When it comes time to choose a supply chain services provider, you’ll find yourself with a number of questions to be answered. From service level agreements to supply chain pricing formulation, you’re likely to have a laundry list of criteria for each provider to fulfill before you can create a shortlist. Continue reading How to Evaluate a Provider’s Supply Chain Pricing
Following a full review of what to ask potential 3PL (thid-party logistics) providers, we resume our #3PLQuestions series today with a look at why you should discuss the possibility of operational bottlenecks.
Logistics professionals work at the real world intersection of simultaneously avoiding disruptions to established plans and making plans for them.
A sound supply chain strategy incorporates not only the most robust, efficient plan to deliver goods and services, but also hires those flexible enough to adjust activities when that plan falls apart.
For business owners, the latter quality can be easy to overlook when choosing a 3PL service. Every provider can tell you what they can offer when everything runs perfectly, but often their answer to what happens when things go wrong is more telling of the relationship your business will have with them.
What to Ask Your 3PL About Operational Bottlenecks
The more specific you get about your own business, the better the answer you’ll receive from a prospective 3PL provider.
Draw up some scenarios that have occurred in the past (or that your managers live in fear of happening in the future!) Present the scenario(s) to your provider, then sit back and let them answer.
While situations specific to your business are best, these are some more general examples you could include in your questions:
- A large order needs to be picked and shipped on much shorter notice than our standard agreement (define a time period relevant to your industry); what will you do for us?
- A product recall requires us to bring items back into stock from various stages of the fulfillment process. How do you assist us with the planning?
- Our product gets rolled from a scheduled shipment at its origin point of manufacture. What alternative arrangements can you suggest to ensure meets the original delivery schedule?
- A labor dispute is rumored at a location that is key to our supply chain. How do you help us explore alternative routes and when do we make the decision to implement them?
Pose as many of these situation questions to your 3PL as you require to get a feel for their ability to plan on the fly.
If you struggle with specific situations, try to at least focus on hypothetical scenarios that apply to your industry. The more general the question, the more vague an answer can be, so it pays to put some thought into your interview to give your potential provider an opportunity to deliver a satisfactory answer.
Aim for the Best, Plan for the Worst
If possible, also add a worst case scenario to your interview questions. Make this something extremely unlikely but which will test the hypothetical resources of even the most experienced logistics professional.
What you’re looking for in worst-case scenario planning is the ability to understand and mitigate the risk to your business. Disasters are largely unavoidable and rarely the fault of the 3PL, but they should have an intimate understanding of the threat to your company and a feel for the priority actions that will help minimize the impact to your operations.
Finally, ensure that the level of experience and expertise in those you interview is present in the team that will be handling your business.
In tighter operations this is less of a challenge, as specialist knowledge runs deep and decision makers are more readily accessible. But in more expansive organizations, even with a wealth of resources and experts that answer your interview questions, you’ll need a team that you trust can deliver on those alternative plans.
By getting these specific questions out in the open early on, you give both parties a better idea as to what to expect from the business relationship. Hopefully these worst case challenges never come up, but if they do you’ll feel safer in the hands of a 3PL who knows your industry and has a passion to serve your customers.
Earlier this month we recommended eight questions to ask a potential 3PL when you decide to outsource some or all of your supply chain operations.
As some of those questions warranted a deeper dive, we’ll be looking more closely at the considerations to make and what to listen for when you ask them.
Today we look at services or processes specifically designed for your business and why it’s wise to ask your 3PL for some custom logistics solutions.
The Benefits of a Custom Logistics Solution
As we said in the previous post, it’s vital that your supply chain partners give you the confidence that comes from understanding your industry. More importantly, you need them to have a good handle on your business itself and the inevitable quirks that come with your order fulfillment process.
A good logistics partner who knows how you work will be able to make suitable recommendations about supply chain improvements that better serve your customers. This could be anything from consolidating a variety of processes into one unified shipping solution, to improved packaging practices that reduce damage potential and customer complaints.
Some of the advantages of probing for these custom logistics solutions include:
- Cost reduction from driving out supply chain inefficiencies.
- Open your eyes to new technology solutions which may be commonplace to your 3PL but that you hadn’t considered (or even heard of!)
- You flag any potential misunderstandings about how your existing business processes work before you’re up and running, at which point they’re more costly to resolve.
- Closer integration with your logistics provider by “learning on the job” and making incremental improvements on the fly.
- Greater business trust between both parties, as you have confidence that they improve your operations and the aforementioned integration gives your 3PL a significant stake in your success.
Know Your Limits
The original question, “what custom service can you recommend for my business?” also helps both parties to understand any limitations that your logistics partnership will throw up.
Discussions around customization tend to dig into the details of what can and can’t be done. If you’re making a decision to outsource for the first time, this could throw up some show stopper issues. If you’re in the middle of a relationship, the question still has value in drawing out the limitations of your current provider.
Even simple misunderstandings about what is possible can lead to expensive disagreements further down the line, so it’s always better to get on the same page as your suppliers as soon as you can.
If you have any more questions about how custom logistics can help your business, we’re happy to help!