Logistics is a critical aspect of any business because it helps companies achieve better productivity and lower costs. In general, this service is often outsourced to third-party logistics or 3PL. Partnering with a 3PL allows your business to be efficient in order management, deliveries, and return queries and processes.
To maximize the benefits of working with a 3PL vendor, both parties need to set clear expectations from the start. Here are six ways to help improve your 3PL management.
1. Use A Reliable Software
Since technology has become a priority in today’s world, it’s important to understand the software that your logistics partner will use. Your partner should manage inventory, operations, and delivery with a high-end 3PL system.
A complete software solution with all the necessary customization can assist in a unified logistics operation and real-time analysis. In addition, for 3PL management, the software you use is crucial in order to monitor every operation, track every activity, and overcome related challenges.
2. Communicate Regularly
Communication is probably one of the most critical elements for successful 3PL management.
By establishing proper communications between partners, you can ensure transparency in all operations. It’s significant to communicate with your 3PL provider regularly on a weekly or even daily basis, depending on the level of urgency.
Setting up meeting schedules and consistently following up on operational timelines will lead to a successful 3PL partnership and management. This allows you to guarantee progress and alignment towards the objectives set.
To have effective communication, it’s advised that you have a dedicated staff to handle the entire communication channels between you and your partner.
3. Share Data
Most businesses outsourcing a 3PL is reluctant to share data. While you shouldn’t share all of your data with your 3PL partner, refusing to share the necessary data to operate can result in poor partnership. Providing all the necessary data and trusting your 3PL partner to use it to offer the best service will give rise to optimum operations.
Thus, all operations and other related business data should be shared with your partner, which will let your 3PL partner perform a detailed analysis. The more your logistics provider studies and understands all the transactions, processes, workflows, and metrics of your business, the more they can create a customized and better solution at the right cost for your business operations.
Besides, you want to make sure that your 3PL partner has the necessary cybersecurity measures in place to protect your data against cybercrimes.
4. Measure What Matters
While working with a 3PL partner, there are numerous factors to be measured and reported to create productive partnerships and operations.
You will have to create a concentrated set of KPIs and measure only what matters most and focuses on objective achievement. The KPIs should break down your business’ goals into a granular form. Communicate and build ways on how you can work together with your partner to reach a certain benchmark.
Some of the most important KPIs you need include the following:
- Customer service satisfaction rate
- Quality control and quality assurance
- Cost-reduction goals
- Turnaround time
- On-time percentages
- Order and shipping accuracy
- Return rate
In addition, you should always keep an eye on your logistics KPIs and review them from time to time, depending on real-time issues and changing needs.
5. Share Resources
Your business’ resources should be proactively managed and shared with your 3PL provider. Having the appropriate access to your business’ resources can better equip your partner to deliver the best services. Not only that but also assigning the essential functions that are better handled by your 3PL provider can help achieve excellent results and enhance relationships.
Moreover, larger mutual goals can be accomplished easily if your 3PL provider is allocated the appropriate resources, as long as they are working with you and not for you.
6. Set Up Escalation Procedures
Mistakes and errors happen. Something can go wrong, especially when processing large amounts of products. Whether it’s a mistake for process returns or a drop in KPI percentage, how can you manage such instances?
Set up an escalation procedure. Whatever the case may be, having a backup plan is a practical move.
Contact your 3PL partner and discuss their risk management and troubleshooting procedure when something goes wrong and set up procedures to deal with issues. This will help prevent the smallest accident from becoming a full-blown crisis that can cost not only your business but also your 3PL provider.
The above tips will help you improve the overall management and experience between your business and your 3PL partner. And following the right approach of management will allow both parties to reach higher profits.