Third-Party Logistics (3PL) has become an integral part of modern supply chains. Due to the growing complexity of the global supply chains majority of the businesses are outsourcing the warehousing, transportation, distribution, and fulfillment activities to 3PL companies. This offers many advantages to the manufacturing companies in the form of extended market reach, decreased time to market, increased flexibility, and reduced costs. 3PL has become a go-to solution for companies looking to enter into new markets, enrich customer experiences, and scale their business operations.
For 3PL companies, onboarding a new customer can be exciting and challenging at the same time. Onboarding does not just end with signing a contract. It is an end-to-end integration of people, data, processes, and systems. Having a well-established strategy for customer onboarding is essential to ensure the continuity of business of the customer, establish a smooth business flow, and quicken the revenue generation cycle for 3PL companies. However, the differences in the methods of operation, systems, and processes make the onboarding process challenging for 3PL companies and businesses alike.
Issues in Customer Onboarding
Below are some of the challenges faced by 3PL companies while onboarding a new customer.
- Poor Data Quality – Data plays a prominent role in the integration of processes of customers and 3PL companies. Data Validation and Data Integrity are key to the success of data integration of customers and 3PL companies. Poor quality master data adversely affects the integration process and delays the revenue generation for 3PL companies. Also, the methods of handling data might differ from customer to customer and not all customers might have a robust data storage, data sharing, and retrieval policy. Setting up proper data channels where business users can access and share the desired information should be a priority for the 3PL company while onboarding a new customer.
- Improper Reporting and Measurement – Based on the size and complexity of the customer’s business operations, 3PL companies might face many issues while integrating the customer’s systems and processes with their own. If these issues go unreported, they might add up to an uncontrollable level and have a domino effect on the entire integration process. Timely measurement and reporting of these issues prevents further damage and helps 3PL companies to take appropriate corrective and preventive actions.
- Excessive Manual Intervention – Seeking the help of experienced resources is a common practice while integrating complex systems. However, excessive dependence on these resources hinders the progress of the onboarding process. People integration is one of the important areas of customer onboarding where key personnel of customers and 3PL companies come in contact with one another. In such cases, stakeholder management is essential for a smoother integration.
- Improper Process Integration – As mentioned earlier, each customer might have their internal process for onboarding a 3PL partner and handling day-to-day transactions. 3PL companies must align their processes with customer’s processes to achieve maximum efficiency. Improper process integration leads to process inefficiencies and delays in delivery. This can be prevented by having Standard Operation Procedures (SOPs) in place and stringent implementation of these procedures.
- Delay in contract execution – Ideally, 3PL companies should start the contract execution in the lowest time possible after onboarding the customer. In reality, due to any of the challenges mentioned above and other unforeseen challenges 3PL companies might face delays in contract execution. This delays the revenue recognition and recouping the investment made on customer onboarding becomes difficult. A phased integration approach helps 3PL companies to quicken the contract execution.
Quickening the Onboarding Process
The below infographic depicts 3 key points which 3PL companies can follow to quicken customer onboarding and revenue recognition.
- Incremental Integration – To keep the initial investment low and to foster the revenue recognition, 3PL companies can start with Manual Integration where all the processes are done manually, and then transition to Semi-Automatic where selective automation of key processes is done, and then to fully automatic where there is a seamless integration of customer and 3PL systems. This approach ensures that the gap between customer onboarding and contract execution is minimized while the business users on both sides get accustomed to the new systems and processes.
- Process Automation – Robotic Process Automation (RPA) helps 3PL companies to automate repetitive and time-consuming tasks and increases process efficiency. Automation helps 3PL companies to stay aligned with real-time data and brings visibility to the whole process.
- Measurement and Reporting Mechanisms – For smooth and error-free integration 3PL companies need to prevent any issues before the business processes break down. Having proper reporting and monitoring mechanisms in place helps 3PL companies to reduce the gap between the identification of an issue and taking the action to tackle that issue. Also, constant monitoring of the whole process brings issues to the surface and quickens the process of preventive and corrective actions.
How to start and not stop at the end of this article piece?
I would recommend starting simply by just taking this approach, which has negligible risk, simple and yet an amazingly effective positive step towards our goal of a proactive strategy
A) Take pen-paper or manual method (start now)
Start implementing the recommended strategy using your existing technology resources for a known and low-risk segment of Suppliers within your supply chain business to find out what works and what doesn’t. Indeed, this causes efforts, but this will pave the way for better clarity around unknown risks.
B) Take help from technology
Work towards making it unattended, assisted by using Super-fast digital solution such that it works autonomously without losing its efficacy by engaging a solid, affordable Business and Technology solution partner.
If you are a CEO/COO/CIO/Managing Director/General Manager who is spending more time in reactive/preventive mode than future-facing, please reach out for an exploratory conversation.
Our Contact details
Pradeep Mishra (Director and Co-founder)
Ashok Mulchandani (Partner – Business Success and Strategic Transformation)
Amit Bhagat (Director – Business Strategy)
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