3PL – Customer Apprehension

Making the decision to hand over ‘custodianship’ of your inventory can be one of the more nerve racking decisions that a company executive can face in their entire career.

Recognition of the benefits that the business will gain from a 3rd party solution, can sometimes be overridden with apprehension about the decision. There is a term in the industry to describe this – The FUD Factor, an acronym for Fear, Uncertainty, Doubt.

It is an issue that professional 3PL providers need to be sensitive to & establish a plan to alleviate these concerns well in advance of day one operations. It is key critical to deliver to the plan, review its effectiveness & look for ways to provide continuous improvement to the operation. This can only be done with both parties working in close communication & understanding each other’s challenges. Successful business arrangements are most likely to result when participating companies cooperate in planning & executing performance.

A mistake that is sometimes made by organizations is the temptation to reduce costs abruptly and in advance of ensuring the new provider has been given sufficient knowledge on the critical elements of the business. It is better to formulate a transition period covering the handover, wherever this is practical.

The key points that should be part of the planning & bring increased confidence to the project are:

  • Define & agree the goals /objectives
  • Establish a Critical Path with realistic timing & accountability
  • Communicate the operational processes
  • Share and understand customer demand & expectation Maintain a flexible approach

Ben Evans (MD of Online Distribution ) states “A partnership approach is the best route to successful logistics outsourcing. Transparency is critical – we always encourage our clients to share their profiles “warts and all”, after 26 years there really is nothing we haven’t seen! Prior knowledge of operational issues actually enhances our opportunity to add value”

It is also important to ensure that the customer views the situation from a third party’s perspective. The 3PL cannot afford failure, as such an outcome would have serious ramifications for the future of both businesses. The customer should also understand that as the 3PL carries all of the fixed costs, the motivation to “deliver superior service” is extremely high. They should also be encouraged to speak with other organizations that have outsourced their logistics to learn from their experiences and reinforce the beneficial outcomes.

If both parties take a responsible approach, understand each other’ s expectations and treat each other with respect, the 3PL experience should be a pleasant one that not only delivers the desired outcomes but enriches the relationship between customer & provider.

Originally posted by Jim Coley on 2010-07-04 updated Jan 2016-01-17


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