As the transportation and logistics industries are becoming larger by the day, 3PL warehouses are playing an ever-increasing role for their customers. In 2018, US businesses spent a record-breaking $1.64 trillion on logistics. That was up 11.4% from 2017 and has accounted for a whopping 8% of the country’s entire GDP. As for the international supply chain industry, trends indicate that spending in the industry will almost double, going from $8.1 trillion in 2016 to around $15.5 trillion by 2026.
This accelerated expansion and industry growth is driven, in large part, by the growing consumer demand and the rise of eCommerce purchases. And in light of the current COVID-19 pandemic, eCommerce sales are through the roof. Between March 29 and April 12, 2020, US and Canada online retailers saw a 55 to 76% increase in online sales as compared to last year. Brick-and-mortar retailers also saw their online sales skyrocket by as much as 42% during that same period. This trend is expected to continue to a similar degree, even after the social distancing measures are lifted.
To seize the opportunities that these industry trends have to offer, 3PLs will need to take a more proactive approach by taking more strategic risks and building stronger relationships with their customers and partners. This practical guide to growing your 3PL warehouse will help you identify opportunities, expand your third-party logistics (3PL) operations, and gain a competitive advantage.
Preparing for Growth
Any plans of expansion must start from within. But when considering the fast changes happening within the logistics industry on a regular basis, successfully implementing warehouse operations can prove to be a challenge. To grow its warehouse, a 3PL company needs to figure out ways of minimizing expenses, maximizing productivity, and providing a superior customer experience at the same time.
To achieve this delicate balancing act, 3PL providers will have to build and maintain a specific growth mentality among all of its warehouse employees. After all, every business is only as good as its employees, and only by changing their mindset will the company be able to achieve its business goals. Below are several steps to do this.
- Setting the Trajectory – Bring together your leadership staff and identify all opportunities for growth in your 3PL warehouse. Consider both the general strategy and the practical execution needed. Make sure that every warehouse manager is clear on their roles, company goals, and show a willingness to achieve them.
- Measuring Performance – Choose your key performance indicators (KPIs) to measure performance, profitability, and growth. Ensure that these productivity-driven metrics are easy for your employees to identify and help them develop behaviors that will have a positive impact on your business, customers, and 3PL partnerships. Customer referrals, process improvement suggestions, or better customer service, are all examples of such metrics. Consider using SMART KPIs, as these will make it easier to keep on track.
- The Right Staff in Key Locations – Review your current staff and make sure that you have the best-suited team working on key projects to drive change faster.
- Transparency – Making sure that the entire workforce is aligned with the company’s goals is essential for success. As such, transparency, in the form of regular communications, departmental gatherings, staff meetings, and one-on-one discussions, is critical to ensure that everyone understands the mission and takes ownership of their role in its achievement.
- Empowerment – To further increase employee ownership of their growth mindset, it’s a good idea to reward individuals publicly, vocally, and/or financially. Some third-party logistics companies even offer bonuses, extra vacation days, or even profit-sharing plans to their long-term employees. Don’t underestimate the power of a simple “Thank You!” or a pat on the back after a hard day’s work.
Identifying New Opportunities to Grow Your 3PL Warehouse
With the right growth mindset in place, it’s time to look outwards for various expansion opportunities. The best place to start is by expanding your relationship with existing customers and partners. These may include pretty much everyone you have a business relationship with, including B2C and B2B eCommerce retailers, eCommerce platforms, WMS, EDI, and TMS providers, manufacturers, other third-party logistics providers, freight forwarders, etc. The second step will be to put together a similar list of all other potential providers, customers, and partners with whom you would like to have future relationships. Once you have this information, you will need to analyze which targets will be the best to pursue.
Start by determining which of them will provide you with the most benefits in terms of leads, referrals, or other ways by which they can further your business goals. Take a look at their satisfaction levels regarding your services and aim to address any problem areas as soon as possible. Do so before you reach out to them. Initiate meetings by always looking to cater to their needs while also looking for opportunities to guide their business forward. With this information, you will also be able to prepare your own operations to be in line with their requirements. Don’t forget to regularly reassess your lists after every few meetings and rerank your list of prospective targets based on the progress made, their level of overall satisfaction, and the number of opportunities provided by each individual prospect.
By spending enough time on building and maintaining your relationships with customers and partners, you will open up new doors for future expansion.
Delivering Superior Customer Experience
The growth of the eCommerce industry has also come alongside an increase in mobile phone usage for online customers. Together, these two consumer trends have put tremendous pressure on retailers to provide an omnichannel experience. In addition, last-mile delivery services, including both forward and reverse logistics, are also becoming increasingly sought after. The same thing can also be said about next-day or same-day deliveries.
With these industry trends growing in prominence, consumers today will accept nothing less than excellent customer service. As such, any 3PL company looking to grow its business will need to cater to these needs as their number one priority. Yet, providing such a customizable experience can prove to be challenging for most warehouses, as many of these touchpoints will not be under their direct control. However, by building and maintaining strong relationships with their partners and customers, 3PL providers will have more to say on the final product.
