The complexity of shipping and supply chain management requires adaptability from your business and your 3PL freight broker as well, which in turn needs to be born of insight and understanding. Where does this come from? Shipping businesses have an obligation to monitor the inner workings of their operations to ensure that everything runs smoothly, and this due diligence must extend to their 3PL partners. Knowing how to manage 3PL performance stems from knowing how to measure 3PL performance, and the insights gleaned from those 3PL KPIs should be revisited regularly to make sure everything runs as it should.
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Managing 3PL Performance
3PL performance isn’t just smart business management. It is also about managing relationships and expectations to ensure that everything is equitable and above-board.
- Designate points of contact between both companies. This limits the potential of confusion and complications while also improving accountability.
- Set clear expectations on both sides, choosing proper metrics and KPIs to ensure that they’re met; more on this in a moment.
- Set aside time for formal performance reviews; these should be done annually at a bare minimum, but it can be useful to set up other times that account for changes in seasonal demand.
- Design communication and escalation processes to address any bumps in the road.
So how do you know if your management processes are effective? Don’t guess. Measure.
Measuring 3PL Performance with 3PL KPIs
Earlier, we mentioned the necessity of metrics and 3PL KPIs to measure results and contract compliance. Managing 3PL performance relies in turn on measuring 3PL performance; those measurements give vital insight into what’s working, what’s not, and what needs fine-tuning. The items you track may include, but need not be limited to:
- Check for comprehensive shipping insurance in the appropriate categories, such as auto, general, and cargo.
- Ensure that all safety and compliance rules are being followed.
- Make sure that your partners’ bonding is valid and up to date.
- Check for membership in TIA and other trade organizations.
- Make sure that all contracts have been executed to the letter.
- Check credit ratings to make sure that end carriers have been paid properly for their services.
- Measure performance against any agreed-upon cost reduction goals.
- Pay close attention to business fundamentals like fuel surcharge management.
- Track processes to ensure that pickups and deliveries are on time.
- Check for errors in tracking and any possible communication problems.
- Monitor customer reviews and other social signals to see how your partners are perceived by their customers, and to identify any shortcomings that may have slipped through the cracks.
If a carrier does not measure up, it should be replaced. This can seem awkward, but it’s worth remembering that this is business, not personal; your partners’ poor performance doesn’t simply reflect poorly on you, it can significantly damage your customer relationships and your business alike.
Expert Assistance For Your 3PL Challenges
Able Transport Solutions manages the supply chain needs for manufacturing, heavy equipment, and several other verticals throughout the United States. From heavy haul and flatbed trucking to expedited shipping in the Lower 48 and more, we help businesses meet their toughest logistics challenges while exceeding their own, and their customers’, expectations. Get in touch today for a consultation!