Chain of Thought

Identify Your 3PL Pain Threshold

One of the most unstable elements in a marriage is control. Too much of it kills spontaneity but too little leads to financial and emotional chaos. The same can be said of a business marriage—as in your relationships with logistics service providers.

I just got back from the business equivalent of a marriage encounter, in which logistics service providers met with clients to learn more about how they can make their relationships more successful. It was the 10th Annual North American 3PL Summit and CSCO Forum, sponsored by eyefortransport and held in downtown Chicago at the Radisson Blu Aqua Hotel.

One of the best takeaways I can offer you from this meeting is a 10-symptom list of ailments that will help you assess the health of your own relationship with logistics service providers. These come courtesy of Kate Vitasek, author, educator and founder of Supply Chain Visions, a supply chain management consulting firm. She is also the founder, faculty and lead researcher in the concept of Vested Outsourcing, which was developed in conjunction with the University of Tennessee.

Here are those symptoms. Ask yourself to what degree you may be feeling them:

1. Penny Wise and Pound Foolish: This is where you do what you can to save a nickel in your relationship but landed costs go up rather than down. In other words, you won't get a payback for considering price without calculating value.

2. The Outsourcing Paradox: You hire experts so you can offload your logistics functions, but then you tell them how to do the work. This not only leads to a really fat statement-of-work document, but it relieves the service provider of accountability.

3. The Activity Trap: This is transaction-based pricing for activities, and if used without consideration for underlying needs, could actually be the equivalent of putting a band-aid on festering symptoms.

4. The Junkyard Dog Factor: This is the equivalent of a client jealously guarding “the way we've always done it!”

5. The Honeymoon Effect: This is the belief that, although satisfied with your current provider, the next one will be better.

6. Sandbagging: You ask for 3% year-over-year savings from a provider who may know how to save you 10%--but won't try because they'll come out looking better by meeting your lower expectations without having to make a greater effort.

7. The Zero Sum Game: The old idea that the opportunity pie never grows. It forsakes the win/win mentality for win/lose.

8. Driving Blind Disease: This is where you don't establish enough metrics by which to judge performance.

9.Measurement Minutia: You establish too many metrics. Five is about the optimum for most, but the trend seems to be going to “extreme measurement” because today's labor management systems put them out there.

10. The Power of Not Doing: Rather than fixing a problem you mask the symptoms. To me, that's the equivalent of whistling while going past a graveyard so you won't be intimidated by what's buried there.

How many symptoms can you identify with? Hope the pain isn't reaching your threshold. If it is, don't let your partner carry you over it. Work with them on building room for a win/win.

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