What is the path to building successful and lasting 3PL-customer relationships?

That was the main theme of a panel session I led at last month’s MercuryGate User Conference 2013, which included the following 3PL executives:

• Shelli Austin, VP at Integrated Distribution Services (IDS)
• Michael Bartz, CIO at ReTrans
• Jane Sandifeer, VP Business Solutions at Advanced Shipping Technologies
• Brad Stewart, President at Rockfarm Supply Chain Solutions

The panelists talked about the importance of trust and transparency, and the need to truly understand customer expectations and desired outcomes. They also talked about how 3PLs and customers need to clearly communicate with one another on an ongoing basis, ideally across multiple points of contact. Technology also plays an important role in creating lasting relationships, particularly when it comes to providing customers with insights and market intelligence (BI/analytics) and enabling new processes and responding to exceptions quickly. And of course, the panelists talked about talent and how “human IP” is becoming a critical component of their value proposition to customers.

Simply put, the panelists underscored many of the points I raised in “4 Important Factors to Consider When Evaluating 3PL Partners,” and they validated a key trend occurring in the 3PL industry — i.e., the continued merging of operations, technology, and consulting.

While at the conference, I also had the opportunity to interview three of MercuryGate’s logistics service provider clients: Michael Bartz from ReTrans; Jeff McDermott, VP of Transportation Management at OHL; and Phillipp Dismukes, TMS Technology Manager at Old Dominion. I was particularly interested in understanding the factors that led them to seek out a transportation management solution and what features and capabilities they were looking for in a TMS.

There was a common thread between their stories: their companies were growing very quickly and their existing TMS could not scale quickly and effectively; and they wanted a solution that was quick and easy to configure to support the diverse needs of their clients. Here are a couple of excerpts from the interviews that illustrate those points:

Jeff McDermott, OHL: “We were a company that had seen significant growth in our transportation business unit, and a lot of that growth came through acquisitions that we had made…and we woke up one day and found out that we had five [different TMS solutions] under our roof. So, we knew that in order to scale our business and be able to grow the way we wanted to grow, we needed to get to one platform. So, the challenge was finding the right platform that could meet the needs of all of our [large and small] customers…and that’s really when we set out to go through the RFP process. We wanted to look at all the providers out there to pick the right one that could scale from [our smallest customers] up to [our largest] customers. And that’s where we really felt MercuryGate stood out…being able to apply complex business rules if needed, but also have that simple and easy-to-use interface [that made it] easy for our employees and customers to [use the TMS].”

Michael Bartz, ReTrans: “ReTrans has been a pretty aggressively-growing company for the last 12 years…When I got to [the company] we had a TMS that was built on FoxPro, which is a legacy retired piece of technology, and we actually had three different TMS, none of which were scalable…We had literally busted out of the seams of the [TMS] we had grown into. [Regarding onboarding customers], we really changed our philosophy. When I arrived at ReTrans, our integration path with a customer was to hand them our format of how we would integrate [them] and say, ‘Well, you really have to do that,’ and, you know, that may not always work. So [with MercuryGate] we are able to be a lot more flexible. If a customer needed to do item-level detail on their load plans, we could do that, or if they were doing multi freight class shipments, [we could do that too]…the flexibility became an asset for us…and as we got more flexible, we actually integrated more easily and reliably with customers because they didn’t have to necessarily jump through hoops to fit our square peg, and so that was a big benefit for us.”

I encourage you to watch the brief videos below to get the “rest of the story,” including their advice for other 3PLs looking to invest in a TMS and their views on the biggest challenges and opportunities facing the 3PL industry in the years ahead. 

I also attended several product sessions while at the conference, including updates on Carma (carrier management), Mojo (transportation optimization), RateFriend (rate benchmarking), Mobile, and their ezClick architecture (a key enabler of the solution’s flexibility and ease-of-use). The most interesting session for me, however, was on how 3PLs can use Mojo as a sales tool — something that both Michael and Jeff commented on in their interviews. In other words, Mojo enables 3PLs to analyze, quantify, and document the potential transportation benefits a customer can achieve under different optimization scenarios — an example, as mentioned earlier, of the insights and business intelligence customers expect from their 3PL partners.

The bottom line is that 3PLs face the same big challenge as their customers: keeping up with the rapid pace of change. When it comes to TMS for third party logistics providers, scalability, flexibility, and ease-of-use are as important — if not more — than features and functions. MercuryGate recognized this need in the market more than a decade ago, and today the company has 185 3PL clients and is almost tripling the size of its headquarters as it paves a path to reach $100 million in revenue by 2016. And so MercuryGate faces the same big challenge in the years ahead as its 3PL and shipper clients: keeping up with the rapid pace of change in customer requirements, technology trends, and the competitive landscape.

(Note: MercuryGate is a Logistics Viewpoints sponsor)