7 Operational Issues Faced by Clients with a 3PL Service Provider

3PL services play a key role in company’s growth plans as it provides numerous advantages; right from timely delivery and availability of product to inventory management. Given the vitality of the role of a third-party service provider, companies expect them to deliver more than just their usual services. However clients in India face few key operational issues with a 3PL service provider for Warehousing & Transportation services which if fulfilled can develop a long term sustainable and successful business relationship.

7 Operational Issues -3PL Service Provider

Controls on inventory

Due to lack of Inventory controls, many times a wrong product is delivered to the channel partners of client against the market orders given by them. Inventory management is a complex management and a 3PL service provider needs to have a stringent control on it, such that the system stock should manage the physical stocks, at all times.

Controls on processes and SOP’s of the client

A C&F agent has to manage the warehouse as per the Standard Operating Procedure (SOP’s) shared by the client. Every client has their own way of handling the stock flow, order punching, inventory and cycle count, hygiene of the stock, etc.

A 3PL service provider should adapt the company’s SOPs, to ensure seamless and un-interrupted service.

Controls on manpower and local issues

Many times C&F agents do not have proper controls on the manpower in terms of:

  • Training and development of the staff on regular basis to keep them accountable and motivated
  • Forecasting manpower requirement for processes – either they are understaffed or overstaffed
  • Keeping themselves updated regarding the whereabouts of their staff and their performance

This may lead to hindrance in day-to-day working on account of company’s inter-division escalations (disputes) and may also lead to financial loss.

Timely communication and reporting

In a field as dynamic as logistics, a 3PL service provider needs to be on toes. It is crucial that communication, in form of an email as well as verbal, reaches the client on time so that necessary actions can be taken in-case of any breakdown.

Moreover, 3PL service provides need to generate and share daily reports with client. These reports needs to be complete, accurate, in proper format and timely in nature as these reports are critical for the client to make crucial sales and business decisions.

Managing transport stock delivery issues

Most of the times clients face issues related to timely delivery of stock as the vehicles do not reach on time, are not tracked properly. Apart for this, there are several other factors that can hinder on time delivery of the stock while in transit. A smart 3PL service provider will always make a forecast of such hindrances, keep a buffer time, and will be prepared in advanced to avoid any delivery issues.

Flexible or adaptable to client working culture

Every company have their own working culture. A C&F agent should be sensitive, understand company’s work culture and adapt its working style accordingly rather than operating as per his knowledge and experience of working with another client in the same industry.

Adaptable to new management practices and technology

Post GST, 3PL service provider’s job has become more complex. Thus using same old manual processes will not lead to efficient output. Upgrading to new technology and automation will not just bring innovation in the work flow, but also reduces the monotonousness of service procedures and will also reduce costs in the long term for the client.

We at JAL understand these concerns and take utmost attention to address them, provide customised solutions and consistently deliver the same.

E-way Bill Requirements under the GST Law

After the implementation of GST from July 2017, the industry was all ears about the E-way bill to be soon passed by the government to streamline the supply and delivery of the goods.

While it is still unclear as to when the bill is coming into effect, as on 30th August 2017 the government has approved the e-way bill requirements under the bill. Here is a brief about what can we expect –

Please click here for a detailed report.

E-way Bill Requirements GST Law
How can Jal Supply Chain Solutions support you in seamless implementation of this process?

JAL offers you GST Automation
We come with a robust software dedicated for all the GST related requirements & compliances. This GST software can be integrate with our Warehouse Management Software (WMS) and manage both – all the Inventory management inside the warehouse as well as all dispatch documents, generation & uploading of the E-way bill on the common portal automatically.

JAL has strategic alliance with Sthir Advisors LLP, founded by Mr. Amitabh Khemka, to provide sustainable and pertinent Warehousing and Transportation related GST consulting services to our clients. Amitabh has more than 20 years of experience and has worked in large consulting firms and multinational corporate.  He recently, on behalf of a trade association, represented before the H’ble Finance Minister Mr. Arun Jaitely, on the matters of GST.  He was also a member of Working Group on GST, a sub-group of the Empowered Committee of State Finance Ministers.

 

Key Factors to Consider Now While Selecting a 3PL Service Provider

The goods and service tax is ready to give a boost to the warehousing and logistics industry in India. The implementation of GST has played a key role in building the secondary factors that will in-turn build upon primary factors of good infrastructure and faster adoption of technology. Post GST more goods will move directly from manufacturing hubs to distributors which will lead to lower warehousing cost with increased efficiency in the supply chain.

