Have you ever spoken those words or expressed a similar sentiment? If so, you’re not alone. In fact, in a web survey I conducted a couple of years ago, along with a series of think tank sessions, “Not being proactive enough” was the number one compliant shippers had about their 3PLs.
“Proactiveness” (or lack thereof) was also the main topic of discussion at a shipper meeting I attended recently, which was hosted by a leading 3PL. The fact that this topic came up did not surprise me. Again, I’ve heard shippers complain about this for more than a decade. But what surprised me the most, and what I took away from the meeting, was that there is no one-size-fits-all definition of what shippers mean when they say, “I wish my 3PL was more proactive.”
For some shippers, “being proactive” means they want their 3PLs to proactively present them with new ideas to reduce costs, improve productivity, become more flexible and agile, and so on. They want their 3PLs to “tell us what we don’t know already” and to develop and implement innovative ways for them to transform their supply chain and logistics processes and networks.
I had always assumed that this was the only definition shippers used when they spoke of 3PLs needing to be more proactive, and as I’ve written about in the past, it’s a difficult standard for 3PLs to meet because existing contract structures (short term, transactional, etc.) limit the amount of risk and investment a 3PL is willing to take on (for related commentary, see “Have an Economist Negotiate Your Next 3PL Contract” and “On Courage, Trust, and Patience in Logistics”).
But as I learned at the meeting, this is not the only way shippers define “proactiveness” (which I don’t think is a real word, but it should be).
For many shippers, “being proactive” also means they want their 3PLs to provide them with insights about industry trends and leading practices. In the area of transportation, for example, they want their 3PLs to provide them with data and analysis about what’s happening with rates and capacity across different modes, and they want their 3PLs to provide them with advice on what actions (if any) to take in response. They want insights on pending legislation and what impact they might have on their business and operations, as well as what steps they should take to mitigate the risks and impact. They also want to know about leading practices in their industry, the 3PL’s perspective and analysis on macro-economic trends, and what’s happening in other parts of the world that could impact them, directly or indirectly, down the road.
Compared to the other definition, this one is much easier for 3PLs to meet, at least in theory. Much of the knowledge and insights that shippers are looking for already exists within a 3PL’s organization. The main hurdle, as I described in my recent posting, “Operational Excellence is Not Enough–Why 3PLs Must Leverage Their Most Valuable Asset,” is making customer engagement management a priority.
So, if you’re a shipper and you want your 3PL partners to be more proactive, what exactly do you mean? How do you define proactiveness? And if you’re a 3PL, what is your response to this ongoing complaint? Why isn’t customer engagement management a priority? Post a comment and share your viewpoint.
Interesting article Adrian. We got similar feedback while at FedEx. The issue is that the customer is asking the sales person for this knowledge/research/info/benchmarketing, etc. And it’s not in a typical sales person’s MBO’s (nor do they have the time/resources) to provide this. So what some providers do is create a ‘Consulting/Industry/etc’ group that supports sales on this efforts, yet they report to Marketing or some other non-sales P&L. And then priorities change, numbers are not hit, budgets are cut, etc, and their initial goals are adjusted. And sales keep getting measured on $ revenue brought in.
Adrian – first let me say I appreciate receiving Logistics Viewpoint, I always find your writings insightful and useful. This particular viewpoint very much interested me, along with others at Transplace. One of our GM’s forwarded it to me and said “sound familiar?” I must say, yes…this does sound familiar and something we have heard from our customers. However, I feel compelled to share with you some of the things we are doing along the lines of being proactive with our customers. As I’m sure you are aware, the Transplace Blog is a terrific place to gain tremendous knowledge directly from our CEO Tom Sanderson and other industry economists and insiders. Many of our customers use the information from the blog to assist them with supply chain decision including assistance with setting annual budgets for their departments. This is also a place you can find updates on recent legislation that affects transportation. The feedback we receive from the information on the Transplace blog has been overwhelmingly good. In addition, we have really focused on raising the bar with our Quarterly Reviews with customers. We are focusing more on strategy, value-driven initiatives and being proactive as opposed to simply reviewing the results of the past quarter. Most everyone involved understands the KPI’s for the past quarter, they are looking more to Transplace for guidance on setting strategic vision and making it actionable. We have found that a commitment from both sides is critical. We work together to identify initiatives, prioritize, resource and actually drive implementation of the initiative. This is all made possible by a willing and committed customer. Once success is gained you have momentum…early wins and momentum help build credibility for future initiatives. It is also key to measure results and ask the question – did we deliver real business value? Finally, and most recently, we are having more customer-centric events such as the latest CPG Summit. This was the 5th annual event that brings together the thought leaders from our CPG customers to discuss issues such as collaboration (real-executable collaboration), freight bid strategy for 2012, and benchmarking. There will always be room to improve in this area, but I wanted to share this perspective and approach.
Mark McEntire, VP, Operations @ Transplace
Timely post, Adrian. 3PL proactivity is certainly a hot button these days. Manufacturers are right to demand value-driving innovation from their 3PL partners. But we find that often the root cause of this “innovation gap” is not lack of ideas; it’s a lack of context to drive new thinking. It’s important for shippers to involve 3PLs in long-term planning and strategy, versus just execution. What’s urgently needed is 3PL participation in supply chain strategy at a more detailed level, and earlier in decision-making processes. 3PLs need to be involved in the WHAT as well as the HOW. Kane Is Able has developed a white paper on the subject that talks about a new “embedded 3PL” model for managing a logistics outsourcing relationship. In an embedded model, a 3PL resource is located at the customer location and participates in all supply chain meetings as a seamless extension of the customer’s organization. This is different than the traditional “strategic account manager” model, which is inadequate to meet today’s supply chain pressures and the absolute need for innovation and ongoing cost savings.