May 31, 2018
Smart 3PL Partnering: 8 Questions to Prepare for World-Class Results
In today’s supply chain environment, strategic companies don’t go it alone.
Instead, they partner with the right third-party logistics company (3PL), in the right way, to bring world-class results that they never could have achieved on their own. So how is this 3PL partnership best accomplished? Here are eight questions to ponder that will help you prepare for and build a successful alliance.
1. What Are Your Company’s Short- and Long-Term Strategic Goals?
If your goals are known and clear, you’re well ahead of the pack.
Many companies have stated goals known in the C-suite, but they’re not always shared widely within the organization.
Making clearly defined long- and short-term goals and communicating them with your third-party logistics company is the most important step towards forging a strategic partnership that can launch you into the next level.
Certain supply chain metrics may come into play when understanding company goals. For example, order-to-delivery time and cost per unit may be key and comprehensive.
Goals and measures will vary by company and industry, but identifying and sharing them is vital so that strategic partners know your end game. All strategic goals, whether long or short term, need to be specific and focused on results so that a 3PL can connect them to the results they can help you accomplish.
Of course, all specific objectives need a time fuse attached to them.
Without a time frame to attainment, there’s little incentive to get them done. In fact, it was the economist John Maynard Keynes who said, in response to the “long run” regarding economic outcomes, “In the long run we’re all dead.”
Set and share your long- and short-term, specific, corporate objectives, tied to a suspense date, with your 3PL; it is also in their best interest to help you achieve them.
2. If You Performed a Candid Assessment of Your Market as it is this Day, What Does it Look Like?
Knowing your market can be confusing, as it is fluid and changes right before your eyes. Standard market practices of yesteryear are also changing with twenty-first century advances in technology and the global marketplace. Look at various facets of your current market to understand it; ask a few questions to make it concrete:
- What happens at the point-of-sale: how are sales made, where and by whom?
- What are the commerce dynamics of your marketplace?
- If there’s a retail component to your market, what does it look like today, how has it changed, and where is that specific retail experience heading?
- What is happening at the wholesale level?
Share your assessment with your 3PL and trade perspectives. Invite the 3PL to bring their wide aperture market view to yours to better understand it. Aim for a common understanding of your market so that you are both coming from the same place.
3. Where Do You Want Your Market to be Tomorrow?
Get a better grasp of where your market will be tomorrow and three to five years from now.
How do you want to target it now and into the future?
This knowledge is crucial as a logistics provider may advise critical strategic moves regarding your supply chain that can make your desired market structure fall into place, sooner and better.
4. What Does a Random Walk Through Your Supply Chain Look Like?
If you were to go to your local supermarket and trace a consumer’s purchase of different fruits from the produce aisle backward, what would that look like?
Those apples, grapes or melons would have come from different continents and countries, depending on the time of the year.
They would have traveled a variety of paths, in different trucks, trailers, ships, and containers. They may have been inspected numerous times, documented, tagged, and tracked by many people in various locations.
From the plants and soils that produced them, to the consumer that carted the produce out of the store and into their home, the supply chain is long and complex.
Can you trace the route of your supply chain? If you know it well, share all the complex details with your 3PL. Doing so will allow them to find ways to help you bring more efficiencies and improve your bottom line.
5. Data Drives Decisions, if Your Company and Your 3PL Both Have it. Do They?
Sharing data with your 3PL is one of the most effective paths to achieving notable results fast. Many companies fail in this crucial step. Accurate and clean data, while often easily available, is not always harvested. Work with your 3PL to gather and apply all the available supply chain data.
For example, do you have supplier data? Is it aggregated in a usable form to be processed and computed? How about customer and client data? Is your shipping data available and usable?
In fact, you can mine existing data to create predictive analytics to forecast future probabilities and develop risk assessments.
Available, accurate and usable information is a secret weapon for you and your 3PL to use to streamline processes and gain a competitive edge.
6. What Goals are Important to Your Customers and How are They Measured?
Share this, upfront, with your logistics provider.
Your customer’s expectations of service, and how such service is measured, is an elementary but important starting point.
What about cost metrics? How do your customers want to see it measured?
For example, do they expect comparative data, audited data, or cost per mile, per pound, per shipment? Additionally, how is quality, from the customer’s perspective, measured? On-time delivery, pilferage, spoilage, and damage in transit are all ways of measuring quality.
What measures do you use and does your 3PL know them clearly? When they do, they can help you better serve your customers and meet their expectations.
7. What Visibility Do You Want from Your 3PL Partner?
Visibility is the new watchword for today’s supply chain.
It is crucial to have the ability to track items from the plant to the final consumer; having this data readily available will improve and strengthen your supply chain.
To be sure, supply chain visibility affords control and control affords results. So what information would you like your 3PL to enable? The answer to this important question will affect how well your supply chain operates.
For example, would you like your 3PL to provide live access and input, or may it be replicated on a delayed basis? Also, at what frequency would you like to see reporting?
Too frequent can be too burdensome; not frequent enough may not give you adequate control.
At what point do you expect comprehensive business reviews, such as quarterly summaries, annual reports, or even daily reports? There are many options, but it’s best to request what’s needed and reasonable.
Most importantly, how is the visibility translated into supply chain improvements?
For effective supply chain management, transparency and control must be parlayed into actions that improve the intricacies of the supply chain. Working with your 3PL to identify issues and concerns and correct them is a best practice that brings results.
8. How Does Your 3PL Fit Into Your Strategic Growth Plan?
Finally, any strong partnership should address how your 3PL can be a part of your strategic growth and help make it happen.
Third-party logistics providers bring specific value and expertise to enhance your operations and, of course, your supply chain. Partner with 3PLs on as many areas as possible to drive costs down, increase market share, and create a competitive advantage.