Leveraging a 3PL’s Competitive Priorities to Compliment your Company

June 22, 2017 Vincent Tran 0

Do you like coffee? I sure do. I can’t imagine a workday that would go by without my morning cup of coffee. Imagine you were waiting in line and the individual in front of you orders an “Iced, Half Caff, Ristretto, Venti, 4-Pump, Sugar-Free, Cinnamon, Dolce Soy Skinny Latte”, aside from the compulsion to roll your eyes or prepare to call work saying that you may be late, you know that you are now stuck in that purgatory moment of staring awkwardly at the floor, ceiling, phone or people as they anxiously wait for their coffee. What happened here was, in asking for a customizable order, the whole process had slowed down. Speed was sacrificed for customization. Similarly, this allows applies to businesses competitive priorities.

Coffee cup top view on wooden table background

Back in 1984, Hayes and Wheelwright determined that companies compete within four dimensions qualitytimecost, and flexibility. That, for a company to compete, they would need to excel in one or two of these dimensions. Keep in mind that it is quite difficult, even impossible at times, to excel in all four dimensions. Want it faster? It may affect quality. Want a lot of customization? It’s probably going to dig into the cost.

Time: Companies that have a strong emphasis on time are known for their efficiency. Big indicators that one of your company’s competitive priority is time is if the company has exceptionally short lead time, can efficiently handle high frequencies of delivery, is known for their on-time delivery and places a heavy focus on efficiency in all manners. A good example of a company that is known for its speed would be Amazon and most other fulfillment based company since a large metric of success they follow would be their turnaround time in orders.

Flexibility: A polar opposite to time, companies that have a heavy emphasis on this flexibility are known for their highly customizable product/service. Companies that place a heavy emphasis on flexibility often have longer lead times as they are more focused on providing a large variety in their service or product. An industry known for its high need for flexibility would be the wedding dress industry with some of their lead times ranging from 6-9 months in advance from that actual wedding.

Cost: Companies that have a focus on cost tend to have a lower cost for their product/service. This is driven by the companies focus on cost reduction in their operations such as reduction of manufacturing costs, running costs, and service costs. Cost drivers tend to be known for having the “lowest price” due to their efficiencies. Notable companies known for their cost are usually fast food chains such as McDonald’s.

Quality: Companies that place a heavy focus on quality places not as much focus on speed of the performance but the level of quality they are providing. These quality characteristics include lower levels of error, a heavy emphasis on aesthetics and delivery of the product, and that there are perceived to be known for their quality and value. An example of a company that has historically excelled in the past in quality would be companies like Tesla.

 

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What is your competitive priority?

As an owner or just an employee, it’s a good idea to determine what your competitive priorities lie. Not only will this help the sales and marketing teams better communicate what makes the company so special, but it also for everyone in the company to know their companies strengths. The days of functioning in department silos are over and it is important for everyone within the company to be knowledgeable of what their company’s mission and goals are. Transparency and communication is king, but that will be an article for another time.

Take the time, if not done already, to sit with your upper management team to determine where your company lies on the spectrum. Once determined, it is then important to focus on how to highlight these strengths and leverage them to your advantage strategically.

Is your strength in flexibility? How can you highlight that in your marketing efforts in order to differentiate yourself from your competitors? Better yet how can you improve your strengths to be considered a competitive leader in that particular area of your industry?

 

For example, consider The Dot Corp’s primary strength.

Flexibility: The Dot prides itself on its flexibility in service. Since the Dot has a multitude of services under its wing, it has the unique ability to provide the customer with a vast level of customizability when placing specific orders. This serves as a competitive advantage over other 3PL companies in the fact that the Dot has a vertical strategy being able to manage multiple levels of logistics as opposed to competitors who only fulfill or only print.

For example, one of The Dot’s clients base has, for years now, contracted the Dot to create their internal distribution system for their sales team. In the past, the company’s nationwide sales team would operate using their individual materials from their local printer and designers. Brand consistency is a major factor since a consistent brand takes marketing has been shown to increase consumer trust and dependability on the brand. The logo of the company in Orange County (CA) is drastically different from Los Angeles (CA). This inconsistency was a problem.

When the Dot was contracted, they created an ordering store for internal use for promotional items for the company’s sales team. These items would vary from business cards, large display stands, banners, flyer, and posters for particular property sales. Aside from creating the exclusive ordering store, they also created a digital editing interface that allowed the sales team to create and design their marketing items while maintaining some brand consistency. The Dot’s print-on –demand service also allows the sales team to order the supplies when they need them as opposed ordering in bulk. This is due to the fact that the Dot has access to the ordering store created by their IT department, has one of its primary functions as a printing company, and can fulfill orders as part of their fulfillment department.

Most other vendors who focus on specializing primarily in digital solutions or fulfillment would have a hard time providing the same service provided by the Dot due to their inability to control and manage the other process of sales. This inability would mean that their service may be limiting leading to the client having to employ multiple companies as opposed to a single entity.

 

How 3PL’s can be used to compliment your competitive strength?

The great thing about 3pl companies is that they have the capability to covering the areas your company is weakest at. This stems from the idea that 3PL’s allow their clients to focus on this core objectives rather than spending capital nonobjective based departments. If you want to be the best table manufacturer, you want to focus on the quality, speed, and cost of the actual product and not the shipping, storage, and transportation of the product.

Depending on your businesses needs, you can determine whether or not a 3PL company would compliment your organization. Weak on the turn around time? The right 3PL can fix that. Want to reduce cost? Employing a 3PL can reduce cost since you are paying for the storage rather than a whole building of which you may or may not be fully utilizing. Regardless, be sure to assess the need of your company and the expectations of employing a 3PL will do for your organization before proceeding.

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