The supply chain breaks down into a variety of functions, including procurement, production, inventory management, warehousing, distribution, and transportation, among others. While these areas often have significant overlap, many companies handle distinct functions using different teams, vendors, and software. This creates silos around each function that lead to operational inefficiencies and increased costs.

Breaking down these operational silos involves a complex effort known as integrated supply chain planning.

What Is Integrated Supply Chain Planning?

Integrated supply chain planning enables companies to break down barriers between various supply chain operations, providing better visibility, improving efficiency, and enhancing coordination across the entire supply chain.

It sounds great in theory, but what does it look like in practice? Here’s an example.

Let’s say your company’s procurement and logistics teams both use the same carrier, with procurement using them to bring in raw materials for production and logistics using them to ship finished goods to stores. If those two teams do not interact very often, they might each have established separate contracts with that carrier under different terms.

By collaborating and sharing data about how this carrier gets used, your procurement and logistics departments can:

• Consolidate the contract and standardize the carrier’s relationship to your company.
• Optimize routing and scheduling with the carrier to avoid overwhelming them during peak shipping times.
• No longer compete internally for capacity.
• Obtain better volume discounts from the carrier.

How Your 3PL Can Support Integrated Supply Chain Planning

As an integral part of your supply chain, your third-party logistics (3PL) partner can serve as a cornerstone of your integrated supply chain planning efforts. Here are some of the ways a 3PL can help you break down silos and integrate the various aspects of your supply chain operation.

Providing data and insights

Your 3PL can provide additional data beyond what is already provided by your tech stack, especially in terms of inventory location and movement. This data can help your supply chain stakeholders understand demand better and generate more accurate forecasts. Some of the data your 3PL can provide might include:

• Real-time or near-real-time shipment tracking
• Identification of unsaleable or aging inventory
• Critical metrics, such as order accuracy, on-time shipping, returns data, etc.
• Real-time inventory levels and locations across the warehouse network

Augmenting supply chain capabilities

Outsourcing logistics and fulfillment operations to a 3PL frees up internal resources that your organization can dedicate to other supply chain activities such as procurement, product development, manufacturing, and more. Additionally, your 3PL may be able to scale up and support other supply chain functions when needed. For example, if your production and procurement teams require additional warehouse space for incoming components or materials at specific times of year, your 3PL could potentially extend its services beyond the logistics arm of your supply chain to assist.

Enhancing resiliency

3PLs specialize in responding quickly when something goes wrong, which can help keep goods moving through your supply chain even in the face of disruptive elements. Some of the ways a 3PL can help avoid disruption include:

• Contingency planning. Rerouting new or in-progress shipments to avoid severe weather, natural disasters, or other disruptive elements.
• Diversification. 3PLs work with a variety of carriers, ensuring that alternative options exist in case something goes wrong with a single carrier. Similarly, a 3PL typically spreads inventory across multiple warehouses and regions so that a problem in one geographic area does not impact your ability to fulfill orders from another warehouse.
• Scalability. Your 3PL can help you scale up in times of crisis or unexpected peaks, whether that means hiring more labor, expanding a warehouse network, or adding more carriers.
• Risk management. 3PLs can proactively monitor the logistics arm of your supply chain for potential disruptive threats and address most issues before they escalate into serious problems.

Making Your 3PL a Strategic Partner in Your Supply Chain

The days of siloed supply chain management functions are behind us; organizations that still operate in this manner will find it challenging to remain relevant in a competitive market. Leveraging your 3PL as a strategic partner, rather than just a vendor, can help you reap the maximum benefits from the relationship through improved visibility and streamlined operations. To maximize the benefits of your integrated supply chain planning efforts, ensure that your 3PL has a seat at the table.

About Phoenix Investors

Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost efficient solutions, and a reputation for success.