Related to:
July 24 2006 05:46 PM

�Many of the recent articles on outsourced logistics hail it as the latest and greatest competitive weapon � and provided you work with the right provider, that�s exactly what it is,� says Michael Gardner, global chief operating officer of APL Logistics. �However, it�s important to note that any 3PL you work with is only 50% of the outsourcing equation. The success you yield depends just as much on what kind of partner you�re willing to be.�
To assess your partner potential, Gardner recommends asking yourself the following four questions. �The answers could save you a lot of time and money,� he notes, �because they�ll help you predict whether your company is ready to fully capitalize on the benefits a 3PL can bring to the table.�
Question #1: How defined are your logistics objectives?
 It�s not unusual for companies to have mixed feelings about what they expect from their logistics � or an outsourced logistics relationship. For example, one company department may feel like faster delivery is paramount, while another may feel like reducing costs is far more important.
�There are a lot of valid reasons to outsource, and it�s quite possible for your company to have more than one,� explains Gardner. �However, that doesn�t mean you can skip the hard work of getting everyone within your organization on the same outsourcing page.
�In order to find and work most effectively with the provider that�s right for you, you must have a true consensus of need. All of your key players must agree on what your business is trying to accomplish through its logistics. Just as important, they must agree on why you�re outsourcing � be it customer service, cost or core competency. Only then can you do the best job of choosing the right 3PL for your needs.�
Question #2: Do you know how your company�s logistics perform?
Companies frequently raise the bar when they outsource their logistics, asking for higher levels of performance from 3PLs than they previously experienced in-house. �I believe that companies should set more aggressive expectations for their 3PLs because we�re in business to excel at supply chain management,� says Gardner. �However, companies must temper those expectations with a firm dose of reality � and that means using a real-life baseline, not an imaginary benchmark that is unattainable.�
Before you outsource, it�s advisable to conduct an intensive analysis of your own logistics costs and service levels. That way, you�ll have a point of reference for setting goals and evaluating a 3PL�s performance.
Question #3: How supplier friendly are you?
Although every company must rely on outside services to some degree, some companies are clearly more capable of working with strategic outside providers than others.
�Your company�s past and current relationships with outside providers such as marketing companies offer some excellent clues about how well your 3PL relationship will work,� notes Gardner. �If those relationships have been fraught with conflict and misunderstanding, you can be relatively certain that your outsourced logistics relationship could have some bumpy times ahead � unless you take the time to figure out what�s caused problems in the past and take action to prevent history from repeating itself.�
Question #4: Is your company willing to open up?
Case studies of successful 3PL relationships frequently use terms like �open,� �honest� and �no holds barred� � with good reason. �One of the biggest reasons some outsourced logistics relationships fail to live up to their full potential is that companies are reluctant to trust their 3PLs with the knowledge and information they need to get the job done,� explains Gardner.
For example, if your company has experienced some customer service problems in the past due to its logistics, that�s something your provider needs to know. Ditto with issues such as packaging problems and manufacturing challenges.
�Once you decide to work with a 3PL, you need to dispense with �us and them� thinking and view that 3PL as a part of your company,� says Gardner. �An atmosphere of mutual respect usually offers the best results. And when you get right down to it, better results are what most companies want out of an outsourcing relationship.�
For more information, visit