Outsourcing Logistics Philosophy
From the beginning of any relationship, outsourcing logistics to a provider should always start with a customer-centric and a solutions standpoint. Unfortunately, the mention of freight logistics and third party logistics at times conjures up negative connotations. An outsourced logistics provider should have the philosophy of continually looking for ways to add value, offer solutions, and always advocate for the customer; otherwise how could the relationship work in the long term and thus continue to increase the ROI of the establishment of the business relationship? Every business decision made on your behalf by the outsourced logistics provider should also focus on decreasing risk and foster long-term sustainability. Additionally, shortcuts are not the answer, but typically, the quickest way to future lost revenue. If it’s not a long-term solution in which all parties involved benefit long-term, don’t do it. This philosophy allows you the customer and the logistics service provider to build a reputation as a company who is committed not only to you, and by the transitive property, your customers, but shows the logistics providers commitment to increasing the positive reputation of the industry. This philosophy then permeates to every part of theirs and your business, and thus, a core value of continuous improvement to diminish inefficiencies, make smarter business decisions, have a long term relationship, and feel good about your decision to outsource your logistics to a provider.
6 Tenets Based in Customer Service & Solutions for the Key To Success in an Outsourced Business Relationship
- Transparent Communication and Collaboration: When it comes to all entities in your logistics ecosystem, (customers, carriers, business partners stakeholders, vendors, suppliers) when outsourcing logistics, service providers must set proper expectations of what they provide. Expect and demand open communication to troubleshoot issues, allowing for the creation of sustainable solutions.
- Provide Solutions, Not More Problems: If you see reactionary changes, watch out! The logistics service provider shouldn’t make changes if it’s not a long-term solution. The worst thing for to hear is, “Why did you make this change? It was already working so well!” Don’t fix what isn’t broken, unless it provides a road map to increased productivity and bottom-line savings.
- Shared Goal & Initiative Alignment: A good outsourced logistics provider aligns their goals with your goals. Then there needs to be a phase where the logistics provider clearly states those goals to each party in the ecosystem, which usually allows everyone, after getting on the same page with those goals, to accomplish goals more efficiently.
- Continuous Process Improvement: A logistics service provider shouldn’t stop a getting the contract signed, or even after implementation. The provider should work intimately with you to eliminate wastes within your logistics department to provide better service to you which in turn will increase your customer service and business process efficiency. This allows you to stay strong in all aspects of your business. When outsourcing logistics, these continuous process improvements should always try and track towards the KPIs established from the onset of the relationship in order to always track towards an expected ROI.
- Create Long-Lasting Relationships: The more the outsourced logistics provider knows about your business and freight management needs, the more hard and soft costs savings they will uncover. Additionally, with tenured employees the provider won’t waste time having to replace your dedicated customer service rep and get them up to speed. There is a lot to be said about legacy knowledge.
- Advocate for their Customers: In logistics, such as in ground transportation when shipping LTL or TL freight which requires working with motor carriers, if you don’t have happy carriers, it’s hard to negotiate rates which benefit you. It’s a fine dance a logistics provider must understand well when negotiating rates in order to get the best rates for each of your locations, lanes, and loads. This idea of advocating for the customer when the logistics provider is working on your behalf, should hold true in all aspects of logistics.
If you are not currently outsourcing logistics, the above tenets would still hold true in your logistics department. Typically, hiring an outsourced logistics provider, if they hold true the above tenets as well, will yield the ROI you expect. What tenets would you add are important for keys to success in a logistics department or in an outsourced relationship? Let us know in the comments below!