July 2010 | Commentary | Checking In

What We’ve Got Here is Failure to Communicate

Tags: 3PL, Supply Chain Management, Partnership, Customer Service

Keith Biondo is the publisher of Inbound Logistics magazine.

Remember that great line from the movie Cool Hand Luke, “What we’ve got here is failure to communicate”? That’s what popped into my head as I reviewed the more than 4,700 responses from readers and 3PLs participating in our annual third-party logistics survey. We asked both 3PLs and their customers the same question: What is the primary reason that 3PL relationships fall apart? Their answers illustrate a failure to communicate.

According to 47 percent of 3PL respondents, the primary reason 3PL relationships go south is “failed expectations,” while 20 percent cited “poor customer service.” It is reasonable to suggest that responsibility for poor customer service resides with the 3PL. It is also reasonable for 3PLs to think that failed expectations on the part of the customer belong on the customer side of the responsibility ledger.

Customers of 3PLs held almost an exact opposite opinion. Fifty-two percent of shipper respondents feel 3PL relationships fail primarily because of poor customer service, and failed expectations only 23 percent of the time. It’s clear that shippers see the issue stemming from the 3PL’s failure to provide the expected level of service. It also seems pretty clear that 3PLs think the failure resides in the customer’s expectations, not the service provided to that customer. Failure to communicate here, too.

I suppose you could say that customer service and failed expectations are actually two sides to the same coin, but it would be a lot better if both the customer and the 3PL were on the same side at the same time. You could also think that this kind of obverse opinion is the natural by-product of any buy/sell relationship.

But I say no. A 3PL relationship is more like a marriage because of the inherent need for tightly intertwined business operations. Given the complexity and scale of touchpoints required to make that happen, you would think that there was enough communication to ensure that the expectation gap was small. Can you guess the top reason cited for marriage failures? Right, communication.

Could the paradox raised by this survey’s dataset be the fault of the monumental and increasing complexity of what businesses and their 3PL partners are trying to achieve? Could the rigid structure of the RFP process itself cause the polar-opposite perspective on this question? Is it time to re-examine the entire 3PL selection process and forge a successful business logistics relationship?

Perhaps. But one thing is certain—without better communication on both sides about service expectations and performance limits, chances for success will only be slightly improved.