Businesses over time have to rely on third party logistics companies to manage their logistics, transportation, and supply chain functions, so it is important to be careful and pay attention on every single detail related to the contract and project terms before start doing any business. As part of an article published last month by Inbound Logistics called “163 Ways to Supercharge Your Supply Chain”, we bring to you 10 noteworthy tips for you to grow the relationship with a 3PL provider:
10. Ask better RFP (Request for Proposal) questions. Don’t ask the same old tired RFP questions. Weed out the weak ones, refine the keepers, and add some new ones to inspire insightful answers. Two suggestions: “Share a situation with a client that didn’t go as well as you’d hoped and explain how you worked through it” and “Show us a process map of how you’d fulfill a typical order for one of your current clients.”
9. Ask what the 3PL does best. Like most companies, many 3PLs excel in certain niches, such as global logistics, transportation, or warehousing. Most service providers started off focusing on one function, then added others along the way. Ask 3PLs about their mode and lane strengths. Depending on office and yard locations, a 3PL can likely guarantee capacity in some areas of the country, while offering substantially lower rates. This knowledge will help you better match your transportation needs to the right 3PL.
8. Include your performance objectives in the RFP (Request for Proposal). Solicit input from all the key players in your supply chain about the performance, pricing, and productivity levels they hope to achieve through outsourcing.
7. Focus on operational excellence instead of the procurement process. When companies put out 3PL bids, they often focus time and attention on the bid itself, instead of assessing whether a new logistics service provider can perform to the level of operational excellence they need. Shippers should consider what the optimal scenario looks like once the implementation is complete, and how they can work with their 3PL partner to improve upon it.
6. Recognize what’s in and out of scope. Many procurement-driven companies will push for more from their service providers. The danger of scope creep is that it can slowly erode the relationship. With the understanding that customers have leverage, 3PLs may build walls and become less willing to give more when customers are taking instead of asking. On the other hand, shippers that recognize when they are asking for out-of-scope solutions, and acknowledge it upfront, are likely to find 3PLs more amenable to helping out and investing in the relationship.
5. Ask your 3PL how it qualifies carriers. 3PLs utilize other companies’ assets to serve you, and you entrust them to select the appropriate carriers to move your freight. At a minimum, they should verify operating authority and insurance, and assess each carrier’s safety rating. What process do they have to prevent unscrupulous carriers from re-brokering your freight without consent? Make sure they execute a written contract with each carrier that includes clauses to protect you.
4. To foster long-term partnerships with 3PLs, be honest. When shippers enter a partnership, they should be willing and able to admit their shortcomings. Whether it’s acknowledging pain points and limitations, or recognizing that bid data may be inaccurate, being upfront with service providers from the beginning is an important step toward building a collaborative relationship. Conversely, 3PLs should be equally candid about their capabilities. Such reciprocity builds trust.
3. Value corporate compatibility. Finding a 3PL whose corporate values and philosophies are compatible with yours is essential. Build specific questions into your RFP to get to the heart of this issue.
2. Use 3PLs for more than just a back-up plan. Being choosy about 3PLs is wise, but don’t treat them only as a back-up plan for a last-minute load that needs covering. A common misconception is that 3PLs can always move a load at the last second. While 3PLs can often find the capacity needed in a pinch, it’s not a guarantee, and you could be missing out on many benefits 3PLs can offer if you only use them this way.
1. Use your 3PLs as solutions providers. One great thing about 3PLs is that you can use them as much or as little as you want. Use them as you would an asset-based carrier to handle only specific lanes, or treat them as an extension of your supply chain. Many 3PLs can operate as an outsourced traffic department, and can manage as much or as little of the shipping process as you need.