Welcome to the party

Lester Barratt, international key account manager at Sealed Air looks at the emergence of 'fourth-party logistics' (4PL) and explains how to successfully integrate protective packaging processes to realise the fundamentals of this form of outsourcing

To realise the full benefits of this form of outsourcing, we must first understand the true role of the 4PL service provider. As more and more functions are outsourced, the need to manage all aspects of the ever-complicated supply chain grows.

The managing provider or lead contractor role is crucial to ensuring all outsourced services are working together at optimum efficiency, similar to a project manager in construction working with a number of different subcontractors on one site.

Supply chain operations
Many companies outsource their supply chain operations to reduce the number of warehouses, fleet vehicles and inventories, enabling them to concentrate on their core business. Protective packaging can provide wide-ranging benefits within the supply chain and many customers need to really understand how to leverage operational excellence by utilising the right product for the right application. Unless you have experienced how packaging plays such an important role in the supply chain it is difficult to imagine just how crucial it is to find the most suitable product.

For this reason, Sealed Air analyses the specific circumstances and works in partnership with each service provider in the supply chain to demonstrate the true value of getting the packaging just right. Outsourcing of key functions can often result in several different organisations working together on the same contract and site. Importantly, Sealed Air understands the different requirements through the entire process and offers a complete collaboration to ensure each of the providers meets the objectives in their respective area of expertise.

Fourth-Party logistics
For a 4PL provider, the benefits of working with a partner that really understands the needs of each contractor in the chain is essential and, in times of economic challenges, it is vital to maximise efficiency throughout the supply chain. A key factor why Sealed Air demonstrates operational savings and increased efficiency is through its comprehensive Packaging Value Analysis (PVA) process.

Savings can easily be achieved from endless improvements in the packing process, including the operational benefits of configuring your packaging solution in such a way that reduces the cube size or reduces the overall weight of the pack. This simple change in the process can increase operational efficiency throughout the chain. For example, one contractor may increase the number of finished goods packed on a pallet because the cube size has reduced, whilst another could benefit from lower fuel costs due to the reduced weight of the consignment.

In some circumstances, the supply chain process can be incredibly complicated. It can involve costly procedures where the right packaging choice can make a real difference to the customer experience, while maintaining a manageable cost for the contractor without compromising the customer's brand appeal and reputation.

Reverse logistics
An example of this could be from a manufacturer that specialises in products that flow through the supply chain network before reaching the retailer. If that product is found to be defective, the customer would need a replacement product and, ultimately, the defective product will need to be returned. As the return happens after the sale this process is classified as 'Reverse Logistics', a time consuming and costly procedure if not carefully managed. The contractor will generally act on behalf of the manufacturer and organise shipping of the defective product, testing, dismantling, repairing, recycling or disposal. The product will travel in reverse through the supply chain network in order to retain some value.

At this stage, packaging requirements may be completely different to those supplied originally to the retailer. Another reason why Sealed Air tries to focus fully on our customers and their market, when you really understand the market it is possible to achieve the best solution considering the supply chain and the customer's cherished brand.

Manufacturers often turn to 4PL companies because their process requires logistical support across international borders, requiring high levels of competence managing local laws, regulation and taxation.

Packaging excellence can only be achieved by making smart choices and the 4PL role is to view the entire process, and to select partners based on their area of expertise. A packaging application may require a fully automated solution, requiring the support of a dedicated engineering, design and technical support team; another may require a bespoke material providing the very highest levels of protection tested to international standards.

Views expressed on this page are those of the author and may not be shared by this publication.

www.sealedair.com