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Route to Market & Supply Chain Blog

FMCG 3PLP partnerships: A happy marriage? Avoid divorce.

Posted by Dave Jordan on Thu, Nov 01, 2012

Marriage is quite a project, isn’t it? You take a look at what is on the market and get to know a few possibilities. You may search for a long time to find the right partner who will sweep you off your feet and eventually carry you over the threshold of your first house. That could be a long way into the future as there are the inevitable set-backs and mismatches, e.g. she likes One Direction and you like Motorhead.

As relationships develop there are investments in drinks, dinner, after-pub snacks, cinema tickets and possibly “test” holidays. This is when you see the inevitable reality of the toilet seat being continually left up or the New York skyline of cosmetics blocking out the light from the bathroom window. Get through that and the family interrogation and you might actually make a choice of partner, get engaged and plan to marry.

Here is where the money starts to flow. Payment s for the church, flowers, cars, the wedding breakfast, the evening disco plus the cost of cleaning your car after your “mates” treated it to a shaving foam respray. You are making a huge personal and financial commitment on this project so let’s hope the partnership lasts as divorce is equally expensive and causes untold disruption.

Finding a logistics 3PLP is quite a project isn’t it? You see what is in the market and how well they are doing; who has capacity, capability in your sector, eg FMCG and the best credentials. When you have a short list you operate a tender process so all candidates have an equal and fair chance to become your preferred partner.

You make a selection and celebrate with drinks and dinner with the parents; sorry I mean senior 3PLP partners and then jointly plan the transfer of responsibilities to the new 3PLP provider. The new relationship gets off to a flying start but in many cases sooner or later the “toilet seat” effect arises. The 3PLP is not performing as well as you expected and your business is suffering.

Do you

  A) Immediately stop the contract and find someone else?
  B) Find a way forward to jointly improve performance?
  C) Do it yourself?

C is certainly a possibility to consider but after you have sent so much time and effort finding the partner and then getting to know each other you really should avoid the discontinuity a 3PLP change brings.

  1. Talk to each other at the right operational and senior levels.
  2. If you do not have a Service Level Agreement (SLA) within the contract, construct one.
  3. If you have an SLA are the correct KPI parameters being measured? Are expectations clear?
  4. Agree very clear improvement targets and timelines and monitor progress frequently.

The key requirement here is to have an SLA agreed before you start collaboration. Without this vital pre-nup you may end up flushing away a huge amount of time and money.

Getting to Grips with 3PLPs in CEE

Tags: Route to Market, Logistics Service Provider, Dave Jordan, Performance Improvement, Supply Chain, CEE, Logistics Management, RTM Assessment Tool, Outsourcing

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