Like most business decisions, choosing a Third Party Logistics company, or 3PL, is an investment of resources on both sides. What is at risk includes not only time and money, but more importantly, the future success of your firm’s profitability. Land Link Traffic Systems would like to share a few tips to help you in your 3PL selection.
Hone Your RFQ
Your request for pricing should be a blueprint of your logistical needs and challenges. This is a time for specificity. Historical data can be helpful in determining future volumes using predictive analysis. This is also a time to concentrate on problem areas that have been an issue. The more specific the details provided, the more specific the possible solutions. Finally, set realistic expectations as to the time it will take to implement recommended solutions.
Define Contract Terms Clearly
Ambiguous contract terms lead to disagreements including everything from performance results to billing issues. Trust can be quickly lost and relationships soured by not clearly defining individual responsibilities and expectations. All the work spent on the RFQ can be completely lost over seemingly small details.
Set Contract Terms to a Length Necessary for Success
Most shippers like to bid their business every year or two. That may work for predictable, uncomplicated logistical operations, but not for today's more sophisticated logistics challenges. Two years would be the minimum time to allow for possible technology updates, personnel and capital investment and related recuperation or capitalization of those costs. The more demanding the challenge, the longer the term may need to be. Strategic relationships benefit from longer-term agreements because, they give 3PLs the ability to plan along committed lines. And to consider breakthrough strategies involving technology and automation, that could literally transform your operation.
Measure What Matters
In this time of Big Data, it is critical to manage and measure what matters. Massive amounts of logistics performance data can be crunched, turned into reports, and analyzed ─ but what are the metrics that can provide insights that lead to productivity gains, cost savings or customer service improvements? Decide on a focused set of KPIs and make these your operational religion. Most of the operational metrics that matter can be automatically captured and displayed from your 3PL's software program. Understand the data that will define and help you manage the performance you are looking for.
Consider Sharing Long Term Direction with Your 3PL
Companies are typically resistant to share too much information with outside service providers. Given the growing demand of e-commerce and ever increasing customer expectations, that mindset may have to change. These customer pressures, combined with the insane rate that technology is changing how we conduct business, may necessitate the inclusion of your 3PL in the board room discussions to ensure long term success. Shippers benefit by providing their strategic 3PL partners with the insight they need to envision how the supply chain must evolve to support a particular business plan. Inclusion in long-term planning is empowering, and will inspire more insightful thinking and better performance on the part of your 3PL.
These are but a few recommendations to enhance the success of your 3PL relationship. For more insight, contact one of our Logistics professionals to review your company's individual needs. Click the button below for additional information.