Few phenomena have had more of an impact in recent years than social media. At its core, social media connects people with similar interests. It facilitates interactions with people “like me.”
There is a strong “like me” component to collaborative distribution – a topic KANE has been talking about for some time. It involves using a neutral, third-party warehouse to co-locate products that ship to the same customer base and then delivering retail replenishment orders on the same truck. Companies reduce costs by shifting from less than truckload (LTL) shipments to consolidated truckload (TL) shipments and then sharing the cost of these less expensive moves.
In the future, we’ll see less product variety in commercial warehouses. Instead, we’ll see distribution centers for grocery products, for wine and spirits, for pet products, and other commodity sets. Call it “social distribution.”
In this new model, 3PLs will be the logistics equivalent of social media networks like LinkedIn. Shippers will “join,” not just for the services that 3PLs can provide them individually, but for how the 3PL can connect them to shipping partners.
Just like social media, social distribution has an egalitarian ethic. The mindset shifts from mine to ours, from proprietary to open. There is liberal idea sharing and companies stop trying to compete in the warehouse and the trailer.
Instead of individual incremental gains, they look to minimize the time and cost to get products to market. And the best way to do that is by SHARING – ideas, infrastructure and, ultimately, costs.
Collaborative distribution involves a mindset shift from “me” to “we.” Manufacturers go from managing discreet lines of supply to retailers, to sharing a common distribution infrastructure with others. We believe the shift is inevitable. Strategies tend to follow the money, and there’s simply too much there to ignore. The question is really “how long before a new model takes hold?”
The next generation of supply chain professionals will be more hard-wired to see collaboration as an answer. They will be less concerned about who controls the physical distribution assets and more concerned with achieving the desired result. The problem is, we need to start now. Look for opportunities to co-locate your inventory with similar companies, even competitors.
The best 3PL partners for retail consolidation will have these characteristics:
- Nationwide shared warehouse network for flexibility.
- Serve a large concentration of companies in your space that deliver to the same grocery chains and mass retailers.
- Strong transportation systems that automatically identify consolidation opportunities.
- Active retail consolidation program with a proven ability to equitably parse out costs among program participants.