The shipping time bomb- Who is handling your products at your 3PL?

Whitepaper, Blog, News

December 7, 2015

Of all the industry trends discussed in 2015, the real time-bomb waiting to go off has been the talent bomb. We’ve seen the need for skilled talent being discussed in many places—but, at the current rate of change, we think this will be an issue for years to come. And it matters to companies using 3PLs and supply chain companies, because having the right talent will be the key to competitive advantage in logistics going forward.

Let’s start with the reality of the situation: the pool of supply chain and logistics talent is not keeping up with growing demand. This was the major finding reported by the Wall Street Journal in May: “Companies are finding that the growing complexity of supply chains has a significant consequence: hiring the right people to build and manage the expansive operations is more difficult than ever.”

Why difficult? Technical skills and familiarity with the needed technology is a big factor. Many of those who work in logistics are of an older generation where things like real-time analytics, risk analysis, RFID, mobile technology, and so forth were not part of the job. Nowadays, even workers on the warehouse floor are expected to learn and use these technologies. And new ones are on the horizon.

Still, logistics requires more than just being technology savvy. Analytical skills are also needed to understand and balance factors such as cost, service, risk, and capacity. And, as with any job, it pays to have employees who are eager, engaged, and able to learn from their mistakes. An earlier study by Deloitte found just this mix of aptitude lacking in the current talent supply for logistics: though there was an eager workforce, that supply of talent often lacked either the technical skills needed, the business and leadership skills needed, or both.

Though this issue has mainly been reported in industry publications, it is important to bring it to the attention of any organization that ships product or has a supply chain. It is important because, when the talent supply runs short you have to start worrying about who, exactly, is handling your precious merchandise, and hoping they aren’t taking short cuts at your expense.

On the other hand, companies that have managed to attract and retain the right talent have a competitive advantage. These companies tend to embrace new technology more rapidly, find efficiencies more quickly, and generally have a lower rate of turn-over in their workforce. They can also scale with increased demand more easily. All of this translates into faster service for customers, reduced loss, and better visibility overall.

So let’s say that we’ve convinced you of the importance of talent in logistics. In fact, it’s so important that you don’t want to build an internal supply chain team from scratch, or you don’t want to leave the details to your exiting in-house team. The simple answer is to turn to a 3PL that is already embracing these issues and have found solutions. If you have already outsourced to a 3PL how do you uncover whether they have been successful in building a quality workforce ? After all, it does matter, either today or sometime soon.

What to Look For In Assessing A 3PL’s Workforce

One way that prospective clients try to figure out the quality of our workforce (or that of any other 3PL) is by asking lots of questions. Some of them are quite frankly silly, like do we have dedicated employee parking spaces, but many are spot on

Here are some things to keep in mind as you evaluate potential supply chain partners in hopes of finding the right company to handle your products:

How long has the company been in business and do they have a dedicated internal human resource function? Good companies will have a demonstrated track record of success and dedicated resources focused on employee relations, training, and recruiting.

What is turnover /tenure like for full time employees? A high turnover might signal management problems; on the other hand, full-time employees with a long tenure bring their experience to the table, and are much more likely to care about clients and their merchandise.

What Warehouse Management System Technologies are being used? This will give a good indication of how progressive the company is and whether it can retain/attract top talent, give them tools to excel, and ultimately drive your business forward.

What do the KPI’s tell you? A good 3PL with a well established quality control program will be able to tell you things like order accuracy, on-time performance, inventory spoilage or shrink. This signals to everyone that the 3PL team is obviously watching out for your inventory and your customers.

Does the company have a good relationship with a temp agency that can be trusted to supply quality workers when needed? If they do work with a temp agency, does that agency have systems in place for screening and pre-training?

Consider peak seasons. Every 3PL hires more seasonal workers. So their ratio of seasonal workers to full-time goes up. But not every 3PL hits their peaks at the same time, and the variance season-to-season can be larger than the variance from company to company. So you never get a true picture of a workforce by asking this question. What you really want to know is what roles do the temporaries play and are their checks and balances to monitor their work.

The ultimate test is client retention. A good 3PL with a well trained workforce will have extremely low client turnover. Ask for references and if they have lost a client along the way find out why. Sometimes matches are not made in heaven for any number of reasons.

These are questions and conversations that we welcome, precisely because the issue of talent has kept us up at night-- and we feel that we have taken the high road in securing and keeping good logistics talent.

If you want to ask us these questions yourself, or if you have other questions for our veteran team here at Materialogic, we’re happy to help. 

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Thank you for taking the time to read,

Milton Cornwell- President