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Outsourcing—Far From Taboo

By: Elizabeth Abrams
Posted: June 3, 2010, from the June 2010 issue of GCI Magazine.

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Many 3PL provider companies also employ efficiency-driven programs such as retailer consolidation. This is especially important for small to mid-sized beauty care companies needing to plan for changing needs like expanded distribution and new retailers. Experienced providers operate consolidation programs that combine various products headed to the same retailer onto one purchase order, shortening delivery times and reducing costs and damages.

For suppliers, your back-end transportation costs are significantly reduced. As opposed to reducing logistics costs by lessening service levels, these programs effectively enhance your on-time rates and allow you to focus on additional sales. Also, your retailers may thank you for decongesting their loading docks and reducing damages. CaseStack CEO Dan Sanker says, “There is no longer a gap between the resources available to small suppliers and large competitors.” He explains that many 3PL providers now can provide a high on-time rate by working directly with retailers, transforming less-than-truckloads (LTLs) into full trucks, and reducing transportation costs and transit times. Take Advanced Beauty Systems (ABS), a Dallas-based manufacturer of body oils, moisturizers and cleansers. A CaseStack customer since 2005, ABS has saved money each year through the provider’s warehouse consolidation program, Sanker says.

“On-time rates are high, damages are low, and both the customer and the retailer benefit,” he notes. “It’s a win-win. ABS increased its performance by nearly 20% and in the process, it was able to focus on growing the company rather than maintaining the status quo.”

Profit: The Ultimate Motive

Your job likely exists because your company is making money, which had been hard to do during the recent economic upheaval.

So when you decide to make the switch to a 3PL provider, be sure to target the area that will have the most impact. Simply put, emphasize cost savings. The rates you’ve garnered during the time with your carriers are nothing compared to the rates offered by the right 3PL provider.