Does He with the Best Logistics IT Really Win?

Published : November 4, 2014

man-holding-a-trophyIn the third-party logistics industry, there's no doubt that the deployment of state-of-the-art information technology can be a factor in a firm's ability to deliver excellent service. But is it the main factor?

This is an important question for companies to ask. IT system upgrades represent a significant capital investment. Not only do you pay for the development or purchase of equipment and software, you need to maintain and update a system continuously over time. A 3PL company that employs obsolete methods, equipment, or software will find itself quickly outclassed by competitors.

But for clients, deployment of the latest high tech does not in and of itself a successful 3PL relationship make. According to respondents to Inbound Logistics' 2013 Readers' Choice Top 10 3PL Excellence Awards poll, there are several factors that determine superiority.

And those respondents know good 3PL service.

Inbound Logistics annual survey polled, “supply chain professionals from companies including consumer packaged goods manufacturers, food companies, automakers, and retailers—both brick-and-mortar and e-commerce.” They included “global leaders such as PepsiCo, Target, Chrysler, AT&T, Boeing, Amazon.com, Del Monte Foods, MillerCoors, and Walgreen's,” companies that “spend millions annually on logistics services.” 

With over 9,000 ballots cast last year, it’s probably safe to assume that their recommendations are reliable.

Communication counts.

A good 3PL partner will openly and transparently communicate with its clients. Transparency is of critical value to a client; when challenges arise, the client and the 3PL company must be able to work together to figure out the quickest, most effective solution.

A solid partner is one at which “you can get someone on the phone, and get answers,” according to one merchandise coordinator who responded to the 2013 poll. A 3PL provider that ducks a client's logistics manager, or that attempts to shift blame back to the client's processes and procedures, is not going to be a reliable provider.

A quality third-party provider must be reliable.

If your business depends on the ability to deliver goods quickly and accurately to consumers, you need a 3PL provider that has the procedures and safety checks in place to make sure that delivery of the right item happens on time, every time.

Moreover, you need a provider that has the ability to store and handle your items without allowing damage to occur in transit. As one traffic coordinator stated, his company contracts with its 3PL partner because “we know we'll get on-time deliveries in perfect condition.”

But the biggest single factor in excellence, according to readers…

…is customer service. According to Inbound Logistics' Catherine Overman, “Overwhelmingly, voters cite outstanding customer service as the provider quality that wins them over. In fact, although 63 percent of respondents list cutting transport costs among their greatest challenges, 64 percent rank service as more important than cost when it comes to their 3PL partners.”

A solid 3PL partner needs to be able to quickly adjust to your company's needs, develop customized solutions when they are necessary and to do so with acumen and professionalism. They need to follow through on any and all promises made. They need to be proactive in identifying areas for potential client savings, or in suggesting streamlining opportunities when they become evident.

As one responding logistics coordinator stated, his company contracts with its provider because it feels like that 3PL company “wants what is best for our company, and always tries to achieve it.” Or, as another nomination stated, "they handle our business as if we were their only customer."

Technology is important, but excellent service carries the most freight with clients.

If your organization is seeking a new 3PL provider, make sure you research a potential partner's current client roster. Contact logistics managers, traffic coordinators, service managers and executives with those current clients and ask what their experiences have been. This can be easily accomplished over LinkedIn or a few prudent phone calls.

As Overman warned, “Supply chain challenges can weaken a business' foundation, clogging product flow, wearing away at customer satisfaction, and draining profits.”

Whoever you choose, make sure you do your homework in advance. You need a 3PL provider that is responsive, adaptive and open in its communications with clients.

 

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Topics: Supply Chain Technology

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