Why 3PL Relationships Are Fraught and How To Manage Them


In today’s competitive environment, having strong customer service relationships is critical. Learn why 3PL relationships are fraught- and how they can be managed when things go wrong.

Failure to Communicate

Communication is key to the growth of the partnership. The growth of the partnership depends on communication. When you go to a 3PL office, you want to be given information concisely.

As you go through the RFT process, you need to optimize services. This allows the bidding 3PLs to recognize the specific outcomes of logistics outsourcing. 

To start with, communication and clarity of goals and expectations are crucial. Ensure that you offer detailed information about your merchandise. Besides, ensure clients are aware so that prospective 3PL can fully view what you want.

Right from the first meeting, ensure that you outline very :

  • What are your goals and expectations?
  • How do you plan to assess the contract? 
  • The Key Performance Indicator that you plan to use

Be bold and clear about how you want the supply chain operation to be. Note that it is safe to include a draft contract during the contract finalizing process.

What should be added to the draft contract 

The draft contract should outline the following; 

  • How do you want to handle the partnership?
  • The major Key Performance Indicators that you want to be measured
  • The business targets that you want to meet

Also, you may want to think about some profit share or bonus mechanism to bargain into the contract. You want to set some most minor targets that you want to be fulfilled and the duration. If they fail to meet the goal, they will need to make changes. If you are happy with their work and see that they go above and beyond, it might be worth giving them some extra money.

Failure to Share Data

Another crucial issue is that retailers and businesses usually don’t share enough data. Poor communication between 3PLs and retailers means poor information sharing. The information about data available can either enhance or limit the service provided.

Look at it this way; you are going to the 3PL world to negotiate with a 3PL provider. One of the essential things to comprehend is what they will be storing, moving, and fulfilling. It would be best if you furnished them with:

  • A list of all the sizes, weights, quantities, and dimensions of your merchandise.
  • Precise product master that indicates the dimensions of all the cartons and pallets. It should also outline the number of items and their corresponding weights.

This detailed data is essential for the partnering 3PL to develop warehouse spaces. It will also help to pick openings in readiness for the beginning of the contract. The 3rd party logistics provider needs to know the number of pallets to be moved when it comes to cargoes. A 3PL provider needs it to determine if they will charge you by product weight or cube.

Failure to Share Enough Information on Operations

Quite often, retailers do not share adequate information about their operations. For instance, assembling and kitting, if needed, must be disclosed. Retailers often ignore this because of the cost attached.

This is a big problem because many resources, labor, and time are required to receive all the stocks. Arrange and assemble them, and sort out the different carriers. 

If retailers don’t reveal purchase details, 3rd party logistics companies won’t take it. Instead, they will review the price and ask for extra charges.

So, it is crucial that you lay all your cards on the table. Be sure to clarify the whole operation. This includes the complications and issues that might go wrong.

The benefits of accurate data can not be overemphasized. A 3PL provider cannot try to create a warehouse facility and work out the retailer’s needs.

Warehouse workers ought to know how many batches they are doing in a picking location. It is also crucial to see the number of lines to transport per order and the merchandise size.

How to rectify and have a tremendous 3PL relationship 

Retailers can experience a great relationship that is formed on transparency. It is about the readiness to share:

  • Up to date information 
  • Data about your merchandise 
  • Customer base information 

We are not saying the challenges are always from the retailers. Third-party logistics companies are sometimes to be blamed for substandard services.

Yet, the onus is also on the retailer to offer accurate and detailed information as fast as possible. But, a professional third-party logistics firm will ask a lot of questions. This happens if they notice an information gap.

Bottom Line 

It takes two willing and honest parties to make it work as a relationship. Retailers and logistics companies must lay their requirements. Compliance with rules and expectations is also a crucial consideration. This way, it is easy to track the success and know where the problem is sprouting from and how best to rectify it. Hopefully, this post has taught you why 3PL relationships are fraught.

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