Thursday, January 26, 2012

Should a 3PL Understand the "end" Customer

This is a key question I think all 3PLs should ask themselves.  Their customer (the person who pays the bill) may be a big manufacturer or retailer.  This manufacturer or retailer may have a set of needs they articulate to the 3PL but the real need they have is to add value, through their supply chain, to the customer of their customer - usually the consumer.   If a 3PL can add value to that supply chain, in the eyes of the consumer (The person who pays the ultimate bill) then I am sure the customer (the manufacturer or retailer) will be happy with the 3PL.  Given this statement, why do so few 3PLs really know the consumer's needs, wants and desires?

If you are a 3PL you can do two things:  1) You can require a detailed statement of work, hundreds of pages including convoluted metrics and then you execute against this document.  Does the consumer (again, your customer's customer) see value in what you are doing?  Does that value accrue to the manufacturer or retailer and add real value?  In this situation, the one most 3PLs play in, the 3PL does not care.  They are executing "to the contract".

In the second and preferred situation the 3PL really takes it upon themselves to fully understand the needs of the consumer.  From this they formulate a plan in conjunction with the manufacturer or retailer which outlines what services are needed to add value and have that value accrue back to the manufacturer or retailer.  This is the preferred method.  This is the method some sub-assembly providers give to auto companies;  they help shape the business and not just do what they are told.

The analogy to this situation is what your mother most likely told you when you were young:  If so and so told you to jump off a bridge would you?  Unfortunately, a lot of 3Pls will jump off the bridge if they are told to.

I submit 3PLs need to spend time doing market research and living with the consumer of the products of the companies they are servicing.  Once they do that they will truly not what is needed and not just wanted. 

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