Logistics and supply chain operations are subject to constant disruption. Never mind how COVID-19 ravaged supply, demand and delivery expectations. Unanticipated events — from natural disasters to social unrest to labor stoppages — happen all the time. A report released by the Business Continuity Institute in 2018, well before the current pandemic, found that 56% of companies had experienced at least one supply chain disruption during the prior year, while 60% dealt with between five and 10 disruptions over the last two years.
In an age that demands quick and precise delivery, many shippers aren’t fully aware of the expertise required to get the right product to the right customer at the right time. Until that is, something goes wrong, and the logistics provider either can — or cannot — fix the problem.
Applying the right set of logistics services to a given situation isn’t just about ensuring smooth sailing; it’s about remedying problems as they arise. Leading logistics providers have the processes in place to do just that. And, most importantly, they have the people with the experience and the attitude to fix the inevitable debacles.
Take the time a food vendor was moving a truckload of fresh beef from Texas to Florida. Unbeknownst to the driver, the brake lines on the trailer locked up, and the tractor dragged the trailer until its entire contents caught fire. With the trailer engulfed in flames, the shipment of beef was a total loss. Quips Mo Shearer, senior sales executive at Trinity Logistics, Inc.: “The state troopers who responded to the call said it was the best-smelling road fire in the history of Florida.”
Or the time a snowstorm prevented parcel carriers from picking up any e-commerce shipments from a warehouse on a Monday, usually the busiest shipping day for direct-to-consumer sellers. “We called customers and told them that no one was picking up, so there would be delays,” says Megan Caruso, senior account executive at Burris Logistics, “but we also set the stage for how we were going to fix it.”
Or the time a major retailer was transitioning from homegrown information technology to an off-the-shelf system while also expanding internationally. The company hired a consultant to provide installation and transition services, but “that relationship didn’t end well,” recalls Nick Falk, Burris’s senior vice president for business development and solution design, who was working for that retailer at the time. The retailer in question ended up with a 20-year supply of a single product, clogging its warehouses and supply chain. “We were able to get the product into the country and the distribution centers, but unable to flow them out to stores,” says Falk. “We were sitting on tons of inventory.” Falk’s lesson from the debacle: “Sometimes the lowest-cost service provider isn’t the one to get you the results that you need in the long term.”
Each of these problems and their solutions suggest attributes that shippers should look for when choosing a 3PL. In the case of the barbecued beef, Shearer called the customer to let it know what happened and ascertain the next available truckload of beef that could be put on the road. “The load may have ended up being a couple of days late,” he says, “but it got to Florida before there were any mishaps with their customers’ orders.”
When she dealt with weather-related delays, Caruso made up for the lack of Monday pickups by scheduling longer shifts later in the week and into the weekend. “We usually avoid weekend shifts,” she says, “but it was important to get those parcels to their destinations. Communication with customers was key to getting parcels where they needed to go without the end-user having a bad experience.”
Falk’s experience with an information systems debacle taught him the importance of having I.T. expertise directly at hand. “It’s possible to configure or modify off-the-shelf systems,” he says, “but it’s a long and arduous process. When a customer needs I.T. support for a particular process, you need the technology expertise in-house if it’s going to be done right.”
All three of these incidents offer shippers important lessons in their quest for 3PLs that can deal smoothly and successfully with everyday supply chain hiccups. They include:
Choose a full-service provider. When it comes to dealing with the inevitable debacles that plague logistics, relying on a 3PL that’s a one-trick pony just won’t do. If a truckload of product gets delayed, sometimes it needs to be delivered by other means, such as an expedited service.
“There are lots of different ways of getting things moved, such as truckload, rail and air, depending on requirements,” says Shearer. “3PLs need to have solutions in place, and they need to be able to apply them proactively.”
For an effective 3PL, devising plans for getting goods to their destination cost-effectively and efficiently is a daily task. And when problems arise, adds Shearer, “they need to have alternatives available to make sure the shipments get where they’re supposed to be on time.”
3PLs further need the expertise to walk customers through the claims process to ensure they’re made whole after an incident like the beef truck fire. “Many shippers don’t even know the first step to starting a claim for cargo loss,” says Shearer. “That’s where full service comes into play. The customer needs to be reassured they’ll be covered, even in case of a total loss.”
