We inducted a new member to our TSD Hall of Fame, Mr. Eddie Magness. His…
Outsourcing is on the rise in logistics: 73% of shippers indicate they are increasing the use of outsourced logistics services, according to a Korn Ferry survey, with 60% of users outsourcing transportation specifically. And customers (shippers) are overwhelmingly pleased with the experience: 93% told Korn Ferry that they’ve found their outsourcing relationship to be generally successful.
But here’s a question: what if you’re one of the unlucky 7%?
With a rise in outsourcing comes renewed concerns about customer service and the ability of outside services to meet internal business objectives. Clearly, the majority of the time, it works out well for everyone. But if you’re uncertain, or your goals are getting off track, here are several signs that it may be time to put on the brakes in your relationship with your carrier.
1: When you (the shipper) become a low priority.
In a world of capacity constraints, carriers must sometimes make difficult decisions that include determining which shippers and loads to prioritize. Loyalty is (and should be) a big factor; but so is profitability. For instance, sometimes carriers will leave shippers for more profitable loads (e.g., during produce season) instead of sticking with a company to consistently carry loads for them. Then the carrier will come back wanting to pick up where they left off. Essentially, they are chasing dollars and aren’t worried about relationships. Maybe it’s time for you to end the worry about that relationship too.
2: When the carrier negatively affects the shipper’s relationship with its own customers.
Chasing dollars has another form: cost-cutting, which can sometimes go too far. “The 24th Annual Study of Logistics and Transportation Trends” from Logistics Management said, “Increasing service levels often leads to increased cost. Results from the 2015 annual study indicate that when faced with a trade-off, the majority of companies will choose to focus on cost over service.”
In fact, studies have found a mismatch in priorities when it comes to service and cost between shippers and some carriers. According to the Inbound Logistics “2015 Trucking Perspectives” report, customer service is the second greatest challenge for shippers; it doesn’t even appear in the top ten for the carriers surveyed, for whom three of the top four challenges center around various costs (driver, equipment and liability). If the ways in which your carrier is cutting costs or chasing dollars reflects poorly on you, it’s time to re-evaluate the carrier.
For example, we recall a story one of our shippers told us about their previous carrier. The carrier didn’t answer their phone all day, and finally returned the shipper’s call—only after they had delivered the load late. Then, they provided a convoluted excuse as to why they hadn’t answered the phone.
There are hiccups in every operation, but the occasional late delivery is far more understandable than dishonesty.
3: Patterns of missed commitments and deliveries.
Here’s a perfect example of the ways in which service can be compromised: a pattern of missed commitments and deliveries impacts not just raw performance metrics but also affects how favorably your own customers view you. The Logistics Management study found rising issues with missed or delayed deliveries, with the biggest service declines posted in rail and intermodal.
To be fair, mistakes, accidents and unforeseen circumstances are unavoidable in an industry that deals in high volume and tight deadlines. The real question: does your carrier react with integrity in response to occasional issues? Some carriers will dodge calls or create false excuses for their late deliveries. Shippers should be able to expect the truth up front; if your carriers can’t deliver simple honesty, it’s probably time to unload that relationships.
4: Drivers represent your brand poorly.
In logistics, customer service and service delivery can sometimes be confused– but they’re not the same thing. The confusion can happen because the key performance indicators (KPIs) that measure performance and productivity – from timeliness metrics to cost measures – don’t necessarily capture customer satisfaction. Yet drivers may be the face of your brand with your own customers. Friendly, responsive drivers create goodwill that translates into fewer complaints and problems. But with driver shortages and high turnover endemic to some carriers, drivers may not have the incentive or interest in nurturing relationships with the people to whom they deliver your goods. If your customer satisfaction is slipping, take another look at your carrier’s drivers.
What should you do if it’s time to fire your carrier?
If you’ve realized it’s time to let go of that carrier relationship, here are a few next steps you can take:
1: Identify and acknowledge the problem.
Honesty starts in-house: be up-front with yourself if the relationship with your carrier is deteriorating or failing to meet your needs. Then you can take a serious look at the issues and determine if you want to try to resolve things with your current carrier, or if it’s time to end the relationship completely.
2: Define expectations and KPIs.
Clearly defined metrics of success can serve as a foundation for good service that meets your business objectives and can help carriers understand what kind of service and performance you expect. Service-based KPIs can include:
- Timeliness of email responses, updates and reports;
- Time taken to answer calls;
- Frequency of visits and customer satisfaction surveys;
- Flexibility and responsiveness to changes in service needs; etc.
3: Build a collaborative relationship with your next carrier.
Shippers and carriers actually share many of the same major challenges today – cutting transportation costs, improving business processes and bolstering customer service are all common priorities. With a bit of creativity and collaboration, shippers and carriers can often find mutually beneficial solutions that both reduce costs and improve service. For example, a solid carrier relationship that offers guaranteed capacity can, in some scenarios, help shippers to forecast production runs (by knowing in advance what they can/are going to load) and avoid idling back plant production when the carrier doesn’t yet have assets on-site.
The good news: you have options.
Remember, generally speaking, the industry sees widespread success with outsourced transportation. Many carriers are deeply invested in developing mutually beneficial outcomes and delivering fast, on-time shipments. If you’re on the suffering end of that statistic, just know that you don’t have to settle for mediocre or poor service when a great carrier is just around the corner.