Don’t Let Them Underfund Your Transportation Technology Implementation

By Mike Skinner, Vice President, CLX Logistics

Let’s face it, IT (the information technology department) is either the enabler or the gate-keeper for all-too-many of our good ideas.  Unfortunately, when it comes to prioritizing IT budgets and resourcing, Logistics all too often takes a back seat to Finance, Sales, Customer Service and Manufacturing – i.e. everybody else. As a result, logistics technology projects such as a Transportation Management System (TMS) are often underfunded and/or understaffed, and therefore prone to project delays and missed go-live dates – which results in greater difficulties delivering ROI.

So what is a logistics/supply chain manager to do in convincing senior management to give us some love – to prioritize and properly fund these projects? Let’s start with, why are logistics projects, say for instance the implementation of a world-class TMS, so important?

Why Specialized Transportation Solutions Matter

It’s pretty simple really: transportation costs account for 3-8 percent of your company’s total revenues, and transportation represents the first and final leg of your ever so important supply chain. Automating and optimizing transportation activities can drive huge savings.  Providing predictability and visibility to shipments both inbound to manufacturing and outbound to customers can drive step changes in the effectiveness of the end-to-end supply chain. This has been proven over and over again by shippers of everything from yogurt to roof-top HVAC systems.  These improvements matter …… a lot…… to nearly every department in your company, to your customers and to bottom lines!

The obstacles that companies tend to encounter in pursuing such improvements stem from the fact that logistics and transportation IT decisions get lumped in with decisions to buy and implement enterprise resource planning (ERP) software.  ERP solutions from companies like SAP, Oracle and Microsoft offer transportation modules, which are typically sold at a steep discount as part of the whole ERP package.  So in acquiring ERPs, companies are too quick to determine that Transportation’s needs will be met in the course of implementing the ERP.  The problem with this thinking is that transportation activities are a lot more nuanced and complex than companies realize.  During the ERP assessment and deployment, far too little time and consideration are given to addressing the complexities of actives such as: transportation contracts and rates, customer delivery requirements, load planning and optimization, carrier integration/connectivity, and freight cost accounting/settlement.

The result?  Too little attention is paid to whether the ERP can actually address your company’s transportation requirements, and only the bare basics are developed and implemented. More often than not your company’s fancy new ERP might even make your job harder than it was before!

4 IT Challenges Logistics Organizations Face

Now that your company has spent many millions to implement the ERP, and your transportation requirements remain unmet, what next?  Decisions to find and implement the right TMS are going to fall on you.  And, although IT is a critical player in finding and deploying your TMS, IT is now entirely consumed with just keeping the ERP wheels turning for everyone else. You have some major hurdles to overcome, including:

  1. Resourcing: The needs of the logistics organization are often deemed lower priority than the needs of other departments, despite Transportation’s cost footprint and important touch points to customers and manufacturing.
  2. Business case development: Even though savings and service improvements are often significant, developing a baseline and ROI for IT projects is a complex challenge.
  3. Communication: Logistics managers often struggle to get senior management attention and to articulate their needs sufficiently to get attention on logistics projects.
  4. Capacity to staff projects: Logistics is often one of the hardest hit departments when it comes to head-count reductions, resulting in understaffed organizations that struggle to man improvement projects.

4 Steps to Getting the Buy-In You Need

So what can you do to better ensure that IT buys into the project and is held accountable for deadlines? And how can IT be made to feel like a strategic partner rather than a service provider? Here are a few ideas:

  1. Build a compelling ROI: Remember, over and over again shippers have delivered substantial savings from TMS implementations. Work with a TMS vendor, and engage your finance team to calculate and present the business case. TMS can pay for itself within the year, and pay large ongoing dividends.
  2. Engage IT early in the discussion: Once there is a business case, IT needs to be engaged in order to help identify a solution that will work. IT should be closely involved in evaluating the business case, scoping and designing the solution, and selecting the solution provider.
  3. Understand the project complexities: To implement a successful project, you need to be realistic about expectations and timelines. These projects are not easy – do not let technology vendors convince you otherwise.  They need proper attention, professional project management, and sufficient resources in Logistics, Operations, Customer Service, Accounting, and IT.
  4. Demand sufficient funding and resourcing: Enough said.

