10 TIPS TO IMPROVE 3PL PARTNERSHIP MANAGEMENT

Logistics is an essential aspect of an organization and is often outsourced to third-party logistics service providers. A 3PL partner needs to be efficient in managing orders and deliveries, as well as responding to queries from customers. It helps the organization to get a holistic picture and set their long-term future path goals.

E-commerce has played a major role in the growth of 3PLs. Due to the sudden COVID-19 crisis, the demand for 3PL service providers has skyrocketed overnight, right from healthcare and personal care to retail and aftermarket. This demand is expected to increase further in the coming times. The increasing focus of retailers and manufacturers on their core expertise and outsourcing complex areas like logistics is playing a major role in driving the demand for 3PL providers.

Entering into any contract early without a full understanding is a mistake that can lead to a problematic 3PL relationship. To maximize the benefits of working with a 3PL provider, both parties should set clear expectations from the start. Clearly defining your requirements and ensuring they are met will ensure a beneficial partnership. Here are ten ways to improve your 3PL management.

1. Measure only what matters

There are many factors that are reported and measured. A focused set of KPIs should be the most important and should be focused on achieving a goal. The vision and focus of the 3PL partner should always be to improve your company’s bottom line, not simply generate reports.

KPIs should break down goals into granular detail. Understand or develop ways you can work with your logistics provider to achieve a certain standard. Customer satisfaction should always be the primary KPI. You should track the KPIs and review them from time to time based on changing needs and real-time issues.

2. Ensure effective software usage

With technology being a top priority in today’s world, it is important to understand the software application your logistics partner uses. The provider should manage operations, inventory, and deliveries using a high-end software application.

A complete software solution with all the necessary customizations will support real-time analytics and be ready for unified logistics. For 3PL management, software is one of the most important parts, as every activity can be monitored, every activity can be tracked, and every related challenge can be overcome.

3. Build a regular communication rhythm

Communication is an essential element for successful 3PL use. Establishing proper communication provides transparency between the logistics provider and the company. The information can also extend to a contract that includes expectations of the services to be provided, goals to be achieved, milestone targets, work assignments, and contact information. There should be a dedicated team of staff to handle all communications with the provider. Additionally, clearly defining the work assignments of the contract helps avoid any confusion in case of missed, late, or damaged deliveries.

It is important to communicate regularly with your 3PL partner on a daily or weekly basis, depending on the urgency. Setting a schedule for meetings and calls and constantly monitoring milestones is crucial to a successful 3PL partnership. Communication is the most effective way to ensure alignment and progress towards the goals set.

4. Expand Your RFP

All operational and other relevant data should be shared as required so that the 3PL partner can perform a detailed analysis. The more your 3PL partner can learn about all your processes, transactions, metrics, and workflows, the better they will be able to create better, more customized solutions at a reasonable cost.

5. Don’t be afraid to share data

One of the biggest mistakes in using a 3PL partner is the reluctance to share necessary data. This leads to a less than optimal operating partnership. Operations will not be optimized and seamless until there is a good fit between you and your 3PL partner. It is important to provide all the necessary data and trust that your 3PL partner will use that data to provide you with the best service.

6. Set Realistic Expectations

You should set realistic expectations for your 3PL provider. For example, if a company has a major operational issue, the logistics partner should not solve it overnight. Setting realistic expectations from the beginning is key to allowing the company and partner to work together and solve problems one at a time.

7. Clearly State the Terms and Conditions of the Contract

While it may take more time to get the full details, businesses should ensure transparency about payment terms, services to be performed, and expected performance. Mutual understanding is crucial. Lack of understanding will lead to disputes, which will damage the relationship between the 3PL partner and the business.

8. Define a Long-Term Contract

You should let your 3PL partner demonstrate their plans as they will likely make an initial investment in your project and depreciate in value over time. While long-term contracts involve some risk, the higher investment by the 3PL provider means they are in it for the long haul.

9. Allocate appropriate resources to manage the relationship

Customer data should be proactively managed. The 3PL partner must have the right access to provide the best services. Larger shared goals can be accomplished more easily if the 3PL partner works with your company, not for your company. Essential functions that the 3PL partner can handle better should be assigned to them as early as possible. This way, they can improvise and help achieve results and promote successful cooperation.

10. Ensure Teamwork for Greater Success

Collaboration is essential to motivate the 3PL partner to always work with your company and help with continuous improvement. Combining the company’s staff’s business expertise with the 3PL’s logistics experience can create a more effective partnership that benefits both the company and the partner.

Conclusion

A company should conduct a thorough internal analysis to get the most out of 3PL logistics outsourcing. The right approach to managing outsourcing activities can also make a difference in volume and profitability. The above tips help improve the overall experience between you and your 3PL partner so that both parties can achieve higher growth and profits in a combined manner.

If your business is still wondering about 3PL partners, please contact us. Vinafco is one of the first Vietnamese enterprises to deploy 3PL services with the full implementation of partners' cargo requirements. More than 35 years of experience in the field of logistics as well as implementing 3PL service chains for many businesses such as Akzo Nobel (Dulux Paint), Kimberly-Clark (Kotex), Masan, Saigon Co.op, Big C, Central Retail, ... clearly demonstrate Vinafco's capacity & capability.

Contact information:

Mr. Pham Kien Cuong (Kris)

Phone: +84.904.233.755

Email: cuong.phamkien@vinafco.com.vn