When pet food company WellPet received the 2008 Supplier of the Year award from the Pet Industry Distributors Association, the company had a long list of people to thank. At the top was its third-party logistics provider, Scranton, Pa.-based Kane Is Able.

"Before we began working with Kane, we would not have been considered for this award," says Beth Wilson, WellPet's vice president of operations. "The work we've done with our 3PL has made a big difference in the customer service we provide to our distributors."

WellPet turned to Kane Is Able in 2004 to help improve service to its customers, the network of distributors who bring the Tewksbury, Mass.-based company's four pet food brands -- Wellness, Old Mother Hubbard, Holistic Select, and Eagle Pack -- to specialty pet retailers around the country. WellPet and Kane Is Able visited the operations teams at WellPet's distributors "to learn how we could improve our customer service by better understanding the distributors' warehouse strategies, how they handled WellPet products, and what they needed to service the pet stores most efficiently," Wilson explains. The Supplier of the Year award signals that these visits, and the service changes WellPet enacted as a result, paid off handsomely.

THE CUSTOMER SERVICE LOOP

WellPet and Kane Is Able's partnership exemplifies the importance of the "customer service supply chain" -- the idea that customer service is not a one-way street between logistics providers and shippers, but rather a group effort aimed at meeting and exceeding customer expectations for all players throughout the supply chain.

By providing reliable service, 3PLs play a key role in giving shippers the ability to provide stellar customer service to their customers. Indeed, 59 percent of shippers say that their use of 3PLs has a positive impact on customer service, according to the 2009 Third-Party Logistics Study, an annual report from the Georgia Institute of Technology.

Regardless of a shipper's distribution model -- whether customers are distributors or intermediaries who bring their products to market, or end consumers who buy their goods or services -- they often depend on upstream 3PL partners to make sure all parties in the downstream supply chain are taken care of. To be true supply chain partners, 3PLs must operate with a focus not only on their own customers, but also on their customers' customers.

"The best way to provide customer service for shippers is to understand their customers' pain points," says Mike Marlowe, vice president of customer development for Kane Is Able. "3PLs that can solve those pain points for them and for their customers will be successful."

WellPet's pain points included increasing warehouse efficiency and ensuring that orders to its distributors were filled accurately and received on time, without damage, so that distributors could fulfill their delivery promises to pet food retailers. Kane Is Able helped WellPet implement a variety of changes aimed at meeting those goals.

"We restructured our pallet configuration because we learned it wasn't efficient for our distributors, or for us," Wilson explains. "As a result, we can now store more product in our warehouses using the same amount of space, and we can cube out our trucks more effectively, which reduces costs."

WellPet's distributors benefitted, too. "Changing the pallet configuration allowed our distributors to utilize their space more efficiently and to cube out their racking," adds Curtis Mendes, logistics manager for WellPet.

With an eye toward improving distributor satisfaction, Kane Is Able also helped WellPet switch to a paperless, RF-enabled warehouse management system that cut errors and streamlined order processes to reduce order-to-shipment cycle time by 24 hours.

"These changes have been a win-win for all parties, extending service benefits all the way through our supply chain," Mendes notes.

Making sure that everyone in WellPet's supply chain benefits was part of Kane Is Able's goal from the outset. The company seeks to engage its shippers on a strategic level and sees effective customer service as a means to that end.

"All Kane Is Able employees are, to some extent, customer service representatives," Marlowe says. "Our ultimate goal is to become a partner to customers."

A STRATEGIC ASSET

That goal meshed well with WellPet's willingness to treat Kane Is Able as a strategic asset, sharing with the 3PL detailed information such as sales volumes and future sales projections, and plans for future corporate activities.

"We view Kane Is Able as an extension of our business," says Wilson. "Providing strategic information helps Kane understand our business so they can prepare to meet our future needs."

While divulging strategic business information to a third party is not always popular with corporate management, the willingness to treat 3PLs as true business partners and not merely vendors is crucial to helping shippers receive the customer service they need.

Taking the time and effort to ensure that providers understand your business and your customers is key to creating the successful shipper-3PL relationship that brings customer service excellence to the whole supply chain, says John Langley, professor of supply chain management at the Georgia Institute of Technology, and author of the Third-Party Logistics Study.

"When shippers and 3PLs create an open, strategic relationship, there is greater opportunity for the two companies to collaborate on the kind of service package they want to deliver," Langley explains.

Shippers understand the value these strategic relationships deliver to servicing customers and improving supply chain efficiency. Seventy-five percent of survey respondents say that a more strategic relationship with their 3PLs would reduce total landed and distributed costs, while nearly 60 percent indicate more strategic 3PL relationships would increase operational flexibility as well as cut capital and labor costs, and operational expenses.

"When shippers engage in a strategic relationship with a 3PL, the parties share effective dialogue and can resolve problems more quickly," Langley notes.

TALKING POINTS

Shippers continually cite effective and frequent communication with their 3PLs as keys to success in the customer service supply chain. But how best to achieve that goal?

