THIRD-PARTY LOGISTICS
Warehousing: Adding Value . . .
and Complexity
Simply handling storage and order fulfillment more efficiently than their clients could in-house
is not enough. In difficult economic times, 3PLs are being called upon–and are uniquely situat-
ed–to take on additional tasks such as kitting, light assembly, and custom labeling, that will
ease the burden on their clients' operations.
—Scott Pezza, research associate, Supply Chain Management, Aberdeen Group
lthough the ultimate ownership of product, and
the nature of their customers, may differ from
one 3PL to another, they share the day-to-day
concerns of order fulfillment with each other. Across industries,
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their required work with fewer resources—directly addressing the dominant cost pressure.
This is not to say that 3PL warehousing providers are starting
with inefficient operations. To the contrary: 3PL respondents to a
revenue ranges, and supply chain functions, the need to reduce recent Aberdeen survey outpace their peers across multiple qual-operating expenses is the main pressure driving warehousing ity-related measures, including pick accuracy, inventory accu-professionals to improve their warehouse management perform- racy, and on-time shipment. It is the combination of these results,
ance (cited by 73 percent of all respondents Aberdeen speaks along with their lower average error-handling costs for both
with). But this cannot be addressed in isolation; warehousing picking and shipping errors, that illustrates the value proposition
3PLs must also address their customers' demand for value-added for 3PL services: the promise of on-time, accurate fulfillment for
services ( 35 percent) at the same time.
In the face of these pressures, 3PLs have two main goals:
improving the efficiency of their own operations ( 76 per-
clients, and a lower cost of operation for the 3PL itself.
The Outlook
cent) and increasing the value-added services they can offer When compared to their self-run peers, 3PL respondents report
to their clients ( 31 percent). Of course, these goals are inter- higher levels of planned adoption across the spectrum of avail-related: improved efficiency frees resources to be put to able technologies—from business intelligence to slotting to labor
more productive use. When picking and put-away can be management solutions. This paints a picture of aggressive per-accomplished more quickly, warehouse staff will have time formance improvement initiatives for recent 3PL respondents,
for activities such as kitting and light assembly. For 3PLs not which may ultimately benefit not only their bottom lines, but also
looking to add services, efficiency allows them to complete those of the clients they serve.
