The State of 3PL
Third-Party Logistics experts sound off on their industry and saving their customers time and money.
Retail inventories are rising and companies are looking for ways to cut costs — both of which are favorable conditions in the third-party logistics world.
“I think a difficult economy has made companies look for ways to be more efficient,” says Buzz Fly, vice president of Patterson Warehouses, Inc.
Often, companies finding efficiencies means shedding cumbersome warehouses and reducing manpower. A primary way to do that is to rely on middleman operations such as Patterson that supply the space and employ the workers. Then it’s just a matter of storing and moving goods to points near and far.
“I think that companies are looking to improve their capabilities, their systems, and their compliance, and they can do that with a 3PL instead of doing all of that investment themselves,” Fly says.
One trend Fly has noticed since the economy began its massive contraction is company executives thinking less about shipping from either coast and more about using cities like Memphis that sit on or along the country’s midsection. Being on the receiving end of that outsourcing impulse is a big plus for Patterson Warehouses, which commands 1.5 million square feet.
“I think our biggest asset is the continuing high labor cost and healthcare benefits [and] the fact that we can offer flexible space and flexible labor, versus [companies] having to continue to pay high insurance and labor costs,” Fly says.
John Ozier, director of sales, marketing, and business development for UWT Logistics, says that even though belts are tightened to their utmost these days, the opportunities are everywhere, particularly when it comes to requests for proposals (RFPs).
“I have probably had more RFPs in the last year than in the two to three years combined before that,” Ozier says. Once, his company, which supplies 1 million square feet of warehousing space, would accept seven out of 10 opportunities. Today it’s opting for one of out 10. “People are calling and asking, ‘What can you do this for?’”
Part of what Ozier advocates in his business dealings is forming partnerships with clients. That involves building trust and saving customers money but also making them realize that shaving a few pennies off costs here and there might not be their best bet.
“It’s a challenge,” he says. “It’s really hard to know how much money you’re going to make and not make until the business gets into your facility,” he says.
Clients have to be reliable enough themselves to supply accurate specs on the front end. Otherwise, it’s difficult to estimate just how much can be saved by using a 3PL.
“Looking at something on paper is not always the same as when it gets into your facility,” Ozier says.
During the past five years, UWT Logistics has grown dramatically, and a big part of that is because its Memphis location is accessible to major U.S. cities. More of them can be reached by truck in two days or less.
“People are concerned about how fast you can get them that product,” Ozier says. “From Memphis you can get more product there in fewer days.”