Benefits of Warehousing in Rockford, IL Over Chicago, IL

3PL Partnership: How to Provide Great Customer Service

Did you know that half of a company’s customers would leave after just one bad experience? According to this research from Zendesk, eight out of ten also said they would quit being clients if poor service happened more than once. Meanwhile, Khoros found that 83 percent of customers they surveyed “feel more loyal to brands that respond and resolve their complaints.”

It’s simply good business to keep customers happy. We all know the difference between good client care and a bad service experience. Meeting or exceeding customer expectations distinguishes a positive interaction from a negative one. 

You can’t please everyone all of the time. Still, a business can generally get on the bright side of its customers with certain basic practices. Communicate often, clarify what is requested, treat everyone with respect and courtesy, ensure everyone involved knows what will happen next and when, and respond to mistakes quickly when something goes wrong. 

Customers want to do business with vendors that provide top-notch service and support. Sometimes, strong client relations can save the day when products or services come up short. On the other hand, a firm’s best offer can’t do much if the customer feels poorly treated. That’s why you see high percentages of unforgiving patrons making the switch after just one slip-up.  

Firms try to deliver consistent experiences to many customers across different communication channels. These are complex problems. Communication occurs over phone calls, text messages, live chat, e-mail, and social media. 

There isn’t one central customer service department. No matter their role or division, taking care of clients is everyone’s business. All these touchpoints can become flashpoints if something goes wrong. For example, a poor chat with a support agent who isn’t knowledgeable may negate all of the positive vibes generated from the marketing department’s social media campaign.

Finite resources constrain an organization. How does it meet the demands of delivering uniformly superior customer experience beyond occasionally successful singular transactions? One of our favorite books with some answers is “The Strategy Mindset 2.0” by Dr. Chuck Bamford. The author suggests that half of a company’s strategy should maintain standard or conventional operations to meet customer expectations. The other half is to focus on two or three actual competitive advantages, which are rare in a highly competitive world.  

By way of example, patrons of a high-end restaurant would be shocked to find dirty silverware or a neglected toilet area. While customers expect cleanliness, the establishment needn’t go overboard with a high-end dishwasher when a less expensive one would suffice. Tidiness is an example of table stakes: you notice them when they’re not there. Unique, tasty dishes might be examples of the competitive advantages that drive sales.   

Dr. Bamford provides proactive solutions to improve customer service: “each customer interaction with any part of the organization should be tracked, scripted so that the experience is consistent, and aligned with the strategy goals of the organization.” Once competitive advantages are aligned in a way that makes sense for employees and customers, there is a fit. As Dr. Bamford shared, “When that fit is not there, the road to attaining your ‘unfair share of customers’ gets much harder.”

This meditation isn’t about competitive advantages. We focus instead on the other half of the equation for sales: the table stakes. The commoditized side of the business that another could handle. A cost-benefit analysis could determine that it makes economic sense to outsource some or all of the conventional operations. 

Regarding supply chain management, businesses can offload such tasks as warehousing, the shipment fulfillment process, and delivery functions to a third-party logistics (3PL) provider. Through an alliance, enterprises focus on developing their brand. Sometimes the 3PL brings its reputation to promote that it handles fulfillment. Firms have the assurance that experienced professionals are operating the service. Most Fortune 500 organizations already work with a third-party logistics provider in some capacity. 

Armstrong & Associates has been assessing the size of the 3PL market for nearly thirty years. The consulting firm analyzes the market by segment and then totals up U.S. and global revenues. U.S. net revenues grew from $93.5 billion in 2020 to $119.4 billion in 2021. The market size is large worldwide, though some sectors benefited more from solid demand and limited supply than others.

Skander Logistics provides third-party logistics solutions and related customer support at home in Rockford, Illinois, and around the country. We offer warehousing and inventory management at our fulfillment center and operate a separate transportation services segment. We focus on 3PL warehouse operations in this post, but we love the transportation industry just as much.

We note that a 3PL has at least two sets of customers. The “company customer” directly pays today’s bills to the 3PL. The “end customer” is the company customer’s customer. Think of the end customer as at least two degrees of separation from the service provider.

