How to Manage Your 3PL Performance
You’ve got a lot on your plate. Shipping, warehouse operations, and customer service are just the beginning of what you do for your business. But if you don’t have a good relationship with your 3PL provider, it could be a serious problem—especially when it comes to managing performance. Here are some ways to ensure that your 3PL provider is doing its job:
Understand and define the elements of your 3PL performance
Understanding and defining the elements of your 3PL performance are essential to managing it. To begin, it’s important to identify the problem before you start solving it. The more clearly you define what your business needs from its 3PL partner, the easier it will be for them to deliver on that requirement.
It is also critical that you set goals before you start working with a new 3PL provider or renewing an existing partnership-and these goals should be specific enough so they can be measured objectively by third parties (such as customers). Don’t worry about what other people’s goals are when setting yours; instead focus on achieving results that matter most for your company’s success in order not only make those happen but also achieve them faster than ever before!
Monitor the 3PL’s performance and manage it on an ongoing basis
Before you can manage your 3PL performance, you need to define what “managing” means. This is an important step that many people skip over. In order to manage something effectively, you need to know what it is that you want to achieve and why.
If your goal is simply for the 3PL company’s trucks to show up on time every day, then that’s all well and good–but it isn’t really managing anything at all! You need a more specific goal in mind: if one of your main objectives is reducing freight costs by 10% year-over-year (YOY), then this gives us a much better idea of what we’re trying to accomplish with our 3PL provider(s).
Build a process for collecting information about your 3PL’s performance
You need a process for collecting information about your 3PL’s performance.
It can be as simple as asking for it and following up until you get what you need, or it can be more formalized with the use of tools such as surveys or dashboards. The important thing is that everyone involved in the process has access to the same data so they’re working from the same baseline when making decisions and taking action.
Review common problems with third party logistics providers
- 3PL’s are not always the best choice for all supply chains.
- 3PL’s are not always the best option for small companies, as they may not have enough volume to make it worthwhile for a 3PL provider to invest time and resources into providing them with services.
- If you need to control your own supply chain (for example, if you’re an OEM or distributor), then hiring a third party logistics company might seem like an unnecessary expense when compared to managing everything yourself.
Choose a trusted company
Choose a trusted company with experience in the industry, such as the reputable General Carrying. A good way to vet potential partners is by asking for references from their current customers (and getting those references). You can also ask about the company’s certifications. If possible, visit the company’s facilities and speak with its employees. Seeing where your products are stored and how they’re handled will give you more insight into how your shipments will be treated.
Establish and maintain an ongoing communication plan with your 3PL provider
You don’t want to be the one who is always asking for more information or data, but there are some times when you will need to do so. For example, if there’s a problem with one of your shipments that causes it not to arrive on time or at all (or if there’s any sort of issue), then it’s important that you know about this right away so that you can take action. You may also want regular updates on what’s going on with their operations so that nothing slips through the cracks; this includes new hires, changes in personnel and policy updates (like updated safety procedures).
The first step in the process of improving your 3PL performance is to define the problem. Before you can start solving it, you need to know what exactly needs fixing. Do you want to drive down costs? Increase productivity? Improve customer service?
What are your goals? Are they tangible and achievable within a certain timeframe (3-6 months), or do they seem out of reach at present but could be achieved over time if given enough resources and effort? You may find that it’s helpful to set both short-term goals–like cutting costs by 10% this month–and long-term ones–like reducing the time it takes for goods from point A to arrive at point B by 50%.
When you take the time to understand your 3PL’s performance and manage it effectively, you can improve your supply chain processes and increase customer satisfaction.