Working With a 3PL: Why Transparency is Key
A modern 3PL—or third party logistics provider for those not familiar with the acronym—can make a powerful positive impact on your business when combined with a sophisticated transportation management system (TMS) that gives you a competitive edge when it comes to meeting customer satisfaction. They can help you better understand the complexities of forming a successful transportation network that allows you to see continued success amongst the ever-growing demand of the current consumer population. And can help you proactively handle issues that arise before they become out of control or lead to significant internal or external damages.
But that kind of beneficial partnership isn’t possible without transparency. So today’s 3PLs need to be ready to bare all to their business partners.
Traditional 3PLs Just Don’t Work Anymore
Previous solutions for managing transportation networks put too much separation between 3PLs and the businesses they helped support. They took a more hands off approach to managing the transportation of a company’s freight by relying mostly on securing a low cost for shipment instead of helping businesses see the larger—and equally as significant—picture. And it wasn’t difficult to do. Most businesses will take great care to keep their costs as low as possible, including trusting their transportation to low-cost shippers if no other information indicates that they shouldn’t.
However, focusing on price alone leaves a lot of room for potential shipping issues. From a reputation for damaged shipments to lack of reporting, low-cost shippers can end up causing more headaches for businesses than the cost savings are worth. But without a transparent 3PL, a business may have no idea these issues even exist—until they’re saddled with unhappy customers or damaged goods. And pretty soon any cost savings they received will have been wiped away by the cost to fix these problems.
Plus, traditional, non-transparent 3PLs may have been less than forthcoming about shipping rate contracts, leaving you to wonder whether you were truly getting the lowest cost. This meant that businesses had to blindly trust their 3PL instead of working with them to agree to contracts that were in their best interest right now and in the future.
How Transparent 3PLs Help Businesses
Fortunately, modern 3PLs fully understand that there’s more to a successful transportation network than keeping costs low, although that’s still a significant piece of the puzzle. They make sure to look at the different aspects of a reliable shipper—from cost to reputation to reporting capabilities and delivery times—to make sure that businesses are fully aware of the good (and the bad) of working with a specific shipping partner.
For example, a business that needs to ship fragile items across the country will want to know that the lowest cost shipper also has the highest percentage of damaged shipments of all available carriers. This would tell the business that the potential risk for unsuccessful shipments outweighs the reward of cost savings.
Modern 3PLs and TMS software are a definite step-up from traditional systems that had a tendency to treat each business as though their supply chains operated in the same way—despite vast differences in industry, product and customer base. This led to limitations in resources and support a 3PL could provide. Today’s TMS software, on the other hand, is versatile and can be adapted to meet the unique needs of individual businesses by working concurrently with other systems and providing them with data that is specifically valuable to them.
So armed with a transparent 3PL and integrated TMS a business will have greater access to data that gives them valuable insights into their supply chain that leads to new strategies for continued growth and optimization. Real time data from shippers like current location, weather conditions, driver speed, the temperature inside the box and more ensures a business has greater control over their shipments and holds carriers accountable for their freight. This gives them leverage when selecting carriers and maintaining mutually beneficial relationships with them.
And some 3PLs, like LTX Solutions, go the extra mile to ensure that nothing is left undisclosed to their business partners by giving them full ownership of contracts with the carriers. This allows them to not only actively negotiate their rates but also gives them the authority to deem a contract unworthy of consideration or of continuation. By owning carrier contracts they can feel confident that they are getting what they need out of their transportation relationships.
Don’t let your business get bogged down by a traditional 3PL. Instead, embrace the modern, transparent 3PL and reap the benefits of having a full understanding of your transportation network.