Mid-Market Companies Compete on an International Scale

March 1, 2009
Mid-market technology companies are aggressive by their very nature, constantly striving for the next level of innovation: the latest product offering,

Mid-market technology companies are aggressive by their very nature, constantly striving for the next level of innovation: the latest product offering, market expansion, or new customer acquisition. Global initiatives can help broaden market penetration and the pool of potential new business, yet many mid-sized companies face significant personnel, resource and infrastructure limitations that make this endeavor cost-prohibitive.

In the face of larger and more established competition, it is challenging to enter new markets internationally without great expense and the investment of years to cultivate market knowledge and relationships. However, forward-thinking mid-market companies can leverage the expertise and available resources of a third-party logistics (3PL) provider, and this can rapidly accelerate growth and open new distribution channels, without significant expenditures in real estate, personnel and a variety of other necessary resources.

Growth minded companies should take advantage of the economic downturn by offering a wider geographical footprint and scope of services when many of their competitors may be scaling back. This helps distinguish those companies as stable leaders, with an eye on the future that is attractive to both current and prospective customers.

International expansion is no small task. There are myriad challenges that must be closely analyzed and addressed, including cultural, regulatory and taxation issues. An experienced 3PL can lend significant expertise to help understand and overcome these conditions, offering best practices and creative solutions. Further, a reputable and qualified provider will have the technological infrastructure, access to secure warehousing and transportation space, along with overall capabilities for successful market entry, allowing a company to flourish.

An established 3PL can offer these resources at a reduced, variable cost, providing far more flexibility and efficient implementation in the target market. The most critical aspect of a successful logistics operation is comprehensive, real-time access to data, which is fundamental for identifying and determining stocking locations. By strategically positioning inventory, the supply chain can be streamlined so companies can reduce costs without compromising service to end-users.

The mid-sized company seeking to expand needs to ensure qualified providers under consideration offer a flexible, unified global technology platform that can easily integrate to its clients' systems and processes, rather than vice versa. This level of connectivity creates another layer of efficiency that speeds international expansion and quickly establishes reliable operations. An international operation must also be able to scale down as quickly as it can scale up, to meet the evolving needs of a company's customer base.

3PLs can offer the required scalability with an established global network in place. This provides an advantage to mid-sized companies that cannot afford to over commit resources if client profitability fluctuates.

Partnering with a competent 3PL can further differentiate a mid-market company, allowing it to provide specialized service offerings. One example is a more aggressive approach to service level agreements. Depending on the industry served, offering mission critical logistics (also known as time-definite), with deliveries within hours on a globally consistent basis, can support new revenue streams for global business opportunities with existing and potential customers. This level of expedited and specialized service is not cost effective for most mid-market companies to perform independently, and requires outside resources to execute.

Upon selection and implementation of a 3PL to offer new services, most mid-market companies have the benefit of a flat organizational structure. This level of nimbleness enables expedited 3PL integration, which can accelerate time to ROI.

However, the lean operational structure of mid-sized companies can also be prohibitive, as the internal structure may not efficiently support the uptick in business demand. For these situations, a well-matched 3PL partner can provide the necessary resources to support growth. By relying on a 3PL for information technology and personnel, a mid-market company can maintain focus on its core competencies, which can lead to efficiencies far beyond the supply chain.

Global expansion is a challenge. Managing this process internally, means a significant investment of resources, taking years to establish. As companies may refrain from this type of expansion as a result of today's down economy, ambitious organizations have a significant opportunity to gain ground and increase market share. A strategic 3PL partnership can be an ideal strategy to accelerate growth in a cost effective manner.

For the relationship to be successful with sustained growth, a top-down organizational commitment is essential. Companies must be willing to fully understand their own operations to realistically assess the potential results. If the business model is inefficient, the benefits of an outside partner cannot be realized.

Internal alignment will allow a mid-market company to maximize its own resources, while leveraging those of an established 3PL partner. If implemented correctly, with thoughtful leadership, new heights of success and growth can be achieved.

Paul Malamet is executive vice president of account services and business development of Choice Logistics, an outsourced service parts logistics provider for mission-critical, high-tech global service organizations (www.choicelogistics.com).

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