LTD Management
Logistics & Supply Chain Management Consulting Global Solutions That Work

3PLS AND END-TO-END E-COMMERCE

—Assessment Action Plan for Manufacturers and Retailers—

This is not about providing a directory/list of 3PLs. There is no list of the usual suspects. Presently, things are in the initial stages of achieving definition as to services and sectors. Positions have not been staked out by providers; leaders and laggards are not identified.

For providers, new, even startup, and established, it is more than watching supply chain events unfold for providers. Strategies and transition/execution plans are unfolding as same-old thinking debates new ideas, new providers, and new ways of doing it. Will more be expected for e-commerce? Will third-party providers be viewed in terms of logistics or supply chain management?

Retailers are moving from the known of traditional selling with stores/bricks to the unknown of online/clicks and customer expectations. Manufacturers are shifting from selling to third-parties, retailers, and selling direct to end customers. Both are venturing away from cases into the world of eaches, from push to pull supply chains, and into higher performance requirements. New means a move from familiarity to new ways and new players. 3PLs should note that the points mentioned here are relevant to them as they determine their place in what is happening.

Companies need an action plan to identify and assess potential 3PLs for end-to-end e-commerce fulfillment programs. New ways of doing business should have an assessment of providers, both old and new, both known and unknown. That is Step 1 and should be done before issuing RFPs. E-commerce and its customer expectations can be an unforgiving market. Performance is mandatory. Therefore, the 3PL assessment should be a blend of a high-level approach and tactical points of how to proceed to meet the challenge.

Approach. Start with determining the needs and desired results. These lead to questions. In turn, these set the framework. Key points—fundamentals--to the approach are—

  1. Define the e-commerce fulfillment/supply chain requirements. A vital one will be the ability to meet customer expectations in the world of the Amazon Effect. This and others provide important reference points for the effort.

  2. Research 3PL market as to providers and overall view of end-to-end e-commerce.

  3. Align requirements with the market. Providers and their capabilities are not a standalone issue. They must meld with your needs.

  4. Identify 3PLs that have potential for you.

  5. Assess their service capabilities and market/competitive factors.

  6. Also recognize that—

    • The project presents more challenge than it appears on the surface. Much of that comes from the states of the market and of 3PL e-commerce capabilities.

    • Unique needs should be recognized. Some, such as speed of implementation/speed to market, can be very important to the overall project analysis

    • The assessment should center around your company needs. Otherwise what the 3PL does has no context or relevance. The extent of required capabilities may be broad and include

    • last-mile, returned orders, order-delivery velocity, technology, total end-to-end supply chain visibility, and more.

    • What is the geographic scope for the e-commerce? For example, it is for the US and Canada? If so, you may need to differentiate the US vs Canada. There are dissimilarities as to providers and country configuration that should be recognized. It is not a homogeneous 3PL market for both countries.

    • A single 3PL may not have the capabilities in the US and/or Canada to meet all requirements. This may be so with the facilities footprint and operating infrastructure given the need for end-to-end and providing an e-commerce service satisfies the customer experience.

    • The project is not just a search of logistics directories for the usual suspects. Many 3PLs have trailed the change with e-commerce and its transformation with supply chains and logistics. These and other events have created new 3PL entrants. As a result, potential 3PLs for may range from traditional asset-based to new, technology-based, and in-between. It may be a fusion of the known and the new.

    • Analyzing against the market and capability reality of the various types providers and operating needs can create comparing unequal situations. Such differences should be recognized from the beginning. Otherwise, findings could be distorted. Providers should be reviewed on capabilities, financials, and more.

    • Analytical techniques of 3PLs should be utilized for the provider assessment. These may include

      • SWOT (Strengths, Weaknesses, Opportunities, Threats)

      • Gap Analysis (between Unilever's requirements and provider capabilities)

      • Functionality Matrix with weighted scoring. The matrix content will be developed after we are selected for the project. Initial ideas are that items such as innovation and coverage would be high scoring criteria as they enable meeting customer expectations.

    Underlying the approach are the basics of e-commerce. The roles presented here are a structural part, of e-commerce, supply chains, and fulfillment

    BUYER/DEMAND POINTE-COMMERCEE-FULFILLMENT
    BrowseSystem managementManage fulfillment facility
    CompareCreate portalManage physical inventory
    Place orderMake/source goodsProcess inbound into storage
    Pay onlineMarket productsPick/pick and pack orders
    TrackWeb designCreate delivery routes (if valid)
    CommentSystem refreshShip
    ReturnManage inventoryTrack deliveries & performance
    Manage replenishmentUpdate/advise customer on delivery status
    Track ordersProcess returns (pickup, if valid)

    Methodology. The how you will do it should complement the Approach. As noted, your needs are the starting point.

    To identify possible 3PLs, draw on experience and on your network of companies and logistics providers. Drill down as to operations and operating issues of online sellers. In addition, make diligent searches of traditional and non-traditional sources for e-commerce, supply chain management, logistics, omnichannel, retail, trade, sourcing, and other local and global venues.

    Potential 3PL candidates should be contacted and interviews and surveys conducted. These will range from what they do, what they can and will do, customers, etc. Tabulate, score, and roll results into the analytical techniques.

    Results. Your efforts will achieve—

    1. Thorough understanding of e-commerce 3PLs for the country/region you are planning to do e-commerce for.

    2. Comprehensive market scan of 3PL end-to-end e-commerce providers.

    3. Identification of possible 3PLs for your e-commerce program.

    4. Analysis of providers.

    5. Positioning you to take the next steps of design and execution.

    Conclusion. Preparing for e-commerce and using outsourced providers takes planning. Companies must understand the new selling duality for manufacturers of sell and ship to retailers and now sell/ship to direct customers. For retailers, it is going from mass selling through stores to single order direct to individual customers. Selling duality requires supply chain duality, especially because supply chain management drives e-commerce success. Amazon has proven the vital role of supply chain management and its logistics elements.

    E-commerce fulfillment has risk for laggard retailers, manufacturers, and 3PLs. There is the risk of the Amazon Effect and being Amazoned. The competitive point is moving continuously. Delay increases the distance to catch up.