Aeropostale, Macy’s, Mens Warehouse, Office Depot, Sears . . . these are just some of the retailers who will be closing brick-and-mortar stores this year. With ecommerce growth increasingly dependent on retail store locations as distribution centers, pick-up locations for online orders and centers for returns, widespread store closings may have a broader impact on retailers’ supply chains.
With fewer store locations supporting fulfillment and distribution functions, retailers may find that an integrated third-party provider can help to relieve their omnichannel supply chain challenges. Warehousing, fulfillment, transportation, packaging – the more services they can obtain from a single provider, the more seamless, scalable and cost-effective their supply chain can become.
Top Business Drivers for Using an Integrated 3PL
An effective third-party can provide a single point of contact for all logistics operations – from traditional warehousing and transportation services to packaging, product customization and omnichannel fulfillment. By taking on a greater role, a 3PL can take links out of the supply chain and streamline the logistics function.
The provider can look at the retailer’s needs holistically and develop a creative solution that incorporates a variety of logistics services. They can assist with expansion into new markets, accommodate multiple sales channels, or increase use of value-added services like kitting, building displays, and contract manufacturing. The result? A stronger and more cost-effective supply chain.
Logistics represents a significant portion of retailers’ budgets. In fact, omnichannel retailers spend an average of 18 percent of every dollar to satisfy customers’ expectations to buy anywhere and pick up anywhere, a study by EKN Research found. Naturally, that makes managing costs one of the largest business needs driving retailers to outsource to an integrated service provider.
A 3PL can help retailers control costs and reduce capital expenditures related to transportation, labor/training, warehouse space, equipment and technology.
Postponement strategies can also be effective. An integrated provider can build to order instead of build to stock, allowing companies to reduce production and inventory carrying costs. Moving product customization closer to the end customer can also help to shorten the cash-to-cash cycle.
Accommodate Business Fluctuations
In today’s retail environment, companies need to react quickly to adjusting customer demands, seasonal promotions or other business fluctuations. With scalable space, flexible staffing, equipment, and a variety of transportation options, 3PLs give retailers the flexibility to scale to meet peaks and valleys in their business.
Third-parties also give companies the ability to strategically position their distribution operations with locations that put inventory and/or product customization closer to the customer to help increase speed to market.
With the ability to streamline operations, control costs and accommodate business fluctuations, retailers may find that leveraging an integrated logistics provider can be the key to optimal supply chain performance in today’s omnichannel marketplace
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