September 2008 | Commentary | 3PL Line

Cultivating Healthy Carrier Relationships

Tags: 3PL

Developing robust relationships with your carriers can be challenging, but it's essential to establishing well-defined expectations.

Capacity shortages and other carrier-related service issues will inevitably occur, so you and your carriers must work together to sustain a mutually beneficial relationship when times get tough.

The following best practices can help you maximize value within your strategic carrier relationships.

1. Establish trust and credibility with carriers. This will not happen overnight, nor will it happen with all carriers and service providers. The key is to identify and align yourself with carriers whose cultural values closely match those of your organization. You can then reinforce these relationships through reliable volumes, open communication, and opportunity development.

2. Communicate specific expectations. Conveying your strategic requirements to the carrier's executive leadership and operations team will develop a collaborative atmosphere. Carriers often respond favorably and will build unique service offerings for valued shippers or share solutions they have developed with other clients.

3. Reward outstanding performance and enforce established expectations. The carrier should know what you consider a service failure or outstanding performance, as well as the respective penalty and reward. It is no longer enough to enforce service performance with punitive measures and a paycheck. You can set your company apart with a set of unique, credible benefits and rewards for excellent performance.

4. Measure service parameters through agreed-upon metrics. Using a standardized scorecard for carriers helps align their goals with your requirements such as on-time delivery/pickup, invoice accuracy, and order automation statistics. In addition, obtaining feedback on how carriers feel about their relationships and opportunities with your company can uncover areas where you can become more efficient and drive a higher level of customer service.

5. Create opportunities that maximize carrier networks while minimizing supply chain costs. The relationship between a carrier and shipper is about more than service expectations, capacity, and rates. It is also about maximizing the carrier's network value and efficiencies.

Third-party logistics providers traditionally have a more complete transportation network that both carriers and shippers can utilize to drive operational efficiencies. Working together to understand how their collective behavior impacts the supply chain will reduce the cost of landed goods, enhance service, improve the carrier's margins, and often improve your overall rate structure.

Creating Lasting Alliances

The nature of business relationships does not always allow a win-win, but creating an atmosphere where everyone obtains something of value can evolve into a lasting business alliance.

If the various representatives can develop a non-adversarial relationship during critical or challenging interactions, they enhance trust and allow more opportunities to present themselves, advancing positive outcomes for all parties.

This give-and-take is no different from any other type of lasting relationship. Strong relationships survive the good times and the bad, and continuously improve through transparency, sincerity, and direct and open interaction.

Instilling these values as a core component of the shipper-carrier relationship can result in a unique alliance built on integrity and a commitment to successfully serving mutual customers.

Sound shipper-carrier relationships establish an understanding of what both parties want to achieve. Knowing how to effectively work with your carriers, and realizing the impact of what each of you wishes to achieve, will help deliver tangible and sustainable results.