The lead story this month asks an intriguing question: "So you think your freight is insured?" The point that transportation claims expert Bill Augello makes here is that too many shippers don't take the time to read and understand their cargo insurance policies. So when a major loss occurs, they're surprised to find themselves under covered—or maybe not even covered at all.

The message of due diligence underscored in this article extends beyond cargo insurance to include other key aspects of the logistics job as well.

Consider the seemingly routine task of picking an LTL carrier. Some shippers treat this as a commodity buy, often opting for the lowball carrier. Yet not all trucking companies are created equal in terms of their coverage capabilities, equipment availability, technology, driver training, and so on.

A little bit of effort up front to carefully match your freight requirements to the comparative strengths of the carriers under consideration goes a long way towards avoiding problems down the road. Many shippers do make the effort with their core carriers; logistics leaders make it for all of their carriers. They realize that a late pickup or missed delivery window can do a lot of damage—regardless of whether the offending carrier is a core provider or not.

That same level of attention needs to be given to any outsourced activity, warehousing being a prominent example. All it takes is a single bad experience with product damage or contamination to undo many years of good service.

But all too often, choosing a warehouse is a casual exercise in many companies. They simply pick the one that's most convenient or least costly, and drop off the goods. The warehouse operator's past performance with similar goods or customers is never investigated.

The mandate for due diligence increases with third-party (3PL) arrangements where multiple logistics services are provided. Since you typically share sensitive information with 3PLs and empower them to act as your representative to the outside world of suppliers and customers, the process of evaluating and selecting these important partners should proceed with the same discipline as a merger or acquisition activity. Logistics managers need to take a lead role in assuring that every aspect of the relationship—operational, financial, and legal—is addressed. Making it abundantly clear which party in the relationship is responsible for doing what will go a long way toward ensuring success for both sides.

In a time when managers are being asked to accomplish more and more with fewer and fewer resources, it's hard to step back, take a breath, and give logistics decisions the attention they deserve. But with insurance coverage, as with all the other key aspects of transportation and logistics, it's now the only prudent course of action.