Addressing Vendor Management and Shifting Global Trade Currents
Q: What are the most important aspects of good vendor management?
A: Fairness is the first element that always comes to mind when this subject arises. Both parties need to be satisfied and gain benefits in each deal that is agreed upon. If not, deals tend to end faster than planned and turn into a waste of time for all stakeholders. I would estimate that 50 percent of my time is spent with our carrier negotiations that involve both our print and 3PL sides of our platform. As LTL is the majority of our spend on the faster growing 3PL side of our business, I have learned that transparency with core providers has become rather critical in both our blanket and account-specific pricing agreements.
Lastly, a key and beneficial gentlemen’s agreement we employ is simply giving our carriers the option to opt out of handling any type of shipment(s) or freight that does not work for them. This surgical approach allows LTL carriers in particular to maintain healthy operating ratios by removing business that does not operate well in their respective systems networks. We can generally remove any business from a particular carriers’ hierarchy within 24 hours; some of our best providers at identifying freight movements that don’t work for them include FDX, R&L, Saia, Estes, Roadrunner, and YRC.
Q: How can today’s manufacturers deal with increasing regulations, security concerns, and shifting global trade currents?
A: One way a manufacturer can mitigate the effects of regulations, security, and volatility is by working with a third-party logistics provider with a leveraged platform. When a 3PL has a leveraged platform, it employs the same best practices to manage its own supply chain needs as it does for its client base.
A leveraged platform is likely to have a global transportation partner network that adjusts to the changing global trade lanes, and meets supply chain security concerns by voluntarily participating in the Customs-Trade Partnership (C-TPAT) program managed by U.S. Customs and Border Protection (CBP). The C-TPAT program ensures a high standard of operating procedures for the partners in the import supply chain, and is validated regularly by CBP. The results for clients are fewer delays at the points of entry into the United States, and less cost as goods move more quickly and efficiently to the end user.
Q: You’ve mentioned leveraged platform again. What is the difference between a leveraged platform and a 3PL?
A: A leveraged platform is the reference I use to differentiate our platform, which employs RR Donnelley’s 150+ year presence as a large shipper. Our logistics offerings, with over 130 local-based Station Agents, differ greatly from the usual large call centers that only employ a typical 3PL brokerage model. Domestically, we have been able to minimize higher priced LTL by co-loading customer’s freight with our print and mail tonnage that must move on a timely basis. Internationally, we have employed the same practice from Shenzhen, China, by combining our client’s retail goods with our books on regular import schedules.