The selection of the right partner such as a logistics service provider or a contract manufacturing organization is crucial as changing providers are cumbersome, costly and requires significant effort. After selecting the right partner, it is important to have a solid contract in place with the right service level agreements, KPIs and an account management structure, to properly manage the relationship over time.
Key criteria in selecting the right partner for the execution of Logistics (3PL/LSP) or Contract Manufacturing (CMO) activities include:
After the final vendor selection, negotiating a fair contract between the brand owner and the third party logistics and LSP is crucial. In an RFP procedure, elements such as liabilities, pricing structure (open vs closed book), KPIs or metrics, and contract duration should already have been specified, to make sure they are covered in the solution of the supplier. The contract should not only reflect the proposed and future pricing elements and contract termination, but needs also to articulate the lifecycle management of the relationship as such. This includes account management between the brand owner and the 3PL/LSP including an account management structure, quarterly business review meetings to review performance, identify opportunities to improve and inform both parties on future developments (i.e. future volumes, mix changes, etc). Too often relationships are failing due to improper management of the relationship.
The partner selection process of BCI is based on a proven and pragmatic approach:
BCI can support the implementation process as well in different roles (project manager, sparring partner, subject matter expert).