What Size Logistics Company is Right For You?
Logistics Industry April 22, 2010
These are all great questions that you need to find the answers for. For you to have success in the marketplace and to ensure that you get the best service for your customers, it is crucial to make sure that you do your due diligence.
To help you out, I'll attempt to bring some clarity to your search. When you are considering which 3PL company you should use, size definitely does matter. There are benefits to all companies that you use but for my money, I'd look at a midsize company as they will provide you with the opportunity to use your own WMS system. This means that you won't be forced into using their system which will likely happen with a large multinational. On the flip side, rarely do the smaller 3PL companies have the ability to give you what you need from a systems standpoint. they simply don't have the resources. Most midsize companies will allow you to use your own system and they'll give you the flexibility to do it your own way.
When looking at things from a cost perspective; the larger the company, the more money that you're likely to spend. With all of the overhead that multinationals have, they need to cover it off somehow. When it comes to dealing with a smaller, one warehouse 3PL's, they tend to cost less but they come with a huge risk. The last thing you want in these trying times is to go with the lowest cost provider who shuts his operation down because he can't afford to pay the lease. Between the banks and the various creditors who will be going after them, your inventory could be tied up for months and this will cause you major grief with your mass retail customer base. Also, service can be an issue with the smaller players as they simply may not have the resources you need, especially during the peaks of your business. Midsize companies will generally come in priced below the larger companies and they will have the staff available to handle your peaks and valleys which will give you the peace of mind that your customers will be satisfied. Below is a graph that demonstrates this.
Lastly, your concerns over service and the ability to stay on top of your product are of paramount importance and the midsize company will usually have the IT systems you need to see your product immediately. They will generally also have the RF systems in place that you'll want and they can offer the reports that you need to keep on top of things. When a mistake happens, and trust me they will, you'll have the peace of mind in knowing that you can take it all the way up to the president if need be. It's a definite comfort to know that you're a big fish in a small pond. Unfortunately with the large players, top notch service is generally not something you'll get unless you're a multi million dollar customer and trust me, you'll pay for it. Based upon what I've seen with various large multinationals over the past few years, this is the unfortunate reality of the situation.
Hopefully this input has helped to make your decision on the size of the 3PL you need a little bit easier. Change is never easy but with a midsized logistics company like McKenna Logistics Centres, your life will be easier and you'll definitely be able to focus on the important aspects of your business such as the bottom line!