5 Signs that the Success of your 3PL Service Provider Relationship is at Risk

This week we take a look at 5 signs that might indicate that the success of your 3PL service provider relationship is at risk.

Maintaining effective 3rd party logistics service provider relationships requires effort from both parties.

Ultimately however, the responsibility lies with you as the logistics or supply chain manager to keep things on track.

Throughout the relationship, particularly longer term partnerships, both parties may start to become complacent about the disciplines required to sustain an effective supplier management process. Signs that "relationship fatigue" may be starting to occur include the following:

1. Emails not responded to in as timely a manner as normal
2. Operational reviews postponed or cancelled on regular basis
3. Reports submitted late or incomplete
4. Assigned tasks not completed by the agreed timelines
5. Projects delayed

1. Emails not responded to in a timely manner

In today's world email is the primary source of communication for most people and it is expected that a response will be received in a timely manner.

This expectation is no different for 3PL service provider relationships and responsiveness should be one the key evaluation criteria for selecting and managing 3rd Party Logistics Service Providers.

A timely response to an urgent operational issue is critical in many instances.

A lack of responsiveness can be a sign that the service provider's customer service team or the client relationship manager has competing priorities and is probably having to deal with the demands of too many other customers.

2. Reviews postponed or cancelled

Operational reviews can occur daily, weekly or monthly. More strategic reviews usually occur on a quarterly or annual basis.

The success of any 3PL service provider relationship is driven by a disciplined review process and this process is reliant on both parties being committed to attending the reviews as per the agreed schedule.

An ongoing review meeting  that is postponed or cancelled on a regular basis is a sign that one or both of the parties is prioritizing other activities over the scheduled meetings and that they have lost sight of the role that maintaining a regular review schedule has on the overall success of the relationship.

3. Reports submitted late or incomplete

A key part of the 3PL service provider management process is to review a series of reports that provide an overview of the volume , cost and performance of the services being provided by the supplier.

The reports and the supporting data are arguably the most important element of the 3PL service provider management process as they provide a snapshot of the operational activity. They are an essential element that enables the successful management of the service providers cost and performance.

Typically the data and the reports are prepared by the service provider and should be submitted in advance of the review.

During the review the service provider should present the report and be prepared to provide commentary on any variation to volume, any increase or decrease in the cost of the services or why there are exceptions to the expected service levels.

Reports not submitted prior the review or when the service provider has not analysed the data before the meeting are signs that the service provider does not respect how important the data and the reports are to the overall management process.

4. Assigned tasks not completed

An outcome of most 3PL service provider meetings will be a number of tasks or actions that have been assigned to the service provider.

Each task will have had a due date assigned to it and it is expected that the action will be completed on or before that date.

Tasks not completed on time are another sign that the responsible party is under resourced and prioritizing other tasks.

5. Projects delayed

Operating in an efficient and cost effective manner is a fundamental expectation of  any 3PL service provider relationship.

What sets a service provider apart from others is the organisations approach to identifying and implementing continuous improvement projects  and cost reduction initiatives.

The outcomes of these projects can have a significant impact on the operational and cost effectiveness of the services being provided but also help to enhance the relationship with the service provider.

Conversely, if the commencement or completion of the project is delayed the opposite will be true.

The lack of senior management support, the absence of a formal project management methodology and a dedicated project manager are signs that the project may be at risk of being delayed.