Stop Your 3PL Profit Leaks With Ryan Frankenfield From Datex - Unboxing Logistics Ep. 92
Third-party logistics margins are notoriously tight. And when you’re dealing with dozens of different business models, running multiple fulfillment centers, and coordinating a large team of workers, margins can shrink without anyone noticing. In this episode of Unboxing Logistics, Ryan Frankenfield, director of implementation at Datex, shares tried-and-tested advice for defining processes, learning where your time and money are going, and plugging any leaks. Do you know your margins? As Ryan has talked with 3PL operators throughout his career, he’s noticed a troubling pattern: a surprising number of them don’t know what their margins are. One problem? They don’t account for the complexity of the business model. Many 3PL operators assume the fulfillment process is handled the same way for each customer, but small exceptions happen all the time—and if you don’t charge for extra labor, you’re losing money. “Unless they're really looking at the customers with a magnifying glass, looking at the processes, looking at their rate cards to see if the rate cards match the actual labor, margins are sometimes unknown.” How a WMS helps plug the leaks Before you can increase your margins, you need to find the leaks. That’s where a warehouse management system (WMS) comes in. Ryan says, “A spreadsheet can only go so far. … There's nothing there that is standardizing the way you input data. There's nothing that's going to catch those exceptions. And that's the value of having a WMS: the process is standardized.” He notes that a WMS won’t necessarily solve all your margin problems at once. But “But it helps expose those exceptions that become the norm.” The importance of standardized processes When you make the leap from spreadsheet to WMS, the best way to set yourself up for success is to have standardized processes. For 3PLs that aren’t quite there yet, Ryan’s advice is simple: “Sit in a room, lock the doors, and don't [leave] until everything is defined.” To get the full picture of your company’s operations, he recommends including people with various perspectives. “If you have a finance person in the room … [they can’t] tell you how you should be receiving, what are those exceptions, how do we handle those pallets. If I have an ops person that works on the floor … they're likely not going to be able to tell [you] how they should be billing for those things.” Links Connect with Ryan on LinkedIn: https://www.linkedin.com/in/ryanfrankenfield/ Visit Datex’s website: https://datexcorp.com/
