$ 40.9 Bn
3 Percent
Category Intelligence on Warehousing Sourcing Best Practices Turkey covers the following
Warehousing buyers predominantly own/lease the facility in case of bigger and long-term operations, whereas operations usually of less complexity and volume are usually outsourced.
Closed Book Contracts with Activity-based Unit Pricing Mechanism
Open Book Cost Plus Management Fee Pricing Mechanism
How does buyers and 3PL manage the labor cost increase for warehousing services?
Both buyers and 3PLs adopt combination of process improvement methods, automation technologies, and contract negotiation techniques in order to keep in check the labor cost involved in warehousing operations.
The 3PL market is expected to grow by approx.3 percent to reach TRY 40.9 billion in 2018, where the demand is driven by the 3PL companies expansion and consumer goods industry.
Labor Cost
Depreciation for Plant and Equipment
Software and other Intangible Assets
Utility Cost
Rentals for Occupancy
Major FMCG companies in Turkey adopt ‘owned/leased facility and outsourced operations' and ‘complete outsource to 3PL' sourcing strategies for the warehousing operations in Turkey.
FMCG companies adopt following sourcing models in Turkey:
This decision is effected by multiple factors, such as land prices for the given region, initial investment/already existing facility, available space for investment, 3PL service provider agreements for coverage.
Both buyers and 3PLs adopt combination of process improvement methods, automation technologies, and contract negotiation techniques in order to keep in check the labor cost involved in warehousing operations.
Process Improvement:
Time, energy, opportunity cost, and space impact the overall labor costs in warehousing. Adopting process improvement programs can mitigate and reduce these costs by avoiding higher picking time, unnecessary repetitive movements, rework, and returns
Methodology
Technology Investment
Buyers and 3PLs invest in technology to integrate with the warehousing operations in order to increase the visibility, leading to higher efficiencies and correspondingly lower variable costs.
Methodology
Software
LMS
Automation equipment
Contract Negotiation - SLA
3PL suppliers tend to increase the price, due to inflation on labor (or any other cost driver) throughout the contract period. To avoid this type of increase, buyers can introduce certain clauses and techniques to reduce the labor cost and align in line with inflation increase.
Methodology
Process Improvements Programs
The industry should engage and assess supplier for continuous improvement programs during supplier evaluation process and mandate suppliers to include success case studies related to continuous improvement programs during evaluation.
Continuous Improvement Programs
As a process improvement program, 3PLs adopt continuous improvement projects, such Kaizen, Lean, TQM, Six Sigma, Lean Six Sigma in order to mitigate the overall cost increase in warehousing operations
Reason for adopting these practices in Turkey
These systems are implemented with purposes, such as workflow simplification, increased productivity, cost (direct and indirect) reduction, HSE benefits (due to simplified environment), and risk mitigation.
Pay for Performance and Other Productivity Measures
Above are the major process improvement programs adopted by 3PL's to mitigate cost increase
Reason for adopting these practices in Turkey
Complimentary 12-month access to Beroe LiVE