Slow Growth Drives Need for 3PLs

In today's slow-growth environment, customers expect their transportation service providers to help them attain a competitive advantage, and that involves developing innovative solutions based on best practices.

Many companies don't know what they want when it comes to transportation and logistics, and that's why they hire a third-party provider, Jim Butts, senior vice president of C.H Robinson Wordwide, told the Los Angeles Transportation Club.

"If all you do is what the customer asks you to do, you're just an executor. You're not bringing your customer to a better place," Butts said.

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Although the lengthy economic recession is over, growth is still slow. In many industries, the battle is not over growing sales but rather over market share. Transportation service providers that make their customers more competitive will help them to increase market share.

This emphasis on competitive advantage is no longer a value-added service, but rather is considered the new norm for third-party service providers, Butts said.

Business intelligence is the key to developing a competitive advantage. "What do we know that others don't know?" Butts said.

Many companies do not have the experts on staff to provide the intelligence they need. It's up to the service provider to supply the brainpower. "That's why they have you, so they don't have to have those costs on their ledger," Butts said.

Even when the service provider delivers actionable intelligence, the needs of the customer may change, so the service provider must be flexible and adapt to the new needs of the customer, he said.

In the area of transportation, the customer wants more than someone to move the product from one point to another. How the product gets to the destination, when it gets there, on what size equipment and how much the total landed cost will be is the type of information customers are looking for.

Completing the logistics move flawlessly is also a high priority. "Problem solving wins some business, but problem prevention is the higher art," Butts said.

-- Contact Bill Mongelluzzo at bmongelluzzo@joc.com.