The bottom line? Logistics IT projects matter.  They drive big-time improvements.  But they are not easy.  Don’t let yours go underappreciated and underfunded.


Mike Skinner is the vice president of
CLX Logistics. He is responsible for strategic development, marketing and deployment of CLX Logistics technology-based solutions and services. Skinner leverages his experience in supply-chain consulting, information systems and operations management to help shippers design and deploy world-class technology solutions in their efforts to reduce costs and improve service.

Top 4 Challenges You Need to Master for International Shipping

By Raimond Van Kampen, Vice President of International Logistics, CLX Logistics

As increased globalization and mobile workforces continue to create opportunities for international business, it is more important than ever to realize the need for seamless global trade. Of course, international shipping is a complex service with countless moving parts, including regulations, security, capacity and legal considerations – all which can lead to a reliable and cost-effective shipment when tended to properly. Whether you are shipping one container per month, or 10 containers per day, successful shippers are aware of global challenges such as adhering to international rules and regulations, using suitable shipping methods, considering supply chain visibility, and knowing when to turn to freight forwarding and broker specialists to get the job done.

For many global companies, conducting seamless business overseas is critical to the vitality of partnerships, clientele, and sustained profitability. Oftentimes, many people within a company are dependent on the attainment of a global shipment, so avoiding delays or mishaps is imperative to ensuring a continuous and uninterrupted operation, which radiates performance excellence.

In order to continue conducting reliable and cost-effective business overseas, it is important to know how to combat the top four international shipping challenges:

1. Don’t rule out the importance of international rules and regulations. Understanding the various, and constantly changing, requirements and regulations from across the globe is critical to seamless shipping. The most common problems encountered with international shipping arise from paperwork errors and customs brokers not having the proper information about your items. To avoid significant delays or additional costs to your transportation spend as a result of overlooked logistics, be sure to collaborate with customs at origin and destination to ensure all information is compliant with regulations and procedures.

2. Get your priorities straight to determine which transportation mode is best. When choosing which mode of international transportation to use for your shipment, be sure to know your timeline, budget, and any regulations associated with the materials or goods you are shipping. If cost is a primary concern, then ocean shipments, particularly Full Container Loads, are going to be best. If timeliness is key, then airfreight is often recommended. When shipping FDA approved goods, there are separate regulations and documentation that is required, and leaning on a logistics specialist for assistant is often the best bet.

3. Recognize the importance of supply chain visibility. When shipping internationally, the importance of supply chain visibility from a customer service and financial perspective is especially crucial. Understanding where your cargo is at any given time gives you the ability to prepare for the next step – if you’re aware that a shipment will be arriving in a few days, then you can start the clearance process. This saves time and allows for quicker access and less chance for storage charges and delays, which could arise if you wait for arrival notice from the carrier.

4. Know when to ask for help and leave it to the specialists. No matter how many or how few shipments you move internationally, it doesn’t take much for a shipment to get complicated, fast. Third Party Logistics Providers (3PLs) act as an extension of your logistics services and are proud to represent your company’s name and reputation. This is why the best logistics providers employ only trained specialists who are well-versed in international shipping regulations and compliance. To maintain control and visibility of your shipment the entire time, 3PL’s:

  • Organize bookings with the carrier
  • Handle arrangements for loading or take control of the cargo at the agreed upon point
  • Work with customs at origin and destination to assure all paperwork and information is compliant with rules and regulations
  • Work with the carrier to transfer any needed information
  • Are in direct communication with the shipper and receiver for documentation and information throughout the process

It’s no secret that transferring items or goods internationally requires an experienced shipper with the necessary knowledge to cover all necessary bases. By keeping apprised of ever-changing global regulations and knowing the international savviness and capabilities of your company’s shipping department, you can determine what to handle in-house and when to lean on freight forwarding and broker specialists to avoid pitfalls and remove challenges of global shipping. In short, due diligence is key – and when it doubt, turn to an experienced professional.

It’s often the best route to take.


