Finding The Right Partner

Take the time to do a thorough and accurate job when evaluating potential logistics providers.

Most companies, he adds, can start by going to knowledgeable resources for suggestions and recommendations, including their competitors, industry consultants and associations.

"I think if a company takes this approach to qualifying potential providers, it shouldn't perhaps even need to send out a preliminary RFI. But if it does, when it comes time to send out the actual RFP, it shouldn't go to more than three to four potential providers, who've already been qualified through the RFI or some other investigation." This more targeted approach can not only save considerable effort, but may actually result in better decisions.

"Having too much data to sort through can actually distract from the review and selection process," Cook notes.

Ray Smith, facilities and quality systems director for United Sugars Corp., Edina, MN, which deals with an extensive network of 3PL warehouses and transfer stations, says his initial round of information gathering typically involves word of mouth, such as recommendations from other 3PLs it already works with, if they don't have a location in the area. He may also visit providers' websites to glean information, or make some phone calls to potential candidates to check on a few basic requirements or request some other preliminary information from them.

"We know that our first priority is to find a food grade warehouse. We want a partner who has experience in handling, transporting and storing food, because that's going to enter into their mindset and culture," says Smith.

Secondly he screens for a few basic, necessary capabilities, "such as can they do both truck and rail and what kind of capacity they have. Are they already working at 85 percent, so that they're quite full, with just room to squeeze us in, or are they at 50 percent, with room left for us to grow with them?"

Some other qualifications that may go into the initial prescreening, according to representatives of several 3PLs, include:

  • Has the company done this specific kind of work before? And how much experience has it had in this sector?
  • Depth of management;
  • Financial strength;
  • Longevity of the management team, as well as the stability of the entire organization.

Once an initial pool of candidates has been whittled down to the true contenders-those companies with the necessary basic capabilities and other key qualities, comes the third stage, when things start to get serious.

For Smith, this means "really spending time up front with the provider, finding out what kinds of systems and processes they have in place and whether these are a good match for us."

TLC's Melville calls this step, "looking under the hood."

"You want to go in and do an inspection of some of their existing operations or capabilities, as well as check with some references."

In further narrowing down the pool, Cook adds, a prospective client might want to look at items such as what quality programs a 3PL has in place, what continuous improvement programs they have and their ISO certification.

Kerry suggests also digging into their training systems, personnel, and technology infrastructure.

"Also, what is their history of being in business? Are they really committed to this industry? Have they managed to grow their organization through different market cycles? You should also check out their industry credentials. How are they recognized by industry associations that may rank companies on performance, integrity, pay practices, etc."

Measured Success

Among the factors to look at in this closer stage are key performance indicators. What kind of measurements do they have?

"Most customers probably want a monthly report card from their 3PL, detailing how they are doing according to certain key performance indicators. A good 3PL will have that information readily available and will want to share it with potential customers," Saddle Creek's Cook comments.

For freight brokerage specifically, the arena in which TQL operates, common KPIs to be examined would include on-time performance and loss and damage claims, Byrne notes.

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