If you’re importing or exporting from New Zealand, you’ll need an organisation with a successful track record of working in relevant global trade lanes – ©123RF.com
Global trade lanes – what to consider when choosing a 3PL partner – By Andrew Antonopoulos
It’s never been so important to do your homework before selecting a third-party logistics (3PL) partner. That’s more relevant today than ever, given the complexities of modern logistics.
Global supply chains involve more participants, more routes and transportation options, and are bound by more complex trade agreements than ever before. All of this has created a veritable minefield for any logistics organisation.
Clearly, there’s a lot that can go wrong if you don’t choose a company that is progressive and forward-thinking. What’s needed is a company that has the vision to recognise that logistics is not what it once was.
New challenges are being created that need to be tackled in innovative ways, and companies need to be able to know what to look for to identify a 3PL provider that can tick all the boxes.
How not to do itSo what can go wrong? To begin with, too many companies put too much emphasis on finding a low-cost provider. You’re looking for a 3PL partner that can add value to your global supply chain, and cost is only one factor in that equation.
Even choosing the company that delivers the lowest quote doesn’t guarantee that they will be the cheapest. One of the biggest complaints for companies when choosing a 3PL provider is higher expenses than expected, which, combined with lower efficiency, means that the actual cost of the service can mount very quickly.
Regardless of that, choosing the cheapest provider can mean lower service level agreements (SLAs) and key performance indicators (KPIs) – not to mention increased error, all of which can directly affect the business through dissatisfied customers.
With so much that can go wrong, how do you select the best provider?
How to get it rightThe simple answer is research and hard data. Firstly, before even looking at the available options, companies must be clear about their needs and business objectives. Once you can agree these basic tenets with business stakeholders and decision-makers, then you can look at how they align with the strengths (and weaknesses) of various 3PL providers.
Based on that, you should be able to eliminate those candidates that don’t have the specialisms your business requires to get the most from its global supply chain.
If you can identify several companies within your tender list that look promising, the next step is to evaluate how they will perform based on your unique needs and operations. That means gathering evidence from every source available to you.
Examine reports on current freight logistics and costs in every aspect of operations, including costs per mile and hundredweight. Don’t forget to examine freight accounting and audit performance. Above all, don’t neglect financial stability. The last thing you want is your 3PL partner going under the day before a vital shipment!
Any inside knowledge you can access can be extremely useful. Look at existing partnerships for conflicts of interest and try to assess how they’re performing through third-party contacts in the industry. This should give you a very real measure of how the company does when it comes to real-life service delivery and customer care.
And of course, if you’re importing or exporting from New Zealand, you’ll need an organisation with a successful track record of working in relevant global trade lanes, as well as in-house customs clearance and related issues.
The importance of ITNever underestimate the importance of technology in global modern logistics. As touched upon in our opening paragraph, given the complexities involved with modern-day logistics, one of the key areas to focus on will be technology and IT.
With customers looking for fast, around-the-clock, real-time access to shipping data, the only way 3PL providers can offer this is through methodical application of the latest technology and state-of-the-art IT systems.
Not only will these types of reporting systems be useful for tracking shipments in real time and pre-empting issues before they happen, they will also play a central role when it comes to monitoring the KPIs and SLAs agreed with your chosen 3PL partner.
Be wary of firms that outsource their IT functions, as this can mean less flexibility (and sometimes a lengthy wait) when it comes to customising the aspects of certain operations or systems to meet the needs of new customers or procedures.
With the latest advances in logistics technologies, solid IT capabilities can deliver real value for the business in terms of competitiveness, customer service and potential for growth.
Fewer partners, more efficiencyMany 3PL providers specialise in specific areas, which means it can be tempting to take on more than one firm in order to meet all the organisation’s needs. However, having too many specialised partners can mean directing more time and money towards administration and problems managing disparate third parties. There’s also the increased possibility of error and communication breakdowns between different aspects of operations.
Instead, look for a company that can provide an integrated solution – one that can meet your warehousing, fulfilment, transportation and distribution needs. Theoretically, sourcing all your needs from one organisation should help keep your costs down also.
Furthermore, make sure any potential 3PL partner has the resources and capabilities to meet any plans your organisation has for the future when it comes to scalability, as well as being able to adapt to any rise and fall in demand, whether expected or not.
Committed to serviceWhile ensuring that all these fundamentals are in place provides the basis for selecting a quality 3PL provider to meet current and future needs, it’s important to try to assess the company’s commitment to quality and service, difficult as it may be.
Again, look at past records for evidence of how the provider met and dealt with specific challenges in order to deliver a consistently strong performance, along with the flexibility and willingness to go the extra mile for clients, when needed.
In an increasingly connected and complex world, the most innovative and tech-savvy 3PL providers are the ones that are going to give their clients the competitive edge by creating a more seamless global supply chain.
At a time when the entire world of logistics is rapidly evolving, technology will be the key that allows freight forwarders to identify the best trade routes and logistic solutions. In this new era, logistics is no longer simply about the flow of goods; it’s about the flow of information too.
Andrew Antonopoulos is the managing director of Rohlig New Zealand, a German-based family-owned company that provides logistics services for sea and air freight, plus project and contract logistics; for further information, visit www.rohlig.com