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What is a reasonable cost model for providing a 3PL warehouse management service (Survey Result 3)

Written by: Jon Hansen

Article Overview: What is a reasonable cost model for providing a 3PL warehouse management service and how would it best be structured to hit the key points with both the logostics and finance executives?

What is a reasonable cost model for providing a 3PL warehouse management service (Survey Result 3)

Camelia, Partner, Logistics Firm, Romania

Considering the business case in discussion, I consider also the following points:

A detailed business model is required: starting RMA procedure at retail level till client pick-up from the major warehouse: which are the steps and associated operations (RMA collection, transport, warehouse receptions, warehouse operations and shipments schedule process, etc.), which are the internal/external actors, which are the client's requirements, SLA and KPI, reporting.

Based on this business model you can develop and analyze 2-3 scenarios, both from logistics and financial point of view; timing, orders processed availability at the warehouse level and total costs (logistics operations costs, stock cost and indirect costs) to be considered as key issues.
As first scenario you can use the existing model (internal operations) with associated strengths and weaknesses; making a short weaknesses analyze you must identify improvements (time, results, expertise, quality..) and 1-2 scenarios have to be identified from external operational model. Try to identify the logistics services providers which operate on an existing similar model for others clients; analyze the model and keep in mind that an existing RMA chain/model can respond better to a cost optimization objective compared with a dedicated chain at first implementation, usually more expensive. LSP expertise on this operational model represents an advantage also.

Having an experience in after sales operations - mobile phones collection, transport to a centralized service center, repairs and return to initial point of collection, I recommend to consider and to analyze also the IT application model for this case. You can consider a web interface application and data input/collection at retail level (import form supplier IT application) and you can manage the entire flow starting RMA order creation till warehouse delivery order to client - step by step, timing by operations and operations control, SLA, file export to client application, full visibility on stock level, etc.. Serial number tracking must be considered also, if required.

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Article Tags: application model, business case, centralized service, data input, delivery order, external actors, indirect costs, initial point, interface application, internal operations, logistics services, operational model, retail level, sales operations, services providers, strengths and weaknesses, time results, warehouse level, warehouse operations, web interface



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