Spend your time growing the business and leave the logistics to us, the experts in third party logistics.
We focus on Interstate Road Freight – with palletised full loads for fast and effective logistics.
Our years of industry experience allows us to show our clients how to realise lower costs and greater returns on investments for all their returns departments and programs,. Let us manage your asset, with controlled costs.
Exchanging information with customers especially Proof of Delivery documents. Freight tracking through the supply chain Communication with vehicles. Information provision, such as weather reports & traffic congestion
3pl designed an advance exchange solution to support the rail logistics industry. Today, third party logistics continues to be a leader in advance exchange services and has expanded our capabilities Australia wide.
Using Performance Measures to Drive Warehouse & 3pl Distribution Best Practice's
1. Myriad measures are available to measure supply chain performance. Any organisation serious about driving performance will have identified a number of key benchmarking measures to check daily, weekly and monthly performance. Below gives insight into some proven measures and how they can be applied to best effect.
2 Excellence? Relevant or Not?- A legacy of the quality era of the eighties and early nineties has been that many companies have adopted a customer is king attitude. Exceeding customer expectations is another noble goal, which was spread like the gospel to organisations wanting to gain an edge on their competition. But how has it panned out for companies of the nineties? Or did the switch the Third party warehousing?
In faithful support of the customer service ethic, excellence is often provided, but not always needed. In fact striving for excellence can be an impediment to profitability, particularly when the supply chain is lacking close synchronisation with a firm’s front-end customer service philosophy. One building products supplier has suffered from a policy of supplying any order, in any quantity, anywhere in Australia when the customer wants it. Needless to say the cost of supply is huge. Extra labour, overtime, scheduling problems express rates make the customer service policy unsustainable. Of course, the management should have been aware of the expense of pursuing such a strategy, but did they have the sophistication to really understand their cost to supply, moreover, did they have the intent to critically examine their own practices for better decision making. Amid our world of complexity it is refreshing to know that the answer to driving warehouse and distribution performance is actually unsophisticated! Another reason why people are looking to 3pl third party logistics to get the job done right.
3 Six Key Measures, 3.1 DIFOT (Delivery In Full On Time)
A proven measure of customer service often cited by many logistics writers. Time commences from a customer’s first request for date and product. Alternatively, it can be from negotiated supply for date and product. This measure is not financial, but gives operational meaning to customer service. It can incorporate any inventory strategy, which is in place and provides opportunity for easy measurement on a daily or monthly basis. For example; Reconciliation of driver manifests; Date of order receipt to dispatch; Receipt dates down loaded from scanning technology; Follow up calls.
Deriving a workable measure takes time, as the integrity of the measure is critical to employee acceptance, but the results can be striking.
3.2 Cost per order to supply- As a financial measure this is a very important one to grasp.
Cost of 3pl warehousing logistics=$100,000=$100 per order
No of orders supplied 1000. Of course some organisations have different types and sizes of orders so these can be deducted on an activity cost basis.
300 big order (pallets)20% of costs = $20,000 = $67 per order
500 medium orders (cartons)55% of costs = 55,000 = $110 per order
200 small orders (eaches)25% of costs = 25,000 = $125 per order
What advice would you give to this company? Measuring cost by activity helps make costs tansparent and understandable.
3.3 Order processing rate- The order-processing rate is a measure of output efficiency. By analysing order lines processed as a ratio of labour hours required to fulfill order picking and dispatch operations, it provides managers with a good tool to check output efficiency. An order line is defined, as an entry on a customer order including the Stock Keeping Unit (SKU) number and quantity required. Employee hours include hours worked by hands on personnel, namely those involved in receiving, order picking, mobile equipment operation, supervision and dispatch.
Use of this measure can help understand the overtime ‘bug’ by providing a macro measure of overall performance. Often it is used to gauge hourly productivity levels. For example a third party distributor of computer parts, which had 206 warehouse employees, was not sure how to improve their productivity. Through the application of mechanical picking technologies focusing on increasing the hourly order processing rate, potential reduction of staff to 153 was identified, representing millions of dollars in savings to the organisation.
Examples of Order Processing Rates By Industry- Industry Processing Rate Best Practice Cosmetic Pharmaceutical 30 – 5050 – 55, Stationery 20 – 4040 – 50, Hardware computing/electronic 15 – 3030 – 40, Spare parts 20 – 4040 – 50, Food services 15 – 4040 – 50,Construction Industry 5 – 10 20 – 25, TCF Industry 5 – 10 15 – 25.
3.4 Transport cost per unit, kg, consignment
Freight charges are always a source of concern to any logistician. Monitoring costs per unit delivered, is not a new concept! Yet how many companies regularly check distribution costs? Referring back to the problem of over servicing customers many companies wilfully accept the cost of freight as the cost of customer service, and can neglect the importance of keeping transport costs low. Using benchmark rates from internal and external sources is an excellent means of staying in touch with what you should be paying. And I might add it is not a matter of crucifying your carrier. Look at yourself, and ask is there a better way? It is in your interests that your carrier stays in business so why not take a partnership approach while critically assessing the interdependence of your supply chain members.
3.5 Logistics (warehousing) costs as a % of sales
This is a key financial indicator often used by accountants to gauge logistics cost compared to sales. Keeping an eye on this can reveal any upward or downward trend and can also be used for external benchmarking purposes.
3.6 Transport costs as a % of sales- Used in the same manner as logistics costs.
Now that we know the six key measures how can we use them to good effect? Consider the following rules:
3.7 Know thy 70/20/10 profile- Common analysis in the following categories tells much about patterns of movement.
Class Percent of Movement Policy
A class items70% of sales or movement Supply ex stock next day
B class items20% of sales or movement Supply 50% ex stock next day, other 50% 72 hours
C class items10% of sales of movement Supply on five days delivery
A published price and lead time price list according to class can appease any concerns of customers and can help them plan their inventory requirements well in advance of delivery.
3.8 Set strategy according to movement
Lead-time is a key driver for improvement. Reducing lead-time by implication means that the supply chain must be robust and error free. Any flaws in the system tend to extend time to supply. While many companies strive to reduce lead-time, it is interesting to note that extending lead-time to a level agreed by customers has become fashionable. Surprisingly customers are often prepared to wait for goods as long as they arrive when you tell them. Contemporary organisations are aware of these new dynamics. Increasingly, supply chain strategy is formulated on delayed delivery time commensurate with categories of inventory.
3.9 Develop a Scorecard
A scorecard such as the example below is a good way of benchmarking performance. Typical benchmarks are obtainable from benchmarking partners or can be sourced for industry sources such as the Benchmarking data base of Sinclair Knight Merz .
Distributor Have Your Warehouse DIFOT (AxB) 86% Cost Per Order $ 85Lines Per Hour (Order Processing)18Transport Cost Per Carton$ 5 Warehouse Costs (% Sales) 4.5%Transport Costs (% Sales) 1.8%Order fill rate (A ) 93%Order on time (B) 92%Order Cycle Time<12 hours Pick Accuracy 96%Cost of Shipping Error $120Inventory Accuracy 90%Total Distribution Costs 6.3%
4 How to Benchmark? – While the process of benchmarking is simple, beware of the significance of what your are doing. A benchmarking study must be accepted as a catalyst for change.
Here are some tips for effective benchmarking:
Know thy own process
Evaluated and identify areas of concern
Source possible partners eg internal, external, generic, competitor, functional
Be well prepared for visitation eg questionnaire, team, roles, etiquette etc. Develop relationship, show and tell all. Apply learning by preparing implementation plan &Manage the change
We used third party logistics for to help distribute our goods from their warehouse and we can vouch for their amazing work.