Oil price shocks and the global economic downturn are creating a dynamic supply-chain environment for shippers and logistics service providers.
Manufacturers and retailers experiencing increased landed costs are re-evaluating sourcing and inventory strategies. Those with global supply chains designed for inexpensive oil and low-cost labor in emerging economies are looking at sourcing closer to home. Meanwhile, they are offsetting rising landed costs by shifting to cheaper modes, shipping larger lot sizes and adjusting their logistics networks to reduce miles.
Some are implementing significant changes in product design and packaging to increase vehicle utilization. The objective is to reduce the consumption of transportation resources across their supply chains. This saves money and reduces carbon footprints.
Dynamic changes in supply chains require that 3PLs be flexible and supportive of customer-driven network changes. Non-asset-based 3PLs are working with customers’ lead times to shift freight to modes that are more economical. Changes in safety stock rules and promised order lead times enable this mode shifting.
On the warehousing side, logistics providers are reacting to lower volumes with flexible labor. Companies are reaching out to 3PLs to leverage shared resources as a means to lower supply-chain costs. More than ever, manufacturers and retailers need their 3PLs to optimize their networks, mode selections and inventory policies to deliver supply-chain cost reductions.
Globalization is not going away, though. Global 3PLs must be flexible and nimble to adapt quickly as the customer’s supply chain shifts. The successful logistics companies will be those that can respond quickly and precisely for their customers, with solutions to their supply chains that have global reach and consistency built on local integrity and skill.