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Third Party Logistics (3PL) arrived in Asia in the 1990s and rapidly transformed the business environment, lifting service performance and providing clients with better control over the function.
Generally, 3PLs have become commoditised – leading to competitive rates, but also under-performance as corners are cut and a master-servant relationship develops leading to the 3PLs talents not being leveraged as well as they should be.
When we help companies select and contract with a 3PL, we ensure that the scope of work is fully understood by all parties, that the costing is right (i.e. sustainable) and that the contract is comprehensive and logical.
We also ensure that we facilitate the client-provider relationship, not get in the way of it.
A leading FMCG manufacturer in Indonesia.
The client realised that their throughput had outgrown their logistics infrastructure and capabilities – creating an obstacle for further growth.
LCA’s role was to source viable 3PL providers and then run a RFQ process to find and select the best partner.
The key success factors in this process were:
- Provision of absolute clarity on the scope of work
- Ensuring that the client understood the needs of the vendors
- Facilitating the dialogue between client and vendor, not act as the middle-man
- Transparency and objectivity.
The process reduced a ‘long-list’ of 16 potential vendors down to a ‘short-list’ of 4, and then 2.
The process also helped vendors arrive at the same ‘right cost’ for the task to be performed. This meant that selection of the preferred vendor was on qualitative aspects of their offering, not cost (unless the vendor could demonstrate a specific structural cost advantage – eg lower land cost).
The process also covered contract preparation and detailed deployment planning.
The overall result was a smooth transition from in-house to outsourced operations – with a business relationship designed to support sustainability through WIN-WIN.