3 Problems a Third Party Logistics Provider Can’t Solve For Your Business
Once you’ve decided to outsource your transportation and logistics to a third-party logistics provider (3PL), you’ll probably breathe a sigh of relief. Now that you’ve handed over the reins, the 3PL can start doing the heavy lifting.
The 3PL’s job is to take over supply chain management and leave you to running your own business. But any issues that existed within your business before you outsourced logistics to a 3PL will still be there once you outsource them – and they can actually get in the way of the 3PL doing its best work for your organization.
Think of this analogy: you’re planning to paint your house, but your family can’t settle on what color it wants. You decide to hire an outside painter, but the argument over the color choice still remains.
Here are the three pre-existing issues that a Third-Party Logistics Provider can’t solve for your business. We’ll show you how to overcome them before they become major problems.
An Organization Divided Against Itself
Unfortunately, politics and ambition can rear their ugly heads in any organization. If you’ve got battling departments or conflicts between executives, outsourcing your logistics to a 3PL won’t solve the problem.
You simply can’t expect a 3PL to become a negotiator or peacemaker for the factions within your company. It can, however, provide an objective viewpoint based on its years of experience.
You may not be able to resolve the office politics before entering into an agreement with a 3PL. However, you may be able to use the objective advice from the 3PL as a way of cutting through the internal arguments that may be being biased or colored by battling departments or headstrong personalities.
Problems with Your Customer Service Model
Just as your 3PL can’t mediate between different factions in your company, it also can’t provide a quick fix for problems you might have with your customer service model.
The customer service model you’ve chosen is part of your business processes, and the way you interact with customers is likely structured around that model. It’s unrealistic to expect that your 3PL will be able to make significant changes to improve how you do customer service.
And again, that’s not their task. The 3PL’s job is to offload your existing processes and methods so that you can get back to working on your core business.
If you already know there’s an issue with your customer service model, you owe it to yourself to try to address the problems before the 3PL comes on board. It may involve tightening up response times or changing the entire model from “low cost, low service” to “high-end, high-touch.” Remember, handing off an improved customer service model to the 3PL will likely mean lower costs for them and for you in the long run.
If you don’t know how your customer service model is doing, that’s an issue itself. Key performance indicators (KPIs) such as lifetime value and customer retention are the best way to perform routine checkups on the customer service part of your organization.
Lastly, if your company has existing enterprise-wide issues – such as problems with manufacturing control or MRP – outsourcing to a 3PL may not necessarily help.
An experienced, top-notch 3PL will have experience developing, procuring, and integrating supply chain information systems. On the other hand, your company will have to work with the 3PL to interface your systems with theirs to get everything working smoothly.
Again, it comes back to making preparations before you involve the 3PL. If you have integration or compatibility problems within your organization, they won’t get any better once the 3PL comes onto the scene. In fact, things may get worse, and it may take longer for the 3PL to get up to speed.
In summary, what you’ll get out of your relationship with a 3PL is what you’re able to put into it. A 3PL is a terrific way to save your organization time and money, while providing logistical and transportation services at a low capital cost with a great deal of flexibility.
That said, the 3PL must work within the confines of your people, your business processes, and integration with your existing systems. Any dysfunction or shortcomings that already exist within your firm won’t be fixed by the 3PL. However, you can use its objective analysis and advice as a tool to see your company from a different perspective.