This is a guest blog post from Adrian Chen, an Advisory Board Member (APAC) on the The International Supply Chain Education Alliance, originating from a LinkedIn Discussion regarding the difference between 3rd party logistics companies vs 4PLs.
Using the 5Cs Principle when Selecting Outsourced Providers Such as 3rd Party Logistics
Now & then, all of us require a “higher approach” to effectively source vendors or suppliers, pre-qualify & moving forward to test-trial samples and/or services, negotiate T&Cs; and then the grand finale – implement, execute, manage, and monitor the laid-down processes, KPIs & KRAs. That’s a lot of “considerations and confusions” in-between until the vendor’s finally on-boarded in the system. Typically more so when we need to source & select external 3rd party logistics vendors, & then dissect the levels of service or capability presented.
I do hit a brick wall with a resounding “smack!” very often…not because I don’t know what to do, but because “I don’t know if I’d started off on a journey to arrive at the intended destination”. Until this very day, when such circumstance occurs, I go back to the “starting line or the basics” & lean heavily on the 5Cs principle as my presiding guide to ensure I have mapped my internal commitments thoroughly beforehand. Now, before I dive straight into the “deep-end” of the pool and submerge myself in the technicalities & heightened negotiations to engage any 3rd party logistics vendors, I ask myself the simplest of all questions => is what I’m about to procure for the organization fall within the accepted guidelines of the 5Cs?
- Charter – The corporate mission & the authoritative requirement for the need to contract external 3rd party logistics services, with support & drive from the highest management echelon to all operations globally.
- Collaboration – Engaged co-operation across multiple functional divisions and/or business units in managing a seamless end-to-end supply chain up until fulfillment & delivery to the customer.
- Communication – Essential cross-management of info-data across multiple functional divisions and/or business units to inculcate maximized costs efficiency in the supply chain & associated OPEX (operating expense) involved in efficient fulfillment.
- Commitment – To be precise, with consistent quality results from the supply chain processes and methods – achieving fulfillment & delivery par excellence, cross-borders and globally.
- Customer – Solid & ethical commercial partnerships with the channels and/or distributors, and/or the global end-consumers alike.
The 5Cs Principle provides that confidence when I’m comfortably fitting the puzzle in the massive & intricate labyrinth of how, who, when, where, and why I should source & to engage an exponentially capable 3rd party logistics vendors for my organization’s supply chain. I know the exceptional benefits that such external services provision would effectively contribute, heighten & highlight the value-streams I’d mapped internally.
Nothing means more than driving a smooth through-put, beginning from the front-end up until the back-end of the supply chain itself. But when added components from external 3rd party logistics vendors are in consideration, I need to ask myself again & again (a few more times, perhaps) as to the sub-areas within the back-end of the chain that would be broken out and required to be managed externally. I want to retain that “invisible driver’s seat control” effect. I can’t imagine having my perfectly manufactured SKU getting lost somewhere in-transit, and/or having to stay till the wee hours of the morning to lead & conduct warehouse-to-warehouse, gateway-to-gateway, and/or DC-to-DC searches. We do need adequate controls, almost flawless services provision, undeniable quality-driven processes & systems; & with no argument from the floor – concrete assurances in meeting 100% performance expectations, as per the agreed SoWs in the contracted SLAs.
But…before I make THAT final step, I fall back on the 5Cs as my “decision-making security blanket” not only when sourcing 3rd party logistics vendors, but in several decision making scenarios. Hopefully, the fog would clear & the mist blows over, for me to see thru the external services provided by the valued 3rd party logistics “partners” (not vendors any longer) bring value-add in my “almost” seamless and “almost” perfect supply chain ultimately.