Most people wouldn't consider an old limestone mine-turned underground warehouse as the best location to breed innovation. But for Frank Scheer and Thomas Whitling of the US Postal Service's supply management organization, that's exactly where one of their best ideas was hatched.

USPS' purchasing and supply management specialists had ventured to the eerie location beneath the streets of Independence, Mo. to analyze the shipping processes of one its key suppliers. Hallmark Custom Marketing fills the USPS' orders for paper mail supplies—the padded envelopes and colored packing paper you see on the racks in the lobby of your local post office—from this cavernous location.

The problem was those supplies just weren't getting to the post offices quite as quickly as USPS would like. And when Scheer and Whitling took their first look at the warehouse of Hallmark's logistics provider, they immediately knew why.

“When we arrived at their facility, we realized they had 10 dock doors and were only using two,” says Whitling. “They would receive and fill the order, put the order in a box, put a postage label on it and then they would send those shipments to another distribution center that would pack up and send the items out in the mailstream.”

With the help of Ryder Supply Chain Solutions, the USPS designed a more streamlined order fulfillment system under which Hallmark receives and fills the orders, loading them by the pallet load into trucks at all 10 dock doors. From there, Ryder arranges to have a carrier pick up the shipment and bring it to one of 21 regional USPS bulk mail centers around the country, where palletized shipments are then broken down and put into the mailstream, much closer to their final destination. By having the freight palletized instead of bed-loaded, the trucks can be used to deliver to multiple bulk mail centers in an LTL model.

“That took about two weeks off the ordering process and the cost savings were significant,” says Whitling. “We're using our bulk mail centers as distribution hubs.”

But in addition to the streamlined ordering and filling process, Ryder's involvement in the project brings with it a new level of shipment visibility after shipments leave the underground warehouse and progress to the various bulk mail centers.

Before working with Ryder, USPS had an internally developed shipment tracking system in place, but in evaluating the technology that 3PLs like Ryder bring to the table, it was clear that it was time for an upgrade.

“When we were evaluating 3PLs, we established clear KPIs for the 3PL's software and determined from that Ryder has a very robust system,” Scheer says. Ryder's web-based system was configured to have the look and feel of the USPS' legacy system and 25 training sessions were held with USPS employees around the country on its use.

“Their system allows users to enter shipment information, manage the shipments and carrier selection, book freight with the carrier and all handle all of the processing requirements,” Scheer explains.

At the end of the day, Scheer feels that bringing in the right 3PL can provide a new perspective and expertise to supply chain issues.

“The 3PLs create new business practices and services and through a well-written statement of objectives you can find out what they have to offer rather than just putting a straight jacket on them and saying here's what we need done,” he says. “Without a 3PL's perspective, you might miss out on an even better solution. Ours is a textbook example of if you looked just at the cost of transportation or packaging alone to reduce costs, you'll miss some big chances for total cost savings. You may increase costs in one area to gain a total cost reduction.”

Also see: For more 3PL best practices, see Purchasing.com's Purchasing.com’s Logistics Outsourcing and 3PL Resource Center