The 5 Key Components to Consider When Selecting Your Logistics Partner
What determines your best choice for a logistics partner?
Is it their reputation? Their safety rating? What makes your logistics partner stand out from the competition? Factors such as reputation, safety record and pricing warrant serious consideration, but what key components need to be analyzed to determine the best solution – one that is economical, safe and meets all the service standards for your project?
There are a number of different factors to consider as you determine your logistics partnership strategy. A logistics partner should consider the “big picture” of what a customer needs and wants, not just how to get from point A to point B. With a thorough investigation, consideration of special needs and insight into your overall business strategy, your logistics partner should then present a mutually-developed logistics network solution design, based on what is best and most beneficial for you, their customer.
This solution should encompass the following key components, both for the success of the project and to accurately determine the optimal balance between service and cost. Once you have this information, you can determine if this logistic partner is providing you the best solution to meet your needs.
Labor is one of the most important, yet costly portions of a customer’s full price breakdown. When providing a logistics solution, the ability to have well-trained drivers and staff who are expert advisors and have a clean safety record is critical.
As you talk with your logistics company about their labor force, take the following points into consideration.
- Is there a high turnover of drivers at their business? And if so, can they give you an acceptable reason as to why that is?
- What’s the driver and staff safety record? Does it meet, or exceed national standards, and more importantly, does it meet the standards for your business and the job that you would like them to do?
- What policies and procedures are in place for the drivers? Are the drivers and support staff aware of these policies and expectations of their performance?
- Is there an outstanding training and orientation process for drivers, both initially and ongoing?
When a logistics company employs highly trained, professional staff, labor costs can be higher. Work closely with your logistics partner to determine the most cost-effective option for labor depending on the needs of your project.
One of the reasons that suppliers work with a dedicated fleet solution is because they do not have, nor do they choose, to invest in hauling equipment of their own. This makes good business sense for some, as purchasing trucks, trailers, fuel, etc. can be quite costly. As a result, a logistics companies’ equipment needs to be factored into the pricing of the logistics solution.
When it comes to equipment, talk with your logistics partner about the following points:
- Do they have the right equipment available to meet your needs?
- If not, can they work closely with specific equipment manufacturers in the industry to develop or modify equipment design to meet your needs?
- Is the equipment designed with the latest safety features, including onboard computers and GreenRoad technology?
- Are their trucks and trailers capable of providing the most efficient fuel economy that’s available?
As you discuss equipment options and solutions for your logistics needs, it’s imperative that your logistics partner understands and has available the equipment solutions that will make you successful; and in turn provide the most efficient performance for your project requirements.
The cost of fuel is usually one of the biggest expenses in the pricing puzzle next to labor costs. Typically, the logistics company works closely with the shipper/customer to determine the fuel surcharge – the rate at which a customer or carrier will pay for fuel depending on where fuel price lands on a given week.
Even though the market determines how much fuel costs, it’s important for shippers and carriers to develop a specific plan when it comes to fuel surcharges – including the base rate, surcharge rate, and the pricing impact of fuel price fluctuation – and then follow that plan. That way this seemingly uncontrollable part of pricing becomes more manageable.
These first three key components of a logistics strategy are fairly standard within the industry. So what makes a logistics company stand out? What are the engineering systems and overall logistics support team strategy solutions that can place them above the competition? The next two components can literally make or break your business with regard to a logistics solution.
The trucking and logistics business has come a long way from a simple phone call to see who might be available to haul the next load. The technology by which a logistics solution can be developed is critical. The following should be considered when selecting a logistics partner.
- Is your logistics company using high level resource utilization software that can design the best option to solve your logistics problem?
- Does the technology provide productivity monitoring, real-time driver and customer communication, and consistent product status updates?
The ability for your logistics company to effectively communicate the overall status of your product is vital to the success of your business, and should be based on your specific product needs or requirements. Clear communication and a solid partnership, combined with a state-of-the-art logistics engineering system that maximizes the data to determine the best result, can put you a step ahead of your competition.
Management and Support
While the “nuts and bolts” of a logistics project can be easy to see and price out, it’s equally as important to speak with your potential logistics partner about the overall support you will receive from the management and support teams within the organization. A well-rounded, experienced support leadership team should provide resources, communicate best practices, and be available whenever needed. More importantly, they should challenge the status quo to provide the best results for their customers and always be looking for ways to improve and provide unique and innovative solutions.
Through completely engaging with customers, this support team can look for opportunities to improve customers’ results. Customer service,customer and driver relations are only a part of this piece; quarterly reviews with the customer and coordinating “tweaks” to the system deliver real-time feedback that can continuously improve your overall logistics plan.
When you consider all of the above factors that determine your best choice for a logistics partner, it’s clear that a sophisticated, expert logistics company is the best partner to help you determine the needs of your business. The back-and-forth discussion and conversation to design the best logistics network warrants a professional group of engineers, logistics specialists and expert drivers to deliver the best results.