In international logistics, it’s always good to develop a good, nurturing relationship with supply chain partners. However, we’re always in a rush. What to do to make sure your third party logistics suppliers will keep up with their word?
Cargo is on the move, we need to secure a 3PL warehouse facility, a distribution center, and a delivery service in Mexico.
There is not the time for small talk. We need to get a quotation and ask for specifics very quickly. In a rush, your team may find a supplier that looks suitable. But after spending considerable time ironing out some details, you realize that the 3PL provider may not be the best fit for the company, for no other reason than a gut feeling.
Any business agreement relies on trust. But, in a rush, how do you make sure that your potential suppliers will keep up with their word?
Integrity is doing the right thing, even if nobody is watching. C.S. Lewis
A potential conflict?
Let’s imagine a potential automotive logistics supplier. The manufacturer finds the most suitable warehousing service near their port of entry. Their record shows that they:
Have storage at the port they receive their products.
Have experience in sensitive inventory management
Run a swift freight distribution network.
Handles customs regulation smoothly and cost effectively.
However, they’re so good with automotive manufacturing, that they also serve their direct competitor. Their products are stored 200 meters from one another.
How do you handle it with your 3PL provider?
1. Make sure your confidentiality agreement is enforced
Read your privacy notice. Normally, parties agree that technical, legal, financial or administrative information is confidential, in any form, and that its distribution is limited.
Yet on paper it all looks good. Ask your supplier how will they enforce the details and fine print of these agreements: software security and privacy, internal processes, etc.
2. Check your 3PL supplier’s own providers
There’s a chance your third party logistics provider must rely on other suppliers to manage specific processes.
Make sure that anyone working on your partner’s name is accountable and any privacy and security agreement applies to them as well.
3. Agree on the right metrics across the entire supply chain
Your company’s reputation lies on a thin line when you can’t comply with your commitments. What happens if the transportation network runs on-time deliveries, but the service times at the distribution center are too long?
“Not my problem, I did my part, that was an external party”.
According to Inbound Logistics, “you and your 3PL partner must establish agreed-upon benchmarks for success, and frequently review measurement data to ascertain if the global logistics process is performing well or needs improvement.”
This is especially relevant when aligning not one, but a series of 3PL providers: are they in sync with the performance indicators?
4. Secure the right supply chain monitoring technology
Make sure your potential partners have accurate tracking & tracing capabilities, such as supply chain management software for warehousing, orders or transportation, tells Dave Blanchard at Industry Week.
Jaime Wyatt explains at Supply Chain 24/7 that “having a state of the art technology platform backing up their business gives them the best chance for optimization. (…) A solid 3PL will have cutting edge system that allows them to give you real-time feedback on your freight and supply chain operations.”
5. Talk to other customers
The best, direct source of information is through people who’ve worked with your prospective supplier. Make sure that you can discuss some of your concerns with some of them.
Do they keep up with their word? Were there any loose ends across the supply chain?
How does your company make sure your prospective 3pl provider is trustworthy?