The year ago, with the apparition of the

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The year ago, with the apparition of the

 

The
collaboration, is in fact a sort of partnership that should be based on mutual
trust, that allows the company, as a consumer to delegate its logistics service
such the forecast, management of the stock deliveries … yet, the desire of
over-controlling the process can lead both parts to a loss of momentum and
worse results.

 

Few year ago,
with the apparition of the 3PL concept, and the variety of services proposed,
the imitative of efforts consolidation has accompanied the industries
development in general, and in the luxury sector specifically, since it
concerns high-end products.

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The
collaboration with a 3PL in the luxury sector represent a very sensitive
collaboration, since it allows to deal a service provider to deal the high
products and ensure the transport, warehousing and deliveries for specific
clients.

 

Per my
experience in the luxury sector, a specifically in the jewellery industry, the
3PL choice is critical and required to follow the general criteria of the
luxury industry:

 

·     
Secured and digitalized warehousing

·     
Closeness of the 3pl premises to the firm
location / boutiques

·     
Two types of transport: armoured and disguised
for the security staff

·     
Reactivity and efficiency for the processes

·     
Previous experiences in luxury

·     
Efficient communication and fast solution
proposition

·     
Large network with the pillars of the luxury
sectors: administrative contact, competitors

·     
Updated about the latest operational trends and
technologies

·     
Strong presence in the local / international
market

 

However, the
critical process in the supply chain, when it comes to processes, is the
intermediary delivery between the warehouse or the manufacturing plant to the
final customer or the boutiques. A process that require vigilance, reactivity
and a good and clear information sharing.

 

In accordance to
the importance of the delivery, comes the customs clearance of the product.

Depending on every country policy, there are some transport companies that are
imposed, however, it is necessary for the firm to follow the path of parcel
with an important collaboration of the 3PL, where in case of a lost or a delay,
the intervention should be immediate and efficient since the customer is
waiting for his high-end piece and can’t wait for more than the official delay
communicated by the boutiques.

 

The
collaboration with the 3PL represent a strategic alliance that allows the
company to create a competitive advantage, to improve its operational process
that can’t be done with its own equipment, also for the service provider that
acquires knowledge, experience and financial benefit.

 

Previous studies
have shown that, in the jewellery sector, companies don’t have a full control
of their supply chain processes. Most of the production and transport services are
generally outsourced. However, some limitations have been detected as follow: (Brun &
Moretto, 2011)

·     
Less control on the production involved a lack
in quality

·     
Less control on the transport flows implies a
modification in the brand image of the company

The general
limitations as sited above, have pushed the company to reconsider their global
strategies and focus more on the establishment of mono-stores concept in
collaboration with a 3PL when it comes the management of the external flows to
bring value-added services.

 

1.    Basis of collaboration and trust
between the company (from the luxury sector) and the 3PL

 

Nowadays, the
collaboration between the company and the third party logistics is becoming more
and more challenging, internally as well as externally. Besides the fact that
both the parties collaborate within a cross-purposes strategy, several obstacles
can misalign these objectives.

 

Nonetheless, the
effective collaboration, that leads to a trust, should be based on a good
information sharing, good cooperation initiative and long term objectives.

However, it can also happen that, one of the parties, prioritize some
short-term challenges, and the relationship can change drastically. Moreover,
the goal of a long-term relationship is to avoid complicated processes by a
making them flawless, effective and efficient.

 

The balance in
the relationship between the service provider and the firm as a user be
established on a power balance and a lead time respect, where each party knows
the limits of its work and the deadlines of the deliveries.

 

On another hand,
the negotiation of the clauses of the contract before the beginning of the
collaboration is unquestionably important, and represents the critical phase of
the trust establishment. In fact, during this phase, several processes and
agreements should be defined by both parts, such as the objectives, the costs
and the improvements to be considered.

 

Collaborating
with several companies in the same sector (luxury), allows the service provider
to combine all his materials, equipment and processes to fulfil the demand. However,
with such kind of actions, in an absence of proficiency of work, rude
competition can be easily transformed to an uncompetitive advantage for the
companies as users. In that case, alternative channels are considered to bypass
the competitor, leaving no basis of trust.

 

Furthermore, since
the start of collaboration between the service provider and the consumer, the common
interest has always been the fundamental of such basis.

