Ecommerce customers want perfect orders, and they want them faster than ever before. On time, every time is the new normal when it comes to customer expectations.
As a supply chain manager, you need your third-party logistics provider (3PL) to be a great partner for your business. Achieving that result often comes from the effort you put into maximizing the relationship. Ultimately you want to ensure that you are utilizing all of the tools that are available to you from your 3PL.
Here are 4 things you can do to ensure that you get the most from your 3PL partnership.
Assign the Appropriate Resources to Manage the Partnership
While outsourcing logistics relieves your business of the daily burden of warehousing and transportation tasks, it adds a new and very different set of management requirements. One of the top reasons that outsourcing logistics will fail is if adequate resources aren’t allocated to properly manage the relationship.
It is one of the reasons larger companies have begun to introduce management roles specifically tasked with handling the relationship with your 3PL. Some of the skills that this role requires include:
- Excellent Communication: Strategies and priorities change all the time, and that information needs to be relayed clearly and understandably. This person needs to communicate with a wide variety of people as well.
- Attention to Planning and Organization: Goal setting and managing to deadlines is an important capability. In some cases, such tasks may involve working with a skilled project manager on the 3PL side on what needs to be done, by when, and by whom.
- Analytical Skills: Your business and your 3PL team need to collaborate to set and monitor KPIs to identify problems and strategic opportunities. This will be the difference between easily growing during seasonal changes or feeling behind the ball.
When it comes to managing relationships with logistics service partners, make sure someone is assigned to the role as their sole duty, or at least a significant part of their job.
Regular Communication
Outsourcing logistics is not something where you can sign a contract, go through the initial onboarding steps, and then just assume that the relationship will function perfectly moving forward. That is why regular communication is essential to sync up activities with changing priorities. You should establish with your 3PL how often such meetings should occur (daily, weekly, monthly) and then stick to that schedule, or adjust it if it seems like more communication is necessary to ensure that everything is running smoothly.
These regularly scheduled meetings can be used to address requirements for forecasted order volumes, special projects and other day-to-day issues. It is also important to have periodic strategic reviews. These are meetings where you focus specifically on the big picture issues of your partnership – the state of your individual business, new and ongoing logistics strategies to support business priorities, and the overall state of the relationship with your 3PL.
“DCL enacts frequent business reviews for each client, where we step back and take a look at their business and offer data-supported suggestions as to how they might be able to save money on certain elements of their business, maybe freight or packaging. We try to bring in demonstrative information to show the customer that we are thinking independently about their business, and anticipating what’s coming—outside of just the simple weekly communications we have with them.”
Identify and Track KPIs
Key Performance Indicator (KPI) monitoring is essential when managing your third-party logistics provider’s performance. Most of the operational metrics that matter can be calculated within the warehouse management system (WMS) or transportation management system (TMS) or inventory management software (IMS). Decide on the key metrics that impact revenue gains, productivity gains, customer service gains, or other important business results. Then build a shared commitment at every level of your organization and the 3PL’s team to positively influence these numbers.
Share Your Business Vision and Values
More value is delivered when businesses let go of their need to micromanage every detail of the partnership and instead view their logistics service providers as a strategic extension of their own business. Part of this involves sharing long-term business plans and priorities. At the start of a relationship, you may be reticent to share what you might consider sensitive competitive information. But it’s important to provide your 3PL partner with as much relevant information as possible. The best 3PLs are problem solvers who want to make a material difference for their customers. Having intelligence about where you want to take your business is empowering and provides the context needed to suggest innovative solutions.
Since 3PLs have experience across a wide range of customers and a wide range of logistics categories, you want to leverage their experience and creativity to help you solve your biggest competitive challenges. That doesn’t happen if the relationship and communications are focused solely on the execution of daily operational tasks
“But at Skydio what’s really important to us is the team. We treat everyone as part of the team, the people on the manufacturing line, the people in the offices, the customer support, everyone we treat as absolute partners, and DCL is the same.”
Bottom Line
Outsourcing logistics is largely an execution business. Partners must be able to accurately and efficiently pick, pack, and ship orders.
But what turns the 3PL’s team from a purely execution-based partner into a team that thinks acts like an extension of your company? It’s making sure you’re aligned with partners that know enough, and care enough to do it right the first time—and then come back the next day and try to improve their performance even more.
Getting maximum value from a 3PL partnership also comes down to how much effort and time you put into managing the relationship. Have you created an environment where your 3PL has the detailed knowledge of your business to guide their actions? Where your 3PL team feels like their contributions are valued, and where people have the freedom to explore innovative approaches that drive breakthrough performance?
Creating such an environment takes time and hard work, on both the client and 3PL side, but it is where you really can receive the maximum value that a 3PL can offer.
If you are looking for help managing your logistics and supply chain we would love to hear from you. Send us a note to connect about how DCL Logistics can help your company. You can read DCL’s list of services to learn more, or check out the many companies we work with
Tags: KPIs & Metrics
