Global Logistics: Optimizing 3PL partnerships
November 01, 2012
When examining best practices in managing third party logistics provider (3PL) relationships, leading consultants, analysts, and educators recognize that most logistics managers begin their search with one goal in mind: to reduce cost by leveraging outsourced expertise and technology.
Naturally, one assumes that top 3PL players will provide the basic services that are now in widespread demand to achieve these goals. For example, the best 3PLs use the latest tools such as Lean and Six Sigma concept and offer the latest in warehouse management systems (WMS) and transportation management systems (TMS). And, the big players have real-time tracking and event management systems with “shipper alerts” for delays.
Shippers also expect their 3PLs to have network optimization capability to enable them to select the optimal warehouse locations. And, of course, 3PLs are relied upon for global expertise, including regulatory compliance and documentation.
However, according to our expert sources, there’s more than meets the eye when it comes to managing and optimizing a 3PL relationship. According to J. Paul Dittmann, Ph.D., executive director of the Global Supply Chain Institute at the University of Tennessee, shippers also need their 3PL to take direction, respond rapidly, and generate ideas for improvement.
“Shippers further expect their 3PLs to become a strategic partner in efficiently growing their business,” says Dittmann. “Today, aggressive, continuous improvement is a given.”
According to Dittman, industry surveys indicate that the most important factor in establishing a successful 3PL relationship is trust—fostered by good communications between the two parties. Third party logistics providers report that their greatest challenge is finding qualified people who are dedicated to learning the client’s business, and taking it to the next level.
However, in order to complete that journey, several steps must be initiated and executed. If a checklist has not yet been established, the time for creating one is now. Our experts have helped us create a list of three steps that they feel will go along way in helping shippers fully optimize their 3PL partnerships.
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