The Netherlands is a major logistics gateway to the ever growing European market of more than 500 million customers. Many American, Asian and European shippers are using the Port of Rotterdam and/or Schiphol Airport to supply European customers, and have set up a European Distribution Center in the Netherlands. A wide array of logistics service providers (LSP) in the country are offering various activities and operations to international shippers, ranging from simple transport, handling and storage, to tailor-made value-added operations. For all major supply chain operations, a best-fitting logistics service provider can be found in the Netherlands.
But where do you start in finding the right Dutch logistics service provider for your European distribution operations? BCI Global offers you a comprehensive tool for selecting the right logistics company for your European logistics business. For this, we use the annual overview of the Top-100 Logistics Service Providers in the Netherlands as calculated by BCI Global using an independent panel of experts.
In order to help you get a concise insight into the complex Dutch logistics market, BCI Global has teamed up with the leading trade website www.logistiek.nl to set up the Top-100 of Logistics Service Providers in the Netherlands annually. The brand new 2023-edition of this top-100 is now available upon request as a free download. The top-100 provides a state-of-the-art, data-driven overview of the most prominent service providers in contract and distribution logistics in the Netherland, with a focus on the level of innovation. All logistics service providers are assessed on the level of innovation in six major themes.
The Top-100 ranking for 2023 is just like in the past years based on the Index Score developed by BCI Global. This Index Score is for 30-50% based on quantitative data like number of employees, annual turnover and sqm warehousing in the Netherlands. For the largest part (50-70%), the Index Score is based on a qualitative score of the level of innovation for sustainable transport and warehousing, development of human capital, level of smart warehousing, level of supply chain management and use of advanced digital platforms. This qualitative score has been compiled by a panel of around 20 independent experts. The Index Score consists of nine major criteria:
With this inclusion of innovation as the major factor, the Top-100 ranking is ready to help you get acquainted with innovative service providers in the Dutch logistics market, which is needed in these turbulent times.
Just like in many other countries in the world, the first 4 spots of the top-100 are occupied by major global logistics service providers. The names of DHL Supply Chain, CEVA Logistics, DSV Logistics and GXO Logistics are familiar to anyone in the business, but they all have their specific market presence and expertise in the Netherlands. However, in the top-20 we also find many ‘local heroes’ like PostNL Logistics Solutions, Vos Logistics, ID Logistics, Neele-Vat Logistics, Bakker Logistics, Nunner Logistics and Broekman Logistics, each with their regional roots and specific capabilities. Also outside the top-20 there are many logistics service providers which are specialists in certain market segments and warehouse operations that could be the perfect match for your (changing) European distribution needs. Did you know that there are more than 3,000 distribution centers with over 2,500 m2 in the Netherlands in our databases, adding up to over 50 million m2 of warehousing?
BCI Global has been ranking the top-100 Logistics Service Providers in The Netherlands for over a decade now. We follow the logistics market closely and have built up a large database with more detailed information per company with which we are serving our clients with tailor-made advice. Especially, we know which logistics service provider is best-in-class on a specific innovation theme. In addition, we know almost all contract logistics market and players, also based on our extensive network of personal contacts. We also know where all distribution centers are located, who the owner is and what is happening in the warehousing market.
A shipper makes his own choices for outsourcing logistics and has, to a large extent, control over the satisfaction from the logistics service provider. The basis lies in the selection of the logistics partner, the reasons for outsourcing as such and the way in which the agreements are established. However, many choices can be made in a market that is highly fragmented. How do you select the best service provider for your logistical challenges?
Recent research from the ‘Annual Third-Party Logistics Study’ in the USA shows that almost 50% percent of logistics service providers currently identify that clients are considering shifting LSP or insourcing (part of) their outsourced activities. They do this because they are somehow dissatisfied with their current logistics service provider. The reasons for this vary greatly: non-compliance with contractual KPIs, insufficient knowledge of the specific market and industry, not flexible enough, lack of IT capabilities, too little attention for new technologies, too high rates and insufficient drive to proactively continuously improve on performance and cost levels.
The base cause for dissatisfaction often lays deeper and can be found, for example, in minimum volume thresholds in contracts, changing order characteristics, increasing rates, changing market conditions, increasing customer requirements and also in the strategic or a cultural mismatch between service provider and client. The outsourcing party is responsible for the choices that are made and ultimately controls the satisfaction of the logistics service provider itself to a large extent. The basis for this is in the selection of the partner and the reasons for outsourcing as such. The options are numerous, and the market is highly fragmented: there are hundreds of logistics service providers to choose from. But how do you select the best logistics service provider for your company?
The process of selecting a service provider is really complex. The complexity is in the degree of detail of the specifications that really matter; understanding the true qualities of a logistics service provider and finding out whether there is also a strategic and cultural match with the partner to be selected.
Figure 1: Schematic overview of the logistics service provider selection process
The process starts with the creation of a strategic partner profile. This profile answers questions such as:
In larger companies it is often important that the most important stakeholders are involved during the preparation of a strategic profile, so that at a later stage there will also be sufficient buy-in for the choices made at the end. Companies often disregards the step of strategic profiling and immediately start drawing up a Request for Proposal (RFP). This request is then sent to (a large number of) parties in the market, without clear explanation what the company is really looking for and without upfront verifying whether the RFP candidates meet the strategic profile. In that case there is a good chance the application will not be answered by many parties, or the candidates who do issue a price proposal do not match the desired partner profile. A lot of energy at both the service provider level and at the client is wasted.
