3PLs strategies to navigate supply chain disruptions

The volatility of supply chain disruptions makes finding an all-in-one solution impossible. Thus, 3PLs, fulfillment providers, and other relevant stakeholders rely on diversified shipping strategies to mitigate disruptions. This article discusses how 3PLs manage supply chain challenges, and shares actionable strategies any fulfillment provider can leverage to navigate supply chain disruptions. 

Let’s start by defining supply chain disruptions and look at why they occur.

What are supply chain disruptions?

Supply chain disruptions are interruptions to the normal flow of goods and services that can halt production, transportation, and warehousing. Such disruptions can occur at any stage of the supply chain, from sourcing raw materials and manufacturing to order delivery and returns.

Depending on the cause, supply chain disruptions can be local, regional, or global. For instance, severe ocean conditions in the English Channel can trigger a global supply chain disruption, while congestions in the Port of New York and New Jersey disrupt America’s east coast supply chain.

What are some reasons supply chain disruptions occur?

Supply chain disruptions are triggered by multiple factors that can be identical or diverse depending on location. Three widespread factors for disruptions include:

Macroeconomic factors

Due to the global supply chain’s high interconnectedness, economic factors such as inflation and trade conflicts among countries can disrupt the entire supply chain. Because the supply chain cannot operate in isolation, geopolitical tensions influencing global trade continually disrupt supply chains.

For instance, trade sanctions between two conflicting countries lead to volatile tariffs and regulations, and can disrupt trade routes. Such unwanted factors create a hostile economic environment for global trade, leading to an imbalance in the supply chain as demand can exceed production rate, or vice versa.

Labor and resource shortages

According to Harvard Business Review, 57% of supply chain executives say hiring and retaining qualified supply chain workers was their biggest challenge in 2023. A shortage of supply-chain-skilled labor slows down supply chain operations, leading to missed or late deliveries. There’s also the risk of workers going on strike, worsening the situation even more. 

Technological failures and cyber threats

The modern supply chain is tech-driven. Tech is everywhere in agile supply chain operations, from automated guided vehicles that optimize order picking to cloud storage solutions that secure user data. If this operation-critical technology fails or is tampered with through cyber hacking, it directly disrupts supply chain operations.

How can 3PLs manage supply chain disruptions?

Third-party logistics companies play a crucial role in sustaining ecommerce supply chains. 3PLs and 4PLs  offer end-to-end fulfillment services, which start with sourcing goods from manufacturers, transporting them to their warehouses, packaging them per customers’ orders, and ends with last-mile delivery to a customer’s doorstep.

With such critical roles in fulfillment operations, a 3PL is well-placed to manage supply chain disruptions. Here’s how 3PLs can contribute to easing disruptions:

Flexible warehousing and logistics solutions

It’s difficult to predict the specifics of a supply chain disruption, such as how long it will take and how much it will cost businesses. And when you’re serving businesses dealing with assorted products, predicting disruptions is impossible. 

However, you can prepare for disruptions by offering business customers flexible warehousing solutions. These solutions empower businesses to scale inventory up or down to suit demand volatility. This way, companies can mitigate the effects of supply chain disruptions like understocking.  

Fortunately, 3PLs can leverage a dynamic warehouse management system like Logiwa IO with headless architecture. Such a platform allows 3PLs to remain responsive by modifying the backend architecture to accommodate fluctuating order and inventory volumes. 

Transportation diversification

Transportation bottlenecks contribute heavily to supply chain disruptions, especially when a 3PL solely depends on one transportation mode. For instance, if a 3PL’s sole transportation mode is by road, long traffic jams can cause supply chain disruptions, while other 3PLs with diversified options operate normally. 

3PLs should utilize multiple transportation modes, such as rail, road, ocean, and air, to give them a backup option in case of challenges. With a diversified logistics network, 3PLs can reroute goods when their preferred route faces disruption and avoid extended supply chain disruptions. 

Risk management and proactive planning

Risk management in global supply chains requires 3PLs to utilize sophisticated techniques such as AI-driven forecasting and predictive analytics. Leveraging these techniques gives 3PLs data-driven insights that help them foresee supply chain disruptions and find solutions before they escalate. 

An AI-powered fulfillment management system like Logiwa supports 3PLs in real-time decision-making, optimizing routes and identifying alternate strategies for handling delays or shortages.

Actionable strategies for 3PLs to navigate supply chain disruptions

Mitigating supply chain risk with a 3PL is possible using the following strategies:

Diversifying suppliers and sourcing regions

Avoiding over-reliance on one supplier or vendor in the same region helps 3PLs mitigate risks. This way, 3PLs’ operations don’t have to stop when one supplier fails, as they can quickly sort solutions from other suppliers whose supply chains aren’t disrupted. 

Building strategic stockpiles

3PLs should maintain a buffer inventory of essential goods to keep selling as they maneuver supply chain disruptions. They should have a well-calculated safety net level they follow to replenish inventory so they can maintain enough stockpiles to see them through a disruption. 

Adopting multi-carrier and rate-shopping strategies

Multi-carrier shipping involves leveraging multiple carriers to fulfill order delivery needs. It helps 3PLs minimize logistics delays by switching carriers during disruptions when there’s an alternative to do so. By combining it with rate-shopping technologies, 3PLs secure better shipping rates and avoid being locked into unfavorable pricing and operational conditions with a single provider. You can better avoid third-party logistics fulfillment challenges when you have several options at your disposal.

Integrating technology for visibility and forecasting

Attaining complete supply chain visibility is vital for 3PLs because it empowers them to better forecast seasonal disruptions and other repetitive factors that can trigger a hiccup. 3PLs can use AI-driven platforms to fully capitalize on advanced technologies such as IoT sensors, real-time data tracking, and AI-driven demand forecasting. 

3PLs should also utilize predictive analytics to glean data-backed insights they can leverage when making swift decisions to navigate a supply chain disruption successfully. Technology is a strategic ally for 3PLs in this regard. 3PLs using an AI-first FMS like Logiwa get the best out of such innovative technologies and implement AI-driven supply chain solutions more successfully. 

Embracing agility and building resilience

3PLs should partner with leading fulfillment management systems like Logiwa IO to manage supply chain disruptions effectively and design long-term solutions. Such collaborative relationships allow 3PLs to capitalize on an FMS’s expertise, flexibility, and technological resources. This gives 3PLs the capacity to mitigate risk and strengthen the overall resilience of their supply chains.   

Logiwa’s fulfillment experts can show you how our fulfillment management system can help you optimize warehouse operations and continue fulfilling brilliantly, even in the face of supply chain disruptions. 

Schedule a call with one of our fulfillment experts to find out how to sustain your high-volume fulfillment, even through supply chain disruptions.
 

FAQs about navigating supply chain disruptions