Tony Zasimovich, Vice President, Global Logistics Services, APL Logistics—The fast-changing technology spectrum is also a challenge because it requires that 3PL’s constantly upgrade their IT solution offerings—a proposition that can be time-consuming, complex and expensive to keep up with. Customers are also expecting their 3PL’s to provide an increasing level of supply chain thought leadership, especially as their relationships with specific 3PL’s progress.
What do your customers expect from you now versus two/or three years ago? How have the services that a 3PL provides changed since the recession?
Eusterman—Many of our 3PL clients have taken the offensive with respect to the business situation over the past several years. In tough economic times, our clients have been looking to Intermec for help in developing solutions that fundamentally attack the inefficiencies in their distribution center and transportation workflows; and to help consolidate mobile computing operating costs. These two issues are at the heart of every leading 3PL operation—improve baseline workflow productivity and accuracy which drives operational excellence and customer satisfaction; and implement a ‘least cost’ mobile computing strategy. We have been able to attack both sides of this equation for our customers by focusing on what we call the Intermec value engagement process. We find our 3PL clients to be very open to this process where we collaborate with our client’s operations and IT teams, our internal experts and our key partners to deliver complete business solutions and lifecycle services options to address their specific challenges.
Menner—Vested outcomes. Savvy shippers expect the 3PL’s to construct and execute on a ‘performance-based’ commercial agreement. This means that both parties share a vision for the future—starting from a commonly-agreed-to position and jointly crafting a roadmap for the future state end point. Both parties share in the success of the program as well as the downside if the agreed-to-improvements are not achieved.
Moore—In 2008 and 2009, customers demanded reduction of rates. Over the past 18 months, the emphasis changed to performance and supply. Also, innovation is now a very important attribute that businesses are expecting from their 3PL partners. At Ryder, we get innovation through deep expertise in the industry verticals we serve and it comes in several ways. When we say innovation, what we mean is engineered innovation, where we focus on delivering new value for our customers. Whether it’s a new service or a new capability, that’s what customers want.
Mount—Given the continuous increase in FedEx and UPS shipping charges, customers want the most efficient freight and shipping rates they can find. Reducing transportation costs is always a top priority for shippers and 3PL’s alike. And due to an increasing desire to streamline operations, customers want broader services—the all-in-one provider. As a result of the recession, loyal customers are top of mind for the retailer and building the customer relationship and lifetime value is important.
Zasimovich—Customers have always looked to 3PLs for more cost-efficient supply chain solutions. However, that desire became even more pronounced during the recession—which is why programs like our company’s continuous improvement program (which has used disciplines like Lean and Six Sigma throughout our global facility network) took on even more significance. We’ve been able to pass along more than half of the $28.6 million dollars in savings these programs achieved directly on to our customers, along with many increased efficiencies you can’t put a price tag on—and that’s always welcome. Most companies look to 3PLs like us for greater optimization of their distribution plans to drive down the costs of transportation and facility handling. They’re turning to 3PLs to help them ‘risk-proof’ their supply chains as much as possible. Whether it’s a weather-related incident such as a hurricane or one that’s more man-made such as a possible work stoppage, they want 3PL’s to use their networks, relationships, expertise, systems and ingenuity to help them anticipate and respond to incidents so they can eliminate or minimize potential disruptions.
What emerging market technology innovations can aid you in the services that you provide and help you better meet customer expectations? Do you plan on investing in these solutions?