Raimond van Kampen is Vice President of International Logistics at CLX Logistics. He brings 25 years of strong experience in the transportation sector to his role, where he leads overall operational responsibility for the company’s international transportation and logistics activities, including ocean and air freight and managed international logistics services. Prior to joining the CLX team, Raimond worked at nVision Global Supply Chain Services as the Chief Commercial Officer, and held positions with Kuehne and Nagel, Fritz (UPS), and Wim Bosman.

CLX Logistics Honored with Solvay Chemicals Supply Chain Service Provider Excellence Award

CLX Logistics, a leader in global logistics services, announced that its chemical division, ChemLogix, has been named the recipient of the Supply Chain Service Provider Excellence Award by Solvay Chemicals.

“CLX Logistics was selected as the recipient of the tenth annual Supply Chain Service Provider Excellence Award for outstanding performance, partnership and commitment to Solvay Chemicals,” said Scott Williams, Vice President of Supply Chain, Solvay Chemicals. “In addition to providing exceptional services, their flexibility and proactive approach to addressing discrepancies directly with carriers reduced our workload and eliminated investigations.”

The Supply Chain Service Provider Excellence Award is presented to the logistics supplier that demonstrates extraordinary performance throughout the year. The award nominations are solicited from Solvay Chemicals employees who have a working knowledge of the nearly 170 critical logistics suppliers. The award recipient is selected based on employee recommendations and extensive internal performance metrics.

“We are honored that Solvay selected us as the winner of this prestigious award,” said David Vieira, President and Chief Operating Officer, CLX Logistics. “CLX Logistics is dedicated to providing true, sustainable economic value to our customers. The award serves as affirmation of our commitment to addressing the supply chain needs of our growing global customer base.”

CLX Logistics Announces New Chief Operating Officer David Vieira

CLX Logistics LLC, a leader in global logistics services announced the appointment of David Vieira as the President and Chief Operating Officer of CLX Logistics. Mr. Vieira brings more than two decades of executive logistics industry experience to his new role, having most recently served as President and Chief Executive Officer at MXD Group.

“We are excited to have attracted a proven logistics executive such as David to help drive the continued growth of CLX Logistics,” said Steve Hamilton, CLX Logistics Chairman and Chief Executive Officer. “David has extensive experience leading change and improving efficiencies across a range of business disciplines and company lifecycles. We expect him to bring immediate leadership and focus to a variety of critical operational initiatives.”

While at MXD Group, Mr. Vieira was responsible defining and shaping a $300m home delivery logistics business following a divestiture of Exel Direct from Deutsche Post World Net, and acquiring and integrating the company’s biggest competitor, Home Direct, Inc. Prior to MXD Group, Mr. Vieira served as the President of Exel Direct, Inc. and spent 25 years with Exel, Inc. a leading third party logistics business where he led teams in the Automotive and Retail markets. He earned a Bachelor of Science in Business Management from Providence College.

“CLX Logistics is pioneer in the logistics industry and I am excited to be part of its future,” said Mr. Vieira.  “In addition to focusing on our customers and their needs, I plan to help build high-performing teams to service the industry verticals and solidify our position as an industry leader in logistics.”

CLX Logistics and Kewill to Sponsor LogiChem Europe 2015

CLX Logistics LLC, a leader in global logistics services, and technology partner Kewill, a leader in multimodal transportation management systems, announced its sponsorship for the 2015 LogiChem European Chemical Supply Chain and Logistics event held on April 21 – April 23, 2015 in Antwerp, Belgium. This year’s conference is focused on integrating supply chain as a business enabler to maximize growth and improve overall operational performance.

“We are pleased to sponsor this industry leading event dedicated to providing supply chain solutions to chemical manufacturers,” said Steve Hamilton, CEO of CLX Logistics. “It provides CLX Logistics, our chemical logistics division, ChemLogix, and our partner Kewill, with the opportunity to share and enhance our global logistics solutions.”

Cosmas Hoefnagels, Vice President of CLX Logistics Europe, will act as the chairman for the conference’s Transport Optimization Summit on April 21, designed to provide insights on navigating increasing complexities to reach the optimal network design and how transport management systems are driving efficiencies in the supply chain. “I look forward to discussing supply chain priorities for the years to come and to exchange experiences and issues with a great group of speakers who all have senior management positions in the industry,” stated Hoefnagels. “Our goal is to achieve a high level of interaction between speakers and the audience through round tables, panel debates and the exchange of practical business cases.”

