Logistics 101 - RFI / RFP / Gets You ROI

Last post for January and Logistics 101 is all but done for the year…

So, you didn’t get what you wanted when you hired the last third-party logistics firm…hey, don't automatically blame the 3PL. It may be a matter of mixed signals, miscommunication, or lack of a collaborative atmosphere. The key to a successful relationship starts with a clear RFP and excellent communications between your company and the 3PL. Here are 10 tips to help you get exactly what you need from your 3PL relationship.

Send an RFI (Request for Information) before an RFP (Request for Proposal). The RFI will help you collect better data, define your true needs, and involve your 3PL candidates in developing a solution. It can also help you create a "short list" of providers who you think should receive your RFP.

Be open and honest about issues that could affect your logistics operation. When creating your RFP, and discussing your company with potential providers, include issues that don't necessarily make you look good or that are proprietary. You want, and need honest assessments.

Be specific. Give 3PL providers detailed information about what you want them to accomplish and be extremely careful about making sure the providers fully understand those expectations. Don't just tell them you want next-day delivery; tell them you want delivery by 10 a.m. If you want them to bring fulfillment costs down, give them a percentage. The 3PL then has a specific goal to meet.

Empower your 3PL personnel through training and sharing. Train your 3PL employees as if they were your own, or have them trained as your own! Have personnel at your provider's fulfillment center attend your proprietary quality training course. Give them extra systems training when you upgrade. Invite key members of the 3PL’s account team to the same conferences or training events your own management attends.

Treat the 3PL as a partner, not just a supplier. Be realistic about what you expect them to accomplish. Encourage them to be change agents instead of just order-takers, even if it means taking some calculated risks.

Don't rush responses to the RFP. Allow four weeks, at least, for a regional warehouse RFP, and six to eight weeks for a national or international RFP. Rushing this process doesn't give the provider time to run multiple iterations and evaluate what solutions will work best for you. Rush the process, and you will get a quick answer…not thorough analysis.

Ask the 3PL for solutions in your RFP, leaving room for creativity. Too many companies jump to a rigid solution model instead of putting their requirements and challenges in the RFP and asking the third party for the logistics solution. Experienced 3PLs can add valuable consulting strengths, creativity, and innovations to the equation. Don't miss out on a solution that might be more appropriate than the one you originally had in mind.

Be diligent about the process you use to collect data from internal locations or departments when putting together your RFP. Be conscientious about filtering and evaluating the results you receive to avoid a vague or inaccurate RFP that may lead the potential 3PL down the wrong path. A good litmus test to determine if your company has made its requests clear is to compare pricing responses. If there is a wide spread, something probably got lost in the translation. Using the RFI as gauge is also a good idea…

Take advantage of standard channels to maintain constant communication with your 3PL. Use e-mail, meetings, and phone calls to accomplish this. Hook providers up to your intranet and web site; invite them to internal meetings. In this day and age, maybe break out the "webex" platform, or create a logistics focused "wiki." There are plenty of collaborative platforms out there today...

Fix the problem instead of looking for a new partner. If your 3PL provider has been a good performer and has added value to your brand and it happens to stumble, help them fix the problem. Second chances bring out the best in a good logistics provider and that, in turn, will bring out the best in your logistics operations.

If you think you know it all, and are only going to outsource because you have too…think twice about doing it. The last thing a good collaboration needs is a “know-it-all.” That goes for the 3PL too…sometimes their reps have to be the smartest people in the room…if you get a feeling this is the case, then move onto the next 3PL.

Communication, collaboration, honesty, managed expectations, and realistic goals are essential to make this outsourcing challenge a success. Go for it!