When evaluating a 3PL, the culture should definitely be considered.

Every company has a culture, sometimes called organizational culture or corporate culture.  The culture refers to the values and attitudes of employees in the business or organization.  Each company has it’s own unique culture that can be a great benefit to or a big detriment to performance.

From my experience as both a supply chain consultant and a 3PL manager, the right type of culture means everything in the logistics business.  The culture isn’t just some abstract concept. It is evident in the day to day behavior and performance of the employees.

When evaluating a 3PL, look at the following traits of the company culture:

  1. Communication.  Lack of good communication is the number one problem in the logistics business.  Because logistics moves quickly, the communication process is often shortchanged.  A good 3PL will facilitate good communication between all parties (clients, ultimate customer, suppliers, and other logistics companies).  Follow up emails, timely phone calls, web based IT systems, etc. are all indicative of a good 3PL.
  2. Integrity.  Integrity is a firm adherence to a code of moral or artistic values.  There are many ways a low integrity 3PL can hurt a client:  higher than market pricing, using cheaper carriers, cutting corners and hiding problems.  When a 3PL hides a problem, it hurts you today, but it also limits learning and the opportunity for future improvement.
  3.  Proactive.  In the logistics business, one extra phone call checking on a pickup or a confirmation email regarding shipment details can save clients a lot of money.  So finding a 3PL that values proactivity and maybe even a little healthy paranoia should be at the top of your list.
  4.  Responsive.  Logistics is a time sensitive business and you need a 3PL that responds quickly to your requests.  A 3PL without a quick response culture is going to cost you money and late shipments.
  5.  Ownership of problems.  There will be screwed up shipments and a good 3PL will take responsibility for getting the shipment back on track.  If a 3PL made a mistake, they should take financial responsibility for fixing it.
  6. Process orientation.  A good 3PL will have processes to ensure that their service is effective and efficient.  Processes also enable cross training and continuous improvement.  A good 3PL will define processes for important functions and communicate them to both their employees and clients.
  7. Continuous improvement.  Closely tied to process is continuous improvement.  As a 3PL learns more about the client, there should be improvement (lower cost, higher on time performance, etc.).  First, the 3PL performance should be measured and secondly, the client and 3PL should have a continuously updated plan for improvement.
  8.  Measurement.   The best logistics companies use measurements (metrics, KPIs, etc.) to monitor their performance.  There should be key process indicators (KPIs) for the most important aspects of freight including: cost, delivery, damage, late fees, billing issues, etc.  Measuring performance enables a client to objectively judge a 3PL.  It is hard to manage something you can’t measure.

Bottom line:  Determine the type of culture you would like to see in a 3PL.  When checking references, ask about the company culture and watch carefully how the company performs because it probably gives you a good sense of the underlying culture.

Questions:   Do you agree with the list?  What cultural traits would you like to see in a 3PL?