Executive Briefings

Global Logistics: Customers Demand Stronger 3PL Service Support

Analyst Insight: Any 3PL that wishes to increase its market share in 2010 must provide higher levels of customer-focused service offerings in this competitive marketplace. Client companies want to have their 3PL contract partners provide better support to their current service offerings.

Most companies are asking for better service levels because their customers in turn are demanding better, faster and cheaper delivery options. By providing the additional support requested, 3PLs are becoming more competitive and are thus seen as valuable service partners.

There are a few value-added service offerings 3PLs are being asked to provide as part of their service-level agreements.

• Extend cut-off times to later in the day - Some order cut-off times are as early as 1 p.m., which means at best only orders received in the morning will ship the same day. Customers are now demanding that their 3PLs work with freight forwarders to move cut-off times farther out to the close of the business day and even into later evening hours.
• Fewer delivery errors - Companies today want fewer delivery errors and are even requesting that 3PLs pay a penalty fee on shipping errors.  Monthly KPI tracking reports can now have a real cost associated with unacceptable service performance.
• More direct involvement in establishing and running call center support teams - Especially in the international arena, companies want 3PLs to assist not just in handling the order-taking tasks but to be their customer's first point of contact on any follow-up issues.  These can then be funneled to the proper company contacts.
• Better inventory control in managing a company's product availability and shelf-life concerns - A good 3PL can use its WMS programs to provide companies with current data on proper inventory levels, and, more importantly, show the trending analysis to support purchasing decisions.
• Maintaining U.S. government reports and regulations - Regulations like Sarbanes-Oxley and the "Denied Persons List" are becoming a required service from 3PLs. They must provide the knowledge base needed to support their clients' mandated regulatory concerns.

The Outlook

There is no shortage of value-added service tasks 3PLs will be asked to provide in 2010. Companies will request further support if they feel the job can be outsourced and it fits the 3PL's core service competencies. The more proactive 3PLs will lead the pack by offering new support ideas to their clients before it becomes a formal business requirement.

Most companies are asking for better service levels because their customers in turn are demanding better, faster and cheaper delivery options. By providing the additional support requested, 3PLs are becoming more competitive and are thus seen as valuable service partners.

There are a few value-added service offerings 3PLs are being asked to provide as part of their service-level agreements.

• Extend cut-off times to later in the day - Some order cut-off times are as early as 1 p.m., which means at best only orders received in the morning will ship the same day. Customers are now demanding that their 3PLs work with freight forwarders to move cut-off times farther out to the close of the business day and even into later evening hours.
• Fewer delivery errors - Companies today want fewer delivery errors and are even requesting that 3PLs pay a penalty fee on shipping errors.  Monthly KPI tracking reports can now have a real cost associated with unacceptable service performance.
• More direct involvement in establishing and running call center support teams - Especially in the international arena, companies want 3PLs to assist not just in handling the order-taking tasks but to be their customer's first point of contact on any follow-up issues.  These can then be funneled to the proper company contacts.
• Better inventory control in managing a company's product availability and shelf-life concerns - A good 3PL can use its WMS programs to provide companies with current data on proper inventory levels, and, more importantly, show the trending analysis to support purchasing decisions.
• Maintaining U.S. government reports and regulations - Regulations like Sarbanes-Oxley and the "Denied Persons List" are becoming a required service from 3PLs. They must provide the knowledge base needed to support their clients' mandated regulatory concerns.

The Outlook

There is no shortage of value-added service tasks 3PLs will be asked to provide in 2010. Companies will request further support if they feel the job can be outsourced and it fits the 3PL's core service competencies. The more proactive 3PLs will lead the pack by offering new support ideas to their clients before it becomes a formal business requirement.