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The Startup Phenomenon: How 3PLs Can Use it to Increase Value & Capture Market

It's true that necessity is the mother of invention. Creativity, though, is the father, and knowledge is the midwife.          

As people, we are wired for survival. When we are in tough times, our creativity and persistent shine through. By staying focused and thinking creatively, we can come up with solutions and take advantage of each opportunity as it arises. I know that from experience. When I graduated from college as a mechanical engineer, I was hired to do software development because I had math and public speaking skills. I wanted to succeed and thrive in that job, and I kept pushing even though software development wasn't my forte when I started.  Later, I wanted new challenges, so I leverage my grit, persistence and necessity to reinvent myself as a solutions architect and a leader of consulting, technical, operations and integrator teams. 

The challenging world of third party logistics (3PL) is ripe for a similar approach. Margins are thin. It's hard to make money. Inventiveness becomes a critical skill.

When I worked for a supply chain software vendor, we courted luxury retailers and left 3PL service providers alone, knowing that these logistics providers would fight tooth and nail about our rates. I can think of examples when a 3PL would pass us over, though we were known for great execution, to take the lowest priced vendor. Often, that attempt would fail and they would end up back on our doorstep.

Now, I deal with 3PL executives nearly every day, to help them understand how to enable their supply chains with mobile devices.  I have found many of them to be great long-term partners to their customers. Another shift: some of these companies have started thinking in really smart ways about how to leverage their customer base and add value by transforming themselves into a full-fledged service provider at every possible level.

They are proving that there are plenty of opportunities for organizations that know what their customers need and who are willing to find startup companies who have developed innovative business technologies.  Well-chosen technology has the potential to turn a vendor's businesses upside down.

It's something that has been true throughout history. India, for example, was a great maker of textiles since 1600.  We were taught poetry in our native language written passionate poets that said the weavers from the Bengal region in India made a special Muslin cloth that was woven of uncommonly delicate handspun yarn. It was so wide and long that a lady could drape it nicely and so thin that it could be folded into a tiny ball and held inside a locket or a ring.

Marie Antoinette in her famous 'muslin' portrait, 1783

Marie Antoinette in her famous “muslin” portrait, 1783

Unfortunately India missed the industrial revolution and the technology that came from that and lost out big time. India's gross domestic product (GDP) went from 25% of the world's GDP in the 1700s to 4% of the world's GDP in the 1950s. Any company that ignores the power of technology, innovation, and the opportunity to provide more value to its clients would does so at its own peril.

These same truths hold today. When I worked with one PC maker, I was asked to transition the company from using one small 3PL partner to a much bigger organization. The smaller 3PL partner was offering a shipping service to get the peripherals to enterprise customers. The larger company was tasked with shipping the CPU and the monitor. The OEM had decided to give all of the work to the one big partner.

As part of that switch, I visited the bigger 3PL's warehouse, where I saw some amazing creativity. During WMS deployments it was uncommon to spend hours debating the benefits of farious pick carts and we would often opt for the most expensive one if it was more picker friendly. At this 3PL, though, I saw that thes workers had bought PVC pipes at the local hardware store and built some lightweight, sturdy carts that got the job done for much less.

Let us know where you have leveraged creativity in your distribution center in the comments section below. 

23 comments on “The Startup Phenomenon: How 3PLs Can Use it to Increase Value & Capture Market

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