Consolidation is the buzzword of the decade, and rightfully so. The upsides to consolidating logistics vendors are apparent in most aspects of a business, but everything tends to boil down to one simple thing – its just easier. Consolidation means better communication, simpler billing and accounting, and reduced complexity in your network.
But even with all of these benefits, most companies with large regional and national delivery networks have a hard time consolidating. So, practically speaking, what steps can a company take to begin the process of reducing vendors and consolidating their network?
DECIDE WHAT’S IMPORTANT
It’s a cliche, but you really can’t have everything. Define what matters most to you and pursue it. It may mean that you choose a vendor with a higher cost but a much better experience for your customer. You may have to decide between owning your own fleet or being able to easily scale up to reach new markets with a large regional 3PL. Whatever the case, decide what matters most before you move forward.
RESEARCH YOUR CURRENT VENDORS
A lot of times people think there is a magic bullet vendor out there just over the horizon. Remember, you work with your current vendors for a reason, and one or two of them may have more than enough capability to help you make the next step in consolidation. Call your vendors and ask questions. It may be that a vendor you use to cover a small market in New York can easily cover 5 states, and do it with the right integration tools and within the compliance standards you need to adhere to.
SHOP THE BIG REGIONALS
The last decade has seen the emergence of some regional logistical powerhouses. Small courier companies have been buying and merging to the point that they’ve become large courier companies with all the same benefits of FedEx/UPS but with more of the flexibility. These regionals usually have the network coverage, the technology integration, and the industry expertise to offer a competitive solution. Look for companies that are making over 7,500 stops a day and cover multiple states.
CONSIDER THE COST
Most companies shy away from consolidation because they think it should be cheaper, and sometimes its not. Remember, your love for low bids is probably what got you to this place, so something needs to change. Consider that some of the savings you’ll never see on the balance sheet comes from a healthier culture, better billing and technology integration, and the benefits of a consistent delivery experience for your customer. Cost isn’t always king, and sometimes better service is worth it – for you and your customers.
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