Sometimes, a 3PL may act like a broker and bring in another 3PL for execution. Now you have four degrees of separation from the 3PL and the end customer. To avoid confusion, we’ll refer to the “company customer” as “the company” or “the business” or “the enterprise.” The “end customer” will be acknowledged as “the customer.”

We distinguish between a third-party logistics provider and a higher-level 3PL partner. Both integrate seamlessly into their assigned operational roles, but the partner takes mental ownership of its company’s brand experience. The 3PL partner provides the same consistency as if the company handled the functions expertly in-house.

In his book “How To Create A Winning 3PL Partnership,” Dr. Derek Westfall notes that more than half of these alliances fail because the 3PL does not understand its customer requirements. It does not mean the underlying idea is wrong; poor communication stymied ideal implementation.

There should be frequent exchanges about standard operating procedures, especially at the beginning of the relationship. What is the projected outcome, and what deviations are not acceptable? Good communication is critical in any long-term partnership. 

There once was an executive on our customer service team who was confused about specific requirements from a client company. He raised his hand (virtually) for help. The company’s inventory control coordinator wasted no time coaching him on the fundamentals. Vince Lombardi famously used to break it down to “this is a football,” and look at his track record. 

The 3PL must listen intently to the company’s wishes and fulfill them like an order. The logistics partner should ask many questions to place itself in the company’s shoes. Managing expectations and communications are the bedrock of a strong relationship between the 3PL and the company. Let’s now dig in with a couple of specific examples.

A 3PL offering warehouse space needs management software to track inbound and outbound activity and freight storage. This warehouse management software (WMS) is usually part of the logistic provider’s tech stack. The company may have online access to view its inventory information.

Sometimes a company may separately require the 3PL to complete its internal reports daily, weekly, monthly, or a combination thereof. Without having these agents on its payroll, the business has complete visibility on stock-keeping units (SKUs), inventory levels, and warehouse locations.

The 3PL accepts the transfer of these responsibilities as part of its value proposition. The third-party logistics partner can get economies of scale from servicing two or more company clients, thus down its unit cost per client for the WMS.

If effective client service is the forest, the WMS, and any other software and reports are the trees. Both are important. The business and its 3PL partner should periodically evaluate the process to ensure both sides can see the forest and the trees.

Another aspect of warehousing is order fulfillment services. Packages from online purchases need to be picked, packed and shipped. The consumer doing online shopping will expect delivery of the right product for the lowest shipping cost in the shortest time. Sometimes in two days or less. Packaging must be aesthetically pleasing that reflect well on the organization. The 3PL may also need the ability to handle returns if the buyer has any remorse. Both firm and 3PL should regularly evaluate whether their processes and communication are consistent with the customer’s service expectations.

Dialogue is a two-way street. We have emphasized the 3PL’s role of listening to the enterprise. The 3PL responds and should clearly state what services it is willing and capable of performing. In his book, Dr. Westfall says that a 3PL should craft a thorough Statement of Work to eliminate any confusion around its scope of engagement.

Sometimes, the firm may balk at any costs imposed by the 3PL. For example, the third-party logistics provider may charge a minimum fee if volumes are light. Remember that the 3PL agreed to be a service partner but not a shock absorber. The 3PL has its cost structure, including labor and rent.

Many companies delegate their logistics services to a third-party provider or 3PL. A 3PL partner takes the long view and is mindful of providing exceptional customer service. Third-party logistics is outsourcing without degrading service quality but differs from offshoring to reduce costs.

Keeping on top of the relationship is essential so that customer service doesn’t suffer. More than half of partnerships between companies and a 3PL end in separation because of communication issues. Only a stable and highly communicative partnership can confidently and repeatedly extend the firm’s brand to the end customer.

If you are looking for a 3PL with a service-first culture that puts these thoughts into action, Skander Logistics could be the right choice for you. Contact us at (800) 493-4922 or e-mail us at info@skanderlogistics.com to see if we may be the right fit. We can see if our operations align with yours. We can explore if a partnership could result in even higher satisfaction levels. We can point you in the right direction if it doesn’t make sense to continue the conversation. Drop us a line today.