We are living in a reality in which companies understand that the key to profitability and economic survival is dual faceted When a third party offers its assistance in logistics services for several companies, it enjoys its size advantage and can provide services at low and flexible prices, in accordance with the client’s operations. In this way, the third party can help save the client maintenance costs, operating space, wages, etc. For an affordable price to the client, this service is usually anchored in an SLA that defines the terms of service between the company and client.
I sat down with Ziv Arieli, a veteran consultant and one of the leading experts in Third Party Logistics (TPL).
Ziv, which companies take advantage of TPL services today and why?
Small companies whose size don’t justify the operation of a self-organizing logistics system, companies that want to concentrate on their core business offerings, use for peak periods, companies whose logistical operations are not the core of their business (i.e. companies that aren’t distribution companies, suppliers to retail chains, etc.), and companies whose logistics aren’t volumetric.
What are the difficulties that arise in this transition? Are there any difficulties that you’ve been able to effectively deal with?
Well, the transition isn’t always easy. There are conditions and characteristics that should be defined precisely and in a timely manner. Otherwise, problems may come up. For example, mismatch between between issuance and receipt, interface crashes and malfunctions, client or supplier wasn’t adequately prepared for the migration in terms of data optimization, receiving data, and labelling of handling units. Once Mashik enters the picture, the transformation is much simpler. thanks to our extensive experience. This support may prevent the problems of arising operational “headaches” and even save a lot of money.
Please talk a bit about the companies that provide these services. What is important for them to know before starting the process? What is important for them to know before starting the process?
Many things. We need to ensure the economic transition of those companies. We need to make sure that the level of logistical service that they receive will stay the same or improve. We need to guarantee that the level of information and visibility of the inventory will remain as it was or increase. We need to make sure that the level of customer service is maintained and that the TLP provider has solid and reliable recommendations from companies in the same field.
How do you please all sides involved?
Before initiating the engagement, it’s important to agree upon and coordinate expectations. A SLA must be signed, including the client’s requirements from the supplier, as well as the metrics for examining the level of service. Even during the course of the agreement, the following checks must be undertaken: cost monitoring, monthly examination of relevant indicators, holding meetings to address and correct any shortcomings, etc.
What type of support and guidance do you provide companies who seek your advice?
We tailor our services to each client according to their unique business needs and operational requirements.For example, we undertake economic feasibility studies focusing on the TPL migration; write logistics specifications for quotes from various suppliers, including SLAs, a penalty/ reward model, and indices; assist the organization throughout the migration; oversee the migration according to certain success indicators; improve supplier TPL services and processes in accordance with the client; improve operational profitability of TPL; and more.
In short, what are the key factors for a successful TPL migration?
First and foremost, we make sure that the move is economically feasible for both sides. Appropriate care must be taken to properly coordinate expectations and to ensure that the SLA is agreed upon by both companies. It is crucial to ensure proper preparation and organization of the client, as well as to appoint a customer success manager of the TPL supplier. The transition must be appropriately monitored. Furthermore, both clients and suppliers must be ready for the change. Finally, the information systems need to be prepared for sending and receiving goods and a reliable interface with inventory transparency. Visibility and transparency have to be guaranteed.
Ziv Arieli, Customer Success Manager In Mashik