November 2016 | Commentary | Good Question

GOOD QUESTION | When choosing a carrier/supplier, what’s more important: cost or customer service?

Tags: 3PL, Customer Service, Logistics, Third-Party Logistics, Supply Chain, Visibility

While reducing operational costs is top of mind for businesses, customer service comes first to ensure rising expectations are met with improved visibility and accuracy—especially in today's increasingly competitive environment where loyalty must be earned and options are many.

Steve Rice
Director of Product Management, TAKE Supply Chain

Bang for the buck. There are a lot of providers—customer service levels can be excruciatingly low at even the higher-priced vendors. Service providers should stop thinking they can charge a premium to be 50-percent reliable. You want to charge a premium? Then you must give 90-percent reliability—anything else, you're the same as the low-cost provider.

Matt Tillman
Co-founder and CEO, Haven

This is possibly the most difficult question we face on a day-to-day basis. Some shipments cannot be late and service becomes the most important aspect of the move. There are other shipments that do not have a strict deadline (or are ready early) and price then becomes the most important factor. As a partner, we help our customers identify when and where each is more relevant and where cost savings exist.

Craig Laughlin
Logistics Solutions Consultant, Zipline Logistics

Cost is generally a key consideration, because if the cost isn't in the ballpark, the level of service is essentially irrelevant. However, once the cost is in range, significant differentiation on service can often be the deciding factor.

Kris Hedstrom
Manufacturing Manager, Cambridge Security Seals

Within a reasonable range of variance, service should trump cost. The cost of poor service can often outweigh any upfront cost savings once you factor in back-office support, brand damage, or other soft costs. Great service builds customer trust and loyalty, which, in the end, is key to business success.

Mike Doyle
Director of Customer Success, Kuebix

Depends on the product. I've seen many examples of companies having "low-cost" carriers that are never used or consistently over-ridden when the TMS selects them because the planners know the carrier's service is substandard for the product being shipped.

Terry Wray
Vice President, Implementation Services, 3Gtms

Hands down—customer service. Chasing the lowest cost often has costs of its own, whereas the partnership that comes from true customer service always drives long-term value. And when the market changes, you'll benefit from having a trusted partner with mutual goals.

Nick Fryer
Director of Marketing, AFN Logistics

It is just as important—if not more—to choose customer service over cost. A 3PL provider with exceptional service and account management can bring a wider scope of benefits—including cost savings—by improving efficiencies and managing risk and change.

Chris O'Brien
Chief Commercial Officer, C.H. Robinson

We as suppliers and 3PL/4PLs shouldn't ask our customers to compromise high service for lower costs. By closing the technical gaps (visibility, proven delivery reliability, EDI, etc.) between carriers, customers are able to reap both benefits, or should, if their provider subscribes to a continuous improvement philosophy. Cost may provide a cheap foot in the door but service is what keeps a customer for life.

Tracy Meetre
Vice President—Sales & Marketing, Sunset Transportation

Who says you can't have both? We've found that many of our clients are constantly looking for better pricing while expecting excellent customer service. As the market and its associated costs change, service providers must find new ways of composing RFPs and RFIs in order to remain competitive and provide clients with a satisfying level of cost and customer service.

Leslie Orcutt
Supply Chain Planning & Logistics Manager, ModusLink

Determine the appropriate trade—off between the product cost or service and the levels of service that will keep your internal customers happy. Negotiate a deal that meets your stakeholders' minimum service requirements at the lowest total landed cost.

Tania Seary
Founding Chairman, Procurious

In the business world, competition dictates service requirements, and service requirements dictate cost. Thus, buyers will set service requirements, and that will dictate cost. So customer service comes first, and cost follows.

Larry Hall
Principal and Founder, Logistics Planning Services (LPS)

While both are equally important, I would side with customer service. Most companies are willing to pay above the market value in return for reliability and service performance for their loads.

Dana Walker
Supervisor, Supply Chain Sourcing, Nexterus

It's about achieving the right balance between the two and mapping the supplier's offering to the objectives that will contribute the most success to the business. In light of this, value—service received divided by the price paid—trumps cost.

Chandler Hall
VP, Customer Accounts, BravoSolution

Customer service often outweighs cost in logistics, especially when it comes to the accessorial fees applied on the back end of shipments. When you focus more in finding out all the information needed for a shipment, rather than giving the fastest, cheapest price, you can determine charges upfront. This gives your customer visibility and understanding of charges within the given rate, so there are fewer increases after the fact. I have found that giving this information at the beginning of a shipment, rather than the end, increases trust between you and your customer. Once a trust is created and accurate information is received, you can use your professional expertise to find unique options and create future cost savings.

Courtney Godbolt
Logistics Solutions Consultant, Zipline Logistics

Well, everyone knows "the customer is king," right? When making any choice, you better put customer service at the top or else you may not have a customer to serve at any cost. When you provide great customer service, you don't get caught up in the whole cost/price discussion, but rather it becomes about value.

Kerwin Everson
VP, Supply Chain Solutions, RMG Networks


Have a great answer to a good question?

Be sure to participate next month.
We want to know:

What logistics concerns keep you up at night?

We'll publish some answers.

Tell us at editorial@inboundlogistics.com or tweet us @ILMagazine #ILgoodquestion