In Part One of this two-part series, four of the nine biggest risks faced when working with a 3PL provider was covered. Those first four risk factors discussed in our previous post were:
- Staff Experience
- Information Technology
- Ongoing Training
- Safety and Compliance
Now in Part Two, the remaining five risk factors that can hurt customer satisfaction ratings and cut into margins will be discussed. Consider a 3PL providers strengths/weaknesses in all nine of these areas when selecting or evaluating a supply chain partner.
5. CUSTOMER CARE
When selecting a supply chain partner, be sure to ask potential candidates about their customer care departments. Specifically, ask if their customer care teams use a work order process.
If they don’t use a work order process in their customer care department, a company may likely experience some or all of the following problems:
- Slower than necessary response to customer service issues and problems
- Lack of follow through from various departments in their organization due to lack of accountability
- Failure to correct issues resulting from lack of visibility, or lost/hidden information
- Failure to detect trends and react before an issue/problem escalates
Companies benefit from third-party logistics provider using a work order process in its customer care department, just like businesses benefit from them having a dedicated toll-free phone number for customer care.
6. INVENTORY CONTROL
Businesses want to choose a supply chain partner that has an inventory control team. Without an inventory control team, inventory issues may not be investigated immediately or acted upon in a timely manner. Plus, the lack of audits could lead to additional missed errors and missed trends that are not noticed and addressed before they escalate.
Having an inventory control team means that the chosen 3PL is better equipped to be proactive. And as in many aspects of life, when it comes to inventory management, it’s better to be proactive than reactive.
7. CREATIVITY AND FLEXIBILITY
If an organization needs more than an off-the-shelf, cookie-cutter solution, make sure the warehousing and transportation provider has the creativity, flexibility and agility to design and implement the custom solution that’s right for the business.
Companies need a partner that puts customer needs ahead of standardized one-size-fits-all systems and procedures, and a company that’s adaptable, where inter-departmental cooperation is the norm – an organization with no internal barriers and full visibility, and a culture that’s focused on the business, the customer, rather than on protecting each department head’s walled fiefdom.
A company with a “yes we can” attitude that can follow through and deliver on that promise is a company businesses want to work with.
8. HOW YOU WORK TOGETHER
When it comes to how to work with a third-party logistics provider, just how flexible are they willing to be?
It’s ideal to work with someone who can adapt to fit needs, whether that means a Cost Plus, Transactional or Fixed Cost compensation structure.
Shouldn’t there be options rather than the provider dictating this key element of the relationship?
9. SOLUTION CAPABILITIES
When evaluating warehousing and transportation providers, companies should fully investigate and understand their solution capabilities.
Some firms may focus on providing solutions rooted solely in industry best practices without addressing the specific customer’s needs based on that customer’s internal issues and existing systems.
Other providers may give little heed to industry best practices and focus strictly on addressing the customer’s internal issues and systems, which in the long run may not serve the best interests of that customer.
The best 3PLs will weigh industry best practices against the customer’s internal issues and existing systems and procedures as they develop a custom solution. This “mix and match” approach is usually better suited to real world situations.
By keeping these nine key areas in mind as you select or evaluate warehouse and transportation providers, businesses will be better equipped to make an informed decision, and in doing so, companies should be able to avoid many potential pitfalls.
FW Warehousing is headquartered in St. Louis, Missouri with Midwest warehouse distribution centers in Kansas City, Indianapolis and St. Louis totaling more than four million square feet. Founded in 1949 with a focus on food-grade storage, FW later broadened its services to include contract warehousing, dry storage, hazardous material and chemical storage, temperature-controlled storage, product distribution and B2B and B2C fulfillment.
FW Warehousing has more than 50 years of experience in third-party 3PL logistics and has been ranked in the top 100 Third Party Logistic Companies in the country by Inbound Logistics magazine.