Over the past several years, supply chain resiliency has gone from an academic concept to a major boardroom-level concern for U.S. companies. From the U.S.-China trade war to the COVID-19 pandemic to climate change, business leaders now understand the importance of bolstering their procurement and logistics activities against unexpected disruption.
The solution to resiliency can be summed up in one word: More. More visibility. More transparency among partners. More resources. More staff. More technology. The list goes on and on, leaving supply chain leaders and boardroom executives seeking the most effective ways to check as many of the “more” boxes as possible. Third-party logistics (3PL) partners have provided that answer for many companies.
4 Ways Your 3PL Bolsters Supply Chain Resiliency
An experienced 3PL excels at providing maximum value to shippers. In 2022, that means providing the things businesses need to strengthen supply chains and mitigate the risk of disruptions that interfere with production and sales processes. Here are four ways your 3PL can contribute to the resiliency of your organization’s supply chain:
According to the U.S. Bureau of Labor Statistics, the United States faces an unprecedented labor shortage, with the most recent numbers showing 11.5 million unfilled jobs. Transportation and logistics have been hit particularly hard during the COVID-19 pandemic when the country’s workforce began to seek jobs with remote options. This challenge has made it difficult for shippers to keep internally operated warehouses and fleets fully staffed. Additionally, it has strained the human resources and talent acquisition teams trying to handle labor shortages in every other area of the company.
A logistics partner helps to take some of that labor burden off your internal HR and recruiting teams by providing their own staff to handle fulfillment, warehouse operations, and other logistics-related activities. Passing responsibility for some of your labor efforts to your 3PL allows your recruiters to focus on filling revenue-generating roles in product development, sales and marketing, and other key areas.
2. Real Estate
Industrial real estate has been in extreme demand since 2020 when COVID-19 caused consumers to increase the amount of shopping they do online. An e-commerce fulfillment center requires about three times the space of a traditional warehouse, so online sellers started grabbing up all of the space they could. The U.S. industrial real estate market ended 2021 with a record low vacancy of 3.4% and is expected to remain under 4% through at least 2023.
The lack of available warehouse space has proven challenging for the same retailers who have benefited from the same e-commerce growth. Not all 3PLs have a large national warehouse footprint, but those who do have been critical in helping businesses to scale with demand, locate inventory near customers, and store additional safety stock to avoid disruption.
When the supply chain gets volatile, transportation capacity across all modes dries up. The last few years have been no exception. Carriers tend to give their capacity to the shippers who can offer them the most value over the long term. This fact leaves many small- and medium-sized shippers left scrambling to find a truck on the spot market—or worse, without any way to move their cargo.
A good logistics provider knows how to build relationships not only with its customers but also with its own vendors and carrier network. 3PLs bolster carrier partnerships by leveraging freight volume from their entire customer base to ensure truckers always have cargo to move. Then, when times get tough, truckers go to those 3PLs first as a customer of choice to offer what capacity they can.
Most experts recommend increasing visibility and technology capabilities to build supply chain resiliency, which requires significant upfront expenditures from shippers. However, good 3PLs operate at the forefront of technology, onboarding the latest solutions to drive efficiencies for their customers. By leveraging 3PLs for technology, shippers can gain the benefits and data offered by these technologies while mitigating the risk of heavy upfront investment.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.