In logistics, even the easiest task is sometimes a big deal. You have to find, analyze, and choose the right option.
We discussed this challenge with Andrew Chernyavskiy, WareTeka’s commercial director. In the interview, he explained what is the biggest challenge for Ukrainian logisticians, what companies should know about searching for a 3PL contractor, and how to facilitate the choice of a warehouse and logistics services.
— What is the biggest challenge logisticians face in your opinion?
I’ve been working in logistics for ten years, and in my mind, the biggest challenge for each company’s logistics department is to find a suitable warehouse logistics provider. Why is it important to find an expert in the field of warehousing? It’s simple, you can apply for transportation service from a contractor. You can contact a transport company directly, or use a platform where you find a suitable motor carrier on the chosen route.
But warehouse logistics is non-digitized now. Here is a real case. A company works with different products, such as frozen fish/meat, chilled fish/meat, cheeses, oriental sweets, and flour. All these goods have to be stored and processed somewhere. However, these are different product categories, as they vary between storage and processing requirements. For example, frozen fish. There are many attributes such as the sea or river fish is it, or whether there is direct contact with fish during its processing. In this case, a client needs to find four warehouses to provide proper storage conditions for each type of goods.
Let’s complicate this task. A company needs all four of these warehouses to be located close to each other. For example, on the right bank of Kyiv. A company has to literally go around in circles to perform this seemingly non-trivial task. Moreover, there are a few more nuances.
— What nuances are we talking about?
Returning to the case with multiple product categories, the logistician of a client company has to find four logistics providers that can become partners. This happens in most cases because each 3PL has its operating specifics and different warehouse network. Some of them don’t work with foodstuff, others don’t have warehouses in the location a client needs.
As I’ve mentioned, the logistics real estate market is not well-digitized, so a logistician spends much time finding suitable partners. It’s a lot of work to find logistics providers, get in touch with each of them and find out if they work with a specific product group, have vacant warehouse space now, and are ready to take the freight for storage, fill out questionnaires for each provider, answer follow-up questions.
Of course, most of the options will appear to be unsuitable during the initial negotiation phase. However, it’s necessary to get a commercial offer, analyze it and find out whether it meets all business requirements or not. This whole process can be very time-consuming. Though the goods need to be stored here and now.
— And what if a company just rents a warehouse?
In Ukraine, demand for warehouses exceeds supply. According to the latest data, the vacancy rate is no more than 3% on the market. This is very little. And it is almost impossible to find vacant warehouses that are located next to each other in our realities.
You also have to understand that renting a warehouse on your own isn’t a quick solution. You only get a storage facility, and you have to equip it, hire a staff, and plan the work. It is easier and faster to transfer freight to a logistics provider. In comparison, we estimate that it takes on average three months to find a 3PL and six months to find storage facilities and put it in operation. Most companies don’t have so much time.
— Let’s assume we have all the input data. Why can’t a company just entrust the task of selecting a logistics provider to a logistician and free up its time?
It’s standard practice — for example, a person from the procurement department or an employee who has nothing to do with the logistics often negotiates with 3PL providers. I think that is a completely wrong approach.
Searching for a logistics provider should be carried out by a person who understands the specifics of goods storage, can evaluate how the warehouse work is organized, and so on. If you assign this task to a nonprofessional, he’ll spend a lot of time looking for a solution, if the best happens. At worst, he’ll find an option that doesn’t meet your needs at all.
— Is there any way to simplify the work of the client company’s logistics department?
We’re working on this right now. It’s a digital logistics provider WareTeka. “Digital”, as we operate based on the platform economy — we consolidate logistics providers’ services. In simple terms, there is a client who needs a service, and there is a logistics provider who is ready to provide it. We bring them together so that all parties get a profit.
As we can see in real cases WareTeka greatly facilitates the work of all who are engaged in the field of logistics. If a client looks for a logistics provider and uses our platform, he doesn’t need anymore to spend much time and analyze tons of information, search for partners, analyze their services and conditions, and conduct negotiations. We assume all of these tasks: analyze clients’ needs, find logistics providers according to these needs, in the necessary location, which work with the right product category.
We already have all this information. As a result, our client gets commercial offers from different providers specifically on his request. All he has to do is to choose the commercial offer that is suitable by price and conditions.
Moreover, the most important and enjoyable for our clients is that our services in selecting warehouse logistics providers are free of charge for them.
By the way, we have recently launched a service of LTL freight transportation. So, we’ll be able to close any logistics tasks soon.