Outsourcing to a “Sophisticated” Third Party Logistics Provider

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Many companies are partnering with a new breed of Â?sophisticatedÂ? third party logistics provider to handle global sourcing differences, improve product fill rates, and eliminate points of pain in the supply chain.

CEOs and senior executives typically focus on making the sale, the product, and driving down unit cost, but seldom devote the same attention to improving the logistics side of the equation: customer fulfillment or inventory management. Yet, considering how quickly a missed delivery or incorrect shipment can sour a customer relationship and even cause the loss of existing or returning customers, this is surprisingly short-sighted.

Simply put, a company has two main chances to impress a customer - at the point of sale and receipt of product. While erring on delivery may seem like a forgivable oversight, it can damage a company’s balance sheet, and possibly cost the company customers.

“Because the market is so competitive, I need the right part, at the right place, at the right time to be successful,” says Ron Maltarich, President of Tendeco Sales Inc., a supplier of aftermarket pulleys and tensioners for the automotive industry. “Get it wrong and I’ve lost a customer. Or I’ve racked up extra cost and complexity through re-ordering, back-ordering, canceling, or expediting.”

As an alternative, many companies are re-evaluating the wisdom of keeping critical supply chain management and customer fulfillment services in-house, and instead are turning to a new breed of “sophisticated” third party logistics provider (3PL).

These sophisticated 3PLs do far more than just offload, store, and ship product, the routine functions of a standard third party logistics provider. Sophisticated 3PLs literally partner with the company to transparently protect the performance of its brand, ensuring that customers receive what they ordered, when and how they need it. To achieve this, the 3PL integrates fully with customers at all the touchpoints of shipment, including invoicing, inventory management and reconciliation.

When Maltarich set the standard for fill rates on Tendeco’s aftermarket automotive supply business at 95% within 48 hours, he relied on Kenakore Solutions (http://www.kenakoresolutions.com), a sophisticated third party logistics provider. He made his selection from a wide field of 3PL competitors based on cost, focus, flexibility, compatibility, and technical infrastructure.

Kenakore provides a supply chain management solution that coordinates supply line variations from global, domestic, and regional sources to ensure on-time production and shipment. They consolidate product from multiple sources so customers get a single, complete shipment rather than multiple partial shipments, along with handling special requests such as kitting, assembly, labeling, packaging, and private branding.

A 100% bar-coded environment now helps ensure investment-grade inventory accuracy for Tendeco, while real time processing delivers faster market response.

“Kenakore helps us consolidate bulk product from Brazil, Korea, Germany, and Canada, as well as optimize inventory for shipment to hundreds of customers worldwide,” says Maltarich. “Not only has our inventory shrinkage improved, but now we’re filling more than 98% of orders within 48 hours. That’s 5-8% higher than the average product fill rate of our competitors, which differentiates us in a very competitive market.”

In today’s demanding marketplace, a sophisticated third party logistics provider can provide a practical, cost-effective way to eliminate problems in the supply chain, without diverting capital to train and upgrade in-house logistics departments.

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Kathy Krueger
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