3PLs & Carriers: At Your Service
Shippers don't always measure the 'softer' aspects of the service they receive from carriers and 3PLs. But those metrics can make all the difference for your supply chain and your company's brand.
"How do I make it easy for customers to give me their money?" That question practically defines customer service for Kevin Huntsman, senior vice president of sales at St. Joseph, Mo.-based research and consulting firm Mastio & Company. "You try to find a way to make it easy for companies to do business with you," he explains.
We all recognize great customer service when it blesses us: a friendly human answers your call on the first ring; an order arrives sooner than promised; a troubleshooter promises to help with a problem and then calls back one hour later to report that it's solved.
We also recognize poor customer service: you spend 20 minutes in a phone queue, a bill comes laden with unexpected fees, a company passes your complaint from one office to another with no resolution in sight.
Strong customer service is vital to a successful logistics operation. The supply chain operates best when third-party logistics (3PL) companies, carriers, and other providers are responsive, courteous, and flexible; take a proactive approach to problem solving; and otherwise treat the shipper with utmost care.
In many cases, the partner's service performance affects not just the immediate customer—the shipper—but also that shipper's customers. Because the partner is responsible for getting product delivered on time and in good condition, that partner's performance could determine whether the end customer has a great experience or a bad one.
Given the importance of customer service in logistics, you might expect shippers to measure the quality of service their partners provide, and use that data in performance evaluations. Shippers do that to some extent. But not everyone scrutinizes those "softer" factors the same as easy-to-define performance measures.
Shippers say that customer service factors are important, says Huntsman, whose company publishes a series of Carrier Customer Value & Loyalty Studies. But shippers also say those elements aren't as critical as the metrics that tell them, for instance, how often a carrier delivers freight with no missing or damaged items.
Whether shippers realize it or not, though, customer service influences the way they perceive their partners. Pure performance factors are baseline requirements; a carrier that can't deliver on those measures won't win a shipper's business.
"But once shippers assess that the carrier is competent at those fundamentals, what areas do they want them to excel at on top of that?" Huntsman asks. "Those areas are the soft issues—people-related issues."
Mastio & Company focuses its transportation studies on four kinds of service partners: less-than-truckload (LTL) carriers in the United States, LTL carriers in Canada, truckload carriers, and global freight forwarders. For each study, researchers interview about 1,000 shippers for their opinions on prominent service providers.
For the U.S. LTL study, for instance, more than 2,000 shippers rate carriers on 29 attributes, including 11 in the customer service category: billing accuracy; carrier responsiveness; proactive communications; problem resolution; timely customer service personnel response; freight tracking/tracing capabilities; knowledgeable and helpful sales representatives; willing to be flexible with operations; courteous and professional drivers; easy-to-understand pricing terms; and useful website.
Keep Customers in the Know
Based on those surveys, it's clear that communication is one of the most significant customer service values for shippers. Communicating in advance about upcoming problems is especially important. "If a carrier is not going to make it for a pickup, let the customer know," Huntsman says.
Carriers are getting better at measuring the quality of their own customer service, because those factors have grown so important in relationships with customers. Chalk that evolution up to the influence of the top e-commerce companies. "If Amazon can tell customers when an order will ship or be delivered, or if it's not in inventory, then why can't my business-to-business suppliers do the same for me?" Huntsman asks.
One striking aspect of good customer service is its halo effect. "Doing exceptionally well at a handful of these soft issues gives the impression to the shipper that you're doing exceptionally well on the others," Huntsman says.
It's About Time
While customer service is more subjective than, say, on-time delivery, some providers and shippers do find objective ways to measure it. For example, Zipline Logistics tracks how long it takes to respond to customer requests, says J.J. Rodeheffer, a partner and director of sales for the Columbus, Ohio-based 3PL.
"We also track the timeliness of not just providing rate quotes, but also how long it takes to get a customer order into our system and get the process moving," he says.
Zipline works with shippers to design the key performance indicators (KPIs) that each customer considers most important, including traditional operational metrics and customer service metrics. Through Zipline's proprietary client dashboard, customers can view the 3PL's performance against those KPIs in real time. "It creates a level of accountability for us, so we can't hide from mistakes," Rodeheffer says.
Working to provide a better-than-average customer experience, Zipline tries not just to measure its performance, but also to measure its success at improving performance through proactive measures.
Say a retailer asks a vendor to deliver product to its distribution center in Florida. But the vendor—Zipline's customer—has run out of that product in its Florida warehouse, and has to fill the order from its New Jersey facility. Zipline can measure the cost of dealing with that out-of-stock situation.
