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FEAST OR FAMINE? HOW A 3PL CAN HELP YOU MANAGE PRODUCT DEMAND

December 30, 2020 3PLFulfillment

What 3PL is best equipped to manage product demand? Here are 3 features that stand out.

2020 brought a lot of lessons and none is more pertinent than the importance of planning for the unforeseen. Even during a regular year, managing product demand can be a challenge for consumer packaged goods companies, whether it’s seasonal lows that leave products languishing in warehouses or product launches that open up new markets across the country. Online shopping adds another layer of complexity: Black Friday sales surged 22% to $9 billion this year, offering yet another round of evidence that product fulfillment and speedy delivery can make or break a company.

The question is how you best position your organization for fluctuations in product demand? The average manufacturing company in the U.S. spends 30 to 35 percent of the inventory value on handling inventory storage. Paying for labor and space you only need for part of the year is hardly feasible, nor is sitting on inventory that’s not moving.

The right third-party logistics (3PL) partner can help you through the ups and downs. So what kind of 3PL is best equipped to manage product demand to your advantage? Three features in particular stand out.

3 pillars of effectively managing product demand

1.      Nationwide network

A robust, coast-to-coast warehouse network comes with a range of benefits for managing product demand. Just consider a few scenarios: A major weather event forces the temporary closure of distribution centers in, let’s say, the Southeast; product demand spikes in one area of the country but remains sluggish in another; you’re making inroads into a new market segment and need to rapidly expand across the country.

In all instances, the lack of a nationwide network would severely hamper your efforts. Without the ability to swiftly move inventory before the weather event, you would risk supply chain disruptions. And searching for new vendors to quickly take your inventory to meet surging demand would not only slow you down but also leave your operation fragmented.

Similarly, you would not be in an effective position to expand if your current distribution centers are located far away from the market segment that you aim to target. On the other hand, a nationwide network run by a seasoned 3PL partner possesses all the tools to help you pivot when faced with the unforeseen, being able to fulfill your orders as close as possible to the end consumer.

2.      Scalability

Do you need a limited number of distribution centers or a whole network? Are you uncertain whether that new launch is going to pan out? Are you sitting on too much inventory after a slow season? This is when the ability to scale comes into play. If you manage your own warehouse or work with a regional provider, you may discover it either becomes too costly or too complicated to make meaningful changes. However, inaction has its own price, both in terms of lost market opportunity and waste of resources.

A 3PL can help you secure the space you need when — and where — you need it. Demand should determine where your products go, not the location of the facility. With more distribution centers at your disposal, the range of configurations increases, letting you expand or contract depending on what demand calls for. The closer you are able to fulfill orders to your customers, the more you gain both when it comes to transportation cost-cutting and speed of delivery.

3.      Customized solutions

Pick a solution. Sign off. It may seem simple but what if you discover halfway into the year that the solution leaves much to be desired? Customer service treats you like one among countless others and getting hold of management is a lost cause. With the unpredictability of the current environment becoming an increasingly predictable feature, a one-size-fits-all is not necessarily what the moment calls for.

A 3PL that does not answer to shareholders or is under pressure to meet certain quotas has the flexibility to create solutions based on your needs, not the other way around. It’s worth mentioning WSI has an incredibly high client retention rate as a direct result of our unwavering commitment to customer engagement and tailored solutions. As we like to say, WSI offers small-town values on a big-league scale.

As one of the largest privately held logistics companies in the United States, with distribution centers strategically located near major metropolitan areas, WSI has the capabilities to help you excel at managing product demand.

Contact us below to learn more!

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