A logistics partner should help you achieve goals that are out of reach for your company alone. Their capabilities and resources should enable you to reach your end-customer more cost-effectively while reducing the direct burden your company bears.
If the 3PL has the right experience and a proven record of success, it should be simple: you send the items to be shipped; they collect them and get it done. However, if you’re not careful in how you set up your partnership with a logistics provider, you might be setting yourself up for big logistics issues from the beginning.
Broken Communication = Broken Logistics
A relationship with a 3PL often works best when relevant tactical and strategic information is shared.
Some customers assume that the 3PL will already know about current order volumes, seasonal fluctuations, and forecasts for the future. But a 3PL also needs to plan ahead and align partnerships and infrastructure.
IT systems that are interconnected or shared online inventory and logistics databases allow a 3PL and its customers to work together efficiently today. And logistics roadmaps where freight needs are discussed ahead of time mean better negotiated rates now and into the future.
Speaking In Code
Make product SKUs and descriptions as explicit and simple as possible.
A 3PL will typically be handling many different customer product lines. Obscure SKUs and product descriptions won’t help reliability in picking or in freight handling. ‘LrgWhite24’ as a reference gives people a lot more clues than 04-06-LE-PK-WE
Similarly, a contract trucker can verify parts references and quantities, but is unlikely to be able to identify specific incorrect items or assemblies. Ensure that any kitting is done properly in your part of the supply chain, or work with the 3PL for this service to be reliably outsourced.
Unhealthy Cost Savings Obsessions
The value of a 3PL should go well beyond straightforward cost savings.
Saving money is good when there are no negative side effects. A dollar saved is truly a dollar earned because it goes right to the bottom line. However, using a 3PL does not always mean cost reduction. A 3PL also has expenses to meet to equip, maintain or subcontract facilities. And while grouping shipments together and using economies of scale may allow a 3PL to pass cost reductions back to its customers. Using a 3PL to reach sales regions that were previously poorly served, or to handle shipments requiring special means of transport are just two examples.
Command and Control Prevents Collaboration
Your finished goods are your babies, and you feel proud and protective. However, that’s no reason to yield to the temptation to tell a 3PL how to run its operations.
There is a difference between clearly explaining your requirements and the results you expect, and turning into a back-seat driver too eager to give instructions about how things should be done. A good 3PL will not only have the demonstrable skills and experience to convince you to choose it in the first place, but will also be able to give you valuable feedback about what works well and what further improvements can be made – as long as you’re open to a partnership rather than a dictatorship.
Built-in Flexibility
While a signed contract should contain the conditions to allow both parties to work well and must be respected, it is also open to renegotiation. Markets and business models change; sometimes so should contracts in order to stay in alignment. This is also often a good time to discuss new possibilities with your 3PL for working together for even greater cost-effectiveness and strategic value.
Don’t set yourself up for failure. Come into an 3rd Party Logistics engagement with the right mindset and you’ll be looking towards a smooth final mile.