Overview of the Third Party Logistics Market
Today, companies in the third party logistics market are facing immense challenges when it comes to managing their inventory, reducing capital expenditure, and mitigating risks. With the growing preference for outsourcing business functions, companies in the third party logistics market are facing the need to optimize their supply chain activities to meet the increasing shipping demands. The growth of the industry can also be marked by the availability of industry-logistics services and the emergence of big data. Moreover, the issues related to logistics costs have increased the focus on supply chain visibility and security. Although the third party logistics space is witnessing considerable growth, several factors may curtail the growth of the industry. They include:
- Meeting suppliers’ specific requirements: Prominent 3PL companies are facing the dire need to meet the specific needs of suppliers, especially in terms of packaging, on-time delivery, and customer service. Moreover, third party logistics providers should also ensure that they keep track of all the shipments to provide better visibility into the services.
- Increasing emphasis on rules and regulations: Since most third party companies aid in the transportation of goods to different regions, companies should abide by the set of laws and regulations for that specific location to continue their activities in a hassle-free manner. Moreover, prominent logistics providers should also meet the compliance requirements to ensure smooth functioning of the supply chain.
To address such challenges and identify relative risks in the logistics industry, businesses are utilizing supply chain risk management solutions. In the third party logistics space, a supply chain risk management solution will help businesses identify, monitor, detect, and mitigate threats to ensure supply chain continuity and profitability.
The Business Challenge and Our Journey
The client, a renowned third party logistics provider, wanted to identify the potential threats in terms of cost volatility, material shortages, and supplier financial issues, and ensure continuity in the supply chain process. With the help of our supply chain risk management solution, the third party logistics provider wanted to collect, analyze, and manage supplier information and leverage the use of advanced technologies to automate early detection. Moreover, the third party logistics provider needed to focus on their marketing efforts to reduce production cycles and maximize the ROI.
To identify, analyze, and manage risks, the procurement experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the third party logistics space. The experts also compiled information from reliable sources such as paid industry databases, trade shows, and company presentations to generate valuable insights into the supply chain process.
The supply chain risk analysis solution offered by SpendEdge helped the third party logistics provider understand the structure and the current state of the supply chain. The engagement assisted the client in analyzing the trends and forecasts in the supply chain and the effect of potential risks on the overall supply chain efficiency.
Fundamental questions answered in this supply chain risk analysis include:
The supply chain risk management solution offered adequate insights into the typical risks associated with the supply chain and the impact of these risks on the overall business efficiency. The third party logistics provider was able to reduce lead times, increase operational efficiency, and ultimately improve their overall ROI.