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2. Business experience

of work force.

rates will minimise personnel turnover.

your industry?

3. Business development

services.

-

ous improvement program.

4. Support services

-

ance strategy?

5. Business arrangements

and service levels.

business exigencies.

-

tracts.

operating contract.

Finally, you’ll want to consider conducting site

visits at finalist locations you may not already

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“A 3PL can performlogistical services that

an organisation is eitherunwilling or unable

to perform itself, butare they as good as

advertised?”

Assessment questions to ask& gauge a first-class third-party provider

department function. Are the processflow and procedures realistic? What mod-

ifications would you make? Why?

under way for this business process or

department function? What role can you

play to help us succeed? What competitive

advantage can we gain?

system standards affecting this business

process or department function? Is there

a dominant movement? When will these

standards be functional?

-

ments and performance metrics? What can

be eliminated and/or improved? What are

the operational alternatives to our business

process or functional department? Do you

have some better ideas? Do you have better

ideas for handling operational transactions?

purposes? Are there operations being

done in-house that could better be done

by your firm? Would you be willing to talk

about them in more detail?

operation that you, perhaps, could help us

clean up? How would your recommenda-

tions affect our total cost of ownership and

your internal cost profile?

process or function effectively from a

long-range, strategic point of view?

be familiar with. Your site visit team should be

limited to 2 to 5 individuals, and should be

the same individuals for all site visits. Using a

formal checklist, talk with local management,upper management if possible, and review each

provider’s qualifications, finances, management

philosophy, strengths and weaknesses, and

their ‘strategic fit’ for a long-term relationship.

4. SecureThis final step focuses on finalising and execut-

ing the contracts with your selected providers

and incorporating into those agreements the

measures of agreed performance or structured

service levels that you will use to monitor their

performance. It is imperative that both parties

define their expectations in writing.

To get the most out of your contracting

process, a strong emphasis should be placed

on establishing a mutually beneficial long-term

relationship, where both parties seek con-

tinuous improvement through KPI and user

feedback. You should schedule and conduct

regular in-person reviews with all outsourc-

ing service providers, even those satisfying

all of your KPI, at least every six months, no

matter what the term of the contract may be.

Additionally, a performance report card that

tracks each provider and compares all providersto each other should be issued on a monthly or

quarterly basis, as resources allow.

Hopefully, everything will be copasetic and

what was promised will be delivered. But just in

case… be prepared to address and reconcile the

differences between what was promised versus

what is being delivered on an on-going basis.

It’s important to consider that both outsourcer

and provider share in the risks and rewards.

Both invest time and resources in the relation-

ship. So, just as in any supplier relationship,

there has to be mutual benefit.

Thomas L. Tanel is president and CEO ofCATTAN Services Group, Inc. a logistics andsupply chain management advisory, counsel-ling and training firm. Ronald D. Grossman is apractice leader with CATTAN Services Group, Inc.and president and CEO of Argee Logistics LLC.

George Yarusavage is an executive consultantwith CATTAN Services Group and a principal inFortress Consulting. For more information call +1979 212 8200, email cattan@cattan.com or visitwww.cattan.com.

MHD SUPPLY CHAIN SOLUTIONS — SEPTEMBER / OCTOBER 2012

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