Companies now will be facing a major challenge in terms of timely delivery of goods across a wider geography. Thus their expectations for their 3PL service provider will expand as well. The logistics industries are required to start evaluating the suitability of their current storage, distribution model, route planning and management of transportation networks. So here are some key factors you need to know for considering a 3pl after the new policy:

3PL Service Provider
Attitude of 3pl service provider:

A 3pl service provider is critically responsible for achieving effective logistics integration. The implementation of processes post GST policy is deemed to be challenging. Thus, look for a player who has a learner attitude. Look for –

Adaptability -to changing demands of the industry and the customer’s needs
• Receptiveness – to the feedback and consequences, to overcome complexities and challenges and to offer innovative solutions
• Corporative: and focussing on building long-term sustainable partnership

Execution skills:

What makes a 3PL service provider most efficient is his ability of implement and execute the solutions planned. The process of execution comes after the development of a logistic plan and requires strong control on Manpower, Inventory, and Processes. Apart from the stringent controls, also consider the following factors:

• Ability to handle local area capabilities knowledge
• Adaptability to technology and automation
• Innovative warehousing solutions including warehouse restructuring, warehouse management system, warehouse space utilization, space availability etc.

Experience in handling stocks with various clients:

Look for a third-party logistics service provider having valuable experience in all aspects of handling and storage of stocks. They can provide you service advantages that can majorly improve profitability. Have a look at their client portfolio, the nuances of logistics complexities that have managed. Also, do a research on their client’s feedback and the service quality they offer, especially in terms of manpower, inventory and process controls.

Some of the major benefits an experienced 3 PL service provider can provide include:

• Accuracy: On time order fulfillment and order delivery
• Space optimization and efficiency
• Specialist knowledge in stock control and delivery
• A competitively clear fee structure

Now that you are aware of critical factors to consider for finalizing a 3PL service provider, you can refer our company brochure here to know about our warehousing and transportation services.

Changes in the Stock Flow Management Post GST

In the earlier article, we talked about the impact of GST on warehousing. The major advantage of GST on warehousing is that companies will now consolidate the stock at their warehouses. In order to ensure that the delivery and service is not impacted by the consolidation of the warehouses, there is a need for improved demand planning and stock flow management.

Companies will face a major challenge in terms of timely delivery of good across wider geography, esp. if the warehouse near high consumption area is closed down. This calls for a focus on route planning as transportation networks and management would eventually turn out to be a critical factor for timely service delivery. No doubt, this requires advance planning to build an agile, efficient and stock flow management model.

Here is a brief model that we propose:

 

Stock Flow Management post GST
Stock Flow Management post GST

 

Warehousing and Transportation services post GST
What will change in the Warehousing and Transportation services post GST

Are your warehousing strategies GST ready?

Post 1st July 2017, when the GST is implemented, there will be a Single Indirect Tax system PAN India and because of its simplified and uniform approach, there is surely going to be a more positive impact of GST on warehousing in India.

The companies will be able to take rebate on all types of business transactions whether it is inter-state or intra-state and be competitive in their industry. Since, there will be a single level playing field for all companies, the expectations from the Logistics Service Partner (LSP) for robust Warehouse & Transportation services will increase.

Impact on Warehousing

Impact of GST on Warehousing
Impact of GST on Warehousing

Currently, the companies opt for multiple warehouses PAN India. The idea behind this is to save on inter-State Sales tax by transferring goods from one location to another, reflecting it as Stock transfer movement and take rebate to reduce product costs. This resulted in higher daily warehouse operating costs and also higher transportation costs.

With implementation of GST the local state taxes will be eliminated and there will be single tax applicable across the entire country. This will enable the companies to achieve cost efficiency in their operations and the benefit of it will ultimately be passed on to the end consumer in the supply chain.

Cost of warehousing operations will decline once the GST comes into play

Restructuring of warehouses as per location

At the moment, location is the most critical factor of consideration when leasing warehousing space, then comes the cost of leasing the real estate space in a particular state/city.

Post GST since the operating costs will decrease, companies will consolidate their smaller warehouse facilities into larger ones and expand around the crucial consumption centres.

Restructuring warehouse locations post GST
Restructuring of warehouse locations post GST

Post the implementation of the GST, most warehousing occupiers are expected to take decisions purely on the basis of reach to market, quality and size requirements.

Conclusion:
In a nutshell, advantages on warehousing with respect to GST is that consolidation of stock at the warehouses, improves demand planning and inventory management.

While all this looks rosy, the major challenge the companies would face is transportation and deliveries across a bigger geography. With lesser number of warehouses, the location of warehouses and their transportation networks would eventually turn out to be critical. This demands for better connectivity, technology and management. Thus making it critical to have a stringent planning to build an efficient and advanced supply chain model.

Jal Supply Chain Solutions, being pioneers in Warehousing and Transportation service as well as Warehouse Project Consultancy can support you in seamless implementation of advanced and sustainable supply chain processes post the implementation of GST.

Moreover, we have entered into a strategic partnership with Mr. Abitabh Khemka (a member of ‘Working Group on GST’, a sub-group of the Empowered Committee of State Finance Ministers)  pertaining to providing sustainable Warehousing and Transportation GST consulting services to our clients.