We should be continuously looking at ways for improving 3PL performance. If we are doing our jobs properly we will have a process in place for monitoring 3PL performance against an agreed set of KPI’s and any genuine case of poor performance will have been identified as part of this process and a corrective action plan will have been put in place.
Sometimes however , others will feel that your 3PL is not meeting their expectations. Sometimes this will a genuine case of poor performance as described above but often times it will be based on their perception of how the 3PL is performing at that time.
As 3PL service provider managers we are ultimately in the business of managing the perception of how other people view the quality of the service that is being provided by the 3PLs that we manage on a daily basis.
Whilst the perception may not necessarily be the reality it is an important part of our jobs to be able to manage this type of situation effectively.
The following three steps can be taken to validate the perception and to address the reality.
- Validate the situation
- Increase the review frequency
- Focus on the sum of the parts
Validate the situation
The first step is to improving 3PL performance is to determine if the perception is real. It is naive to expect that your 3PL will meet your expectations 100% of the time. Furthermore, no 3PL will commit to being able to do this. A realistic target is 97% but your goal should always be 100%.
Quite often the perception that the 3PL is not meeting expectations will be based on an incident or a negative experience that is unacceptable in isolation but not necessarily a reflection of 3PL’s overall performance.
The only way to validate the situation is to revert to the facts. As previously mentioned we should have a series of KPI that we are using to manage and monitor the performance of our service providers. Every KPI should be supported by a data set that includes both the transaction information and the timestamps relevant to the transaction.
For example if we are measuring the end to end delivery performance, the transaction information will include details specific to the order and the timestamps will include things like the date and time the 3PL received the order, the date and time the order was allocated to a pick run, the date and time the order was picked, packed and staged ready to ship and the date and time the order was actually collected and delivered by the carrier.
Firstly we need to use this data to determine both the overall performance and the performance in relation to the specific incident against the agreed KPI expectations. If the results support the perception, then we need to proactively implement the below mentioned steps.
If the overall performance is in line with expectations but the specific incident is not, then we need to acknowledge there was an issue but also communicate that it is unrealistic to expect 100% of all transactions to meet our expectations and to continue with the process of proactively monitoring and measuring the 3PL’s performance.
Increase the review frequency
If the overall performance is not in line with expectations, then the second step to improving 3PL performance is to increase the frequency that we measure and monitor the service providers performance. Even though there might already be a daily or weekly review process in place it is most likely that this process is focused on simply executing the process rather than measuring the performance of the process against the agreed KPI.
KPI performance is usually reviewed monthly. A monthly review is OK if everything is on track but if the 3PL is not meeting your expectations then a more regular review should be implemented.
A weekly review for example, will not only sharpen the focus of the 3PL as they will need to review and present their performance on a more regular basis but it will also help you identify and fix whatever is contributing to the poor performance much quicker.
One week of poor performance is much better than a months’ worth.
Focus on the sum of the parts
The last step to improving 3PL performance is to focus on the sum of the parts
Key performance indicators typically measure an end to end process but usually will also be a combination of other sub processes that themselves can be measured separately.
When we have a situation where the end to end process is not meeting our expectations we should then start to examine each of the sub processes to identify which of the parts is affecting the whole.
In the example of the to end delivery performance, when we review each part of the process we are likely to be able to isolate the part or parts that are causing the issue and we can then quickly take the appropriate action to rectify the situation.
For example, if we can determine that the picking and packing part of the overall process is taking longer than expected to complete we can then focus on trying to understand what is causing the delay and then developing a plan to fix it.
Regardless of whether your 3PL’s poor performance is real or perceived, the three steps described above should from the basis of your service provider management process and when applied effectively will go a long way to improving 3PL performance and ensuring your 3PL service provider consistently meets your expectations.
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Jason Darnstaedt says
This is why it’s so important for there to be an ongoing dialogue between a client and a 3PL provider. It ensures that everyone is on the same page at all times. Both parties know what the expectations are.
Scott Leydin says
Hi Jason – Thanks for your comment. You are spot on, a disciplined process of management that forces both parties to interact on a regular basis is the key.