Hello! Blog viewers, I am here with another experience of my observation of a 3PL company during my Bachelors study in India. The ABC company was a third party logistics company working in Northern regions of India (5 states). The organization was having limited inventory flow which sometimes lead them to losses on deliveries. Lets understand the situation.
Every day company had to deliver 2 Trucks following the pattern of LTL (Less truck load) and 3 Trucks as FTL (Full Truck Load) combined with other consignments. The Trucks of LTL were supposed to go to 4 distribution centers so the cost was covered. But almost 10 days of the month The company was not able to fulfil inventory transportation of LTL consignments because of more cost of transportation than service charges for the consignment. So, firm management decided to hire services for LTL from market (& competitors) to keep satisfying the customer. But in this process they were loosing the profit share of those consignments. I kept wondering, if their was another way to handle their inventory and manage a proper process.
During my session of Logistics, I realised they were facing major inventory handling problems. Some of the problems were Procurement cost which includes Administration component, handling, Transportation (increased because of involvement of other service providers) and Inspection of arrival. Other cost is Shortage cost which includes Additional cost of special order, Lost of customer goodwill, Loss of sales.
Moral of the experience was Proper management of inventory and its handling costs is important to maintain the goodwill of the company and sustainability. Control on inventory has became vital for the survival of the organizations.