Good business relationships with your third party supply chain and logistics partners are important for both personal and professional success. Careful relationship management with your outsourced logistics partners will improve productivity, avoid communication difficulties, and help ensure stability in your supply chains. Outsourcing will not automatically improve supply chain or 3PL e-commerce fulfilment by default; however, you can take some steps to ensure efficient use of a 3PL provider.
1) Clear Communication With 3PL
A common cause for a loss in productivity in the outsourced relationship is miscommunication. If there are issues with how orders are sent or received from your provider, it can lead to delays, ultimately affecting productivity. Ensure that everyone involved always has access to all the necessary information so they can make decisions accordingly. Clear communication is achieved in the following ways:
a) Define KPIs
KPIs are the key performance indicators that are set out in the contract with your supplier. The KPIs should be used to monitor whether or not there is a difference between what was expected and what was delivered, thus allowing for troubleshooting when things go wrong.
b) Follow Standard Operating Procedures (SOP)
An SOP is created by both parties involved during negotiations at the initial stages of outsourcing contracts. Both parties should follow the same guidelines and processes. This way, there will be no discrepancies in reporting and communication.
c) Hold Meetings/Conference Calls
Regular face to face or video meetings, or conference calls, allow both companies to come together on a regular basis and discuss any issues that could be affecting them negatively, thus leading to a loss in productivity and profit.
2) Monitor Performance
Some software programs can monitor a company's supply chain progress in real-time and improve collaboration between partners. These systems can also track the best practices for each 3PL provider through data analysis reports. The reports provide information such as how often orders arrive late or damaged goods. It is important to stay up to date with this information so there is room for improvement when necessary. Having identified and defined the KPIs to be used ensure that they are met or bettered and have some form of bonus-malus clause set into the contract to provide a reward – penalty (carrot and stick) against the achievements.
3) Collaborate To Support Each Other's Needs
Outsourced 3PL providers are subject to tremendous pressure. Therefore, supply chain collaboration is not an option but rather a necessity. To achieve effective collaboration, client companies need to be willing and available for communication with their logistics provider.
In this sense, "communication" does not mean just sharing data as much as possible about product specifications or inventory levels; but also creating opportunities for the two parties to work together on achieving common goals. For instance, if you have a special order coming up in the next few days that requires extra attention from your logistics provider, don't hesitate to ask them if they can accommodate it in advance!
There are several ways to build better relationships with your outsourced 3PL partners. Keep the lines of communication open, monitor performance and collaborate in a way that benefits both parties involved. By applying these three tips, you'll be on track towards achieving effective collaboration, which results in business growth. Click here to download our free Transport Planning & Optimisation guide or get in touch if you need help creating a personalised 3PL strategy to scale your business with.
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