"We also measure whether we can let the customer know far enough in advance to avoid that cost," Rodeheffer says. With visibility into its customer's entire supply chain, Zipline detects potential out-of-stocks and warns the customer to take corrective action before problems arise.
Among the other customer service values embedded in Zipline's culture is a promise to stand by its word. "If we give you a quote, we'll stick to it, no matter what," the company says on its website. "This also means we'll never give back freight."
It's easy to measure that kind of fidelity. "At the end of the month, we get a note from accounts payable that says, 'Are we really taking a $900 loss on this shipment?'" Rodeheffer says. Whether Zipline makes an error in calculating a quote, or it loses a carrier at the last minute and then pays a premium to give the freight to a different trucker, it will never penalize the customer.
"If we give the customer a rate, we're moving the shipment, and that's that," he says. "We can measure it—it's tangible."
Measuring customer service won't take a company far unless it motivates employees to keep the number high. "We incentivize our operators around our service metrics," Rodeheffer says. "It's not about who does the most or who does it the fastest. We measure on who does it best."
In this context, "best" could mean choosing a new partner that results in better service, even at a lower profit margin. "If a truck is a few hundred dollars cheaper, but pushes the limits of whether they will pick up or deliver on time, that's not a gamble we're willing to take," Rodeheffer says.
Among the shippers on the receiving end of Zipline's customer service is Canberra Corp., a manufacturer of cleaning chemicals based in Toledo, Ohio.
Zipline handles all Canberra's collect, full truckload shipments on the inbound side, all its pre-paid outbound truckload freight, and an occasional outbound LTL shipment.
Mike Melms, Canberra's logistics manager, tracks Zipline's performance metrics daily and quarterly, looking at inventory turns, back orders, production cycle times, inventory accuracy, on-time shipments, and conformance to the first-in, first-out (FIFO) principle. "Many of our products have lot codes and expiration dates, so turns and FIFO are musts," he says.
Although he doesn't apply hard metrics to customer service, Melms gives Zipline high marks on those values. "Zipline created my definition of customer service: Having the ability to almost read my mind, answer my questions before I even ask them, and react as I would react with my own business; having courteous and professional employees contact my customers for delivery or pickup appointments."
Canberra routinely follows up with its customers after Zipline Logistics, through one of its carriers, drops a load, to see if the customer received the correct product and if it arrived without damage.
Along with the percentage of on-time deliveries and the company's freight costs, Melms names another metric he thinks 3PLs should track on behalf of their customers, one that bears more directly on customer service: "The speed of recovering a load after an unfortunate situation arises."
In retail—and especially in e-commerce—logistics partners play a major role in creating a good end customer experience. The partner that puts product into packages for shipping, or performs last-mile delivery, touches the customer directly. That partner becomes the face of the merchant, and the quality of its service influences how customers perceive the brand.
Quiet Logistics, a multi-channel fulfillment company, has built a business around services that touch the end customer. "The brands we partner with are trying to differentiate themselves and mimic a positive experience that customers might have while shopping in a store," says Brian Lemerise, president of Quiet Logistics, Devens, Mass. Quiet works to promote that objective.
For some e-commerce merchants, excellent service simply means delivering orders quickly. But Quiet tends to work with brands—mainly in the fashion and lifestyle categories—that want to give their customers something extra.
"They might want to write their customer's name on the packing slip, or create custom packing slips, depending on the order profile," Lemerise says. "They might ask for tissue paper and ribbons. Or they might want to include other branded collateral, such as marketing pieces or a customer satisfaction survey." Quiet accommodates all those needs.
Beginning at the Back
Some of Quiet's efforts to deliver a great customer experience occur at the back end, starting with accurate inventory management. "Out-of-stocks are inconvenient and can have a negative customer service impact on the transaction," Lemerise says. Meeting merchants' expectations about how quickly orders go out the door is important as well.
Quiet uses KPIs to measure its performance on functions that keep product moving through the fulfillment center and out to the customer. "That could be measuring dock-to-stock time in hours, not days," Lemerise says. "It's the same for outbound, when we measure a time-to-fill expectation and a service level agreement (SLA)."
Another step Quiet takes to give the end customer a good experience is a series of quality control inspections on incoming product. Quiet not only checks whether items and quantities match the purchase order, but also examines the merchandise itself: Are the shirt buttons the right size? Are the pants legs hemmed correctly?
"The feedback we provide fuels the vendor compliance programs our brands are managing with their manufacturers," Lemerise says. "This makes a better experience for our brands, but also for the end customers, because they will receive what they were trying to buy online."
To make sure that each package shipped includes all the specified details and flourishes, Quiet hires associates who understand customer service. "We try to recruit people who have worked at a mall store or other retailer, because they tend to have a higher appreciation for product care and brand support," Lemerise says.
