Working with a logistics provider instead of organizing your own warehouse may be the most sensible choice in some business situations. I will write soon on when to use 3rd Party Logistics (3PL) services.
But how do you choose an operator? Many factors come into play. Location, range of services offered, specialization in terms of assortment, integration capabilities, price offerings. Or, finally, as in one eCommerce project I ran, the possible pace of starting operations.
You can make a long list of reasons. All the mentioned formal factors for choosing an operator deserve their own post. However, what is most often not mentioned?
Real cooperation with logistics operator
Rarely people talk about the approach presented by the operator. About the way his team works and the definition of where his responsibility ends and begins.
Of course, a well-constructed contract for logistics services includes a section describing the guaranteed level of service. However, the contract is written for the bad times and then it is usually too late from business point of view.
In addition, it is impossible to identify all possible problem situations. We simply don’t know all of them before they occur, as I found out myself in the mentioned project.
The implementation time, less than 6 weeks, required compromises in the amount and scope of the tests conducted. There was also not enough time to test all the product master data.
As a result, a discrepancy between the description of one product in the offer and its unit of measure in the operator’s warehouse system came out as soon as orders began to be processed.
It was only thanks to the warehouse manager, who asked himself why anyone would buy one item out of a pair, that several hundred misplaced orders did not come out on the first day.
His reaction confirmed that I had made a good operator choice. After all, according to the contract, they could simply process the orders as they appeared in the WMS system. The contract clearly stated that the customer team was responsible for the accuracy of the data.
How to know it advance?
It is in such situations it comes out who is a business partner and who is merely a service provider who does not care about the reputation of his own client.
In relationships with logistics operators, I value only those who present the first approach. In the long run, only such relationships create value. But how do you know in advance, before you sign a contract, who takes this partnership approach and who does not?
You won’t find out from industry rankings such as the TSL Ranking (probably the best logistics companies ranking in Central Europe, conducted for 25 years already). The ranking itself is helpful in assessing an operator’s standing. However, it is based solely on financial data.
Cooperation with a logistics operator is not only about finances. Even if it is good to know whether the considered operator has a stable position in the market, the success of the project may be determined by its “soft” competencies. How to check them? Personally, I know of two ways.
First, more comprehensive events in which cooperation with a logistics operator is evaluated by its own customers.
In the Central European, such plebiscite has recently started under the Logistics Awards brand. It is an initiative of Logistics Manager Magazine, in which the evaluation of a company is determined by:
- open voting on the plebiscite platform
- surveys filled out by partners and customers
One of the 14 categories in which logistics companies are judged is ‘Logistics Services Outsourcing’ which is exactly what I am writing about today.
The mere submission of an operator to this type of plebiscite indicates a certain level of confidence in its services. After all, it is always possible not to be selected. No one guarantees that customers, whether current or former, will send their vote to the competition.
Finally, the oldest and often most valuable method of gathering information about business partners – a phone call to a friend. But what to do when none of your friends has worked with the operator you are considering?
Then you need to step outside your comfort zone and expand your circle of friends. Look for new contacts in the logistics community. Whether through conferences or industry trade shows.
Unfortunately, this is not a quick way to build knowledge about what cooperation with a logistics operator. All this takes time because, at least in Central Europe, there is still no single forum that would integrate the logistics community.
Personally, I am thinking about how to change this. Soon maybe something will come out of it. But for now, if you need to talk about the operator of your choice, you can always start by asking me.
Preferably through the tab – contact – visible at the top of the page.
Where else you can get logistics know-how?
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