Supply Chain Logistics can be a crowded industry. With so many roles and players it can be difficult to know which logistics company is good fit for your company. The companies you align your Supply Chain with can be some of the most important decisions you make. These are the people you will trust with your product, who will be an extension of your brand, and in many cases, have a direct impact on your customers. Here are six important factors you should consider when deciding which Logistics companies to team up with.
#1: Safety first
When choosing a transportation carrier safety ratings should be one of your top concerns. Safe carriers hire professional, experienced drivers and operate safe, properly maintained equipment. Fortunately, carrier safety ratings are open to the public and easy to access. You can visit http://safer.fmcsa.dot.gov/CompanySnapshot.aspx to see the current safety grade and record for all registered carriers in the U.S., Canada, and Mexico.
#2: Experience & Reputation
As the saying goes, it takes a lifetime to build a reputation and only minutes to ruin it. This is why track records are so important. In an industry that is always changing, the providers that succeed over the long term have developed a winning formula. Be cautious when approached by new up-and-comers who have a tendency to over promise and under deliver. This is a popular strategy used to level the playing field against more established competitors.
#3: The only thing that is constant is change
To build a robust supply chain it must adapt to all types of change. Be it internal changes, like order fluctuations, new products, or resourcing suppliers. Or external changes, like natural disasters, supplier bankruptcies, or updates to regulations. Change of any kind has the potential to throw your logistics partners into a tailspin.
When shopping for which logistics providers you don’t want a company that’s a nice fit on your perfect day. Rather, you should look for a provider with enough resources and experience to meet the needs of your company’s best and worst moments. What if production doubles in the next six months? Or if your top supplier moves cross country? It would be reassuring to know you have a provider that can handle these curveballs without missing a step. Just remember, a crisis can easily become much worse if your everyday partners can’t step up to the challenge.
#4: Every link to the supply chain is important
When one link breaks, the entire chain fails. In logistics, disruptions happen all the time. Within the past ten years we’ve seen a major ocean carrier go bankrupt (Hanjin, 2016), a crippling strike at the busiest port in the US (Long Beach, 2014), and historic floods close the busiest corridor between US & Mexico (Laredo, 2010). The best logistics companies should have their ear to the ground and always know what’s happening in the industry. They should understand what potential risks lie on the horizon along with what alternative means are available. It’s in your best interest to keep a running dialogue with your top providers and understand their backup plan to keep your material moving when (not IF!) disruptions occur.
#5: You get what you pay for
There’s an adage that’s been used in Transportation for years (and probably other places). It goes like this…
We offer 3 kinds of services, GOOD – CHEAP – FAST (but you can only pick two)
GOOD & CHEAP won’t be FAST
FAST & GOOD won’t be CHEAP
CHEAP & FAST won’t be GOOD
Even though it’s usually said tongue-in-cheek, it’s definitely a truism. Not all companies fall squarely into one of these three groupings, but this adage can still be used effectively as a directional compass when deciding which logistics company to partner with.
For example, the providers labeled as GOOD & CHEAP represent the slower modes of shipping (think RAIL or OCEAN). If you can live with long transit times and the inconveniences associated with shipping amid hundreds of other paying customers, this isn’t a bad way to go. The second option, FAST & GOOD, represent the most expensive premium services available on the market (think white glove). If you can stomach the high price tag, this is by far the preferred choice in terms of customer service. Lastly, in the CHEAP & FAST group you’ll find providers with rock bottom prices and decent transit times, however the service will be the worst in the market. When going this route, you must ask yourself if the low prices are beneficial when factoring the extra time and energy invested to file damage claims, chase down customer service, etc.