One of the main challenges for shippers in today’s highly competitive transportation and logistics marketplace is the challenge to select the “best” freight carrier and/or 3PL logistics service provider for the movement of the company’s products.
The first step in this selection process is to clearly identify what is meant by the term “best.” It’s a fact that some companies consider the “best” carrier or 3PL to be the company that charges the least amount of money for the services they provide. Don’t get me wrong, price is a major factor in any business decision, but the better way to assess the “best” carrier or 3PL when it comes to cost, is to base the decision on “value” rather than solely on cost.
In this shopping process, there are also those companies that immediately discard the lowest and the highest bidder response when they are part of a Request for Proposal submission. That makes no sense whatsoever, because either one of the discarded respondents just might provide the best overall value for the company seeking these services.
The real issue is the fact that every company should determine their own set of values for carrier and 3PL service provider selection. What’s important for company A might not be important for company B. Each company must make the selection criteria fit the needs of their own operations.
So, how does a company begin to assess the values that are critical for their business? There must be a team approach to making the best possible decision for the company.
This can be achieved by creating cross functional teams of individuals that will ultimately be impacted by the final selection decision these are the folks that actually have “skin in the game.” This team should be represented by a member of the Corporate Finance team for obvious reasons. It should include members of the Operations team at both the corporate level as well as the local level, such as a distribution center operations team member, again for obvious reasons.
And, it is also critical to have a corporate sponsor or advocate, someone from the corporate executive level as part of this decision making team. This corporate executive level advocate must have the ultimate responsibility to ensure that the decisions the team makes is solely based on what’s best for the company and not just for some, (or for that matter all of the individuals), that make up the team.
Having a corporate executive advocate involved with these teams might be difficult in some businesses however there is so much at stake here that it should always be considered. It’s a fact that companies never track the costs associated with making the wrong decision and yet they will overlook the importance of assigning a corporate executive to these teams. That’s a mistake they will regret for a very long time.
to receive our FREE white papers: