Out of all the supply chain flows, information flow is one of the most critical for the success of supply chain and hence the business. In your information system, a very important and critical role is played by 3PL providers. 3PL providers update you about your inventory level, daily throughput, replenishment time, dead stock, safety stock, transit time, real time cargo status, document requirements, delays and congestions, transportation alerts and much more information. Based on this information you make your strategic and tactical decisions like your sales forecasting, manufacturing planning, finance planning, inventory level/size, your reorder point, order fulfilment rate/time, supply chain model etc. If your 3PL provider does not handle this information efficiently, it increases your supply chain and business risk.

Read on to learn more on how inefficient information flow can kill your business.

Distribute products efficiently with efficient information flow

Your distribution planning and delivery scheduling is based on the cargo in pipeline and knowing exactly where it is. To make it happen in the most efficient way, it is essential that 3PL providers update you on your real time cargo status. Daily status report (DSR) and online tracking system are the two informative tools which are usually used by 3PL providers to keep their customers informed about the goods in their pipeline. In case there is any delay in updating or the difference between ETA (estimated time of arrival) and ATA (actual time of arrival) is more than 2-3 days, your distribution schedule can go haywire and will directly impact your committed delivery date resulting in unsatisfied customers which can have direct impact on the repeat business and the customers’ perception of your brand.

Effect of your stock unavailability on your sales and promotions

To make your promotions successful and boost up the sales, your inventory needs to be sufficient to fulfil the demand. Every time you pull the inventory report from your WMS, you assume that the same is available on the shelf. However, there could be an inventory mismatch between the WMS system verses physical quantity. This can happen because of incorrect data entry or information gaps by 3PL providers. These mistakes result product unavailability for your customers and diminish your brand value despite your promotions and sales efforts.

Don’t block your finance and space in obsolete inventory

Obsolete inventory not only blocks your valuable capital and warehouse space, it affects your finance planning as well. Inventory is the single largest asset on your balance sheet which is being managed by your 3PL providers. Every obsolete product in your warehouse cost you money, in the form of space, manufacturing and raw materials. Hence, your 3PL provider should keep you informed about the inventory that is soon going to be obsolete. This information can assist you to know what should be sold before it becomes obsolete.

Redefine your Inventory norms?

You Inventory norms totally depend on your 3PL providers’ inputs. Information like transit time, landed cost, and your cargo status decide your reorder point, safety stock, economic order quantity and delivery schedules. Gaps in this information result in frequent stock outs/over stocks, dead stock, delay in delivery, and underutilised resources. An efficient flow reduces slags and bottlenecks from your supply chain process.

3PL providers in Sydney and Brisbane should work with your business as an outsourced partner by assisting you manage your supply chain to achieve your strategy and objectives. To do this, supply chain information should flow in both directions not only one, thus you are equally responsible to gather and share the correct and useful information with your 3PL providers. Share your urgency level, suppliers’ and customers’ feedback with them for them so they can better understand your situation. By setting up an information system and reviewing, revalidating and reconfiguring it frequently, based on performance and your business demands, you will be on the road to successful partnership.