Your relationship with your 3PL should be no different from many of your other relationships, especially those in business. Logistics solutions can get technical and complex quickly, but by working with a company you trust will help alleviate the stress and confusion rather quickly. Your human point of contact within your 3PL partner should be just that… a partner! This person should be someone who you can build a real, trusting relationship with. You know their team is going to give a little extra love to your business.
8 Ways to Optimize Your 3PL Relationship
Once you have this relationship established, there are some ways to optimize that relationship and help it grow to meet your exact needs. While there are certainly more than 8 ways to optimize your 3PL relationship, we have detailed the top ways here.
1. Maintain and Understand Your Contracts
Full of legalese and jargon, contracts may not be the most exciting part of a business relationship but it is important to develop – and understand – all parts of the contract to ensure that they are fair and advantageous to your business and to the 3PL. This can set the tone of your relationship with your fulfillment provider moving forward. Additionally, make sure the 3PL truly understands your company goals and has the team and capabilities to help you meet them.
Establishing this understanding from the beginning ensures that you will feel comfortable with the policies and procedures your 3PL partner is implementing and will lead to a successful long-term relationship. The language of the contract is obviously important, and those partners who carry out the negotiations are equally as important.
Regardless of who negotiates the deal, it is crucial that you are following your procurement’s best practices and working collaboratively with the functional owners for an ideal contract.
2. Ensure That It Is the Right Fit
When choosing your 3PL, you need to ensure that the relationship works for both parties and that both are compatible regarding shared goals and interests. Too many times, outsourcers get into these relationships based only on pricing or promises. The 3PL wants more business and may make promises they cannot fulfill. You need to be fully vested, honest and open with one another before signing an agreement. There will inevitably be requirements that need to change, but try to discuss what could happen beforehand and share as much about plans and strategic direction as you can. This is the best way for the relationship to flourish from the beginning all the way through the life of the relationship.
3. Set Clear Expectations From the Start
When you are entering into a partnership with your fulfillment provider, you must set your expectations clearly at the beginning and do your best to stick to them. Define exactly how issues are resolved right from the start. You may find it useful to utilize Key Performance Indicators (KPI) to assist in setting your expectations. This will also help your 3PL know whether they are meeting your needs or have areas for improvement, and will mitigate lengthy discussions on success versus failure. Metrics should be clear, include definitions on how to be calculated, show where the data comes from, and have a standard/target to be measured against.
4. Establish an Escalation Process
The best way to ensure a smooth relationship up front is to design a formal escalation procedure and stick to it. You may wish to maintain a chart showing this process. Because 3PLs can have issues ranging from quality control to costs to customer demands, in the event that an issue is not satisfactorily resolved it will prove helpful to chart a path and keep track of these trends to improve future resolutions in whatever area the issue(s) may originate.
5. Stay Connected
Your 3PL is essentially your business partner, so it’s important to inform them of any product or organizational changes that might have an effect on the relationship. Even large organizations could easily lose sight of this and miss out on opportunities by assuming their partner “already knows” what’s going on. Open communication will solve many problems down the road and also make your 3PL a more effective partner. Throughout the entire process of the relationship, it is imperative that you stay connected with your 3PL partner and vice versa. Your input and response level will help them be successful and is important for the relationship to prosper.
6. Be Flexible
A “set in stone” arrangement is typically not advantageous for either party. Just like in your personal relationships, you probably do not get your way every time. And when situations change in your logistics program, you should remain flexible enough for the sake of the relationship to change with them.
7. Be Open to New Ideas
Your decision to outsource fulfillment was likely based on the expertise of your 3PL. Allowing them use this knowledge and experience will likely result in them offering new ideas and solutions that will increase your efficiency. They have extensive experience working with a variety of different businesses, as well as unique tools that will help with process improvement, and of course, team members who have years of expertise and have seen it all. A well-rounded and collaborative 3PL provider can help you optimize your supply chain and increase your efficiency more than you might have been able to do on your own.
8. Keep What You Do Best In-House
Your company has core competencies. These are the things that you probably should not outsource just because you can. Make strategic decisions based on your needs and the strengths of your 3PL partner. We all have our strengths. Outsource what you need to outsource and keep your specialties in-house when you know you can do them better.
The FLEX Logistics Team is Here to Help!
When it comes to managing third-party logistics, it can be a challenge at first to build those relationships. But when you work collaboratively with your 3PL provider and work to maintain that relationship, the upfront investment of time and effort becomes easier to bear. With these simple tips in mind, managing 3PL relationships can be easy and certainly worth the effort!
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.