There are some third-party engagements where integration is not necessary - contracts limited to warehouse labor management would be one example. But in the vast majority of cases, data and system integration is critical to success, says Knott.

"Integration is vital when doing some of these more involved projects," he says. "There are standard EDI or XML formats used in the industry to exchange information back and forth and these require integration." Unfortunately, this is usually not as simple as it sounds. "Oftentimes, even within those formats the data is not used as it should be," Knott says. "To make integration work, you have to dig down into the details and do the appropriate mapping between the two companies."

The issue of integration should first be addressed during the RFP process, he says. A lot can be learned about what will be required during these initial stages, but the real work begins after the contract is signed. "At Ryder, we have a very specific process where people from operations, engineering, IT and finance all sit down together with their counterparts in the customer's company to go through the requirements necessary to do the technical integration," he says.

"You have to sit down IT person to IT person, engineer to engineer, operator to operator, to really understand the process that is going to be put in place and the data that needs to be exchanged," says Knott. Like any IT project, data integration needs good project management, good requirements gathering, appropriate testing and flawless implementation to make it all work correctly, he says. "In the end it boils down to just another IT project, but it is absolutely crucial to have the correct associations between provider and client."

It also is important for outsourcing companies to remember that, even when this work is complete, they must stay involved. "We have seen clients who think that outsourcing means the contracted business is no longer their responsibility," he says. "That is really not the way it works." Clients need to manage their 3PL with effective collaboration and communication, he says. "There are always changes that have to be managed and communicated. Doing this well is what will leads to a successful project."

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