Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.
This is a supply chain logistics tip from Bruce Hoard of Microsoft and PKF Texas.
Growing and midsize companies are among the many organizations that are increasingly using the outsourcing capabilities of third-party logistics (3PL) firms. In the distribution area in particular, executives are choosing to hand over such key business process applications as order processing and transportation management to outside experts rather than build out expensive infrastructures that are not compatible with their core competencies.
It’s a smart idea, but takes a lot of work—and trust—to implement. Trust is always a major issue when it comes to outsourcing sensitive company data, as the failure of so many storage services providers a few years back made painfully clear. Even when trust does exist between 3PLs and their customers, it still makes sense for customer firms to insist on being able to monitor every step along the product manufacturing and distribution path.
Most organizations want visibility into the operations of that 3PL. They will want to know how much inventory they have, and, if they’re doing order fulfillment. In addition, how many orders are they fulfilling, and their timeliness. If you know what’s going on, you can provide your customers with better service.