Why Pricing Drives The Order Fulfilment Process
Pricing is still the number one factor in determining which 3PL shippers use to handle their order fulfilment needs…
A June 2013 report from American Shipper, in conjunction with the Council of Supply Chain Management Professions (CSCMP) and the Retail Industry Leaders Association (RILA) has provided some deeply illuminating insights into the current 3PL atmosphere. Surveying roughly 230 transportation buyers on their attitudes, preferences, procurement practices, technologies, and results, the research study found a clear delineation between top transportation providers and their less successful competitors.
Here’s A Breakdown Of The Study’s Most Important Findings
1. Rates continue to be the most important thing transportation buyers consider when choosing their logistics provider.
On the surface, this finding makes sense. After all, in today’s increasingly competitive marketplace, established companies that can provide 3PL logistics at the best price are always going to get attention from customers. What is interesting to note, however, is that the top 3PLs say that capacity assurance is their #1 priority. Put another way, this means they believe their ability to provide quick turnaround and reliable order fulfilment trumps pricing.
A possible explanation for this discrepancy may be the fact that top 3PLs already have the capacity and infrastructure required to provide superior pricing. As a result, they then have the freedom to focus on maximizing their service value.
2. More than 70% of the transportation buyers surveyed said that their purchasing decision is influenced by freight payment data.
Specifically, companies with logistics needs are looking for fulfilment companies that can provide them with transportation rates based on current shipping environments, rather than freight rates based on the previous year. This sounds obvious, and yet many 3PL providers simply haven’t adapted to a smart payment model that allows for accurate price quoting
3. Most shippers are lagging in their order management and transportation management processes.
When naming their current transportation needs, almost half of all shippers use manual lists or spreadsheets. This is especially true of small to mid-size shippers, while larger shippers are more likely to use a system to manage their order fulfilment activities.
4. Related to this last point, nearly 90% of all shippers surveyed said they have no plans to automate their procurement process.
This data was surprising to National Products Fulfilment, as the cost of integrating order fulfilment systems between logistics providers and retailers has declined dramatically over the last few years. And besides providing significant savings, this integration also streamlines the supply-chain process, which creates across-the-board savings for shippers.
5. Finally, transportation buyers overwhelmingly choose price visibility as their most desired attribute when choosing a logistics provider.
As technology enables more and more 3PLs to compete for customers’ business, it’s become essential for these businesses to be transparent. For every one order fulfilment company that makes their pricing hard to figure out, there are three more who make it easy. Retailers and manufacturers have rising expectations, and it’s crucial that a transportation company can meet or exceed them.
Summing It All Up: Pricing Is Still King
The most common thread between these survey results is that affordable pricing continues to be the dominant need of transportation buyers. Customers continue to be more price loyal than brand loyal, despite the best efforts of 3PLs to position themselves as industry leaders. Shippers want to know their postage and freight costs will be determined by current market conditions, not on historical data. And they want clear pricing visibility so that they know exactly what they’re paying each time they ship or transport an item.
National Product Fulfilment’s advanced Freight Management System sorts through all transportation providers to find the best rate, and then generate real-time shipping quotes. Find out more by clicking here.