Regular conference calls and face-to-face meetings has helped Biotta Inc., an organic fruit and vegetable juice producer in Carmel, Ind., forge a deep and communicative relationship with its 3PL, Indianapolis-based Langham Logistics Inc. Biotta points to this relationship as the catalyst for its customer service satisfaction.

"We talk with Langham regularly about our goals and how customers measure our performance," says Biotta CEO George Pappas. "We make sure we agree on our mutual needs, then we continually check in to make sure we are on target."

Biotta's customers -- the distributors who ship its juices to specialty natural and organic food retailers -- are demanding about orders being filled on time and complete, so Biotta depends on Langham to manage these demands on its behalf. By keeping in close communication with its 3PL, Pappas and his team know whether they are meeting their customers' fill rates, and what to tweak if they aren't.

"We have to be on the same page," Pappas says. "If Langham doesn't understand what metrics and services are important to our customers, how can they handle our business correctly?"

"For every shipper we work with, we clearly document roles, responsibilities, and expectations for both parties," says Cathy Langham, CEO of Langham. "Then we constantly review and evaluate what must be improved or changed to meet the needs of shippers and their customers."

Those clearly defined customer service solutions and processes for dealing with supply chain exceptions are what pharmaceutical giant Eli Lilly and Company (Lilly) sees as the keys to its strong relationship with Langham. The company's Elanco Animal Health division in Greenfield, Ind., depends on the 3PL to optimize its distribution network and handle transportation management.

"Langham listens to our requirements, and has tailored a solution that ensures our animal feed products are transported safely and securely," says Jonathan Brown, senior associate, procurement, Lilly.

Part of that solution was a procedure to quickly address and solve transportation issues. "Optimal transportation and logistics procedures are important to us, and should also be important to our logistics partners," Brown notes. He lauds Langham for adopting Lilly's approach to transportation management, which has helped solidify their relationship and provides data that allows the company to improve transactions throughout the supply chain.

"On the back end, Langham provides us with visibility to our materials in transit, and effective reporting that helps us enact more effective decisions and makes us a better shipper for our customers," Brown says.

PARTNERSHIPS GET PERSONAL

For engine and generator manufacturer Briggs & Stratton, peace of mind comes from knowing its 3PL, GENCO, has a team dedicated solely to its business. This factor provides the logistics base for Briggs & Stratton's strategic, customer-service focused partnership with GENCO. It also ensures that a human response meets every call to GENCO's customer service department.

"Anyone in our supply chain who needs to contact GENCO -- whether a supplier trying to coordinate a shipment, or a Briggs & Stratton employee seeking information -- always reaches a live body," says Doug Sowatsky, director of corporate logistics, transportation, and compliance for Briggs & Stratton, headquartered in Milwaukee. "We also have a GENCO employee on site so we can work with a single point of contact."

A DIRECT LINE

Pittsburgh-based GENCO, which manages elements of inbound and outbound transportation, as well as carrier negotiation and freight tendering, for Briggs & Stratton's dealer network and mass retail market, believes this setup is key to its success as a customer service-driven 3PL. The company uses a peer-to-peer mapping strategy to create relationships between GENCO employees and its shippers' employees at every level -- executives are aligned with executives and account managers with account managers, all the way down the line. As a result, shippers gain GENCO's executive perspective on business strategy, as well as its functional perspective on ways to improve or enhance the partnership.

GENCO's emphasis on customer service starts at the top of the organization and extends to every level. "We measure customer satisfaction religiously; it is core to everything we do," says Dave Mabon, GENCO's chief customer officer (CCO). "We even tie compensation to our customers' satisfaction."

The company's creative job titles are also a nod to its enthusiasm for customer service -- rather than CEO, Mabon goes by CCO, and GENCO's top operations executives are called customer service vice presidents.

This elevated approach to customer service is what helps Briggs & Stratton improve its own service operations. "GENCO has the right attitude, its employees take ownership to handle issues that arise, and they suggest improvements for adjusting to our customers' needs," Sowatsky explains.

By using GENCO's transportation management system, for example, Briggs & Stratton has gained visibility of inbound materials down to the part level, enabling the company's planning and production control groups to plan for the goods en route and the materials its suppliers are planning to ship. "This visibility increases our production scheduling flexibility so we are more reactive to customers' needs," Sowatsky says.

On the outbound side, Briggs & Stratton counts on GENCO to provide its dealer network with accurate transit times, and to ensure those times are met. This strategy means that when dealers place an order with Briggs & Stratton, they know when they will receive the product, and can provide that information to customers farther downstream.

"If a consumer wants to buy a particular unit from a Briggs & Stratton dealer, but it is out of stock, the dealer can tell the customer when they expect the unit to be delivered to the store," Sowatsky explains. "That is crucial for keeping customers loyal."

That scenario holds particular strength for Briggs & Stratton during winter storms or electrical outages, when its snowblowers and generators are in particularly high demand.

"When these events occur, we need to quickly ship goods, then switch gears to the inbound side so we can replenish inventory and keep making products," Sowatsky notes. "GENCO has been crucial in helping us manage those situations and maintain customer service."

