3PL - Third Party Logistics: How To Get Your Products Straight to Store
Are you managing or facilitating a supply chain? Then this article will help show you some of the secrets of operating successful supply chains.Brett Lewis
and Peter North
from Smith Lewis and Staff Pty Ltd explain the challenges facing industries using the supply push
and demand push
models. They detail the following three main points in each model:
- Understand what factors drive the demand for the required goods to identify what model best applies.
- Plan your logistics and supply chain management effectively to reduce operational costs
- Efficiently move your goods by choosing a reliable one-stop logistics provider
In their first part on sharing their expertise in 3PL management , read on how about how Brett and Peter detail what factors drive the demand for the required goods to work out if you have a 'supply push' or 'supply pull' situation.
Understanding the two types of supply chain models
Supply chain management is a complex industry that involves the efficient management of:
- Human capital
It requires strict monitoring to ensure maximum customer service is delivered at all time and choosing the best supply chain model to adapt.
Supply push model (built to inventory or built stock)
This model is for products manufactured or procured based on anticipated customer orders. It is influenced by festivities and celebrations such as:
- Chinese New Year
- Valentine's Day
Challenges of the supply push model
Industries adapting to this model, which mostly includes retail, are faced with these challenges:
- High inventory costs
- Challenging working capital requirements due to low inventory turns
- Huge warehousing and distribution costs
- Inability to meet dynamic market conditions
- Seasonal demand and off the shelf product
Recommended logistics solutions
Retail owners can easily anticipate the volume of products that has to be manufactured and procured. However, ensuring these products will arrive in perfect order and condition based on their customer's unique requirements would be a challenging feat.
Partnering with an expert logistics provider that delivers warehousing and distribution, 3PL and customs clearance services will ease you from having to monitor the movement of your goods. Deal with a single point of contact such as Smith Lewis Staff Pty Ltd and let them handle the delivery of your items direct- to-store.
Demand pull model (built to order or configured to order)
This is the ideal model for supply chains, as it minimizes inventory carrying while optimising supply. It is reflected in the following industries:
- Information Technology
- High technology, machine and equipment
Challenges of the demand pull model
- Volatile demand situation
- High rate of customization
- Caters to non-off the shelf products
- Requires highly dynamic and effective distribution network
Recommended logistics solutions
Business utilising the 'demand pull' model requires faster and more expensive services as it caters to high-end luxury products and equipments such as:
- Cars and vehicle parts
- Heavy equipment and machinery
- Electronic gadgets
3PL providers that can deliver complete logistics services and has the flexibility to scale services according to your specific requirements will bring competitive power to your operations. It reduces your logistics costs and allows you to focus on your core business by efficiently handling your delicate items direct to store or to your consumers.
The supply model for the required goods can be seen to be driven mostly by the behavior of its demand. Carefully assess the demand behavior and identify which is model fits your situation.
Smith Lewis has more information about 3PL. Read on to find out how the deliver all aspects of third-party logistic (3PL) services including:
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