“Kewill is delighted to be a co-sponsor with CLX Logistics in this forum which brings the top chemical companies and the world’s most experienced supply chain experts together,” said Evan Puzey, CMO of Kewill. “The conference will enable us to engage with industry leaders about our partnership with CLX Logistics and our multimodal transportation management software solutions.”

LogiChem 2015 will host industry-leading speakers who will discuss transportation optimization, how aligning supply chain and business strategies drives performance, and improving supply chain performance using technology. For more information on LogiChem 2015, please visit to www.logichem.wbresearch.com.

About CLX Logistics LLC

CLX Logistics LLC is a global provider of comprehensive logistics management, technology, and supply chain consulting services to a broad base of industry verticals. The global company, with offices in North America and Europe, is dedicated to solving its customers’ most vital logistics challenges by leveraging a broad range of industry expertise, best-of-breed technology and a personalized, high-touch approach to deliver measurable, sustainable value. For more information, visitwww.CLXLogistics.com.

About Kewill

Kewill is a global leader in multimodal transportation management software, providing organizations with a comprehensive end-to-end platform for managing the complexities of transportation, logistics and trade compliance. The Kewill MOVE® platform helps companies reduce costs, manage volatility and gain greater visibility across the logistics value chain and gives you the insight, agility and tools you need to deliver better customer service and streamline global supply chain execution for strategic advantage. The Kewill platform supports supply chain execution activities for over 7,500 companies in more than 100 countries. For more information, visit www.kewill.com

LLamasoft and CLX Logistics Announce Agreement to Offer European Truckload and Global Ocean and Parcel Data to LLamasoft Customers

LLamasoft, the global leader in supply chain design software solutions, and CLX Logistics, a global provider of comprehensive logistics management, technology, and supply chain consulting services, announced an agreement to offer European truckload, global ocean and global parcel data to LLamasoft customers for use in strategic supply chain design.

CLX Logistics has offered a dedicated transportation benchmark service for more than 10 years. During this time, the number of companies using the service has grown substantially. Today, the CLX Logistics Benchmark database contains in excess of EUR 4.1 billion contracted transportation expenditures (no spot market) with detailed data on a full range of global, pan-European and domestic routes and a variety of transport modes. CLX Logistics rate benchmarking service will now be available to LLamasoft customers through a referral agreement.

The partnership will provide LLamasoft customers with an additional resource from which to draw valuable global reference data for use in supply chain modeling.  “The growing number of companies participating in our benchmarking proves the added value that our accurate and reliable apple-to-apple comparison brings,” said Marc Huijgen, CLX Logistics European VP. “We have seen companies that considered their processes to be best-of-breed, saving double-digit percentages after deploying our benchmark data in their procurement strategy. Hence we are excited to team up with the leading supply chain design software company LLamasoft to jointly help both our clients make better supply chain decisions.”

“Making CLX rate benchmarking service available to our customers is part of our continuing effort to help fill in missing model data—thus removing one of the biggest obstacles to successful supply chain design initiatives,” said LLamasoft president and CEO Donald Hicks. “Highly sought-after European truckload data will enable a higher level of data accuracy in modeling to help support critical supply chain decision-making.”

For more information, contact Andrew Hamilton at ahamilton@clxlogistics.com.

CLX Logistics Selected Top 100 3PL Provider For Five Consecutive Years by Inbound Logistics

CLX Logistics LLC was chosen as a Top 100 3PL Provider for 2014 by Inbound Logistics magazine for its fifth consecutive year. IL editors selected CLX Logistics from a pool of more than 300 companies based on the company’s diverse operational capabilities and experience to meet readers’ unique supply chain and logistics needs.

Inbound Logistics’ Top 100 3PL Provider’s list serves as a qualitative assessment of service providers that are best equipped to meet and surpass readers’ evolving outsourcing needs. Each year, Inbound Logistics editors select the best logistics solutions providers by carefully evaluating submitted information, conducting personal interviews and online research, and comparing that data to readers’ burgeoning global supply chain and logistics challenges.  The selected service providers, in the opinion of Inbound Logistics editors, offer the diverse operational capabilities and experience to meet readers’ unique supply chain and logistics needs.

