Here is a basic outline for negotiating/evaluating 3PL contracts. It should be noted that this outline is a starting point and tactical in nature. It does not address higher level 3PL performance such as full integration with client business strategies and C level involvement.
- Overview– 3PL should use knowledge and buying power to get best price/terms for services needed
- Analyze– Existing agreements, pricing, invoicing practices, benchmark
- Plan/Organize– RFP development and/or improvement, vendor and carrier evaluations, negotiation strategy, what if scenarios
- Execute– Implement cost savings plan, re-negotiate existing contracts, develop problem solving protocols
- Control– Ongoing audit and reporting, regular status reports, quarterly review with vendors and carriers to hold accountable for contract terms
Common shipper client complaints:
– Not getting 3PL A team
– Surprise costs
– Lack of ideas and innovation from 3PL
– Lagging in technology
While 3PL’s want to be more strategic they are often seen by clients as tactical operators and cost reducers.