Establishing a Successful Core Carrier Program
It’s easy to assume that the “core” in core carrier is synonymous with “one of just a few.” But the success of a core carrier program has less to do with the number of carriers than it does with ensuring that each provider selected is equal to the task of meeting your company’s needs in the particular lanes or routes it will serve.
“Expand your definition of what core means— or even super-size it— and review all carriers regardless of their size,” suggests Charlie Hitt, chief executive officer of Atlanta-based 3PD, Inc. Here are his 10 tips for implementing a successful core carrier program.
1. Create an ideal. Cost-cutting is often the underlying reason companies launch core carrier programs. But it is performance, rather than price, that tends to separate long-term successes from short-term experiments.
Before sending your Request for Proposal (RFP), take the time to construct a detailed profile of what the ideal core carrier or carriers would look like for your company, paying careful attention to service issues or opportunities that have arisen in the past. The portrait that emerges will serve as an excellent starting point for identifying, selecting, and screening the best players for your company.
2. Don’t overstate volumes. The number of shipments your company promises to award in its core carrier RFP is directly associated with the carrier quote. Don’t inflate the size of your business volume in hopes of getting a more competitive price. This can backfire and the core carriers won’t be willing to work with you for long.
3. Give soft skills their due. Your core carriers’ drivers and driver teams are often the only representatives of your company that your customers ever meet. Make professional appearance and interpersonal skills of potential core carrier drivers a high priority in your selection criteria.
In addition, be sure that the potential carrier’s drivers can perform any extra non-driving functions. Any shortcomings drivers have in these areas will begin to feel considerably more pronounced— and problematic— as time goes by.
4. Watch your back with thorough background checks. Ask carriers if they have checked the motor vehicle records and driving history of any drivers they’ll be using to carry your freight. Verify that they’ve conducted a 50-state criminal background check on drivers, too, especially if they are making last-mile deliveries to customers’ homes. Don’t assume that the carrier’s safety record meets or exceeds the industry standard until you’ve received and reviewed its OSHA and Department of Transportation safety numbers.
5. Make it a policy to get educated on the carrier’s insurance coverage. There’s a big difference between a carrier that’s insured and one that’s adequately insured. Make sure your core carriers are the former rather than the latter. Require them to provide Certificates of Insurance and know how much coverage they carry. (It may turn out that lower coverage is a key reason why some carriers are quoting you lower rates than others.) Require all of your core carriers to name your company as an “additional insured” on their policies.
6. Make inadequate technology a deal-breaker. Your core carriers are a key connection in your supply chain— which is why it’s essential that you be connected to them via some form of visibility tool. If they’re unwilling to use or provide those tools, be wary. It could be a sign that they don’t truly have the capacity or commitment to meet your service objectives.
7. Consider evergreen contracts. Having contracts that are automatically renewed is an excellent way to breed trust, inspire loyalty, and save the administrative fees associated with drawing up new agreements every year. It also allows your core carriers to stay focused on providing you with excellent service rather than having to worry about re-winning and re-negotiating your business. Make sure you include a 30-, 60-, or 90-day-out clause that you can activate if service declines.
8. Don’t just set Key Performance Indicators (KPIs) —monitor them. Whether your company uses signatures from delivery confirmations to measure on-time deliveries or administers post-delivery surveys asking customers to rate their experience, it’s important to confirm that you chose the right carriers for your program by frequently collecting and evaluating their performance data against the KPIs you established. At the very least, your company should be doing it weekly.
9. Share the results —and the love. Seek out ways to facilitate open communication among carriers via tools such as meetings, newsletters, or Webcasts, because often the efficiencies one carrier discovers for your company may be just as applicable for another. Share performance results across the network so carriers can see how their services stack up. Reward performances that go above and beyond, and consider establishing an annual awards program or building gain-sharing arrangements into your contracts.
10. Recognize that every core carrier may not deserve an encore. A core carrier program thrives on stability. That doesn’t mean its “membership” should be written in stone. If a carrier’s performance doesn’t meet your expectations within a certain time frame, begin looking for another carrier. By the same token, if your core carrier program becomes a revolving door, look at your company’s inability to partner and foster lasting relationships.