“World-class logistics performance is crucial for companies of all sizes – from Fortune 500 to SMBs. Given the scope and scale of that challenge, IL editors recognize that CLX Logistics provides the kinds of solutions that companies large and small rely on to solve the tactical logistics issues of serving customers better, faster, and more efficiently,” explains Felecia Stratton, Editor, Inbound Logistics. “CLX Logistics is responsive and continues to anticipate evolving needs by also offering the strategic solutions required to drive business process improvement and change for customers. For those reasons, Inbound Logistics editors are proud to recognize CLX Logistics as one of our 2014 Top 100 3PLs.”

“This has been an exciting year for CLX Logistics as we united our subsidiaries under one parent company and expanded our mission to serve the transportation needs of clients in different vertical markets on a global basis,” notes Steve Hamilton, President & CEO of CLX Logistics.  “We are proud to be recognized by Inbound Logistics as a Top 100 3PL Service Provider for the fifth consecutive year as it serves as an affirmation to our ongoing dedication and support in addressing the supply chain needs of our growing customer base.”

Expect Shipment Delays Due to Unprecedented Weather Conditions

By Stephen Hamilton, Managing Director, CLX Logistics

Blame Mother Nature. Severe weather conditions over the past two months are causing significant network transportation obstructions across the country.   We are seeing a combination of scenarios where trucks are rerouted onto back roads until interstates are plowed, drivers are spending days in truck stops waiting for highways to reopen and accidents are causing significant delays and even closures on major roadways.   Many of our carriers are advising their truckers to take caution as icy road conditions and blowing snow cause major accidents across the region.  All this adds up to major transportation delays and backlogs.

Recent notices from our carriers have informed us that road closures in Iowa and Minnesota are detaining crews from getting to trains, while blowing snow and extreme cold temperatures in the Chicago area have affected carrier’s ability to process cars in terminals and interchange operations with foreign carriers.  More locally, transportation routes along the I-95 corridor from Baltimore to the North East are significantly impacted by subzero temperatures, high winds and blowing snow.

While most of the weather is focused in the Midwest and Northeast corridor of the United States, transportation interruptions are causing problems across the country.  Railroads have pushed trains out of the Midwest to avoid weather issues which, in turn, caused an overload of railcars on the West Coast. In addition, conditions are playing havoc with the tracks themselves, causing several service interruptions including train derailments.

When I talked with Rich Jousma, president of First Choice Logistics, one of our carriers specializing in bulk liquid chemicals in the Midwest, he told me that continuous bad weather is causing some of the worst transportation problems and driving conditions he has experienced in his 25 year professional career.

Based in Chicago, one winter storm after the other has slowed his fleet over the past three weeks.  Rich said that in a typical storm, the weather typically gets warmer the next day and things smooth out in a day or so.  This year, Interstate 65, which is one of his major travel routes, had been shut down for days as snow crews cleared the roadways.  Most recently, a major accident on I-94 near Michigan City involving 12 or 13 trailers closed the eastbound lanes for more than a day.  With so many road closures, he can’t keep up with delivery schedules.

Rich pointed out that the problem at this point is not capacity but weather causing havoc with transportation schedules.  Carriers are doing the best they can in these situations and continue to inform customers of freight situations.

As crews restore operations and backlog is alleviated, customers are asked to remain patient until transportation networks become unclogged and back on track.  We appreciate your understanding in this matter.  Stay tuned to your carrier service alerts and call your assigned customer service rep if you have any questions.

Five Biggest Pitfalls in Transport Procurement

Insights from European Market Study Can Benefit Shippers Globally

By Stan La Haye, Senior Consultant, ChemLogix Logistics

European market trends indicate that while transport volumes and rates continued to fall during the first half of 2013, market indicators suggest that rates will start rising again. Industry figures showed that as of Q3, road transport supply and demand was more balanced, with rates slightly rising. While a slight decrease in transport volumes is expected in 2013 as compared to 2012, a slight increase in transport volumes is anticipated in 2014 when transport rates are expected to simultaneously increase.

