3PL as a Solution for a Problem You Didn’t Know You Had

August 26, 20210

Tim Proome, General manager of Supply Chain Services, Tarsus Distribution

Flexibility and agility are critical in today’s business environment. This is particularly true for retailers looking to get ahead of the competition. More and more, this involves shipping goods of different shapes, sizes, weights, and packaging. Likewise, there’s the issue of reverse logistics that they also need to consider.

As such, e-commerce retailers and other businesses are increasingly relying on third-party logistics providers to fulfill their customer orders. How can 3PL providers help customers detect and solve many of their supply chain management issues and boost their overall core competencies?

One of our clients, a tech business launched in 2016, has since become a significant player in a highly specialised division of the industry. Because of this success, it is now seeking scalability, without increasing head count. The company has a retail store and a small inventory store which would need to accommodate the growth of the business as it scales

This would require significant capital outlay for items like racking, materials handling equipment (MHE), and full maintenance leases (FMLs) on forklifts. Another challenge is that the business does not have a warehouse management system (WMS), inventory management skills, or a system in place to automate these requirements. Meanwhile, shrinkage and armed robbery are just two possibilities that pose huge risks to the business.

 

The right questions to ask

As a result, the company has to make a decision about next steps. Some of the questions we are ask include:

  • What percentage of the market does the business own, and how much can that be grown?
  • How does the business integrate its systems with ours?
  • Which portions of the business would it move to Tarsus Distribution’s 3PL division?
  • Does the business need a new ERP system?
  • Can the business manage its inventory in the back room through an ERP system that integrates with ours?
  • As the business scales can departments like shipping scale without adding more headcount?
  • How does the business manage forecasting when it comes to procurement?
  • Which company does the business use as its courier?
  • Is there massive risk on the road?
  • What makes the company nervous about its current security setup?
  • How will stock be brought in and stored to accommodate that growth?
  • How will it forecast what to bring in, in order to have a just-in-time solution that does not damage cash flow?
  • How is accuracy of customer orders ensured?
  • How is stocktaking managed?

 

Digging deep to solve problems

This is just a sample of the myriad questions we delve into, the aim being to help our customers solve problems they did not even know they had. That’s when you start seeing the lights come on. Once they engage with Tarsus Distribution, they are able to demand a level of scalability and customisation that they could not have previously dreamt of.

Our 3PL offering can package warehousing, shipping, and inventory management all for one price, and it could be lower than doing it all in-house. Importantly, we bill our clients according to their needs. If these are seasonal, they will pay more in the good months, and less when business is slower, so there is no massive bill during ‘lean months’.

People are always scared of having the outsourcing conversation initially, but when they start to listen to the benefits, particularly in terms of scalability and forecasting, it all starts to make business and financial sense.

 

Traditional versus e-commerce players

We have witnessed a massive difference between the traditional business and new e-commerce players. Brick-and-mortar businesses are still hooked on traditional platforms and warehousing solutions.

E-commerce start-ups, on the other hand, are only too keen to embark on a digital journey. It is critical however for us to continually check in with our clients to ensure that we know what part of the journey they’re on and offer advice where we can.

In the 3PL world, digitisation provides opportunities to reduce costs and efficiently expand with competitive new services. As your business grows and changes, your 3PL provider can take on a more significant role by adding additional services or by expanding operations as a whole.

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As Southern Africa’s leading value-added technology distributor, Tarsus Distribution represents top tier global hardware, software and information security brands. Partner resellers can deliver the best possible service in South Africa by partnering with Tarsus.

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