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When you disagree with your sibling or a friend, you look for a million reasons to keep the relationship you have fostered over the years. You might need to take a breather from each other, but the key to a long-lasting relationship is that it is founded on mutual trust, open communication and shared commitment that holds value.
Every relationship built on these crucial building blocks stands the test of time, resulting in upholding future promises, actively understanding where things are going wrong and eventually growing up through the changing times.
In an ideal world, these similarities should be followed in brand-3PL partnerships as well. But,
“The reality is over 50% of relationships between brands and 3PLs end in a divorce, and we all have to work hard to fix that and to right the ship.”– Dan Coll, Partner at Fulfillment IQ
What Fostering a Good Relationship Looks Like
Effective collaboration, open communication, and reciprocal advantages are key components of a successful third-party logistics (3PL) relationshipship between the client firm and the 3PL provider. Here are some essential characteristics of a successful 3PL relationship:
1. Clear Communication
Transparency and openness in communication are crucial. To discuss goals, expectations, difficulties, and modifications to the requirements, both sides should keep open lines of communication. Making ensuring that both parties are on the same page through frequent meetings, updates, and reporting methods.
“You gotta add value and you gotta have these open discussions, quarterly business reviews, monthly SOI and KPIs, annual business reviews. It’s a partnership, it’s a marriage”– Scott Weiss, Vice-President Technical Sales-Warehousing and Distribution Services at Maersk North America.
2. Shared Objectives and Goals
A strong 3PL partnership is based on shared objectives and goals. Objectives including increasing supply chain efficiency, cutting costs, improving customer service, and upholding quality standards should be shared by the client and the 3PL supplier. A strong 3PL partnership is based on shared objectives and goals. Objectives including increasing supply chain efficiency, cutting costs, improving customer service, and upholding quality standards should be shared by the client and the 3PL supplier.
3. Trust and Reliability
The cornerstone of any solid connection is trust. The client must have faith that the 3PL supplier will regularly keep their word. It is essential to be trustworthy when it comes to fulfilling deadlines, controlling inventories, and delivering correct information.
4. Flexibility and Adaptability
The dynamics of the supply chain are constantly changing. A successful 3PL partnership necessitates a readiness to adjust to novel obstacles, market changes, and unforeseen disruptions. Both parties should be adaptable and capable of changing their plans as necessary.
5. Collaborative Problem-Solving
Issues will come up, but a good partnership requires coming up with answers as a team. Collaborative problem-solving ensures that challenges are properly addressed, whether it be a sudden rise in demand, a logistical glitch, or the need for process optimization.
6. Metrics for Performance and Accountability
The effectiveness of the collaboration is assessed using Key Performance Indicators (KPIs) and performance measures that are clearly established. To make sure that both parties are keeping their promises, these metrics should be decided upon at the outset of the partnership and revisited on a frequent basis.
7. Cost effectiveness
Although cost reductions are frequently the main driver behind outsourcing logistics, it’s crucial to find a balance between price and service level. A successful 3PL partnership attempts to reduce costs while upholding high standards of service.
Understanding the Pitfalls of 3PL Brand Relations
3PL brand alliances can be quite advantageous, but they also have some risks that should be carefully avoided. Here are some common 3PL brand partnerships problems to avoid:
1. Lack of Alignment
Clarity and understanding can result from aims and objectives of the brand and the 3PL provider being in line. Misalignment of long-term goals, performance indicators, and service standards might cause the partnership to fail.
2. Communication Breakdown
Delays, mistakes, and missed opportunities can be brought on by poor communication. The efficient operation of the supply chain might be hampered by a lack of clear communication channels, frequent updates, and productive collaboration.
“So, it’s like any long-term marriage or partnership, the ability to get along, work together. When problems happen, that’s where things go left.”– Scott Weiss, Vice-President Technical Sales-Warehousing and Distribution Services at Maersk North America.
3. Inadequate Performance Measurement
It might be challenging to assess the partnership’s success without clearly defined Key Performance Indicators (KPIs) and Service Level Agreements (SLA). Relevant metrics must be agreed upon by both parties in order to monitor success and pinpoint areas for development.
4. Dependence on a Single 3PL
The supply chain may become vulnerable if a single 3PL is significantly relied upon. The brand’s operations may be seriously impacted if that provider encounters difficulties or disruptions. It’s a good idea to have backup plans.
“Regardless of the size, every brand has similar challenges, and I like to tell them the most important thing in the contract is not in the contract.”– Scott Weiss, Vice-President Technical Sales-Warehousing and Distribution Services at Maersk North America.
5. Lack of Flexibility
A inflexible partnership structure can result in inefficiencies and missed opportunities because it prevents adaptation to shifting market conditions, customer needs, or supply chain interruptions.
6. Issues with Quality Control
If the 3PL supplier doesn’t follow the brand’s quality standards and procedures, it may result in defective products, client complaints, and reputational harm.
Transitioning to a new 3PL provider or altering the terms of the partnership can be challenging in terms of change management. Careful planning and execution are required to manage the shift successfully while minimizing disruptions.
“So, the most important thing in the contract is not in the contract. And so, during that research and discovery phase, it’s very important to look for any of those red flags from both sides.”– Scott Weiss, Vice-President Technical Sales-Warehousing and Distribution Services at Maersk North America.
Fixing the Breakdown in Brand-3PL Partnerships with Best Practices
“So that’s the first step to make sure as a 3PL that you, the customer, are actually a good fit for us. And not every customer is a good fit, whether it’s the vertical they’re in, the size they’re in, their profile. It could be wholesale, and you only do eCom, or it could be eCom and you only do wholesale.”– Scott Weiss, Vice-President Technical Sales-Warehousing and Distribution Services at Maersk North America.
1. Aligning Vision and Goals
To establish a lasting strategic partnership, both parties must share similar views on developing the partnership. They should understand the business environment, identify issues, and collaborate on solutions. It’s crucial to engage as business partners rather than just service providers.
2. Transparent Objectives and Communication
Partners must openly communicate their intentions and objectives, creating a plan to achieve them. Clear communication helps align efforts toward common goals, manage risks, and handle discrepancies. Regular communication fosters trust, openness, and a responsible contribution.
3. Equitable Long-Term Relationship
Partnerships inevitably encounter challenges, but discussing growth plans and jointly investing in people, processes, and technology can lead to better outcomes. Commitment, fair culture, and effective communication drive such partnerships, yielding operational efficiency and sustainable benefits.
4. Scheduled Milestones and Team Coordination
Partners should establish a timeline for achieving key milestones and ensure all teams are synchronized with the agreed-upon plan. Adequate time management balances project scope, resources, and budget, communicated within the ecosystem for alignment. A structured schedule maximizes productivity, prioritizes milestones, and ensures efficient delivery.
“So, once you’ve arrived at the agreement, the partnerships are in place. I also like to tell customers you want your 3PL to do much more than just fulfill orders. You want them to add value by giving best practices.”– Scott Weiss, Vice-President Technical Sales-Warehousing and Distribution Services at Maersk North America.
Need Help Finding the Right 3PL For Your Business?
The journey of prioritizing open communication, mutual trust, and a shared commitment is a two-way street that needs to be fostered by both – 3PLs and brands.
“That’s one thing and we always know in any partnership, especially warehousing problems happen, things happen that we didn’t foresee. And then the management, the people involved in the day-to-day is so key. If you have high turnover, it goes both ways. The customer could have a high turnover.”– Scott Weiss, Vice-President Technical Sales-Warehousing and Distribution Services at Maersk North America.
If you are a brand or retailer who needs help finding your perfect 3PL partner, we can help. Reach out to one of our fulfillment experts today.