With the increasing level of vertical integration, the eight Rs of logistics become more and more crucial. Besides the right (“R”) place, good, quantity, quality, costs, customer, information and time a 9Th “R” is vital to profit in the upcoming Hyper-VUCA world: The right consultancy. It is crucial to have the right consulting partner on your side who has the understanding, tools and proof to face upcoming challenges affecting the way you do business tomorrow.
In our previous article we demonstrated CAMELOT’s approaches to overcome hurdles within your network re-design and realize besides lower safety stocks also double-digit cost savings by applying e.g. CAMELOT’s logistics analyzer.
In our network re-design projects, we advise to review your current portfolio of 3PL logistics service providers (short: LSP). Did you contract too many LSPs for same services? Can you reach your desired target customer base in required lead times? Does your LSPs hinder your own further growth due to e.g. capacity bottlenecks? Can your LSP use your predictive transport planning data to avoid transport capacity shortages? These are exemplary questions we might ask as an introduction to our LSP review process. Moreover, a market review from the perspective of a LSP can also be conducted.
Checklists for quick improvements
However, if the findings of our review process uncover evidence that a portfolio adjustment is advisable, we can accompany you through the tender process. You will then benefit from CAMELOT’s best-practice approaches to shorten time from market research to signed contract. Methods of choice are e.g. workshops respectively a fit-gap-analysis and checklists for quick wins. Additionally, we give guidance to avoid typical pitfalls during the tender process. What are typical pitfalls? We differentiate between the view of a manufacturing and a service providing organization, like an LSP, because pitfalls show differences in both models. Here some brief examples:
Two different perspectives
The manufacturer perspective:
- Make-or-buy decision based on poor information basis
- Internal power struggles between departments
- Too narrow or wide spreading of RFQs, not reaching the LSP you want
- Uncertainty of quality and cost targets leading to non-transparency for LSP
The service provider perspective:
- Target customer group does not match with own capabilities
- RFI process takes too long, importance not clear to project members
- Final contract draft content differs to original specification sheet
- Non-transparent pricing to potential customers
LSP Market is not constantly monitored
In many of CAMELOT’s projects we discover that customers do not continuously check or survey the LSP market for new service offerings like enhanced lead times on specific relations or value-added services. Though, challenging your current LSP setup is crucial in order to verify to have best partners contracted to satisfy your demanding customers and fulfill internal cost restrictions.
Do not change portfolio continuously
However, we do not necessarily advise to change your LSP setup on a regular basis. Building long term relationships with LSPs and joint growth can lead to process cost savings – for both sides. For example, harmonizing the IT infrastructure and sharing e.g. volume information early improves workload foreseeability for both parties which then can be handled more efficiently. Potential risks of entering as well as developing a new market can be reduced by a strong partnership of logistics and industry.
Spot tendering for specific orders
Besides tenders for long-term contracts, there is also “spot tendering”. Normally this is done by at least one employee who is comparing different prices by calling LSPs or sending e-mails. Depending on your software, there are ways to automize this process to a level where you only have to confirm the offer which is selected by the system. Selection criteria and level of automatization can be adjusted, of course. An integration can be done in your existing TM system. However, increased automatization releases capacities which are more efficiently used elsewhere.
In summary, CAMELOT is capable of end-to-end guidance within a tender process. It does not matter if it is regarding a selection for a long-term relationship or about to optimize the tender process itself. We provide e.g. own-built checklist and best-practice approaches. Moreover, some of our consultants have a long-year LSP background and know service quality from the insight.
Click here to learn more about CAMELOT’s tender solution.
In our following and last article of this series, we will have a look into realizing your strategy in operational tools and best practices.
All articles of the series at a glance: