For Holahan, TAGG’s value-added services mean he doesn’t have to worry about every last detail. “Small companies live and die by
with estimates and guesses, creating ample opportunities for project failure. “By keeping information close to your vest, you impair your company’s ability
client may, for example, be afraid of a 3PL employee with in-depth knowledge of a critical process suddenly jumping to a competitor. “But if you can’t share, for
sales,” he notes. “If we kept a big-time indus- try veteran on staff who knew how to set up a warehouse and ware- house management system, maybe we could save some money.” But, lacking such a person, SimplyThick’s management prefers to avoid the energy drain and distraction of running an in-house warehouse and order fulfillment operation. “Outsourcing allows us to focus on what we’re good at,” Holahan says. Companies that ask a 3PL to provide value- added services are, in essence, bringing the provider inside their business. Such a rela- tionship requires a high level of cooperation and trust, demanding that the client and provider work closely together and share knowledge about all facets of busi- ness operations. “Companies need to be able to tell their 3PL things that are kept in confidence,” Langley says. Yet many companies are reluctant to divulge their secrets to people outside their corporate tent. “There’s a perception that if you’re not care- ful, you’ll give out some
whatever reason, you will come up short in terms of the provid- ers’ ability to respond,” Langley warns. Holahan agrees. “You’ve got to find a 3PL you can trust,” he says. That trust is built up over time as the part- ners work together to meet various goals.
Sizing Up Providers
When a business plans to rely on a 3PL for one or more mis- sion-critical services, it’s vital to examine that provider from every possible angle–the same way you might size up a potential merger partner. “Look at the 3PL’s goals, and the people working there,” Klingel says. “Because a 3PL becomes an extension of your company, you want to know you can work with its people.” The formula for creating a successful value-added services partnership with a 3PL is simple: good chemistry and the right contract, which includes key per- formance indicators. It also helps to view potential 3PL partners a little skeptically and not be impressed by mar- keting collateral. Make sure you examine their
information that will come back to hurt you,” Langley says. Yet, if a business doesn’t trust its 3PL, the provider will be forced to fill in missing information
to function,” Langley says. Langley admits that businesses may have good reasons for failing to share sensitive information with their 3PL. The
real capabilities. Then you can be confident that no matter what service requests you pile on, your 3PL can handle it. ■
July 2007 • Inbound Logistics 79
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