Riverside Logistics

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Part 2: 2024; logistics nightmare or a re-awakening?

In Part 1,  we looked at the logistics environment to see what is going on right now and what could happen in the future. Our conclusion was that it’s a toss-up and so it is better at this point to prepare for either scenario, a nightmare, or a re-awakening, in-order-to keep your supply chain functionally whole.

In Part 2, we would like to look at how a third-party logistics company (3PL) could help you navigate this environment. 3PL’s are major players in the logistics marketplace and when used correctly they can improve your supply chain’s performance by lowering overall costs and improving service levels.

How does a 3PL fit into the mix for 2024?

Let’s look at some interesting 3PL info. Over 90% of 3PL’s offer EDI related solutions for everything from Order Tender to Freight Invoice. 3PL’s (like Riverside Logistics) can provide technological solutions that make it easier rather than harder to do business in the logistics space. They are tying API-related (Applied Programming Interface) feeds which marry up requests and responses, to EDI (Electronic Data Interchange) feeds to carry all necessary data. This results in seamless informational flows, which provide more information to shippers. The logistics process becomes more “real time” and much more transparent.

The highest portion of out-sourced logistics activity is currently domestic transportation, however, 3PL’s also provide warehousing, international logistics and other useful services that shippers need. They tailor their processes to fit each client. So, instead of a cookie cutter logistics process, you get a custom-made client specific process. Not only do you get improved information flows, but you also get the ones you need, when you need them. 3PL’s are very focused on providing a helpful portfolio of logistics services. Most importantly, they allow you to focus on your company’s core business, while they focus on theirs. They are tasked with making it easier to execute your logistics not harder.

Knowledge-based work related to logistics is going to move more and more towards AI-type automation and will keep increasing penetration levels as long as it produces efficiency and saves money for providers. The IoT (Internet of Things) is a big reality eye-opener for Logistics-related companies. More and more “process stuff” is being handled directly over the internet. More processes are being automated as well. “Big Data” analytics is also coming on strong in Logistics. Data analytics allows 3Pl’s, carriers and shippers to analyze their logistics information, spot trends quickly and make the proper adjustments to ensure that they are operating according to plan. This is being done more and more at a real-time pace,  and not after the fact, when the damage is already done. Data analytics also allows shippers and carriers to set up a better negotiation platform for doing business in the long run. Better data means a better contract where performance metrics are not guessed at, or generalized, but rather they are specifically spelled out for both parties and are “fact-based”.

A recent, new development is “Smart Contracts”. They allow computer programs to automatically monitor and adjust contracts based on their terms and conditions. This eliminates the normal contract review and enforcement processes and ensures closer-to-perfect contract compliance between the parties over time. This also allows Shippers and Carriers and 3PL’s to spend more time on the operational aspects of their deals and less time reviewing their contracts. As more smart contracts are put in place less manpower time will be required to monitor and manage them. Less time haggling, more time executing. This bodes well for tighter partnerships between the 3PL community and the Shipper community.

After reading Part 1 and Part 2, does it feel like a Logistics nightmare is coming in 2024? I don’t think so. Will 2024 provide a Logistics Re-awakening? I don’t think that either. What I get from the above is that rates will stabilize during late 2023 and early 2024. Capacity will remain soft until the stabilization is complete. Then when rates are stable, capacity will start to tighten, and we will see freight costs increase.

How can you best prepare for this middle-of-the-road scenario? By biding your time before entering contracts with your suppliers. My advice is for you to look to a 3PL for help in navigating the logistics environment. 3PL’s usually have more negotiation leverage across a larger carrier base than medium or small shippers. 3PL’s can provide a technological eco-system that allows for better visibility, lower costs, and more process efficiencies that an individual shipper alone cannot. If you think about it, it’s the business that they’re in, so they are good at it.

At Riverside Logistics, we pride ourselves on our operational expertise and the ability to get things done correctly for our clients in the logistics space. We are consistently upgrading our technological eco-system in-order-to improve the level of performance and transparency of data between our shippers and our carriers. We would love to have an opportunity to look into your supply chain and logistics network to see how and where we can help. Remember, the next year could be a nightmare, if you let it!

