3PL Partnerships: From Tactical to Strategic
It was déjà vu all over again as I sorted through the responses to this year’s Top 10 3PL Excellence Awards survey and 3PL Perspectives research. Like last year, and the year before, and the year before that, a sizable percentage of survey respondents said they select logistics partners based on their ability to secure trucking capacity on demand, and get services at the lowest price: "Give me loads when I need them, and don’t charge me a lot." Capacity concerns and cost savings still drive this approach, despite 3PL investments in technology, resources, and connections.
But, one new pattern emerged this year. Many more survey respondents than in past years said they were beginning to forge collaborative, strategic relationships with their 3PLs—not just tapping them for brokerage services, but actually moving away from "provider only" to a fuller logistics partnership.
We didn’t ask this specific question on our research survey, so it is hard to identify what is motivating this shift. It could be the economy, with more companies focused on reducing total logistics costs as opposed to reducing just the transport portion. Inbound Logistics readers certainly know that practicing demand-driven logistics to better match supply to demand signals will accomplish that. Undertaking an inbound logistics approach, however, is ultimately more complicated than managing outbound transport spend only. Relying on logistics providers to accomplish that philosophy shift requires drawing on more than their brokerage capabilities.
Another motivaton could be a quest for professional excellence, especially in today’s job market. Most logistics and supply chain practitioners strive to do the best they can for their companies, and be the best they can for professional development reasons. The career advancement resources Inbound Logistics produces always generate lots of reader involvement, indicating that they want to be up on the latest trends and practices to help them excel at their profession. Is there a connection between job excellence and using a broader range of 3PL services?
Suppose you are someone who engages in a Mitty-esque dream about being the world’s best supply chain or logistics practitioner, to save the most for your company, and, in so doing, keep your career on track, and your job secure. How do you make that dream real? Even if you are the most proficient practitioner, there are some limits you can’t go beyond. You can be limited by your company’s structure, available resources, management buy-in, and other business realities.
Even if you are on a quest to be the best, few companies and fewer practitioners have the time, authority, or resources to tear down functional silos, build extra-enterprise technology, establish alliances for capacity sharing and cost savings, position seasonal scalability, stage global logistics and supply chain infrastructure, and more. But if you use your third-party logistics partners for more than brokerage—not just as tactical providers, but as strategic partners—a whole new world of logistics excellence and accomplishments could open up to you.
This 3PL issue offers insight into how to make that happen.