eCommerce Logistics 4PL Control Towers: Controlling Costs and Performance

Benedict Leong

Splash Title: eCommerce Logistics 4PL Control Towers: Controlling Costs and Performance Person viewing a port through a tablet in an office

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Managing eCommerce logistics requires us to wear many hats and have many skills. Your team has both a bird’s eye view of the whole supply chain and also all the practical problem solving skills needed whenever exceptions happen in any leg of your eCommerce delivery.

However, all this becomes a lot more complex when you are managing multiple logistics partners in different geographies and at different legs of your delivery chain. Juggling between multiple partners with often lean in-house teams and high volumes requires a lot of practical knowledge: lots of manual processes built upon automations to suit different providers that are not scalable and eventually could break down.

This becomes a particularly large problem whenever any of your staff leaves. The learning period requires you to slow down your operations while the new hire builds back up all the in-house knowledge of these manual processes, software and procedures. In times like these, companies would usually turn to having a logistics control tower, either built in-house or outsourced.

When it comes to managing international eCommerce supply chains, control towers provide you with control, visibility and scalability. Deliveries starting from multiple suppliers to multiple warehouses to multiple customers across many countries only get more complex when new markets are opened.

Business needs are diverse, and so are the definitions and scopes of logistics control towers. In essence, a logistics control tower is a centralised hub of people, process, data, organisation and technology to enable real-time visibility over your supply chain and in-depth analysis of how to improve your supply chain.

The control tower collects and presents delivery data from all your shipping partners and helps you make sense of it. Outsourced teams can also respond immediately to these changes on your behalf to keep your operations running smoothly. Some supply chain control towers can provide visibility even up to the manufacturer and warehouse level. The definition we’ll be working with here will be limited to eCommerce logistics deliveries.

Different shipping partners have different ways of doing things, including recording data. Your outsourced control tower team has software that helps you normalise the data in a way that can be easily viewed and analysed for you to help you make better decisions.
In short, having a great eCommerce logistics control tower team helps give you visibility over your whole eCommerce delivery operations while rapidly responding to any exceptions to keep your delivery performance high and delivery costs low.

Continuous Improvement and Admin Efficiency – People’s Role

At least within an eCommerce logistics context, a control tower needs to help businesses with the following:

  • Service-level Agreement (SLA) and Performance Management
  • Cost Management
  • Tracking Standardisation
  • Customer Service and Communication
  • Exception Handling (Loss/ Delayed)
  • Returns Management
  • COD Reconciliation and Management
  • Billing and Claims Management

Your logistics control tower staff would generally need the capabilities in:

  • Planning
  • Event management for logistics
  • Business intelligence
  • Supply chain partner management
  • IT management

All these skills are used to help you with the following:

Managing Multiple Carriers through a Single Touchpoint

Control towers shine best in complicated supply chains. Supply chain complexity increases as the number of touchpoints, geographies and 3PLs grows in your supply chain. Some eCommerce logistics control tower providers already have wide networks of curated 3PLs who are integrated into their systems they can manage on your behalf.

Supply chain partner management comes into play when onboarding and managing multiple 3PLs into the system. Onboarding a new 3PL can range from as fast as 2 weeks to 3 months or more depending on their size and services.

Outsourced eCommerce control tower teams take on the risk of onboarding these new partners for you. They can handle this thanks to their experience as well as processes in place, such as background checks and contracts.

Outsourced eCommerce 4PL partners let you access their network of 3PLs. This helps you scale rapidly in the region if your existing logistics network and in-house capabilities, systems and teams are still being built. Depending on how large their networks are, your outsourced partner can manage more than 250 separate logistics service providers.

With outsourced teams, you save on IT man hours and costs. The IT management aspect of the control tower team comes into play when collecting, exchanging and normalising data across hundreds of 3PLs in your supply chain. Partner integration, data mapping and more need to be done to ensure that the data is usable on dashboards for the business intelligence side of the team to use.

Screenshot of Janio's 4PL vendor management dashboard - screen showing performance of multiple partners in terms of overall sla performance, Aging, SLA by country

Supply Chain Optimisation: Cost, SLA and Performance Management

Your outsourced eCommerce control tower can help you continuously save money on deliveries and maintain SLA performance based on analysis of data across your whole eCommerce supply chain, such as through optimisation-based allocation.

Optimisation-based allocation helps by tracking performance of all your supply chain partners at every leg of the delivery and allocating volumes to those who provide the best cost and best performance for that leg.

Destination: ManilaDestination: Mindanao
Partner AUS$ 10US$ 15
Partner BUS$ 12US$ 12

In this sample case, the optimum allocation of volumes would use Partner A for Manila and Partner B for Mindanao deliveries. eCommerce Control Tower teams help with this optimisation across all the geographies that you cover and across all their partners.

SLAs and performance are also monitored. With access to real-time data on shipments, events such as issues with specific vendors at each leg of the journey can be quickly identified and rectified.

An affected partner’s volumes can be quickly reallocated to another partner to maintain SLAs for the rest of the shipments automatically for you. This is where planning, event management and supply chain partner management also come into play.

Depending on your agreement with your outsourced team, they will also actively provide recommendations and reports on their activities each month to improve performance and cost savings across your entire supply chain.

In Janio, our teams have experience handling issues such as sudden customs changes and also developing an action plan to swap to cross-border trucking in response to the air freight crunch during the early COVID-19 period to maintain our clients’ SLAs.

Logistics Administrative Activities

An outsourced team helps take over all the repetitive, mundane tasks involved in managing multiple 3PLs. For the purposes of this article, we’ve grouped the following activities together under logistics administration activities:

  • Exception Handling
  • Customer Service and Communication
  • Returns Management
  • COD Reconciliation and Management
  • Billing and Claims Management

Whether in-house or outsourced, you’ll need operations staff who are experienced in logistics event management as well as managing supply chain partners. While dashboards and systems are able to consolidate information together, the processes for the above activities can differ from partner to partner and can take significant amounts of man hours to manage and communicate across your whole supply chain.

Having an in-house team will give you a lot more control over all the processes stated above, but if your capabilities are still being built in your target region this would slow down your ability to scale quickly. You would also need a certain critical mass to make the business case of building an in-house team for these logistics administrative activities worthwhile.

It’s best to weigh the business cases of managing your carriers in-house against outsourcing these functions to partners who already have dedicated teams, processes and systems in place to manage them for you.

Control tower teams function as the operations hub of your company. They help to continuously optimise your systems while managing any exceptions that are detected across the regions you have set them up for. When choosing to set up your logistics control tower it helps to remember that the benefits should form the basis of the setting up of your processes, systems, teams and resources. These benefits include

  • Saving on logistics costs
  • Improved service levels
  • Improved supply chain visibility and responsiveness to exceptions
  • Fast scaling up of operations in the region should you outsource to a partner with an established network

To find out more about how Janio’s control tower team can assist your expansion in Southeast Asia and beyond, reach out to us below.

Air, Land or Sea, our flexible shipping solutions keep your deliveries going forward

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