Delivering the added ingredient
Head of Sales and Marketing | Walker Logistics
For many companies a lack of facilities, manpower or resources can mean that making even the simplest product enhancements becomes anything but the straightforward task that it should be.
Upgrading an established line’s packaging configuration, introducing additional or varied instruction pamphlets or carrying out modifications to key components that require only the lightest of fabrication tasks are all essentially simple operations, but any company lacking the assets to perform them in-house can find that they are poorly positioned to capitalise on growing demand for the products they sell and, as a result, their market realisation potential will be downgraded.
Flexible assembly operations, slick pick-‘n’-pack routines, efficient kitting activities and fast packaging operations are the necessary tools to gaining a competitive edge in a world, where customers expect ‘personalised’ products adapted to their requirements and delivered to exacting time slots.
These are all tasks that a more advanced logistics services company should be able to offer its clients as ‘value added’ services. For example, outsourcing light assembly work, pack configuration and other activities to a third party logistics company can give businesses the necessary flexibility, speed and low-risk profile needed for expansion.”
However, at William Walker we believe that many businesses think that the capabilities and expertise needed to perform such operations are only available through the largest logistics companies. This is not the case.
Any logistics company providing ‘value added’ services needs to have the necessary depth of experience in managing sophisticated logistics tasks, organising human resources and must have the facilities in the right place to provide the service - but size is not the issue.
It is essential that third party logistics operators get closer to their customers and develop strong relationships rooted in the highest levels of the business. It is often through strong relationships with customers that an operator can develop capabilities that mirror and complement the development of their client’s business. It is certainly true that many people believe that a smaller 3PL is far more likely to be agile and able to respond swiftly and more flexibly to a client’s changing requirements than the biggest operators.
The case of a US-based producer of a popular brand of natural personal care products provides a good example of how bigger 3PLs sometimes lack the agility to respond to a client’s needs.
Walker has been providing a range of services to this particular firm for over seven years, but when it first started to market its range in the UK and Europe, the client company opted to work with one of the biggest names in the logistics industry.
Just a few months in to the contract, the firm was seeking another supply chain partner.
“I think it’s fair to say that some people involved in the original decision to outsource to one of the biggest 3PLs in the sector were dazzled by the company’s client list,” recalls Jo Denton, Walker Logistics’ head of business management.
“However, very early on in the relationship it became clear that the 3PL couldn’t cope with the company’s quirky requirements, and Walker was approached – having tendered for the work originally – to take the contract on.”
From the outset the contract has involved plenty of labelling, kitting and rework tasks, but Walker has become increasingly involved in the design of the company’s merchandising and product packaging. We work closely with the company and their design agency on packaging styles and Jo Denton admits that, in some design meetings she is made to feel like “the grim reaper”!
She explains: “Sometimes the agency will produce some amazing concepts that would look fabulous on a retailer’s shelf, but often they are simply not practical from a logistics point of view or would cost a fortune to assemble – so we have to advise the client to turn them down.”
While such guidance can be demoralising for the designers, it is invaluable for the client, as Jo explains:
“Particularly when it comes to kitting we look very closely at how a product will look within the proposed kit idea and assess, for example, if it will travel well and not swivel round in transit. The weight of the kit must also be considered along with the number of kits that can be contained within an outer carton – particularly as some retailers specify a minimum number of kits per outer.”
Because this particular client has built its business around the eco-friendly nature of its products and manufacturing processes, Walker faces the additional challenge of ensuring that all packaging materials are recyclable and that the ink used during relabelling tasks is vegetable ink.
“For 3PLs there is no such thing as a ‘normal contract’ anymore,” says Jo Denton. “You simply have to offer more than making up and shipping full pallet loads if you want to have an edge in this business.”
I believe that kind of close collaboration that works so well with the company’s US-owned personal care products client is a key element of any ‘value added’ activity.
Management and personnel from the logistics service provider must integrate with those of the client to continuously seek out improved processes and efficiency gains, participating in planning meetings and proactively anticipating and resolving issues.
In ‘value added’ contracts the removal of waste from processes – in the form of time, energy, material or effort – must be rigorously pursued to bring about cost savings that potentially can be shared between both parties. The motivation for such a close partnership is strongest with a smaller 3PL, were the value of the contract and potential gains mean proportionately more.
The same is true with regards to risk sharing. The smaller 3PL is far more likely to invest in order to win or retain ‘value added’ work – it is all part of the entrepreneurial spirit and drive inherent in smaller organisations.
There are many ways in which logistics service providers can create extra value for a client, through taking the strain and pain out of business expansion, helping to create new opportunities and enhancing existing operations. But it is the 3PLs that are prepared go the extra mile for their clients that provide the real added value.
Posted on: March 7th 2016