When it comes to how a shipper defines the value of a logistics provider or 3PL to the bottom line, there are often several Key Performance Indicators (KPIs) and Logistics Metrics taken into consideration. Every company knows customer service is important; but it is seldom well-defined, and even more rarely measured in logistics operations.
Hiring a Logistics Provider is NOT Transactional, but Relational
Unfortunately, there has been such turmoil in the world of freight brokering and third party logistics, that as of October this year freight brokers and transportation intermediates will have to have at minimum a $75,000 freight broker surety bond in place. This was established to help weed out those who look at providing logistics services as merely transactional and not one of sustainability or continuous improvement over the long haul. If your logistics provider has not dedicated a customer service representative to your account or a go to department when any issues arise, how are you confident they are putting your best interests at heart?
Customer Service is Now the Standard, Not the Exception
Many logistics providers cite standard KPIs such as on-time delivery and order fill rate as proof of their customer service prowess. Others, however, insist customer service falls into its own category, and deserves its own standards of measurement.
Service providers stand out by adding value, and customer service is a substantial part of the equation. Its growing importance means customer service must be made more measurable—as the adage goes, you can’t manage what you can’t measure.
Your logistics provider should provide the following:
- Proactive customer service: If the company is experienced and is good, they should always be on the lookout for common shipper issues, such as freight invoice auditing and claims. Regular checks should be done to make sure your needs as a shipper are met.
- Easily work with you and YOUR customers: How does your logistics provider handle when your vendors inbound to you? Freight routing should be a standard experience and you should know exactly what is going on through automatic tracking notifications and emailed bills of lading.
- Provide powerful logistics technology with deep reporting and analytics: You should have access to 24/7 visibility of all your freight shipment activities with the ability to access invoicing online. Are your shipments on time? Do you know the reasons why what you were quoted and what you were billed are different? Is it easy to use the technology? Technology is no longer a “wish to have”, but a “need to have”. This technology should also continuously improve over time, offering you, as the customer value over time, not diminishing returns.
So, as a shipper, what should you consider when scoring your 3PL or Logistics Provider? Here are some considerations to add to your KPI scorecard:
- Time taken to answer calls or fulfill quote requests. If you leverage a powerful TMS or freight management software, typically your rating of freight costs are calcualted automatically, and this should include quotes.
- Timeliness of electronic data interchange transactions, status updates, and reporting. Your provider should offer integration and have a dedicated team handling EDI with carriers.
- Frequency of end-customer visits and customer surveys. Does your provider simply ask “How are we doing?” Don’t be afraid to give honest feedback. As long as the provider has a strong philosophy in logistics of improvement, the truth should’t hurt.
- Flexibility demonstrated by the service provider. Logistics providers need to understand the more they know your goals, and align with them with custom service offerings, the better all can attain those goals.
- Engagement demonstrated by customer service staff. Fundamental thought here, but even if over the phone does your customer service rep, “Greet you with a smile?”
- Performance in executing escalation processes and decision trees. As a shipper, sometimes you need to make sure you can get in touch with those at the top. Logistics providers should stay transparent and make it easy for you to reach out to management and leadership.
- Frequency and quality of supply chain recommendations. A logistics provider should be well versed in the industry, thus able to offer considerations to further improve your supply chain.
It’s all well and good for a 3PL or logistics provider to address customer service and other requirements at the outset of a relationship but shippers should judge 3PLs on their ability to monitor the business and offer ideas to optimize the network as the business changes. This will allow you as a shipper to better control your freight spend to the best of your ability and be a leader in the industry.
In today’s freight logistics environment, technology is a must, but it’s customer service which separates, as they say, “The men (and women) from the boys (and girls).”