How to Identify a Superior Warehousing and Distribution Operation
Logistics Industry November 9, 2009
Business owners and managers all seek to hire efficient and productive warehousing and distribution service providers. The quality of that service, however, varies greatly within the fragmented industry of third party logistics. Let's face it, logistics and warehousing covers a lot of ground. Some studies suggest that less than 4% of the entire industry is controlled by the 'Big and Moderate Players'. That leaves a lot of opportunity for individuals, in the spirit of the Old Wild West, to hang out a shingle and declare themselves 'open and ready for business'. So what should you look for when you seek to identify a superior warehousing and distribution operation?
If a warehouse and forklift are all that is needed to look like a logistics service, then we have to determine a better way to decide if you are standing in front of a qualified service provider or a Hollywood soundstage storefront. The answer can be found by passing through the door and quickly identifying 2 key behaviours of your candidate logistics provider. I would suggest that unless both are immediately present, you should consider turning on your heels and enacting an immediate retreat.
The Language of Your Logistics Needs
The first behaviour is very simply Language. Does this logistics provider engage you in the language of your industry and the language of numbers? Each industry has particular buzzwords and ALL operations should manage and measure with numbers such as:
- KPI's (Key Performance Indicators)
- On-Time Statistics
- Accuracy Data
If they do not volunteer this information as they engage you, and if they do not require time stamps as they quote you, then you need to run away, fast.
Be forewarned, the Sirens will sing to you about low price and deflect on questions about measurement. Many a business has scuttled their ship on the shoals of lowest cost logistics provider. It will take significant time and resources to rebuild your reputation with your customers if service is not top notch. Superior measured and documented warehousing and distribution service is always the cheaper path in the long run. Any warehouseman that knows the KPI's of the industry, asks you questions about your requirements in the language of these numbers, and manages their operation around these numbers, is conducting themselves in a manner worthy of your continued consideration.
The Culture of Your Logistics Service
The second and far more difficult trait to discover in your logistics service is Culture. It is typical of businesses to grow and become more bureaucratic as they evolve. Often while they have evolved with numbers and metrics above, they de-evolved into silos that can hamper your ability to get customized service and communication. So here are a few simple things to identify that will give you some insight into their company climate:
Is there a divisive line between their warehouse and office staff or has management conscientiously formed its operation into teams that flow equally between the floor and the office? This will show you whether they communicate face to face or through paper. When issues arise, you need to connect with people, not systems. How quickly can you contact your dedicated team?
Team Structure and Training
Is this a company that trains their staff and allows all individuals access to supporting information to allow them to make educated decisions? Does the forklift operator know all about your contract - can that person view it? Is it an educated, dedicated team that is servicing your account or do your orders simply go into the queue? You need to know. Your interests are best served with dedicated teams that gain recognition for knowing your accounts needs and idiosyncrasies. You want the logistics provider that calls you asking for your Tuesday Wal-Mart order because they haven't seen it yet.
The fundamental information that you are looking for is if your supply chain is served by a number of professionals with the authority and knowledge to make the correct decisions to serve you best. Ask the company about career paths, staff turnover and wages. Ask whom you would communicate with regarding daily orders, weekly inbound shipments, compliance issues, and yearly inventories. In effect: daily, weekly or yearly issues. If the answer is always the owner then perhaps your provider does not have any depth of staff. If the answer is 'anyone' in a particular department then perhaps the provider doesn't have the breadth of skill in the Team.
In summary, your supply chain is a critical component of your company's success. Ensure it is managed within a structure of professional excellence by individuals that are respected, well trained and encouraged to grow and develop. If their company is Best In Class, it will definitely reflect positively on your company.