United Facilities is a third-party logistics (3PL) provider that offers a range of public and contract warehousing, fulfillment, packaging and logistics services to clients in the consumer goods and automotive sectors. In the past 60 years, United Facilities has expanded from a 125,000 square-foot building to more than 5 million square feet, with operations in 11 cities in the U.S.
When one of its customer’s legacy warehousing systems was becoming too expensive to maintain, United Facilities turned to JDA Software. The company evaluated a number of providers, ultimately implementing JDA Warehouse Management and JDA Warehouse Labor Management, from JDA Software’s Distribution-Centric Supply Chain suite, via the JDA Cloud.
"It’s our goal to serve our customers with the absolute highest level of service and uptime, at the lowest costs possible. We chose JDA because we felt like they had the depth in their organization to be able to provide the level of support that we would need," said Jeremy Altorfer, IT director, United Facilities. "We didn’t have the capability to host our own cloud. All of our previous systems were hosted on-site, and we wanted a provider that was experienced with cloud hosting. We’ve found a good partner in JDA."
New Processes Yield Substantial Results
Leveraging the JDA solutions, United Facilities has introduced a number of new processes over the years that have reduced costs and increased productivity within its operations. "We had started to see an increase in fractured ordering, where we ship to customers who place the same orders multiple times a day," said Altorfer. "We worked with JDA to develop a new allocation strategy that enables us to pick these orders more efficiently. If the guys on the forklift can visit a bay one time to pull product for all five orders that we’re going to receive throughout the day, then that’s going to be more efficient than having to visit each of those bays five times as part of the normal allocation process."
Today, the logistics and warehouse management company leverages this parallel allocation and picking strategy to process thousands of complex orders per year, generating time savings of 40 minutes per order. This approach to innovation has been replicated in other areas of the 3PL’s business, such as packaging. A few years ago, one of its customers for which it handles a large amount of packaging approached United Facilities with an ambitious goal: to realize 5 percent savings in the current year, 7 percent the next, and continue to build on the savings with each successive year.
"It seemed difficult to promise those types of savings in an environment where the labor market was getting more expensive, and the number of shipments for packaging was increasing," said Altorfer. "We ended up completely redesigning our rate structure using JDA’s solution, and as a result, we delivered a 12 percent savings to the customer in the first year."
Increasing Visibility & Collaboration
United Facilities has also been able to increase inventory visibility for its customers through the creation of an online portal. The portal retrieves data directly out of the JDA solution database, enabling authenticated users to access real-time updates on any order at any given time. By giving its transportation network real-time visibility into its shipments, United Facilities has eliminated a lot of email and phone call communications. It has also improved trailer availability during high volume periods to 90 percent or higher.
"The online portal gives us one place to pull good, solid information that’s indisputable. This allows us to be able to nail down exactly when trailers are unloaded and exactly when trailers are loaded," said Altorfer. "As a result, we’ve been able to reduce detention charges by as much as 60 percent."
United Facilities also uses JDA Warehouse Labor Management, which has enabled the company to define and document standard performance expectations and then measure, track and report the performance of employees, departments and facilities. The third-party logistics company leverages the solution to decrease labor costs, increase productivity and improve visibility into current workload and down time. As a result, the 3PL company has optimized its labor performance, reducing overtime costs by 21 percent.
Over the course of its relationship with JDA, United Facilities has collaborated with JDA Services and other companies using these solutions to identify new ways of driving innovation in its business. "When we decide that we want to change our processes, we start asking questions. The JDA team will say, ‘Have you tried this? Have you set it up this way?’ That’s helped us be more flexible with how we’re using the system," said Altorfer. "We’ve also been able to network with other companies using JDA’s solutions. Having the flexibility to innovate has been a key driver to our success."
Third-party logistics (3PL) providers are companies that provide the resources, capacity, and solutions to help various businesses better manage and execute the logistics of warehousing, order fulfillment and shipping transport.
Value of Third-Party Logistics Providers
3PL companies that handle transport logistics and freight forwarding make it easier for businesses to concentrate on their primary objectives without having to worry about the transportation and distribution of inventory. In essence, 3PL companies monitor and manage warehousing operations, the transportation of goods, and order fulfillment.
In addition to helping businesses manage complex freight requirements, advanced third-party logistics providers go one step further by factoring-in cyclical market trends, road transport laws and limitations, as well as clients' unique needs and demands. Advanced 3PLs provide a fluid means to adapt and achieve the supply chain goals for particular businesses so as to maximize profit margins.
Advanced 3PL Providers Have Proficiency, Resources, & Experience
One of the most significant elements that distinguish dependable 3PL providers is to be strictly aware of service requirements for the delivery of products. Reputable 3PL companies have the proficiency and experience in the storage and routing of goods. They also employ skilled logistics management professionals, engineers, IT specialists, and supply chain managers to support day-to-day operations.
As a result, advanced 3PLs combine strategic thinking with hi-tech software and logistics resources to attain the most efficient and value-added supply chain possible for their clients. Below are a few ways in which 3PL companies can help businesses manage complex freight requirements, all while optimizing the management of their supply chains.
1. Freight Carriers Contest for 3PL Business
Freight carriers often rival with one another in serving third party logistics clients. Since 3PL companies contract with several carriers, they can often provide various service levels and shipment times. As a result, clients of 3PLs can benefit from more timely shipments, and often times at a lower cost.
In addition, since freight carriers contend with each other for the business of third party logistics providers, 3PL companies have higher bargaining power and control than a single shipper. This implies that you as the client have access to more reasonable rates, better time allocations and booking options, reduced demurrage, and per-diem penalty rates.
2. Hiring a 3PL Company is Often More Affordable than In-House Supply Chain Management
If your business currently does all of your shipping and logistics internally, you can encounter dramatic managerial savings by contracting a third-party logistics provider. Since 3PL companies cater to your whole supply chain from beginning to the end, they can save your business valuable time and resources.
Because of their size and trading power, they can broker freight for far less than you could likely attain independently. This saves your operations both time and revenue, and lets your workforce concentrate on your company's greater business goals and strategies.
3. 3PL Companies Offer Improved Control and Better Information
3PL companies apply state-of-the-art software for tracking and routing all the warehousing and logistics operations under their control. Many 3PLs employ skilled engineers and math wizards to manage accounts personally. By synchronizing all processes of the supply chain and transport modes, they’re capable of combining and reporting distinct data via value-added information services.
Lastly, 3PL companies offer better control via vendor relationship management and pro-actively communicating with foreign suppliers to ensure everything goes as planned. They even provide performance reports so you can accurately see where and how much you are saving. When using a third party logistics, shippers eventually have somebody to hold liable for all shipments along the legs of the supply chain.