4 Best Practices That Should be Standard With Every 3PL
Every day, shippers, carriers and even small intermediaries are relying heavily and extensively on 3rd Party Logistics and order fulfillment companies (3PLs) to manage logistics and supply functions, access capacity and gain technology capabilities. 3PLs create value by understanding industry standards which demands helping customers enjoy better services at lower costs through tactical and technological improvements, enhancing the overall supply chain performance with business process improvements that are strategically applied.
Many 3PLs proactively show quick returns on investment. This is due to the necessity to expand the value proposition and grow their customer relationship. There’s an industry standard required of them and it controls how much satisfactions customers can derive from their service and how much it regulates the services of these 3rd party logistics and order fulfillment companies.
What Industry Standards are required of these Companies?
Below are four of the best practices that 3PL companies are expected to display to gain customer confidence.
Control: While 3PLs are generally in charge of controlling transportation and distribution capacity, liaising with carriers and forwarders, they also must create room for customers to exert some level of control as well.
One problem bedeviling many 3PLs partnerships today is as a result of poorly defined expectations. Where there is laxity in control, scope creep occurs. Outsourcers are expected to communicate objectives clearly and continuously highlight key performance indicators (KPIs) that are most important to them alone.
These data can be measured by the customers and compared with contractual or industry standards. This will help the 3PL understand better what level of service they are providing.
Optimization: Another standard of practice set for 3PLs and order fulfillment companies is to create value through offering customer optimization of existing transportation and logistics functions. They can do this by collecting and distilling large amounts of data to the smallest detail, analyzing it and identifying problems and redundancies. They can then address these with appropriate fixes.
They may uncover system-wide improvements in the supply chain and turn any problem into new opportunities to ensure greater efficiency and economy. Optimization is a recurring process requiring changes in the supply chain to ensure viability. It benefits the 3PLs because new objectives are created as pre-determined goals are met.
Reporting: The key to understanding and recognizing 3PLs service performances, whether good or bad is through periodic reporting. Knowing where goods are and whether they have been delivered and how they have been delivered is an important part of the process. 3PLs should be able to provide shipment visibility and process information. This way, customers can determine what is most crucial to their needs so they can access performances based on their terms and not the service provider’s. This would also help the 3PL collect and have an archive of historical reports which will help identify improvement areas, engage customers with the business, and explore better opportunities of driving further efficiencies and economies.
Execution: With execution, 3rd Party Logistics companies are expected to strive for continuous improvement and satisfying customer expectations. If a service provider is responding to customer priorities, whether KPIs, optimization functions or data reporting, there should a clean execution of plan and in turn show obvious benefits to the customer in the short and long term. It should also offer benefits such as efficiency, cost saving and innovation to the 3PLs. Then the Evaluation process can start all over.
If you enjoyed reading this, check out 5 Reasons It’s Logical to Use 3rd Party Logistics!