This data is supported by a CLX Logistics Transportation Benchmark Study conducted with the European logistics market.  A majority of participants indicated that rates have fallen or will continue to fall further during 2013, although they expect an increase for 2014.

To fully benefit from the current low transport rates, the time is now to tender and contract your freight rates again.   While simple in theory, many things can go wrong when executing a transport tender such as delays (delayed implementation of rates = less cost saving and a lower return on investment), high internal workloads (up to 400 man-hours for completing a tender process) and an intermittent relationship between shipper and carrier.

Research conducted among CLX Logistics customers revealed five major pitfalls when procuring transport that is indicative of any negotiation, whether domestic or global.  These include:

1.  Tender executed without establishing savings potential

2.  No reliable baseline on which to determine ROI

3.  Too little time, no expertise and not the right tools

4.  No equal opportunities for all participants

5.  Insufficient priority and long response times

Tender Execution Without Establishing Savings Potential

How do you know if there is a savings potential within your current transport spend? Do you use available industry benchmarks to determine where you stand compared to the market? Or is it a “gut feeling” that says it is time to tender?

If cost reduction is the primary goal of the tender, insight into potential savings prior to executing a full tender is of great added value. Think about all the lost time and resources if there is no cost reduction achieved after finalizing a tender.

Through a benchmark study, transport rates can be compared against similar companies and savings potential identified down to the lane level.  Using this insight, a well-founded decision can be made whether to only renegotiate a limited number of transport lanes or to execute a full tender when there is sufficient savings potential.

No Reliable Baseline

A reliable baseline is a realistic reflection of a company’s actual shipping profile and forms the basis of a tender.  In addition to providing an in-depth understanding of current transportation costs, a good baseline identifies transport lanes and criteria for setting rates.  When determining whether to execute a full tender, the baseline is used to calculate the savings and the success of the tender based on new rates.  An unreliable baseline leads to wrong tender focus and the lack of a savings indication.  Shippers must remember to use historical data over a representative period and adjust as necessary for future changes in the shipping profile.

Too Little Time, No Expertise and Not the Right Tools

Often, a tender is executed along with the daily activities of one of the logistics planners or managers. Executing a full transportation tender generates an extreme peak workload; 400 man hours (almost a full FTE!) over a period of 3 months is often required.  As a result, performing a tender is difficult to combine with daily work. In addition, sufficient in-house expertise is often not available to create good tender documentation and calculate transport scenarios based on new offers.

Lack of resources always results in a delay of the process and a lower return on investment. By partly outsourcing the procurement process, the logistics department is relieved of excessive burden and maximum financial results can be achieved in a short timeframe.  Prompt implementation of low transport rates results in more immediate savings!

No Equal Opportunities for all Participants

Objectivity in a transport tender is of great importance to find the best fit between the shipper and carriers. The best fit is a combination of compatible factors including price, corporate culture, quality and service.  Through an independent review and evaluation of all offers using an established correct assessment criteria (quantitative and qualitative), negotiations can be limited to a select number of carriers.

Insufficient Priority and Long Response Times

Balance the number of carriers, location and geographical coverage when selecting your transportation team.  While contracting many different carriers may provide higher savings, internal management may increase the pressure on organizational departments (think of number of audits, business reviews, invoices, contact points, etc.).   But don’t limit your carriers to just one or two.   A limited carrier base increases risk should no capacity be available within a required response time and a solution must be found on the spot market.

Often, one primary carrier is assigned per transport lane, but with a designated backup carrier. The backup carrier can be selected from the total pool of “primary carriers” to limit the number of contracted carriers, while still guaranteeing sufficient coverage and availability.

Summary

By estimating the potential savings prior to a tender, valuable time and resources are not wasted unnecessarily on a failed expedition. Ensure that a reliable baseline is set ​​to calculate the savings of the tender (and the success of the tender) and do not start a tender if insufficient resources and knowledge cannot sufficient support the endeavor.

Ensure current market data is available that can be used during project planning.  Supplement resources, if needed, with external specialists that can offer the process and market knowledge, as well as analysis tools, to maximize tender execution and secure optimum cost savings results.