Those associates rely on Quiet's fulfillment management software to tell them, for example, that Package A needs a marketing insert, tissue paper, and a ribbon, while Package B also needs a handwritten thank-you note.
Bonobos, a New York-based vendor of men's clothing and accessories, is one company that relies on Quiet to deliver brand-enhancing customer service. Bonobos sells through an e-commerce channel and at more than 20 "Guideshops" across the United States.
The relationship with Quiet Logistics is one key to Bonobos' excellent customer service. "Quiet is consistent in meeting our same-day outbound shipping SLA," says Angela Goldstein, director of operations. "It provides customized packaging services for us to make sure that the presentation to our customer aligns with what we're trying to achieve with our brand experience."
Quiet is also consistent in processing returns. "We don't send refunds to customers until Quiet actually processes the units," Goldstein adds. "That happens within one business day, so the returns experience is positive for our customers."
To make sure Quiet maintains the expected service level, Bonobos monitors a collection of SLAs each day. Among the metrics that involve customer-facing activities, the most important are the time to process and fill orders, and the time to process returns. Bonobos also tracks how quickly Quiet processes inbound shipments.
Quiet receives those figures in a daily report, with questions attached to any items that seem to fall out of range. If Quiet misses an SLA because a last-minute promotion pushed sales way beyond the forecast, officials at Bonobos won't blame the 3PL. "Our expectations are reasonable," Goldstein says.
Bonobos doesn't measure how well Quiet meets its packaging standards. But the company has a reliable source of feedback on that score: its own employees, who are also loyal customers.
"Close to 200 employees work in our building, and we get many packages delivered here every day," Goldstein says. "If there's ever a one-off problem, and we see a box that may be inconsistent, we're quick to snap a picture and send it to our account reps. And they're quick to do some retraining if needed."
Customer Service Ninjas
Customers who are not Bonobos employees offer feedback via e-mail and in conversations with the company's customer service reps, known as Ninjas. At Bonobos' headquarters, the operations staff works just 10 feet from the Ninjas. "They pass us any anecdotal feedback related to fulfillment, positive or negative," Goldstein says. The Ninjas also aggregate the information they get from customers, by category—including service issues—and provide that to Goldstein's team monthly.
Regarding Bonobos' own role as a Quiet Logistics customer, company officials don't see a need to measure the softer aspects of the service they receive, such as how quickly Quiet returns calls and answers e-mails. "We look at our relationship with Quiet as a true partnership," Goldstein says.
Employees at Bonobos also take it for granted that their partners at Quiet will communicate quickly about problems, such as product that arrives at the fulfillment center in damaged boxes. Regular visits by Bonobos' staff to Quiet's facility help to cement the relationship. "We walk the floors, just to see what's going on," Goldstein says. "They know we care a lot, and it's obvious that they care as well."
Like Quiet Logistics, XPO Logistics plays a big role in helping merchants make a good impression on their customers. XPO's last-mile service manages the delivery of heavy goods—such as furniture, appliances, and home electronics—to customers on behalf of retailers and consumer goods companies. XPO handles more than 12 million such deliveries per year, and its job doesn't end at the doorstep.
"In many cases, we need to facilitate white-glove services inside the home, such as installation," says Will O'Shea, chief sales and marketing officer at XPO Logistics Last Mile, Greenwich, Conn. That puts XPO and its contracted carriers and installers into particularly close contact with end customers.
XPO works with more than 7,000 independent contractors to provide its services. "We conduct background checks on these contractors, because consumers trust them inside the home," O'Shea says. The company relies on customer feedback to make sure contractors continue to uphold the service standards set by XPO and the merchants.
The feedback process starts when the consumer signs a digital proof-of-delivery form. The form tells consumers that they will soon get a phone call; the consumer chooses whether the call should come from an automated system or a live representative. The phone rings within 12 minutes of the sign-off, giving the customer a chance to respond verbally to a series of survey questions while the delivery experience is still fresh.
"We immediately evaluate any voice feedback and get a concern into the right hands for resolution," O'Shea says. "For example, if it's a problem with the product, we route it to the retailer right away."
The customer service factors that XPO measures vary with the needs of individual merchants. "Delivery within a defined time window, exceptions, and satisfaction ratings are key industry metrics," O'Shea says. "Our technology platform is scalable and flexible, with apps that give customers constant visibility to data. Together, we evaluate that data and focus on ways to continuously improve."
That's a worthy goal for every shipper and its logistics partners—keep an eye on the measurements, and use them to make customers increasingly happy with the service they receive.