The Bee Hive

As more companies turn to 3PLs for assistance, they're gaining confidence in these providers' ability to deliver more than just day-to-day tactical solutions. Many companies have "great expectations" for 3PL providers, expecting solutions that may be "undeliverable". I can think of four key issues even the best 3PL shouldn't be expected to solve.

 Fixing a dysfunctional organization.

Anybody who's been in business a while knows politics isn't exclusive to Putrajaya. Many organizations have so many competing agendas - and so many players and departments that don't get along - that even Kofi Anand would find it difficult to negotiate a cease-fire.

No matter how skilled your 3PL, it can't resolve these conflicts for you. For one thing, 3PLs are operators and consultants, not counselors. For another, the commitment to communication and teamwork must come from within. Granted, there are ways 3PLs can help. For example, they can provide an objective point of view about how to approach certain logistics challenges and can offer a fresh perspective on how to structure your logistics process. They can even point out opportunities for dialogue. But they cannot make or keep the peace within your organization. Nor can they do their best work when they're caught in the crossfire.

Repairing strained client or vendor relationships overnight

Many shippers turn to 3PLs to help improve their customer service. For some, this is simply an effort to make their companies that much more competitive. But for others, this may be a long-overdue attempt to restore significantly damaged customer and vendor trust. When that is the case, don't expect your 3PL to be an immediate success. Although your 3PL can make rapid improvements in your service levels - minimizing late or inconsistent shipments, short orders, transportation damage, and claims issues - it won't help you regain your customer's confidence overnight.

Establishing a good reputation takes a long time, but losing it can happen very quickly. Customers must see a trend of positive performance through your 3PL before they'll be willing to believe your company has turned over a new logistics leaf. The same logic applies to relationships with vendors, a key audience you should never neglect or abuse.

Resolving enterpris-wide systems issues

In today's information-driven age, companies are anxious to know how their 3PL's systems can add value to the supply chain. Although the answers vary from provider to provider, one response is consistent: 3PL's strength in this area are largely restricted to procuring, developing, and integrating supply chain information systems. as a result, 3PLs aren't the best solution for order processing, manufacturing control, or materials requirements planning. you need to come to me for those!

Nor should you expect 3PLs to develop interfaces between their systems and yours without some input and involvement on your part. No one knows your system as well as you do. Although 3PLs can provide supply chain information solutions effectively, they should not be confused with total systems providers.

Compensating for a poor corporate strategy or uncompetitive game plan

Much has been written about how the effective use of 3PLs can help companies improve their supply chains and about how these improved supply chains can, in turn, enhance everything from a company's profitability to its competitive advantage. But that doesn't mean a 3PL is a panacea. An inferior product delivered to the right place at the right time and in the right condition is still an inferior product. and a poorly marketed product will probably still languish on the shelves even thoug its handling and delivery may have exceeded retailer expectations.

Even the best 3PL and the most brilliant logistics strategy cannot salvage a poor overall corporate strategy or a misguided set of competitive assumptions. 3PLs can have a big impact on your success, but they're only one piece of a larger competitive puzzle.

I don't mean to imply 3PLs have no value. They certainly do. Nor am I trying to suggest that you shouldn't raise the performance bar a bit when you go to an outside provider. In fact, companies should set more aggressive objectives for their service providers than they set for themselves. But these objectives should have some grounding in the reality of a 3PL's capabilities. If they do, your great expectations have a far greater chance of being met.