THE IMPORTANCE OF METRICS

Despite all the good feelings and positive anecdotes generated by forging strong shipper-3PL relationships, quality customer service -- and the efficiencies it brings to the supply chain -- is a make-or-break aspect of logistics management. Some companies desire more concrete ways to ensure they are getting what they need from their 3PLs. Witness the rise in popularity of customer service metrics in the supply chain. Used to measure a wide range of key performance indicators (KPIs) that are essential to a shipper's business, metrics provide data that shows whether a logistics provider is hitting expected service levels.

Behind the rise in customer service metrics is the idea that the way a logistics provider measures its own internal success doesn't hold much weight with shippers, says Curtis Bingham, president of Littleton, Mass.-based Predictive Consulting Group. To determine if providers are meeting shipper needs, they should be measured by the shipper's standards.

Creating metrics that serve shippers' interests and hold 3PLs to appropriate standards can be done in a few steps.

"When developing metrics, shippers and 3PLs must agree on the expected levels of customer service, and use that baseline to structure KPIs that are measurable and can be reported regularly," says Georgia Tech's Langley. "The second step is to create a process for capturing and sharing that information and discussing it routinely; the third step is continuous improvement."

Shippers and 3PLs should periodically revisit expectations to be sure KPIs keep up with changing business needs.

SAM'S CLUB SETS HIGH STANDARDS

"We expect a lot from our 3PLs. We hold them accountable to a long list of metrics -- covering everything from operational efficiency to accuracy and quality," says Geoff Sease, vice president of logistics for Bentonville, Ark.-based warehouse retail chain Sam's Club. "We apply the same expectations to our 3PL-managed and self-operated DCs."

One area of performance that is crucial for Sam's Club to measure is how 3PLs assist with new store openings. "We depend on our providers to help us schedule deliveries to match the best flow of freight as we stock new Clubs with products," Sease explains. "Then, once a Club is up and running and we can gauge the sell-through, we need their support to maintain replenishment."

Sam's Club also holds its providers to high standards when it comes to carrier management. While Sam's Club develops and maintains relationships with its carriers, the retailer expects its 3PLs to ensure that those carriers are properly executing on delivery service to Sam's Club's DCs -- and to take corrective action if they are not.

"On-time performance is a key customer service objective on the Sam's Club scorecard," says Marlowe of Kane Is Able, one 3PL that works with Sam's Club. "Every piece of the Sam's Club supply chain has to be synchronized or the end customer will not get a quality product, on time, and at a competitive price."

Complementing Sam's Club's long list of metrics is constant communication with its logistics providers -- which Sease credits for achieving the collaborative service it demands. "A daily interactive feedback loop with our 3PLs ensures that everyone is executing on the plans we have laid out," Sease notes. "We don't wait for the end of the quarter or year to evaluate our metrics and take action."

BRIGGS & STRATTON DEMANDS DATA

"Without data, we can't run our company," says Briggs & Stratton's Sowatsky. "GENCO provides us with data down to the transaction level. I can tell you how much it cost to ship one particular unit to one customer this year, and what it cost last year and the year before."

This type of data allows Sowatsky to keep a careful eye on cost savings, one of the company's most important logistics metrics.

"We analyze GENCO's metrics monthly and meet with GENCO representatives for quarterly updates on cost-reduction efforts," Sowatsky explains. To date, he says, GENCO has performed well on its metrics, exceeding its contractual obligations for cost-reduction efforts.

While customer service metrics in logistics are clearly a shipper-driven trend, forward-thinking 3PLs have embraced metrics as a method for proving the value of their services and as a way to clearly define issues and goals with their shipper clients.

"During our shipper meetings, we can use the metrics data to say, ŒNot only did we provide you with good service at a competitive price, but here are some opportunities for improvement in other areas where we could boost efficiency or reduce costs,'" says Cathy Langham. "This helps us set and meet their future goals."

A similar attitude prevails at GENCO, where customer service metrics serve as the basis for regular meetings with customers, and as a way to incentivize internal employees. The company surveys its customers quarterly, asking them to rate GENCO on a wide range of issues, including how easy the company is to do business with; and how well it performs from a systems, operational, and budget perspective.

"We follow up on items that arise in that survey, and create processes to make sure we meet those promises by the next quarter," says GENCO's Mabon. "We then track those scores and use them to calculate bonuses for the GENCO employees whose work directly impacts those shippers."

INGREDIENTS FOR SUPERIOR SERVICE

GENCO's approach touches all facets of what Geoff Sease defines as the recipe for an effective customer service supply chain: relationships built on trust and communication; clear expectations that are measured regularly; and the integration of partners into your business.

"If these conditions are laid out for the provider, and the provider has those capabilities, you have all the ingredients for superior service and a great relationship," Sease says. "But if you are fuzzy on your expectations, and if you draw a formal line between yourself, your 3PL, and your customers -- then you're going to have problems."

Keeping all players in the loop is the key to a strong -- and unbroken -- customer service connection.