A “Black Swan” event is the name given to the occurrence of something completely unexpected with an extreme impact. The most recent example is the COVID-19 pandemic, which all but broke a fragile global supply chain in 2020—a supply chain that is only just now recovering. This occurrence has resulted in dramatic shifts in supply chain management philosophies as industry professionals hope to build resiliency into their global networks and better prepare themselves to mitigate unexpected disaster the next time it strikes.
Due to the very nature of the term, we can’t tell you what the next Black Swan event will be. It could be another pandemic, a natural disaster, a war, or something nobody has even considered. The best action that supply chain professionals can take to mitigate future disruptions is to ensure they only align with suppliers, technology providers, and logistics partners that benefit supply chain resiliency efforts.
4 Ways a Good 3PL Contributes to Supply Chain Preparedness
As the pandemic locked up the supply chain, many companies turned to their third-party logistics (3PL) providers for solutions. Some of those 3PLs had already sprung into action. Others were as lost as the customers they were meant to help. The supply chain has learned the hard lesson in recent years that an organization is only as strong as the weakest link in its network. When suppliers failed, their customers suffered. When logistics partners couldn’t present alternative solutions, their customers felt the strain.
Therefore, step one of preparing for disruptive events involves partnering with reliable providers. When evaluating existing or potential 3PLs, review their performance during the pandemic, natural disasters, and other disruptive periods to understand how they might react in the next crisis. Consider your logistics provider’s offerings in the following areas:
- Scalability. When disaster strikes, your business may suddenly need to ramp up its logistics capabilities—or dial them back. How fast can your 3PL expand facilities? How quickly can it consolidate inventory to fewer locations? Does it have reliable transportation partners to increase shipments or move inventory to new facilities? Can it still function with minimal in-person labor? If your logistics partner can’t scale when needed, you risk fallout for your business, such as stockouts and dissatisfied customers.
- Technology. Participating in the digital transformation of the supply chain is no longer optional. A 3PL that relies on manual and paper processes can no longer stand as a valued partner during a disruptive event. They need inventory management and warehouse management software capabilities at a minimum. Similarly, throwing additional labor at problems has become more challenging in the last few years. Ensure that your 3PL has a forward-thinking technology plan that accounts for potential labor shortages.
- Visibility. While your 3PL need not have a full supply chain control tower, it does need to provide visibility into the specific areas of your organization that it touches to feed into your larger visibility data pool. For example, a 3PL should be able to provide up-to-date inventory information from warehouses, track incoming and outbound shipments until they arrive at their destination, identify trends and problem areas, and more.
- Diversity. Does your provider rely on only a few truckload or less-than-truckload carriers? Does it have relationships and volume discounts with multiple parcel carriers? Does it operate in multiple regions to ensure a shutdown of one facility won’t lock down your entire inventory? Functional diversity has become essential to perseverance in the supply chain world. Your organization needs a logistics provider that can pivot somewhere else when something goes wrong at one location.
If you explore these areas and find shortcomings in past performance, ask the provider what it has learned and what it has done to correct its processes and capabilities. If the answer is “nothing,” this could signify that it’s time to break up with your 3PL and find a new one.
About Phoenix Logistics
Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.