As per our infrastructure damnation post on Postal Services, public postal services, even though not widely used by most large enterprises, are necessary to prevent private monopolies and to force the private enterprises to be more competitive than they would otherwise have to be.

More importantly, they are often vital for large retailers that depend on direct to consumer sales (and shipping) as, sometimes, public sector service prices (for large retailers who cut good deals) are better than private sector prices, and just as quick (as many postal services have enough carriers to cover every door 5 days a week without having to add staff or miss promised delivery dates in peak seasons).

But the costs might skyrocket as many postal services go deeper and deeper into the red, and look to stabilize themselves through increased package costs (and USPS rates recently went up rather significantly in the US for parcels), and those retailers not ready for this may find themselves losing customers hand over fists who balk at shipping prices that dwarf the costs of the products they are buying. Even if the retailer has the volume to negotiate only a slight increase, any increase can be devastating.

So what can a retailer do?

The first thing it needs to do is try to lock in long term price agreements with the public sector postal services it is dependent on. That way, if prices do rapidly rise, it has the time to negotiate the best deal it can with private carriers if it has to go the private route.

The next thing it needs to do is start negotiating with multiple private carriers that can handle its volumes and try to negotiate deals as good as it has in the private sector and switch about half of it’s volume to the private carrier who wins. That way it has both options, and can even switch back to the public sector if the private sector option because more costly or risky.

Finally, it has to explore in-store or near-store pick-up options. For example, Amazon is exploring locker pick-up in urban locations that can be as fast, or faster, than direct-to-door shipping, and cheaper too. Multi-channel delivery options are the key to perpetual success.

Just like 3PL firms were the first provider damnation we covered, they are also the first provider sustentation we are going to cover. For many under-staffed, under-supported, and under-platformed logistics departments, 3PLs are a blessing because, without sufficient staff to analyze options or modern technology platforms to crunch the numbers, 3PLs offer the organization an instant cost savings, a substantial time savings, flexibility, and, presumably, focus. But, as we said, these advantages are there for a reason — to cloud the disadvantages that 3PLs also bring. 3PLs are a true double-edged sword that, depending on the angle you see it from, shines as bright as the sun or drowns you in the darkest night of the abyss.

As we clearly said in our damnation post, in exchange for:

• cost savings, the organization gets IT headaches
• flexibility, the organization gets a loss of visibility
• focus, the organization gets a complete loss of control

Why?

• the 3PL uses its own TMS, and doesn’t give a damn whether or not it integrates with any of your systems
• the 3PL contracts the carriers, and if it the carrier gives you sucky service, too bad as you’re stuck with them until the contract is over (which could be a while if it services the 3PL’s bigger clients good)
• the 3PL manages the carriers it contracts, the lanes they take, the cross-docks they use, and so on and as a result your visibility into where your stuff is at might be limited to expected ship date, current status, and expected delivery date

But all is not lost. If you properly pre-qualify, properly pre-nup, and properly (pre-)define the commitments, you might only see the bright and shiny side of the double-edged sword — the side that cuts through your problems and leaves only cost savings, flexibility, and focus in its weight. Of course, to do this, you have to make sure that:

• during the pre-qualification phase you
  • be sure to dig-deep into the TMS, out-of-the-box integration support, data import/export options, and timelines for custom integration
  • be sure to ask a lot of questions about standard carrier contracts, common carriers, selection process, and the input you can have over it
• during the proposal phase you
  • make sure the provider gives commitments on system integration timelines, carrier selection process, issue response and resolution times, and support availability
  • make sure the 3PL provides active references of a similar size, proof of necessary insurance or regulatory approvals, and other documentation that will be needed upon signing
• during the final contract pre-nup phase you
  • make sure the carrier agrees to penalties if integration dates are missed, deliverables are late, or promised performance never materializes
  • make sure the organization can back out if problems persist or go beyond a certain point of severity

As we said before, the right 3PL, that is properly selected, agrees, and adheres to the right terms and conditions, will be a lifesaver for many companies, but the wrong one could bring the organization to its knees. So it’s critical to select the right 3PL.