It’s fair to say that complex market conditions are having a significant impact on the roles and responsibilities of supply chain professionals. Indeed, it’s been a tumultuous few years for supply chain professionals–from warehouse managers to logistics specialists–whose organizations have increased pressure on them to protect their financial health and reputation despite colossal global supply chain challenges.
Of course, the talent shortage that’s left an indelible mark on almost every facet of business has compounded these challenges. Which is why we’re seeing more businesses turn to third-party logistics (3PL) at a record-breaking pace. And while there’s tremendous value in leveraging the services of 3PL providers, from storing and warehousing items to transporting and shipping, it’s also one of the most important relationships an ecommerce business or retailer will own.
At Anvyl, we’re passionate about optimizing 3PL relationships. We believe that it’s essential that these relationships are managed with the utmost care and with a focus on maximizing efficiency. Why? Because we understand that the quality of these relationships often contributes to you getting what you want, when you need it, and consequently, being able to fulfill your customers’ orders.
With that in mind, we’ve put together this guide to help supply chain professionals maximize success by creating more transparent and collaborative 3PL relationships. First, though, let’s take a look at why this type of synergy is so important.
The Value of Great 3PL Relationships
We know that there’s a lot of advantages to collaborating with a 3PL provider. Indeed, working with a third-party logistics partner can enable organizations to focus on their core competencies, reduce costs, and improve the overall efficiency of their supply chain–benefits that are growing increasingly valuable as a rocky economy continues to batter businesses and, in particular, the state of their global supply chain.
In fact, when Anvyl surveyed 400+ business owners and C-suite executives to study the impact of persistent supply chain issues on their financial health, 60% reported losing up to 15% or more in revenue to supply chain delays. Furthermore, a quarter admitted that they’re worried about their organization’s supply chain strategies and processes for the year ahead.
And while an experienced 3PL partner might not be able to eliminate the risk of delays and other challenges, they can certainly reduce their threat while instilling confidence in companies’ supply chain operations. But maintaining a positive and collaborative relationship with your 3PL partner is integral to achieving this success. So how do we foster these connections?
How To Optimize Your 3PL Relationships
Define Your Roles & Responsibilities: An important first step when establishing a strong 3PL relationship is defining the roles and responsibilities of both parties within the logistics process. This clarity can help to prevent misunderstandings, reduce the likelihood of errors or delays, and ultimately improve the overall effectiveness of the supply chain. Moreover, it increases accountability for both the brand and their 3PL partner. This is because each party knows what they are responsible for and can be held accountable for meeting their obligations, ultimately maximizing performance.
Set Clear Expectations: Similarly, it’s vital that brands and their 3PL partners come together to set clear expectations for their relationship. This includes agreeing on key performance indicators (KPIs) and service-level agreements (SLAs) upfront. This enables both parties to continuously measure performance and make adjustments where necessary.
Streamline Open Communication: Opening up regular–and transparent–lines of communication with your 3PL providers is crucial for a successful relationship. Something we’ve seen is too much of a reliance on outdated communication methods like email, phone, and even spreadsheets. Sure, these channels have their use. But the unpredictability of the global supply chain today warrants more streamlined methods.
It’s much more efficient to keep your communications together in one place, like on an order management platform that allows easy collaboration with your suppliers. Doing this can help facilitate deeper conversations with your 3PL partners that are also traceable. Modernizing your communications channels also helps facilitate more regular check-ins, allows you and your 3PLs to share data and information more quickly, and address any issues that arise in a timely manner. Of course, this type of collaborative communication also helps to build mutual trust–a critical element in any relationship.
Conduct Regular Audits: Audits aren't just for suppliers. Brands should conduct regular audits on their 3PL partners too–especially in a landscape as cut-throat as today’s, and as economic uncertainty and supply chain issues continue to ramp up the pressure on businesses.
Audits are vital for partnerships that want to work together to continuously improve the logistics process. This is because they enable parties to identify areas for improvement and implement changes to optimize the process. Moreover, they allow organizations to identify potential risk areas before they become a major issue in their logistics process, something that can have a huge impact on a brand’s reputation and customer satisfaction. Indeed, although it might seem counterintuitive, 3PL audits can build stronger relationships and a more reliable supply chain.
Investing In The Right Technology Stack
A positive to come from an increasingly complex supply chain is the innovation it’s inspired. Brands now have access to a wide variety of solutions that help create transparency and collaboration in logistics operations. We already talked about the value that order management platforms can bring to improve collaboration with suppliers, but they also solve a host of other pain points like document management and data analysis.
In fact, order management platforms automate these tasks which frees up supply chain managers and professionals to focus on the jobs that need more of a human touch. And when a brand and their 3PL partner integrates with an intelligent PO platform, they both can track shipments, monitor performance, and share data in real-time.
Additionally, this innovation surge has also inspired technology providers, like Anvyl and Extensiv, to partner up so their customers can seamlessly deploy and enjoy both technologies’ benefits. These integrations essentially empower your supply chain technology to collaborate for you, enabling you to make more intelligent and informed decisions about your supply chain strategy including your 3PL relationships.
Indeed, investing in the right technology stack is integral to creating more collaborative and transparent 3PL relationships. And when you’re able to do this, it becomes much easier to drive your business forward and accelerate growth, no matter the economic circumstances.