To better understand and anticipate customer expectations, 3PLs will need to map out their buyers’ journey. This can be achieved in four major time increments, as follows:
- Before Customers Start Purchasing – Even before consumers decide to add items to their shopping carts, 3PLs need to make sure that their systems are fully integrated with their partners. Every piece of warehouse technology needs to be tested and approved, and each one needs to have the capacity to scale up quickly in the event of high demand, particularly during peak season. In addition, they will also need to have several back-up partners capable of handling any sudden spikes in demand. Multiple same-day delivery providers will increase customer choice and increase overall satisfaction.
- During Purchase – With your competition always being just one click away, your customers will not shy away from switching vendors at the slightest hiccup or inconsistency. Therefore, it’s important for your warehouse management systems (WMS) to be fully and seamlessly integrated with suppliers, the retailers’ product information, eCommerce platforms, your inventory, and your delivery provider’s systems.
- After Purchase – Like before, once a customer places an order, everything needs to go off without a hitch. All the information has to be 100% accurate. The pick and pack, as well as the fulfillment process, will all be handled within the confines of your warehouse. Providing them with a white-glove level of service will make all the difference between a fully satisfied and unsatisfied customer. This is also when same-day services come into play. Every partner will need the capability to provide multiple delivery options, tracking capabilities, and customer service in the event of a delay or other issue. It’s important to keep in mind that last-mile delivery providers will often be the only ones coming in direct contact with clients. If this interaction doesn’t go as planned, your entire relationship with that customer may be compromised.
- During Returns – Providing a superior customer experience doesn’t always end with the product delivery. In some cases, your customers may want to return their purchase, either because a mistake has been made, there was a problem with the item, or they simply changed their mind. Making the whole returns process a hassle-free experience will go a long way in turning a single-time customer into a long-term relationship.
Identify the Best Technology Resources for Your Warehouse Operations
By combining well-established partnerships with state-of-the-art technology, 3PL warehouses will be able to weather most disruptions or other obstacles coming their way. Among these, we can include things like fast scaling, qualified worker shortages, the increasing demand to provide customers with real-time information, multiple shipping options, and superior customer experience at every touchpoint. By making use of all the tools at their disposal, 3PLs will also be able to not only survive but actually thrive during major disruptive events, such as the COVID-19 pandemic.
To make sure that you will be investing in the most cost-effective technologies that will not become obsolete in a couple of years, you will need to follow the steps below:
Analyze Your Current Technology
Start by taking a careful look at the current state of your warehouse technology. Determine if it’s enough to ensure your business’s growth, as well as your partners’ goals. You will also need to ensure that it will be able to handle sudden demand spikes without affecting your bottom line or your ability to provide the same levels of customer service. If these criteria aren’t met, then it’s time to consider an upgrade.
If you plan to purchase a new Warehouse Management System, make sure that it will be able to support any and all of your plans for expansion, including the purchase of new facilities. An on-premise WMS will not always be in line with your goals. If the system is not a Software As A Service (SaaS) or is not supported on the cloud, your sales teams and/or customers will not be able to access it while not on location.
Make sure that the new system will be able to capture data and provide you with comprehensive forecasting and reporting capabilities. Having plenty of insights on your warehouse transactions, cost analysis, future forecasting, etc., will make a huge difference between yourself and your competition. This data will reveal where you can optimize your operations, boost profits, and find new sales, services, or product opportunities.
Follow the Latest Industry Trends
Make sure you are always up-to-date on the latest global logistics trends, as these advancements will make it into warehouses faster than ever before. By knowing how software providers are influencing the supply chain management, you will be in a far better position to identify which tools will make a beneficial addition to your own technology stack. What’s more, you will do so before other 3PLs, giving you an early competitive advantage.
Just make sure to discuss these technologies with your IT professionals and analyze all of their benefits, costs, and possible downsides. Focus most of your attention on software that will help you achieve long-term growth over tools that will satisfy a short-term need.
Keep Tabs on the Competition
It’s also a good idea to keep regular tabs on your competitors in terms of what prices, technologies, and value-added services they are providing to their customers. Consider it a way to test out new technologies and processes without having to invest your time and resources in them. Look for what’s working for them, as well as what their customers consider to be “good enough.” In today’s hypercompetitive environment, you can’t afford to settle on what’s “standard.” You need to invest in technologies that will offer you capabilities superior to those of your competition.
Consider Your Partners’ Capabilities
Implementing new technologies, though effective, may not always be the best answer. You should also consider the opportunities provided by supply chain partners who can enhance your services through their own. Identify potential partners who can handle certain aspects of the supply chain, help you enhance your own ability to provide exceptional customer experience, or fill in any gaps in your processes. When choosing the right 3PL partner, look towards those that can provide you with the highest level of synergy in terms of value-added partnerships, where everyone involved will be incentivized by a mutual benefit.
Taking the necessary time to research and understand your supply chain environment will provide you with a huge strategic benefit for your 3PL warehouse. By establishing and nurturing a growth mindset in your organization, identifying external opportunities, providing excellent customer experience, and choosing the right technologies, you will be well on your way to grow your warehouse.
If you need help with managing or expanding your warehouse and your supply chain strategy or you are looking to partner with a professional logistics provider, Redbird Logistic Services can help!! Contact us today!