3PLs Must Make Adjustments in China
Third-party logistics providers that are investing in more automation and IT will attract more and larger customers.
Beyond just export and freight forwarding services, third-party logistics providers (3PLs) in China are now offering pick-and-pack services for direct-to-customer shipments in the U.S. and Europe, observes Rosemary Coates, president of Blue Silk Consulting and author of Rules for Sourcing and Manufacturing in China.
“3PLs will prepare individual shipments for end customers, then overpack and consolidate to take advantage of bulk shipping to a U.S. or European distribution hub,” says Coates.
“For example, Nike has a web store (Nike ID) where you can design your own shoes for color and style. The shoes are then manufactured in Shenzhen and then shipped to U.S. customers via UPS consolidation to the UPS Louisville hub.”
Incoming containers are broken down and individual pairs of shoes are sent on their final route to customers via UPS domestic delivery. No inventory is kept in any part of the supply chain, as the shoes are manufactured on demand.
“Smaller 3PLs and freight forwarders without global networks, processes, and IT systems cannot compete with the larger, more sophisticated global companies,” says Coates. “This is key. Without global IT systems, the ability to serve customers in China or any region of the world is limited.”
According to Coates, as supply chains become more global and more complicated, IT systems become the backbone to supplying critical supply chain information.
Other key observations include:
- Operations people need to know where supplies are and how they are moving to support production
- Customers want to know where their orders are and when they will arrive
- Customs authorities are getting more sophisticated and require advance electronic information for clearance and collection of duty
“Third-party logistics providers that are investing in more automation and IT will attract more and larger customers,” adds Coates.
“In addition, 3PLs that have process engineers to design new services for customers will also win new business through the creation of innovative solutions.”
Download the White Paper: Doing Business in a Changing China
For more than two decades, China has been a global manufacturing powerhouse. It was unavoidable that a robust, fast-growing middle class would emerge from this manufacturing economy. A middle class that is hungry for American-made goods.
Capturing this opportunity may not be easy though: logistics networks that have been organized around manufacturing centers, ports, and primarily China’s east coast, are not necessarily the same as what is needed to reach population centers far beyond the coast. The main question becomes, logistically, how to get U.S. products into the hands of Chinese consumers.
Get the answers you’re looking for during this Webcast as three veteran UPS® executives join Mike Levans to discuss the opportunities, obstacles, and strategies to capture growth in China.
Related: 2013 Top 50 Global & Domestic Third-Party Logistics Providers
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