Value is one of the primary factors to consider when choosing a 3rd party warehousing company. At Easley, we use the term value to distinguish from relationships based on pricing. When making a change to pick a warehousing provider, a company needs a long term relationship that is a value based partnership. The pricing and service levels are the primary driving components of value-based partnerships. These service levels are built around both the customer and logistics provider building strong Standard Operating Procedures and training warehouse and operations teams to run accordingly. A value-based warehousing partner will contribute to the success of their customers’ supply chains.
Value can be evaluated as you compare the pricing and service levels of a warehousing provider. Many times it’s easy to focus on pricing without examining underlying service quality. When service levels increase, the pricing may move up slightly, but the underlying value most likely offsets any price differences. When you choose a service provider based on pricing alone, you will most likely find your service levels suffering. Companies like Easley Transportation build long term value-based relationships for their warehousing customers.
When you start to look at the service levels, you will need to work with your warehousing and logistics providers to build Standard Operating Procedures (SOPs). Companies that build excellent SOPs will be able to continuously improve operations by making process improvements based on standards. The SOPs allow customers and service providers to agree on what operations teams need to do in order to be successful and provide competitive pricing. With these SOPs in place, shippers can assess the performance of their third party warehouse providers. Defining the service performance you desire will improve your ability to make an excellent choice for a warehousing or distribution service provider.
“When performance, trust and communication build over time, the value of the relationship grows into a win-win scenario for both parties.”
The value of a warehousing partner should grow over time as service providers better understand how to meet the needs of their customers. Excellent service providers want to understand their customers’ needs and desire to earn the customers’ business in every transaction. Over time, great warehousing and distribution companies will earn their customers’ trust as performance meets and/or exceeds customers’ expectations. As trust grows, the communication between companies in partnership will greatly enhance. When performance, trust and communication build over time, the value of the relationship grows into a win-win scenario for both parties.
“Be careful to avoid the trap of looking at pricing only…”
Successfully deciding on the right warehousing provider is complex. You need a clear understanding of the value that will be created from this relationship. Your SOPs will help define the outcomes and desired service levels. Be careful to avoid the trap of looking at pricing only while picking a warehousing provider. If you will look for service providers that have a track record of building value-based relationships, your chances for success will increase. In this series, we have covered how to select the best location for your warehouse and how to determine which warehousing provider delivers the best value. Join us next week as we discuss the final and most vital factor to selecting the right warehousing service provider… Team Experience. Please reach out to us if we can assist you with finding the best value for your warehousing needs.