Need help with executing a tender process?   Using CLX Logistics Benchmark services, we can identify savings potential prior to a transport tender, after which we are able to execute the tender quickly but thoroughly with our structured tender approach and analysis tools.

To learn more, contact Marc Huijgen, Vice President, CLX Logistics Europe, at huijgen@lhc.nl or +31(0)40 293 86 16 or Mike Challman, Vice President, North American Operations, at mchallman@chemlogix.com  or (215) 461-3842.

Prepare Your Company To Work with a 3PL For Greatest Success and ROI

By Mike Challman, Vice President, North American Operations, ChemLogix, LLC

So, you’ve made the decision to contract a third party logistics provider (3PL) to optimize your logistic operations.  While the resources and market intelligence offered by the 3PL promise to address your transportation challenges and help you better maintain a competitive edge, companies – and their staff – must be prepared to work with the 3PL and commit to the program.  Here are some keys to outsourcing success:

Upper Management Buy-in and Commitment to Program

Getting the funds and approval from executives to implement and/or expand transportation services and systems sometimes takes the assistance of 3PLs who can provide detailed explanations of the long-term benefits of specific supply chain strategies. Executive approval is necessary for supply chain programs to move forward. Experienced in providing transportation solutions to customers in the same industry but with varying scenarios, 3PLs can readily provide informed answers to the questions posed by executives and give examples of the successes and pitfalls associated with certain actions.  3PLs, essentially, become a part of the logistics team when presenting ideas and updates to the board room.

Successfully Managing Internal Rate of Change

Shippers must realize that with the promise of optimized supply chain operations, 3PLs bring with them new processes, techniques and efficiencies that must be deployed in varying departments.  As a result, supply chain solutions affect the way in-house personnel have operated in the past.  Companies must communicate and manage change activity so there is complete “buy in” at every level.   Employees of every level should understand the reasons for change, their role and the corporate implementation schedule.  Lack of visibility of new supply chain strategies throughout the company can result in key players not knowing what to do to affect change.  At the same time, lack of flexibility to change by employees can cause implementation delays and impend the overall success of the new supply chain strategy.  Changing the ways activities have been done in the past may be one of the hardest challenges faced by shippers.  Inability to make changes may results in loss of savings as the hard changes make the most effect in driving out cost.

Cross Functional Commitment

Personnel in varying departments at different management levels must accept the supply chain solutions presented by a 3PL for the company to succeed.  While corporate executives might be all for change, it is actually the department heads that must implement new processes and direct their staff in new activities.  Communication is key for “buy in” as everyone from the warehouse and dispatching to accounting and customer service is critical component in change.   Plants and business units may be upset with loss of control over specific activities that they managed for many years.  Open discussions on the reasons and methodologies for deploying a 3PL to optimize current logistic operations may be warranted with different groups to ensure a smooth transition.

Make Supply Chain Activities a Priority

Most companies are extremely busy and juggle a number of competing projects.  As a result, staffs often “multi-task” to the point that they have too many projects on their plate.  Lack of resources and over activity is often the reason some shippers elect to outsource their logistic functions.

While busy, shippers must make the 3PL and associated supply chain activities a priority to obtain the qualitative and cost improvements promised by contracted managed services.  Companies must fully commit to make appropriate in-house changes according to the implementation schedule.

On-going Commitment – Solution is Never Final, Always Evolving

In addition to satisfying the terms of a contract to manage specific freight activities on a monthly or cost-per-transaction basis, 3PLs should proactively present cost management ideas as part of their services. Rather than wait for problems to arise, a 3PL should lead a periodic review of supply chain processes with appropriate personnel to discuss new transportation solutions, specific cost reduction ideas, service levels, and any issues that the client may have with current operations.

On the client side, shippers must make a commitment to truly partner with a 3PL to inform them of their business strategy and competitive landscape.  Without in-depth information, a 3PL cannot create a well-defined process that meets corporate needs and requirements.  A non-disclosure agreement should be established so a 3PL and client feel comfortable exchanging information.  And as the supply chain evolves, companies must disclose new business strategies, threats and competitive information to 3PLs to constantly re-evaluate current supply chain strategies and make necessary adjustments.

Working together, the 3PL and shipper should continue to assess performance and set new goals that enhance supply chain performance.