Many FMCG manufacturers outsource their logistics activities to local 3PLs. What makes this a better ‘fit’, asks Key Accounts Operations Manager John Greenland? He shapes his advice around Mohebi Logistics’ long expertise in the Gulf.
Why outsource to 3PLs?
Third-party logistics providers (3PLs) undertake the storage, distribution and fulfillment tasks that manufacturers usually find hard to achieve in the local market. It calls for a high level of integration – both with manufacturers at one end of the supply chain and retailers at the other.
What defines the Gulf markets?
It takes time to build trust. Once that trust is earned, the business connection is expected to be a long-term collaboration. The 3PL must be fully committed to the manufacturer and equally fully supportive of the distribution centres on the retailer side.
What are the factors that build trust?
The most successful FMCG client-3PL relationships are built on the model of inter-dependence (effectively two groups playing on the same team). A high level of communication and transparency, as well stability, on both sides ensures that decisions are well planned.
Can high maintenance be given on low margin products?
The answer is ‘yes’, when the 3PL is correctly organized. Products need to be stored safely and properly, delivered on time and at ‘just-in-time’ stock levels. This demands sophistication both at the order management and delivery levels.
Many costs are consumed by inefficiencies. If these can be eliminated from the process through the application of best practices, all will benefit.
How critical is the element of local expertise?
The word ‘expertise’ has two aspects: understanding the quirks of local markets and preferences; and also fully understanding the opportunities and challenges of dealing with FMCG goods. Many retailers wish to reduce their in-store inventory yet still be assured that the shelves will always be stocked.
The 3PL’s long track-record in the business also reassures the manufacturer that when ‘work-arounds’ are needed for any problem, they can be quickly and efficiently implemented.