Therefore, it is better to start with a longlist of candidates and to reduce it to a shortlist of qualified candidates by properly screening the market or by means of a Request for Information (RFI). The limited number candidates that qualify will be then included in the RFP process. The Top-100 LSP 2023 in the Netherlands is a very useful tool for making a long list or even short list of potentially suitable Logistics Service Providers for your European warehousing and distribution business.
Creating a good RFP document is not an easy task. The following elements should be carefully analyzed and subsequently described in the RFP document: specific details about the market, used sales channels, specific product and order characteristics, and expected volumes with insight into seasonal patterns and peaks. The RFP document must provide clarity in the scope, both functionally (e.g. inbound transport, all warehouse functions including Value Added Services and outbound transport to customers) and geographically (e.g. certain or all EU countries are included in scope, all export countries are not included in scope). Moreover, the processes, the intended IT integration and clearly defined service levels must also be described.
Often the legal elements that should be included in the contract later are forgotten in an RFP. Elements such as rate structure, liabilities, insurance, termination clauses and waiver statements can best be described in the RFP document, so that there is no longer any discussion about this in the contract phase. Insight into the long-term business strategy is also an important input for a logistics service provider to make a suitable offer.
Finally, there must be a part describing the RFP procedures to be followed, including a time schedule, the communication lines, the decision-making process and the confidentiality of the shared information.
To ensure that the proposals from logistics service providers are comparable, the advice is to use clear response formats for both the qualitative response and of course for the commercial (financial) part of the proposal. Response formats are specific to each selection process, depending on the requested services and the desired rate structure. The rate structure can be based on an Activity Based Cost model, but it can also be based on an ‘open book’ model, each with their own advantages and disadvantages. In practice we often see a mix between the two models.
The shortlist of qualified candidates must be given enough time to make a well-based and comprehensive proposal for the client. The minimum for an RFP with warehousing activities and possibly with transport should be three weeks. Service providers appreciate being informed a few weeks before the process that an RFP is pending. In this way they can already mobilize teams and reserve time. Remember that also on the side of the service provider, developing an RFP requires a significant amount of time and investment. Allow sufficient time for questions and answers in the process and ensure that the answers to the relevant questions reach all candidates.
Then the analysis of the offers follows. If no good response format has been drawn up, a comparison between ‘apples and oranges’ will occur. Even if a response format was used, it is important to carefully study the assumptions and conditions of the provider and to assess any caveats. This is also the moment the RFP process is no longer just a ‘paper’ process. Deepening the process through company visits, interviews and workshops must now contribute to further reducing the number of candidates. This deep dive gives further insight into the organizational fit: is the service provider familiar with the specific business characteristics, does the service provider have multiple references in the same industry segment, is the size appropriate for your company, are the IT-capabilities as strong as presented on their slides? It is also important to get a feeling for the organization and specific team of the service provider that will maintain direct contact and their capabilities to guarantee a flawless start-up and operation. Also important are the overall corporate philosophy and culture, which are tested during these visits, interviews and workshops. Professionalism and trust in the organization are important factors in the assessment of service providers.
A second bidding round is subsequently the moment to allow (a more limited number of) providers to sharpen their offer based on advancing insight. Analysis of the second (or possibly following) bidding round should then lead to the selection of the preferred candidate.
If a candidate is selected a contract must be agreed upon. To guarantee a quick start-up of the implementation often a Letter of Intent is agreed, prior to a final and detailed Service Agreement. Drawing up a service agreement is certainly not exclusively the task of lawyers. First and foremost, the business must determine the content of the Agreement.
Start each Agreement with a detailed preamble with a description of the principles and circumstances for clarification purposes in case the contract would not provide full clarity for certain unforeseen circumstances. Naturally, elements such as scope, services, responsibilities and obligations, agreed performance and KPIs, communication lines, interfaces and processes must be clearly described, as well as the commercial agreements and the associated rates.
Elements such as the contracting parties, termination clauses, liabilities, right of retention, indemnification and applicable law are mainly done by lawyers, but the business owner must certainly keep an eye on the impact thereof.
We often see a termination clause defining the conditions for termination, but it rarely describes the responsibilities and obligations on how parties separate. A difficult transfer to a new service provider of information, process knowledge and specific customer requirements is often the result.
Another pitfall is the definition of KPIs. These are often ambiguous, and after a while it becomes often unclear whether a measurement of, for example, completeness of the order must be measured on the basis of orders, lines or item numbers. This can result in endless discussions about the performance of the service provider.
Last but not least, drafting the contract too much from the current situation is also a pitfall. The advice is to include enough flexibility to be able to implement changes in the relationship with your service provider due to changing circumstances. To illustrate this point: it is fine to agree on a 5-year contract, but if you want to change the network after 3 years for strategic reasons, there must be flexibility regarding for example, the use of warehouse space.
In conclusion, selecting a (new) logistics service provider for outsourcing logistics activities is a process that requires a great deal of time and attention. The advice is to allow sufficient time for the process so that well-considered and well-based decisions can be made. Moreover, it is a process that companies do not carry out frequently, because in general a strategic choice is made for service providers for longer time periods. That is why professional support from an experienced supply chain consultant such as BCI Global is not superfluous, for example by providing market knowledge, working out meaningful rate structures, setting up benchmark performance and KPI’s, guaranteeing sufficient depth and the adequate quality of the selection process by using proven scorecards or assessment tools.
Table 1: The Do’s & Don’ts of LSP selection
Feel free to contact us if you want further information, or have a specific question, and we will be happy to help you.