 

With the
evolution of the 3PL collaboration, the service providers tend to customize and
adapt more their business strategies according to every firm’s requirement,
specially in the luxury sector. The effect of this personalization of services,
the operations are optimized and the companies feel unique. Moreover, in some
cases and specially in the luxury sector, the companies require an exclusive
relationship with the service provider, a clause that, in case of a good
collaboration, requirement fulfilment, share of assets and information, can
lead to a mutual and long term trust. 

 

The BCG report
2012 mentioned that: “What’s more, the
collaboration within these relationships doesn’t end at the supply-chain
interface. Rather, the parties seek to align operations in mutually beneficial
ways. For instance, they may develop joint operating practices to capitalize on
the retailer’s forecasting ability, order and replenish merchandise in a way
that optimizes the manufacturer’s production schedules and batch sizes, or work
together to minimize waste and inventory levels without sacrificing product
availability”. (Boston Consuting Group, 2012),

 

Even though, the
panel of service proposed by third party logistics is quite large, including
apart from the services cited above, the transport and the deliveries between
the different actors of the chain, the cost reduction and the optimization of
the existing practises.

 

Though, a good
collaboration between a firm and a 3PL can be established from the starting
point of the supply chain, which the purchasing phase of the raw materials,
from leveraging the raw materials clout to the packaging, to rise the transport
efficiency and have a better visibility of the demand and the processes. The
second step contains the efficient share of the operating costs, to develop
actions to increase the savings.

 

By the same
token, transparency and the strategic and tactical sharing of information is
the key factor to build a long-term trust and collaboration. In fact, it
reveals the real inefficiencies and helps to improve the decision-making
processes for the company and it helps the service provider to improve its way
of operating.

 

Nowadays, the successful
collaboration between a 3PL and a firm is becoming more and more a necessity and
a pre-requisite and not only a simple added value to create a competitive
advantage that requires a significant investment (apart from the resources and
the time).

 

What’s more, the
commitment and the strategic alignment comes at the same level as the
definition of the edges of the relationship as criteria to go over differences,
sustain the strengths of the company and overcome the difficulties. In addition
to the factors mentioned before, there are other keys that need to be taken
into consideration which are:

·     
Efficient choice of the service provider based
on the needs

·     
Long term engagement 

·     
Agreement on how to divide the profit

·     
Constitute a cross functional team

·     
Build successful pilots and respect them

 

To that, (Grean & Shaw, 2003) has mentioned a
significant quote as follow:” the
strategic partnership is the most involved, with the greatest commitments from
the partners and requiring the strongest trust.” We can deduce the
fundamental basis of a long-term collaboration which is the “TRUST”.

In order to
choose the right service provider, several points should be insured to follow
the good collaboration management processes:

 

Step 1: Collaborative design, under an
SRM angle. Very early, this phase will allow to the company to define its need.

Basically, it comes down to asking the question: “What should I buy to
make my product so that its cost of production becomes the lowest possible?
“The relationship will optimize the product design. can, most often, offer
an equivalent quality with a smaller number of parts

 

Step 2: sourcing. At this stage, the
logistics vs supply chain Officer seeks to determine who will be the best third
party logistics for the services that his company needs.

It is incumbent
upon him first to identify them and then to qualify them according to various
criteria. As their critical value (high-end pieces) and their ability to
deliver on time, which depends in particular their geographical location. At
the end of this step, a list should appear

service
providers who will be put in competition.

 

Step 3: the negotiation. Direct or
reverse invitations to tender, simple or complex

part of the
possible methods to elect among service providers who have already passed the
second stage or those – in very small numbers – who will participate in the
negotiation. The objective, at this stage, it is possible to define the ins and
outs of the contract. In this optically, the company sends RFIs and RFQs to 3PLs
who, upon receipt of requested information, will allow him to elect whoever
will respond with his products from the the most suitable way to his request.

It is also with this type of information that service providers are put in
competition and that they have to lower their prices for win the contract.

 

Step 4: e-procurement as such, under
the SRM angle. A final negotiation takes place at this stage to decide by agreement
the last aspects affecting among other things the logistics in the context of
the delivery, the principle adopted for the payment, and the way in which one
will carry out the execution of the order.

 

Recurrent step 5: the evaluation of the service
provider’s performance. It is the final step after delivery, analysing how
it was delivered end-to-end.

Can
we improve the process? Surely, if only by considering the choice of the 3PL
differently or by questioning the way of working together. Remarkable
indications discovered with experience and passed on in the form of rules will
serve, in the same way as customer 

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