Executive Briefings

Strategic Alignment in 3PL Engagements

As with a marriage, the success of 3PL partnership is largely determined before the union is sealed, says Harry Drajpuch, CEO of Weber Logistics. Clarity about mutual expectations and the nature of the relationship, whether tactical or strategic, are issues that need to be thrashed out well in advance of any commitments.

"Companies need to do their homework, not just outwardly but inwardly," he says. "This means getting clear about what is it you are looking for, what type of partner will fit with you culturally and have ideas aligned with yours, and who will want to grow in areas where you want to grow." Making this internal assessment will limit the field of potential partners, he says. "Trying to commoditize this decision with a check list isn't going to get you where want to go, any more than it would enable you to successfully pick a spouse," he says.

The next step is to have a candid discussion with potential partners about profit margins, Drajpuch says. "This is something that is rarely discussed, but it is very important. As part of the selection process, you need to understand the financial health of your potential partner and the level of profit that you think is fair in regards to your relationship. Then you need to discuss what you will do with the profits you make on your business together − invest in new technologies and capabilities or offset higher costs to keep rates low, he says.

Finally, the parties need to agree on procedure to maintain constant communications that is not dependent on individuals, he says. "People come and go but the relationship between entities has to last."

To view video in its entirely, click here


Keywords: supply chain management, logistics services, logistics management, third party logistics, 3PL, 3PL partnerships, logistics partnerships

"Companies need to do their homework, not just outwardly but inwardly," he says. "This means getting clear about what is it you are looking for, what type of partner will fit with you culturally and have ideas aligned with yours, and who will want to grow in areas where you want to grow." Making this internal assessment will limit the field of potential partners, he says. "Trying to commoditize this decision with a check list isn't going to get you where want to go, any more than it would enable you to successfully pick a spouse," he says.

The next step is to have a candid discussion with potential partners about profit margins, Drajpuch says. "This is something that is rarely discussed, but it is very important. As part of the selection process, you need to understand the financial health of your potential partner and the level of profit that you think is fair in regards to your relationship. Then you need to discuss what you will do with the profits you make on your business together − invest in new technologies and capabilities or offset higher costs to keep rates low, he says.

Finally, the parties need to agree on procedure to maintain constant communications that is not dependent on individuals, he says. "People come and go but the relationship between entities has to last."

To view video in its entirely, click here


Keywords: supply chain management, logistics services, logistics management, third party logistics, 3PL, 3PL partnerships, logistics partnerships