Managing your 3PL relationship

For any organisation that has decided to outsource their Warehousing and route to market requirements to a 3PL, how you decide on how to work together will have a significant impact on the overall success of the venture.  Needs range from simple warehousing & transportation management to complex integrated systems and solutions.  Here are what we believe the key factors to success in managing your relationship with a 3PL partner.

Understanding each others operation.
For any partnership to truly work, it is imperative that both parties understand each other operations, its capabilities, constraints, needs and aspirations.  This allows for more effective solutions to be found.

Establishment of clear & consistent ex1pectations
The relationship needs to be a partnership that is open and honest.  As the client, you will need to define what is and what is not acceptable performance (using KPI’s).  Performance should be reviewed regularly & in a timely fashion.  At the outset, set out expectations clearly, particular focus should be placed on how issues are resolved.  Setting out your expectations early in the relationship will help ensure that you & your 3PL partner can effectively monitor your performance leading to success.

Points of contact
A common mistake made, is that some organisations have too many points of contact which can lead to confusion.  Someone senior enough within the organisation needs to take the lead role, to deal with supply chain issues & challenges at a global / holistic level.  This person should be able to make business defining decisions and to be able to hold the 3PL to task where and if necessary.

Other points of contact need to be in place and formally agreed; operational, transport, warehouse, accounts and a customers service point of contact, all with their respective 3PL counterparts.

Establishing an escalation procedure
Nipping issues in the bud in a timely fashion will more often than not help prevent a crisis.  In any supply chain, issues range from local customer demands & cost control to global influences & unforeseen occurrences.  It is imperative that from the start of any strategic 3PL partnership, both sides need to establish and agree what the escalation process looks like and how it will work.  This will help to ensure that any issues from either partner can & will be resolved timely and effectively.

It is good practice to keep a log of issues & outcomes, this will allow both partners to keep on top of performance & expectations.  This should be reviewed regularly as part of the formal review process.

Formal review Process
Scheduling a formal review process whether Monthly, bi-monthly or whatever, is useful to ensure that both partners can compare KPI’s and performance.  Where applicable action plans can be agreed upon to move forward & resolve issues.  It is also an ideal forum for re-aligning expectations as well as sharing information / ideas about how to maintain and further the relationship.

It is good practice to ensure that these reviews are agenda’d, minute’d & outcomes / actions / feedback are distributed to the core team in a timely manner.

Keeping each other in the information loop
Since this needs to be a partnership, ensure that you both communicate any changes or new developments within your organisation, will only help the smooth flow of products to the end consumer.  Yjis could range from anything to do with NPD, Forecasts, engineering work, promotional activity, year end dates, etc etc.  This works both ways.

This information could be part of the formal review, it may also be weekly / monthly data sets communicated between the partners.  It could be captured as agenda points on a weekly operational catch up, the point being, don’t give each other surprises that should have easily been foreseen.

As Bob Hoskins said in the early 80’s, its good to talk.



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