Call Riverside Logistics any time and talk to a professional logistician regarding your warehouse, transportation, network or logistics consulting needs and questions. We can be reached at 804-474-7700 Option #4. Good luck!

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What can Supply Chain Consultants do for me?

Consultants sometimes have a bad rap right out of the gate. After all who wants someone to tell you how to do your job or run your business?

Frankly, if your business is growing and changing you probably need a consultant to help you chart your future.

This is not a small under-taking and it can be challenging but very rewarding when approached with the correct partner. The key is understanding your objectives, what is realistic to expect as a return on your investment, and the type of knowledge that a Logistics Consultant can bring to the table.

When do you need a consultant?

Some good indicators might be the following:

  1. You are either privately held or a division of a large company in a specific market that is a new focus.
  2. You have reached 50 million dollars in sales revenue.
  3. You have primarily operated from one location.
  4. You want to grow your business by expanding geographically.
  5. You want to grow by acquisition.
  6. Your current logistics team is knowledgeable, but they have never operated multiple locations, evaluated multiple modes of transportation, or possessed the support staff to train new employees.
  7. Transportation is a big part of your total cost of going to market.
  8. The value of your business in either service or manufacturing is very high per employee.
  9. You have product coming through a port but are uncertain of what ports are best and why.
  10. Your Supply Chain Costs are increasing dramatically in Warehouse and or Transportation and you do not have a formal way to measure your investment.

Let’s look at and talk about Supply Chain and Logistics Management Consultants (LMC). They are SME (subject matter experts) on how to move your Logistics Network from where it is today, to where it needs to be in the future. Network evaluations are relatively painless, but they take time to complete properly. For example, if you feel that a 6-week consultation will allow you to plan for and adapt to a new network, don’t waste the money.

If, however, you realize that the process could and should take up to 6 months to fully realize, then go for it. Because like most things that are keys to your business success, they take time.

Supply Chain costs are rising, becoming more complex and now demand more automation. It only makes sense to have someone who has been down the path before, who can guide your team and bring in expertise if your current management does not provide that expertise. As your business expands, its demands for adequate supply chain management increase. These increases are like stepping-stones. They go up in increments or buckets. For example, you may have to go from a single warehouse to multiple warehouses. Or quite the opposite, you may have grown by opening small warehouses throughout your network and now need to take a hard look at a smaller number of warehouses, maybe even just one, with a larger single set of inventories. And, oh by the way, you may need a WMS (warehouse management system) and a TMS (transportation management system) or an upgrade to both if you already have some in place. Additionally, how do you, or how will you, handle managing you transportation needs. Will you do it “in-house” or utilize external management?. What are the upsides and downsides of each approach? How have you accommodated supply chain risk? Did you factor in the trade-offs between operating different (multiple) facilities as opposed to one large facility? This logic also holds for how, when and where you source your product. If the pandemic has taught you anything, it has taught you the value of operating a flexible supply chain for both sourcing as well as moving product through your system.

So how does a LMC Consultant provide you with value?

Here’s how: If competent, they can create a roadmap of “AS IS” and “TO BE” showing how you stack up against industry baselines, how you maximize your competitive supply chain profile and how to develop a sustainable “TO BE” supply chain that helps rather than hinders your business as it expands.

All in all, the question is not whether you need a LMC consultation, its whether you can afford NOT to hire and use one. Market conditions are moving faster than ever. How long would it take your management team to learn what they need to know? Savings in speed can provide a lot of value. Rather than debating a topic for a year a consultant can provide solutions much faster. How much is that worth to your business? If you do not hire a consultant will opportunities vanish?

Typical savings that we encounter from our own consulting efforts usually generate savings in Supply Chain costs, NET savings, of between 15% and 25% long term. If you’re in it for the long term and you have a business that is growing, you need to strongly consider hiring a LMC Consultant to help steer your business through the myriad of supply chain issues affecting your business now and in the foreseeable future.

Riverside Logistics, has been in business for over 25 years and has accumulated a very “long and strong” set of capabilities to analyze, recommend, and execute a Logistics plan for you company. Give us a call at 804-474-770 extension 82 . We are here to help!

 

 

 

 

 

 

 

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