When a company chooses to outsource logistics and transportation (see Transportation and Logistics: Internalize or resort to Outsourcing?), the first question that arises is how to select a good partner.
The supply of logistics and transportation services is large and tends to grow, so there are many options. The risk that the company does not select its logistics partners well is equally great, because the temptation to favor the price factor tends to be rather fallacious.
If logic started out as a simple service provider, today, companies need a strategic partner that enables the development they want for their business.
Like personal relationships, in the first instance it is fundamental to align expectations and identify possible “zones of conflict” (Ruzzier & Scrabotic, 2012). Much more than enumerating punctual ingredients for perfect recipe, it becomes crucial to know how to question the essentials in a potential business partner.
1. Expertise in the specific needs of the company
Regarding transport and logistics services, the expertise in the processes inherent to the reality of each niche assumes the leading role.
The requirements of the activity of a textile company, for example, are very different from those of a company specialized in the production of equipment for the petroleum industry, in terms of cargo handling, transportation procedures or even inherent bureaucracies’ distribution.
2. Company Culture and Communication
Is the Organization’s culture compatible with ours? Very divergent organizational cultures prevent the success of any partnership, soon after birth.
Nevertheless, although it is a transversal and elementary factor for any relational dyad, effective communication is an excellent predictor of weighted choice and success of a partnership. It is necessary to define exactly what one wants and how, what one expects and demands, so that a plan of action can be established, and setbacks or disappointments can be avoid.
The flexibility to accept and follow the changing needs of customers or markets, to develop different and diverse solutions, so urgent in the current panorama, are the apogee of a “legs-to-go” partnership.
These demands only make sense within a trust scenario, the sine qua non factor for the establishment of any relationship, commercial or otherwise. Especially when it involves sharing with third parties goals and visions.
We have seen an expansion in the paradigm of decision-making in the Business world, which tends to go beyond the inherent aspects of the business or merely financial. If it is clear that financial benefits are a common business priority, much more clearly is the search for competitive advantage through the sharing of technical knowledge, resources and influence.
5. Monitoring indicators and continuous improvement
Is it a company that measures what it does and practices continuous improvement? If this is not the case, you will have difficulty knowing if logistics management is effective, what is the margin for improvement and how to improve it.
6. Customer Service
Does your partner make a clear commitment to customer service? More than a set of good practices, this is a matter of attitude. If it is not in the company’s DNA, it will be harder to change.
And for your company, what is absolutely indispensable in a business / transportation and logistics partner?
Ruzzier, M., Scrabotic, A. (2012). Logistics Outsourcing: Lessons from Case studies. In Managing Global Transitions, 10 (2): 205-225.
John Langley, Jr., Ph.D., and Capgemini. 2013 Third-Party Logistics Study The State of Logistics Outsourcing Results and Findings of the 17th Annual Study