In the beginning, logistics companies were rooted in building solutions. Solutions to problems manufacturers and shippers needed to outsource. These solutions were often transactional, operational and seasonal. The life span of the relationship between the 3PL and the shipper was short. As the industry matured, shippers reveled in the benefits of strategic relationships and skilled workforces. These forces dedicated themselves to continuous improvement and gained expertise through a familiarity with the product. Customers began to enjoy the security of this expertise and its resulting increased market share.
During the recession many 3PLs experienced some backslide to the days of the transactional relationship. Many shippers felt that they could contain costs through shorter contracts, and could use the highly competitive market to their advantage. This high-turnover habit means that many shippers have been missing out on the many benefits that a quality 3PL can offer. Outside of the obvious financial and procedural costs of annual RFPs and provider changes, there are more subtle costs associated with subscribing to a revolving door attitude. A relationship begun on such unstable ground can often go sour quickly due to lack of trust. Customers often feel the pinch of operational delays and failed relationships between the manufacturer the transactional logistics provider.
So, as the economy rebounds, how can you leverage your 3PL in a beneficial way? Consider a longer-term contract. Establish a relationship that will contain your costs by eliminating the cost of frequent provider changes. Allow the security of a long term contract to foster an environment that facilitates a dedicated and loyal workforce in a time when the logistics industry is experiencing a major talent crisis. Feel confident that you have quality warehouse space allocated to your operation during a warehousing space shortage. Know that the people managing it have your success as their number one goal, because that will in turn guarantee their own long-term success. Long-term contracts allow for agility in your supply chain, especially when inked with mature, experienced providers applying the latest technologies.