Building Strategic Partnerships with 3PLs and Carriers with Don Dovgin
Don Dovgin and Joe Lynch discuss the advantages of building strategic partnerships with 3PLs and carriers. Shippers who develop strategic partnerships with 3PLs and carriers get better service and lower costs than shippers that switch from one carrier to another based on the lowest cost.
About Don Dovgin
Don is the Director of Engagements at Maine Pointe. Don was born and raised in the Chicago metropolitan area. Don started his career working as a mechanic at American Airlines. Don rapidly moved up the org chart at AA and eventually landed in the freight and cargo division where he learned first-hand about air freight, distribution, trucking, and supply chain management. Don earned both his undergrad in business and his masters degree at night school. Prior to joining Maine Pointe, Don held a series of positions with increasing responsibility at Accenture, Ryder, Transportation Management Group, and Roadnet/Omnitracs.
About Maine Pointe
Maine Pointe is an implementation focused consulting company that specializes in procurement, logistics, and operations. Their goal is to accelerate measurable improvements in EBITDA, cash and growth across the plan-buy-make-move-fulfill supply chain to deliver the greatest value to customers and stakeholders at the lowest cost to business.
The Consequences of Not Building Strategic Partnerships with 3PLs and Carriers
- Service failures including shipments that are late, lost or damaged.
- No customization because neither the shipper nor the provider has invested in the relationship.
- Capacity and availability may become a problem in tight markets. 3PLs and carriers are always looking for business, but when capacity is tight, they will take care of strategic customers before servicing transactional customers.
- Cannot fully leverage technology and technology integration which leads to problems. If a shipper decides to use multiple 3PLs, rather than develop a strategic relationship with one, they may not be able to gain the full benefit of system integration. Shippers may find themselves using several different systems and processes. They may not be able to view and track all their shipments in one place. Additionally, KPIs and business intelligence must be managed internally because no one carrier or 3PL has all the data.
- The data harnessed and then harvested from transportation management systems is extremely valuable for insights and future carrier negotiations – trading these insights for a one-time lower price is short-sighted.
- Lack of account familiarity is a problem when a shipper uses a lot of different 3PLs and carriers. The 3PL/carrier never fully understands the shipper’s business requirements.
The Process for Building Strategic Partnerships with 3PLs and Carriers
- Select the right partner for your transportation and logistics business. Involve all internal stakeholders in the selection process to ensure the carriers and 3PLs ultimately selected can provide a world-class solution.
- Establish trust and mutual respect with your 3PL and carriers.
- Don’t wear out the welcome mat. As a shipper, become a shipper of choice. Expedites and special requests are a necessary part of logistics, however, shippers who plan and communicate better make better partners.
- Be patient and expect ramp-up issues at launch. The shipper, 3PL, and carriers should develop a launch plan that includes onboarding, training, system integration along with a regularly scheduled launch meeting. Even with careful planning, there will be issues. Encourage the 3PL/carriers to share the problems and solutions. Constructive feedback should be readily given and received.
- Make sure the partnership is win-win. Spend the time required to build the relationship. For the shipper, learn about the problems that your carriers and 3PLs have. Ask what you can do to improve your interactions and touchpoints. Become a shipper of choice. For 3PLs and carriers, learn about your customer’s industry and their biggest problems. Focus on continuous improvement and customer experience.
The Benefits of Building Strategic Partnerships with 3PLs and Carriers
- Improved service performance and cost reductions as the shipper, 3PL, and carrier network analyze and optimize the logistics and transportation function.
- Customized solutions that make shipping faster, easier, and less expensive. When a shipper develops a strategic relationship with a provider, it enables the provider to invest in developing a customized solution for a shipper. For shippers who don’t develop strategic relationships with 3PLs and carriers, they will not a customized solution or the results that come with it.
- Additional capacity and availability even in tight markets. Shippers who have strategic relationships with 3PLs and carriers typically do a better job forecasting demand, which makes it easier for carriers to support your business.
- Fully leverage technology and technology integration which streamlines the shipping process and provides invaluable insights, KPIs and business intelligence. Those insights will lead to service improvement, reduced costs and enhanced forecasting.
- Account familiarity which builds relationships, improves communication, speeds problem resolution, and a better understanding of your business requirements.
- For shippers, build strategic relationships with 3PLs and carriers to ensure that your company gets world-class performance from your 3PL and carriers.
- For carriers and 3PLs, develop your people, service offering and technology so your company can become the type of service provider that top shippers want to partner with.