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Choosing a Logistics Partner: 5 Key Considerations

Published Date: Friday, Jan 19, 2024
Last Updated on: Friday, Jan 19, 2024
Choosing the perfect logistics partner.

Building a reliable, seamless and cost-effective supply chain isn’t easy.

It requires a tactical mix of innovative technology, careful strategy and sharp decision-making. And at a time when speed, scalability and cost are critical, choosing the right logistics partner for your business is one decision that simply can’t be overlooked.  

Disentangling your business from a poorly suited partner can be both operationally disruptive and financially crippling. Supply chain disruptions caused businesses financial losses of 15% or more in 2022, with 56% of small and medium businesses changing suppliers due to “costs” and “consistent delays.

So what does a great logistics partner look like? In this article, we’ll explore the key considerations for identifying the right match for your business.

Culture

Business partnerships are becoming increasingly transactional, with the lowest cost often being prioritized above all else. This focus has created a race to the bottom. 

When the losses of missed shipments and deadlines are weighed against cost, a more “budget-friendly” provider may – paradoxically – be the more expensive option. A culture of “every shipment matters” may come at a slightly increased premium, but with a whole host of benefits:

Reliability and consistency: A culture that emphasizes the significance of every shipment creates a sense of responsibility and reliability. This is ideal for businesses that rely on a consistent and dependable supply chain.
Proactive problem solving: When every shipment is considered important, third-party logistics providers are more likely to deal with problem solving in a proactive manner. Whether it’s addressing unforeseen challenges, mitigating risks or optimizing routes, a great provider should go above and beyond to ensure your operations are smooth.
Long-term partnerships: Transactional relationships may prioritize short-term gains, but a culture that values each shipment fosters a commitment to understanding and supporting the unique needs and goals of the business over an extended period.
Continuous improvement: A culture that values every shipment reflects a commitment to continuous improvement. Logistics providers with this mindset are more likely to invest in technology, training and process enhancements to consistently elevate the quality and efficiency of their services.

Strategic alignment

Each supply chain will have its own strategic demands, based on the lanes and cargo it works with. Businesses that deal in perishable goods will adopt a greater focus on punctuality, whereas those simply looking to ship cargo at high volume may prioritize cost over timeliness. In short, a specific 3PL partner may be ideal for one business, and totally unsuited to another.

It’s always worth considering what makes your supply chain tick, and where value must be added by a potential logistics partner. Most businesses base their choices on the following factors:

Optimizing expenses: For businesses aiming to minimize expenses, a logistics company that places emphasis on cost-efficiency is ideal. However, a provider that is focused solely on offering the cheapest service possible will likely have a lower priority for timeliness and would be poorly aligned with a company that values punctuality and lean operations.
Scalability: If a company anticipates that it will grow considerably, there is little value in partnering with a logistics provider that doesn’t possess the capacity and resources to scale operations accordingly. Many small-sized logistics firms can offer regional or domestic shipping at competitive rates, but may struggle to size up to your operations as your business grows – especially if your product faces significant seasonal demand.
Communication and collaboration: On the other hand, businesses that value punctuality may have stricter, more human communication preferences. For those who rely on temporary staff and a lean, flexible operation for loading and unloading, a partner with transparent communication channels is crucial.
Logistics partners containers ready to ship goods.

Experience & expertise

A long history and proven track record of success is always a good indicator of a reliable logistics partner. Their rich experience means that they will likely have already jumped many supply chain hurdles – both common and unexpected. A younger company is unlikely to have the judgment or capacity to compete in this area.

Experience

​​Institutional experience: Logistics firms that have weathered changes in technology, market dynamics, and industry trends are likely more adaptable and innovative. They can utilize their experience to implement cutting-edge technologies and process improvements that positively impact efficiency and service level.
Employee experience: Experienced employees are often more adaptable to changes and technological advancements. Their familiarity with industry innovations allows them to integrate new technologies into their logistics process seamlessly.

Expertise

Deeper understanding of industry-specific requirements: Experienced logistics providers have a thorough understanding of the unique challenges and regulations that govern specific industries. This knowledge allows them to tailor their services to meet the specific needs of your business, such as ensuring compliance with industry standards and the handling of hazardous materials.
Specialization in handling specific products: Some industries have specialized handling procedures and equipment for specific product types, like delicate goods, high-value items, hazardous materials and oversized shipments. Ensuring your chosen provider is well-informed of these procedures can prevent damage to shipments or contamination of products, minimizing losses and preserving customer satisfaction.
Logistics partner showing experience and expertise.

Financial viability

With the current levels of inflation and variation in fuel prices, many logistics firms are in a precarious financial position. This can lead to a host of problems, such as:

Inconsistent service quality: Financially precarious logistics providers may struggle to maintain consistent service quality. Lack of funds can impact investments in training and infrastructure, leading to a decline in overall service standards. This, in turn, can cause delays, disruptions and missed deadlines.
Limited capacity: Financial instability restricts a logistics provider’s ability to invest in resources, such as a modern fleet and advanced technology. This limitation can result in inefficiencies, reduced capacity, and an inability to handle complex or large-scale logistics requirements.
Risk of bankruptcy: With increased financial stress comes a greater chance of business closure. In the logistics industry, especially with brokers involved, a business closing can lead to a situation where the client pays for order fulfillment, but the funds never reach the carrier due to the broker’s financial troubles. The result may be that the client has to pay double for the same service to ensure a shipment is delivered, if they are unable to recover their funds from the now-defunct provider.

Technology

A logistics partner with a high-quality tech stack can be transformative for your operations. Effective logistics software provides clients real-time visibility into the location and transit times of shipments. Combined with a warehouse management system , they can also provide the granularity needed to optimize supply lines, inventory management and staffing levels at distribution centers.

Integration opportunities

Technology that can integrate with your own systems will give you a real-time view of your shipments, and an in-depth understanding of how and where your money is being spent. 

This insight can help facilitate a massive reduction in your logistics costs. For example, a multi-billion-dollar retail client of ours had previously managed all of its logistics operations through spreadsheets. While commendable, the reality is that even with the most talented administrators, you will never achieve the level of oversight necessary to compete with dedicated logistics software. 

As a result, in the first year of their partnership with us, and utilizing our Allink360™ software, this business managed to save over 30% in logistics costs.

Final thoughts

Selecting the right logistics partner is pivotal for a streamlined supply chain. An overemphasis on cost savings can often prove to be the less financially prudent decision in the long run. A good logistics partner will endeavor to constantly optimize your supply chains and provide you with the best “bang for your buck.”

At Harte Hanks, we have provided logistics services to a wide range of businesses across a variety of industries, from global CPG companies to liquidators. With our holistic Transportation Management System, Allink360™, and over 40 years of logistics expertise behind us, we provide a service where every shipment truly matters.

Contact us today.