Companies that opt to change third party logistics (3PL) service suppliers frequently will rarely, if ever, enjoy optimum supply chain efficiency. That is the view of Jo Denton, General Manager of Berkshire-based 3PL, Walker Logistics.
“There is no doubt that any traditional B-2-B logistics or B-2-C e-fulfillment operation becomes more effective the longer the contract runs,” she says. “Walker has been working with many companies for more than 10 years and, in my view, these accounts operate with 100 per cent efficiency. Quite simply, we know exactly how those clients’ business models work.”
Research into 3PL contracts undertaken by the United Kingdom Warehousing Association (UKWA) – the trade body that represents the logistics sector – found that, when it comes to new business wins, the average length of new logistics contracts is 2.41 years, but, typically, 3PLs work with their clients for a decade or more.
“Long-term business partnerships allow a 3PL to develop a closer client understanding which, ultimately, brings cost savings to the process,” says Jo Denton. “Unfortunately, some companies still perceive logistics services to be a commodity and apply the same fiscal rules when choosing a 3PL as they do when buying, say, raw materials .
“But, using ‘pounds per pallet stored’ comparisons as the principal driver to switch 3PL is never sensible.
“In my experience, the client company comes to realise – usually sooner rather than later – that their new logistics partner is unable to provide the range of services they require and the whole process of seeking a 3PL starts over again.
“So, the company never achieves long term supply chain stability and misses out on the financial and operational efficiencies that continuity brings.”