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Route to Market & Supply Chain Blog

Logistics: Working With 3rd Party Logistics Providers (3PLPs) in CEE

Posted by Dave Jordan on Wed, May 05, 2010

If you have outsourced your logistics operation to a 3rd party logistics provider (3PLP) in CEE and you have any of the following problems:

  •  Unexplained stock losses  
  •  Poor communication
  •  Delivery delays
  •  Inefficiency
  •  Cost increases
  •  Picking errors
  •  Complaints
  •  Unsafe practices
  •  Poor customer service...









"Hold on" I hear Producer Supply Chain and Logistic Directors shout, "surely it is the other way around?"

The vast majority of 3PLPs are wholly unprepared for what they are tasked to do. During a tender process you are not going to hear the 3PLP admit to any short-comings or potential problems. They want your business and will do almost anything to get it. Their approach is very short term and focused only on securing the contract and not on how they are actually going to execute the day to day operational requirements.

Producers make assumptions that big-name 3PLP candidates know how to be a reliable partner. Of course they understand the KPI's and the cost targets in the tender but few know how they are going to achieve these standards until it is too late. By the time the Producer realises what a mess their logistics is in they are between the devil and the deep blue sea. Do they change providers and suffer the enormous business discontinuity or do they stumble on accepting the poor service on offer? Most soldier on slowly but surely destroying customer relationships and profits.

3rd Party Logistics Service ProvidersSo what do you do to avoid this scenario? You need a Project Manager leading your team and this must be someone steeped in warehousing and logistics knowledge. Such a role is not a place for a fresh-faced but promising junior manager; that's not fair. Nor is it a role for anyone expected to hold a line job at the same time; that doesn't work. Consider hiring an expert logistician to fill this vital role.

Do not assume the 3PLP will have the required skills and experience in place. These people are running the sharp end of your business so also make it your business to know the key people involved. Check and reassure yourself on the profiles and career records of your key partners or you will find the 3PLP is staffed with "bright young things" and even worse, family members!

Plan the transition well in advance and resist the temptation to over promise on deadlines. Position the change in an off season or one with traditionally slow sales to take some pressure off your own and the 3PLP teams. The change will not be perfect so prepare your customers and offer them the chance to temporarily raise stock levels. You could offer the extra stock on extended terms or even consignment to keep the customer sweet.

Lastly, ensure your own internal team and peers are aligned behind the objectives, plans and timelines. Sales and Marketing colleagues will rarely pass up the chance to have a bitch about supply so involve them in the decision making process about risks and contingency. You will be getting enough grief from your 3PLP and will not need unnecessary internal strife and politics.

Tags: Logistics Service Provider, Dave Jordan, KPI, CEE, Logistics Management

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