Contract distribution has emerged as a vital link in the supply chain for many companies. As the third-party logistics industry grows, successful outsourcing firms will be the ones that meet shippers' needs with excellent service.

When asked which qualities they seek in a distribution partner, survey respondents often cited the following: flexibility, cost control, and outstanding service.

One respondent looks for a long-term partnership. Also important: "How they can help me reduce and control costs." Another noted the importance of working with a company that could provide service beyond U.S. shores. "Worldwide distribution capability door to door," the shipper said. "And a uniform computer platform."

Survey participants also indicated that they look for contract distribution vendors that can demonstrate agility in today's dynamic business world. In particular, one reader noted that companies with "quick reaction time and flexibility" are the ones that make the grade. Another said that "maintaining industry-leading, 'state-of-the-art' operational approaches and world-class structure" was critical in an outsourcing partner.

Finally, readers said they look for a third-party company that offers them a helping hand. For example, prompt responses to questions and concerns, better integration of services, and proposals for improvement were important to one respondent.

This year 10 third-party logistics companies met our readers' high expectations for first-rate service in these areas. Seven of this year's top 10 made the list last year: Landstar Logistics, FedEx Supply Chain Services, BAX Global, USF Logistics, Ryder Integrated Logistics, UPS Supply Chain Solutions, and Menlo Worldwide Logistics. Joining this year's winners circle were Con-Way Logistics, DHL, and EGL Eagle Global Logistics. It should be noted that FedEx Supply Chain Services and UPS Supply Chain Solutions have won three years in a row.

Third parties are rated on different criteria than other types of providers in the Quest for Quality survey. Contract distribution companies are evaluated on carrier selection and negotiation, order fulfillment, transportation/distribution, inventory management, and logistics information systems.

Each attribute is assigned a weighted value based on its relative importance to survey respondents. As in the past, respondents focused heavily on transportation. Most said that how a 3PL manages transportation and distribution was most important. Continuing that theme, next in importance was carrier selection and negotiation.

Third-party logistics companies appear to have improved their performance in the eyes of their shipper customers. This year three of the average attribute scores were higher than they were last year. Carrier selection and negotiation rose from 7.13 to 7.68; order fulfillment jumped from 6.85 to 7.35; and inventory management soared from 3.99 to 5.11. The transportation/distribution category slipped very slightly from 8.23 to 8.22, while logistics information systems inched down from 5.91 to 5.90.