Third-party logistics (3PLs) has evolved significantly in the past few decades and they are no longer limited to transportation and warehousing. It now encompasses outsourcing everything, right from supply chain management to offering managerial and technological support to budding companies.
Companies use a 3PLprovider as it cuts current and future costs, enhances customer satisfaction, reduces risk, and provides global expertise. After selecting a 3PL that meets your organizational requirements, you must also find ways to manage it effectively. However, if you are having issues with 3PL management, here are the three key areas where you could be going wrong.
Practicing good contracting practices follows a balanced approach where the shipper and the 3PL are satisfied with the contractual arrangements. Here are some contract-related issues that may dilute the effectiveness of your 3PL management approach:
Different companies have different metrics for measuring performance. Identifying these key performance indicators (KPI) is generally a collaborative process.
Your company may experience problems if the KPIs are not clearly defined in the service level agreement. 3PLs should be made aware of your data collection channels and the formula for performance calculation. Quite often, 3PL software can take charge of this aspect and introduce automation in the processes.
Here are a few category-wise KPI examples:
Depending on the above KPIs, companies can create a scorecard that will help measure performance against the SLA terms, and subsequent penalties/incentives can be defined. This reward and punishment system does a great job of fixing performance measurement issues.
3PL management is all about good governance so that either party feels heard. It ensures consistency, transparency, and flexibility in all operations. Companies may make use of 3PL software, which offers a perfect balance of accountability with independence.
To overcome issues related to governance, companies can define a structure regarding how 3PLs and organizational executives must work together. These channels of interaction must be communicated to the 3PL so that they get an overview of your business structure. Managing special requirements and external concerns according to industry standards must also be worked out through a collaborative technique.
From the above, it becomes clear that reliable 3PL software is potent to take care of several 3PL management issues, ranging from performance management to governance. Employing a 3PL software like GetFarEye allows the partners to focus on the outcomes rather than staying fixated on the transactions. Further, it optimizes the business pricing model to give a fair standing for the shipper and the 3PL.
Most importantly, it establishes a collaborative channel that does away with red-tapism and any other roadblocks and facilitates a seamless flow of data.
FarEye is empowering businesses across the globe to optimize logistics operations, reduce costs and drastically shrink delivery turn-around-time. Signup for a quick demo here to understand how we can help your business enhance core logistics processes.