The Strategy Behind the Logistics Partnership

The one certainty in the supply chain industry is change.  How companies respond to change is what differentiates them from each other.

Managing the logistics of the global supply chain requires innovation that has many shippers turning to logistics partners for solutions.

A recent survey sponsored by EyeforTransport(EFT) revealed the majority of companies (58 percent) use between one and three third-party logistics (3PL) partners.  The survey provides insight into what companies expect from the partnership.

Service and Cost

EFT’s annual survey shared responses from supply chain and logistics executives to what is most important in their partnership.

  • For shippers, the best quality service ranked number one in priority (58 percent) in logistics partnership
  • Most 3PL respondents felt lower prices would edge out service for shippers
  • Only 18 percent of shippers rated lower prices as most important

The top five reasons companies do not renew 3PL contracts include:

  1. Cost “creep”
  2. Poor service
  3. Better service offered by another 3PL
  4. Hidden costs
  5. Cheaper price from other 3PL

3PLs appeared to underestimate the influence of cost “creep” in shippers’ contracting decisions as it was ranked eighth among 3PL responses.  The results demonstrate the need for a clear understanding of the scope of work and transparency in pricing.

2012 Summit

EFT plans on incorporating the themes presented in its annual survey at the Chief Supply Chain Officer Forum, which takes place June 18 – 20, 2012 in Chicago, Illinois.