When it comes to managing your transportation costs, third-party logistics (3PL) providers offer various solutions to companies with a wide range of monthly shipping expenses. According to Mike Broussard, Vice President, Broussard Logistics, the key is right-sizing the service for each client. Businesses that rely on freight methods they’ve historically utilized stand to lose potential cost savings. Finance executives, however, are keen to minimize costs that impact the bottom line. The opportunities in 3PL offerings are impressive.
“We often find situations where 3PL providers focus on services designed for small companies but are selling to big companies or vice-versa, and it’s just not a good fit for the shipper,” Broussard said. When the 3PL services don’t align with the shipper’s needs, the shipper tends to incur higher freight costs—either because the shipping costs haven’t been well negotiated in relation to the volume of shipping being done or because the organization is left with manual shipping procedures that are time-consuming and labor-intensive. In either case, shippers can save money by using standardized systems and technology that streamline shipping and control costs. That’s music to the C-suite’s ears.
Right-Sized Shipping/3PL Services
Shippers with lower, monthly freight usually partner with traditional brokers and are simply piggy-backing on negotiated wholesale prices. On the other end of the spectrum, shippers with hundreds of millions in annual freight (the likes of Nike and Home Depot) tend to outsource the entire shipping process—from inventory and warehousing to freight. In the middle are the shippers with approximately $500,000-$250 million in yearly freight, who stand to gain big cost savings, by using a 3PL provider.
Shippers in this mid-range tend to:
- Have multiple facilities with shipping being processed differently across sites,
- Are in growth or expansion mode,
- Use little or no technology to manage transportation costs and
- May be looking for standardized systems to automate processes.
“For this middle area, we bring in our technology to streamline processes and find the best rates for each client,” Broussard said. “We serve as a watch dog for shipping rates and we audit pricing for these shippers.”
As C-level executives focus on business growth, shipping plans need to adjust to accommodate for current and future freight needs. Knowing that the 3PL provider has the knowledge and experience to grow as your business grows is critical.
“It’s really about looking at which stage the shipper is in and matching the needs with right-sized tools”, Broussard explained. It’s a simple concept, he said, but one that freight managers and subject matter experts (SMEs) often overlook. It’s easier to continue what’s traditionally been done but the potential cost savings of the change is grabbing executives’ attention, Broussard said.
“It’s examining the evolution of a company and the relationship to their freight spend,” Keith Buford of Broussard Logistics added. “Instead of pushing a solution, we listen to where the business is and where it’s going. Then we can address that business’ specific needs.”
“We can work with shippers who are in growth mode to adjust their shipping plans over time to reap the most rewards at each stage of growth,” Broussard added.
Whether in growth mode or trying to better control costs, executives are wise to re-examine their 3PL relationship and explore options to align transportation needs with current plans.
“So much has changed in the logistics management industry,” Broussard said. “Why would you continue doing what you’ve always done when the added costs are hitting your bottom line?”
About Broussard Logistics
Broussard Logistics is the leader in the logistics management industry. The organization has revolutionized its services into a proactive outsourcing tool with sophisticated technology instruments to continue its original mission: Assist companies to manage, control and lower freight cost by improving their supply chain strategies. Learn how Broussard Logistics’ knowledge, experience and buying leverage can help move your business forward.