries and well-managed logistics contribute to increased customer satisfaction, leading to repeat business and positive word-of-mouth referrals. As businesses grow, having dedicated logistics operations in place allows for scalability and adaptability to meet changing demands and market trends.

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Finally, a dedicated operations partnership is nothing without identifying what is of the most value to the customer and how the 3PL is to provide it. The Service Level Agreement (SLA) should clearly spell out the expectations of the manufacturer and 3PL relationship in terms of capacity, quality, and responsibility. This agreement typically defines any gainshare/pain share if either party fails to live up to their commitments and should define a regular cadence of communication in order to drive waste out of the system. By having experts handling logistics operations, businesses can mitigate risks such as delays, damages, or loss of goods, ultimately ensuring a smooth and secure supply chain.

Dedicated operations through either all or part of a small to mid-size manufacturer’s logistics functions will provide value in operational efficiency, knowledge & expertise, advanced technology, improved customer service.

Allowing a 3PL to serve as a trusted partner to manage the day-to-day and strategic operations of your logistics will springboard your business’ growth and profitability. So, whether you’re a business owner looking to optimize your operations or simply someone curious about the intricate world of logistics, understanding the importance of dedicated operations can open up a whole new perspective. Let’s get the conversation started about how working with a 3PL can help excel your business, contact Keller today.