Choose a customer-focused provider. Some 3PLs are happy to take one-off loads from shippers, while others look to form long-term relationships. It’s a good idea to examine a 3PL’s customer turnover rate to indicate whether it’s willing to take all comers or is more selective in choosing with whom it does business. Selectivity means that the 3PL seeks engagements in which it can add true value.
“Adding value means focusing on helping customers grow their businesses,” says Falk. “Customer-focused 3PLs look for win-win solutions that enable shippers to expand their books of business, and allow the 3PL to be part of that.”
Not surprisingly, when it comes to customer focus, the human factor is the most important differentiator among service providers. “3PLs need to put themselves in the shoes of the owner of the freight,” says Shearer.
Customer-focused 3PLs hire for “personal character and cultural fit,” says Falk. In addition, they look to train staff in the technical aspects of the business. 3PLs are, after all, in the service business, so their number-one focus in the hiring process should be on the prospective employee’s “intrinsic desire to be of service to the customer. These people regard their biggest measure of success in how they can create success for other people.” Part and parcel of customer focus involves being honest and candid with those being served. Shearer believes it’s a good idea for 3PLs, when onboarding new customers, “to prepare them for anything that might happen,” because something inevitably does. “No provider can truthfully say that nothing will ever go wrong,” he says.
The open communications channels that this attitude fosters are essential for solving problems when disaster strikes. Shearer says 3PLs need to reach out to their customers, let them know what happened, and discuss the next steps. “You always have to have a plan in place.”
Leading customer-focused 3PLs have established recovery teams whose job and expertise it is to provide solutions to problems as they arise in real time. “Then when they get hit with something,” says Falk, “the overall caring attitude comes into play.”
“3PLs put out a lot of fires,” says Caruso, “but it all comes down to communications. When issues pop up, active communications with customers are important in figuring out the best way to solve them.”
Customer-focused 3PLs strive to integrate their personnel into the operations of their customers. “Quarterly business reviews are fine,” says Falk, “but it’s important for the customer to know that someone is always just a call away.
“It’s a huge advantage to have logistics team members embedded with customers,” he adds. “Customers need to know that there are formalized processes in place to deal with problems and that there’s someone to call or text to get the help that they need.”
For customer-focused 3PLs, the ultimate measure of success is “when their customers are in constant touch with ideas and questions about how they can improve their businesses.”
Choose a provider with I.T. expertise. 3PLs are increasingly morphing into technology companies, providing customers with information services almost as much as they do the physical movement and storage of goods. That’s why leading providers “have a long history of creating I.T. systems that are strong, robust and redundant,” says Falk. They boast engineering teams that are able to create personalized solutions for customers. “Sometimes they help customers with problems they may not even know they have,” he says.
That’s especially true for shippers of perishable goods, where conditions in the transportation and storage processes need to be maintained and monitored in order to protect the integrity of the product, as well as comply with regulatory requirements. Shippers of perishables often must deal with first-in-first-out requirements, so tools that support those processes need to be developed by 3PLs and incorporated into enterprise systems. The same goes for tracking and tracing.
“Delays can impact the shelf life of perishable products,” notes Shearer. “It’s not the same as managing a truckload of lumber or auto parts. These items are going on people’s tables, and the last thing you want to do is jeopardize somebody’s health because the temperature of a load was off.”
Leading 3PLs often provide online portals where customers create their own profiles and take care of all kinds of business, from getting shipment location updates to accessing data on the conditions of perishable goods and viewing the status of invoices. If a customer needs a specific kind of automated tool — for example, one that would make product inspection more efficient and less costly — the 3PL’s I.T. staff should be in a position to develop one for them.
I.T. experts also need to be able to make changes to systems in accordance with customer needs. “They should provide a better response than off-the-shelf systems,” Falk says. Hurricanes and fires may rage, snowstorms may shut down roads, drivers may quit in the middle of their runs. But by seeking out and choosing the right third-party logistics provider — one with a full menu of services, a customer-centric model and strong information-technology capabilities — shippers can overcome these problems and do much more: they can promote efficiencies in their businesses and grow their top and bottom lines.
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