Global Logistics: Optimizing 3PL partnerships

In today’s dynamic, global marketplace, shippers need to execute a checklist of essential action items in order to get the most out of their third-party logistics partnership.
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By Patrick Burnson, Executive Editor
November 01, 2012 - LM Editorial

2. Find a cultural fit
The vetting process is a two-way street according to John Langley, Ph.D., professor of supply chain and information systems at Penn State University. He says 3PLs carry a checklist of their own when interviewing prospective customers.

“A good 3PL will let a shipper know if they can build a long-term relationship,” says Langley. “Basically, the same evaluation principles apply. Third party providers want shippers to share their operational strategies and financials with them, and they want the big picture before committing to a deal.”

This includes learning about the shipper’s core competencies and its labor relations, says Langley. Once that’s achieved, the 3PL can align its offerings with shipper demands. “The shipper can then ask the 3PL to outline its range of operational capabilities and services,” he adds. “They should define their geographic areas of strength, information technology, and their capacity for growing the shipper’s business.”

Langley defines this as “onboarding,” or the gradual integration of cultures based on management of performance and feedback processes. He adds that a “pre-planned exit strategy” should also be put in place.

“There is delicate balance to be maintained during the initial collaboration, and if either party fails to understand the shared objective, they should part ways before the situation worsens,” says Langley.

Robert Lieb, professor of supply chain management at Northeastern University, agrees, notes that most 3PL contract failures can be traced to the implementation stage.

“Remember, the deal isn’t done when the contract is signed,” he says. “At that time it’s essential that both parties are clear about expectations, responsibilities, and the metrics to be used in judging performance.”

Lieb advises shippers and 3PLs to “cross-train” as part of the implementation process, thereby learning the same tactics and strategies necessary for collaboration. “Don’t look at the relationship between the two companies as a zero-sum game,” he adds. “And don’t panic during tough times. My research has indicated that at least one-third of 3PL relationships actually improve during periods of time when the parties look at their problems and work toward resolving those problems together.”

Lieb says he can’t stress enough the power and benefit of strong communication between the parties: “Develop an early warning system that identifies potential problems when they first emerge and don’t personalize the problems. Collectively work toward problem resolution.”

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About the Author

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Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


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