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The Bosch Group is a leading global supplier of technology and services, in the areas of automotive and industrial technology, consumer goods as well as building technology. 

163 Ways to Supercharge Your Supply Chain (part 4)

2014-03-04 14:50:59

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3PLs

 

Companies of all sizes increasingly rely on third-party logistics (3PL) providers to manage logistics, transportation, and supply chain functions, access capacity, and tap technology capabilities. Here are some factors to consider when choosing a 3PL, expanding the value proposition, and growing the relationship.

 

74. Be selective when sending out 3PL RFPs. If you send out RFPs in a cattle call, your candidates may not participate or respond with their "A" game. Nor will your internal team be able to dedicate the proper time to evaluating each response.

 

75. Ask what the 3PL does best. Like most companies, many 3PLs excel in certain niches, such as global logistics, transportation, or warehousing. Most service providers started off focusing on one function, then added others along the way. Ask 3PLs about their mode and lane strengths. Depending on office and yard locations, a 3PL can likely guarantee capacity in some areas of the country, while offering substantially lower rates. This knowledge will help you better match your transportation needs to the right 3PL.

 

76. Focus on operational excellence instead of the procurement process. When companies put out 3PL bids, they often focus time and attention on the bid itself, instead of assessing whether a new logistics service provider can perform to the level of operational excellence they need. Shippers should consider what the optimal scenario looks like once the implementation is complete, and how they can work with their 3PL partner to improve upon it.

 

77. Include your performance objectives in the RFP. Solicit input from all the key players in your supply chain about the performance, pricing, and productivity levels they hope to achieve through outsourcing.

 

78. Ask better RFP questions. Don't ask the same old tired RFP questions. Weed out the weak ones, refine the keepers, and add some new ones to inspire insightful answers. Two suggestions: "Share a situation with a client that didn't go as well as you'd hoped and explain how you worked through it" and "Show us a process map of how you'd fulfill a typical order for one of your current clients."

 

79. Value corporate compatibility. Finding a 3PL whose corporate values and philosophies are compatible with yours is essential. Build specific questions into your RFP to get to the heart of this issue.

 

80. Don't believe everything you read. An RFP is just one step toward finding the 3PL that's right for your company. Make every effort to conduct at least one thorough site visit and have some face time to make sure the 3PL hype lives up to the reality.

 

81. To foster long-term partnerships with 3PLs, be honest. When shippers enter a partnership, they should be willing and able to admit their shortcomings. Whether it's acknowledging pain points and limitations, or recognizing that bid data may be inaccurate, being upfront with service providers from the beginning is an important step toward building a collaborative relationship. Conversely, 3PLs should be equally candid about their capabilities. Such reciprocity builds trust.

 

82. Conduct a thorough review of the 3PL's financial history and outlook. Check credit report and bank references, certificates of insurance, vendor ratings for payment history, and financial rating with an independent firm such as Moody's Investors Service. Also review the 3PL's customer base for diversity and stability, private funding for impact on available cash, outstanding liens or claims, acquisition costs, or any factors that could overextend financial resources.

 

83. Recognize what's in and out of scope. Many procurement-driven companies will push for more from their service providers. The danger of scope creep is that it can slowly erode the relationship. With the understanding that customers have leverage, 3PLs may build walls and become less willing to give more when customers are taking instead of asking. On the other hand, shippers that recognize when they are asking for out-of-scope solutions, and acknowledge it upfront, are likely to find 3PLs more amenable to helping out and investing in the relationship.

 

84. Consider claims handling. Most 3PLs don't like to admit it, but accidents do happen—so make sure you're working with a 3PL who has your best interests in mind. A good 3PL can help facilitate a claim, and act as a liaison between you and the carrier on your behalf. Some 3PLs carry insurance so if the carrier defaults on a claim, the 3PL will step in and cover the cost of the claim—but this is not standard practice.

 

85. Make sure your 3PL has the legal authority to provide the services it is offering. Federal law requires any company arranging motor carrier transportation for compensation to either have a property broker license from the Federal Motor Carrier Safety Administration and a surety bond, or be registered with that agency as a domestic freight forwarder. This rule applies to warehousing companies and motor carriers that broker shipments to other carriers when short on equipment. If a claim or accident occurs, don't assume the insurance covering their business assets will cover a brokered shipment.

 

86. Ask your 3PL how it qualifies carriers. 3PLs utilize other companies' assets to serve you, and you entrust them to select the appropriate carriers to move your freight. At a minimum, they should verify operating authority and insurance, and assess each carrier's safety rating. What process do they have to prevent unscrupulous carriers from re-brokering your freight without consent? Make sure they execute a written contract with each carrier that includes clauses to protect you.

 

87. Execute the correct type of 3PL contract. Many shippers mistakenly use a motor carrier contract with 3PLs. Unfortunately, these contracts include many clauses that are not enforceable with 3PLs, and omit key protections. If you use 3PL services from asset-based providers, make sure your contract with them includes specific language addressing those services. Don't assume your relationship with the asset side of their business is covered in your contract.

 

88. Use 3PLs for more than just a back-up plan. Being choosy about 3PLs is wise, but don't treat them only as a back-up plan for a last-minute load that needs covering. A common misconception is that 3PLs can always move a load at the last second. While 3PLs can often find the capacity needed in a pinch, it's not a guarantee, and you could be missing out on many benefits 3PLs can offer if you only use them this way.

 

89. Find out what technology tools the 3PL offers that could help you work smarter, faster, and more efficiently. Information is a 3PL's greatest asset, and many invest heavily in IT systems designed to streamline information flow and access. Most 3PLs offer online tools ranging from full logistics management outsource platforms to standalone tools for rating, optimization, tracing, and document retrieval. If you have special needs, some will customize an application for you. Choosing the right 3PL can save you costly IT investments of your own.

 

90. Use your 3PLs as solutions providers. One great thing about 3PLs is that you can use them as much or as little as you want. Use them as you would an asset-based carrier to handle only specific lanes, or treat them as an extension of your supply chain. Many 3PLs can operate as an outsourced traffic department, and can manage as much or as little of the shipping process as you need.

 

to be continued...

Source: inboundlogistics