The selection of the right partner such as a logistics service provider or a contract manufacturing organization is crucial as changing providers arecumbersome, 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:
- Strategic and cultural fit i.e. match of DNA’s between the brand owner and the potential partner
- Capability and experience
- Industry know-how and experience
- Price – Quality ratio
- Financial stability
Partnership contract and account management
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.
Logistics Partner Selection & BCI advice
The partner selection process of BCI is based on a proven and pragmatic approach:
- Developing a partner profile, derived from the business strategy and goals of the client
- Creating a long list of potential partners. In an RFI process (Request For Information) this long list is evaluated and a limited number of participants will be selected
- Companies on the short list will receive a detailed RFP (Request for Proposal)
- The responses to the RFP will be evaluated from a financial and qualitative perspective. BCI analyses the bids in detail, facilitates multiple bidding rounds, conducts due diligence during company visits and carries out reference checks before a final recommendation is made regarding the preferred partner
- Supporting our client in developing a Letter of Intent (LOI) and a Contract with the selected partner
BCI can supportthe implementation process as well in different roles (project manager, sparring partner, subject matter expert).
