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Strengthen Your Third-Party Logistics Partnership

Tuesday, August 26th, 2014

If you are looking for a third-party logistics provider to help take your growing business to the next level, you might be tempted to think that unloading all logistics to a third-party logistics (3PL) provider is all that’s needed.  Commercial Warehousing can certainly accommodate this, but to foster a truly powerful 3PL relationship requires continued efforts from the shipper.

We recently read an article from Inbound Logistics featuring 4 case studies of highly successful shipper-3PL pairings. Let’s review some of the major take away points that we feel contributed to these successful relationships.

Planning and Communication

To create long-term success, proper planning is paramount. Questions need to be asked, reviewed and realistically answered. Is the proposed partnership profitable to your operation? Based off past experiences, can you spot future difficulties? What has or hasn’t worked in your previous supply chain setup that you wish to avoid or remedy by utilizing a 3PL? The list of questions that need to be asked is inexhaustible. The Inbound Logistics’ article mentions that it took almost 4 years of planning for Performance Team to transload the first shipping container for their customer, Belk. That is an extreme example, but the point is, taking a comprehensive approach to planning can make or break a supply chain relationship.

The 3PL should be proactive in this planning stage, leveraging years of supply chain management experience to ask the right questions of the shipper in order to flush out all potential issues that may not be readily apparent. The key to quality planning is constant communication from both partners. This is a skill that needs to be continued and optimized throughout the life of the partnership.

Scalability

During and after planning, capacity to handle growth (both seasonal and long term) needs to be evaluated. Can the 3PL scale its operation in order to consistently meet the goals of the shipper? What if the shipper suddenly enters a new market, doubling their demand? What if this demand increase occurs during their peak season? Can the 3PL handle such a drastic change in supply? For a long-term relationship to be successful, the answer from the 3PL should be, “not a problem”. The 3PL and Shipper should both be forecasting long into the future to maintain a nimble business agreement prepared to handle all foreseeable and unforeseeable turns in supply and demand.

Increased Efficiency Through Constant Evaluation

One of the best ways to increase efficiency is through constantly evaluating key performance metrics. The article brings to the forefront an idea of symbiotic evaluation. The Shipper and Third-Party Logistics provider should each have a list of metrics for which they evaluate both themselves and each other.  These metrics should be evaluated together, and will make it easy to spot where inefficiencies are being generated, or where bottlenecks are found.

Trust Equals More Value

Inbound Logistics’ article makes it clear that trust and transparency is paramount in the best Shipper-3PL dealings. Sharing access to transportation management, warehouse management, and purchase order management tools can open new doors of efficiency. Integrating tools leads to proactive response to current and predicted business changes.

Transparency of real time information can lead to value-added services offered by the 3PL. At any point, fulfillment might include a combination of receiving, putaway, replenishment, picking, packing, knitting, shipping and transportation management. If the Third-Party Logistics provider has access to the Shipper’s resource and product planning system, then the 3PL can spot sudden changes in product production, or demand, and quickly make required changes to meet fulfillment, before the product hits the crossdock, warehouse or end destination.

Failure is Not an Option

If planning, communication, evaluation and tool sharing is properly implement, then The Third-Party Logistics provider is typically responsible for any failure, or bump, in the supply chain. The 3PL agrees to the scope of each Shipper’s need, if they cannot reach those goals, then they need to speak up and point out what aspects are unrealistic, provide alternatives and then ultimately fix the deficiency to prevent similar issues in the future. This honest communication allows the Shipper to make necessary changes ahead of time, versus being stuck in a hard spot that could have been avoided.

3PL partnerships are complex, and drastically different from one another depending on the parties involved because, “When you bring two companies together, you have to bridge a culture gap.” There is required level of customization in every partnership, but this customization is critical to a long-term successful 3PL relationship. Commercial Warehousing is dedicated to building long-term success around planning, communication, evaluation, and trust. Contact us about your supply chain needs; let’s build a success story together.

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