Look (Closely) Before You Leap

Third party logistics (3PL) companies have become an important part of today’s supply chain.

They have grown as their clients decided to become leaner, conserve capital, and focus on core business strengths and processes.

On the other hand, many enterprises view distribution/fulfillment as a strategic tool driving their business models. For them, the supply chain is much more than a transactional process, it is a competitive weapon.

And so, the question becomes: Outsource distribution to a 3PL or fulfill from within through a wholly owned distribution center (DC)? There is no simple answer to this conundrum. There are myriad factors to consider and subtle issues to analyze that can be best addressed with the assistance of a deeply experienced supply chain consultant.

The Current Environment
It may seem cliché, but supply chain management is all about reducing costs and improving the volume and accuracy of throughput while enhancing the customer experience. This is a constant, as true today as it will be tomorrow. But there is a profound complication: Order fulfillment and distribution are increasingly multi-channel processes.

While largely thought of as a retail phenomenon, a July 2013 study conducted by Peerless Research Group on behalf of Modern Materials Handling magazine sponsored by FORTE revealed that manufacturers and distributors are also under pressure to address the challenges of multi-channel distribution.