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Can your 3PL partner grow with you? - Part four

By ICS Connect

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With new pharmaceutical logistics providers emerging every day, it can be difficult to determine which will serve you and your product’s needs best.

Making the wrong choice of partner can result in a sub-standard supply chain solution that can lead to process shortcomings that can jeopardize product safety, your customer relationships, and brand reputation.

In the fourth of our blog series exploring the five questions manufacturers should ask to uncover whether your third party logistics (3PL) provider is the right choice for your business, we ask…
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Question 4: What does success look like?
As a pharmaceutical manufacturer, you know the value of value. It is something you have to prove relative to your product’s performance every day. It is only logical, then, that you demand value out of your partners as well. And when you invest in a partnership with a provider for the distribution of your product, it is essential to know what success will look like — where the value is and how your logistics partner defines it.

The logistics landscape is not what it was 20 years ago — what is needed to ensure the successful delivery of pharmaceutical products has changed. While it is important to select a logistics partner that has the right experience, as well as one that can scale to meet your business goals and product profile, measuring those qualities is often as much qualitative as it is quantitative. But there are several metrics you can look at to measure your partner’s success — not just for you, but also across the company’s business and customer base.
 

“When you invest in a partnership for the distribution of your product, it is essential to know what success will look like — where the value is and how your logistics partner defines it.”

How do you evaluate a supply chain partner?

What are the important success metrics (on your end and theirs) to keep in mind?

The investment

The lowest-cost provider is not always the best choice. In the same vein, the most expensive is not always the most robust service provider. When you are looking at metrics like price versus performance, think about the savings a qualified provider can win you in terms of the infrastructure you will not have to construct. Consider the staff you will not have to hire and look at the licensure you will not have to obtain. The cost of these quickly adds up, and those numbers can be a great “tell” for the value of a logistics partnership.

It is also important to measure the more intangible aspects of your investment, such as the time a great logistics expert can save you — and the advantage it can offer you —when it lends industry expertise to your distribution management functions. For example, what consultative guidance does your partner offer when it comes to channel strategy or supply chain optimization? How much time and money are you able to save by having this trusted voice also be able to execute all recommendations and be accountable for them?

Based on a combination of a deep understanding of your product profile, market knowledge and experience in your industry, the right 3PL should act as a thought partner in determining how logistics can drive your business.

The discipline

Operational discipline and rigor are table stakes for any provider, to ensure it has the best interests of all parties and is able to be proactive in preventing issues getting your products where they need to be. 

Your partner should be able to provide its benchmarks and service level standards. Does it keep an accounts receivable (A/R) of 96 percent current or better? Is on-time delivery and inventory accuracy at or above 99.9 percent? If not, why?

The data

Your 3PL should be constantly reviewing the performance of every aspect of their supply chain in real time, from the infrastructure, their capabilities, and their people. This way, they can quickly identify areas for further improvement to get your products to their destination faster and more efficiently. 

Data is central to all of this. If you are not getting a useful set of even the most general reporting from your provider on a regular basis, something valuable is missing from your relationship. At a minimum, you should know your revenue, accounts receivable status, and delivery.

That means your provider should, at any time, be able to report on how much of your product has been ordered, paid for, and/or received.

Your customers demand data from you — whether it is efficacy info, outcomes data or shortage reporting. It is one important way you prove that your product not only works, but also that it is available. That is how your customers define value. Why should you expect less from a partner that is dedicated to demonstrating value to your supply chain operations?

Culture

Finally, great service requires a great team full of people who know what they are doing when it comes to logistics and are passionate about their jobs. The culture within your partner’s business is vital to achieve this goal. 

The right culture can ensure that there is a diverse array of people with diverse backgrounds that can bring a range of experiences vital to finding creative solutions to logistical challenges. It can also ensure that expertise is prized and built by boosting staff retention, and can also nurture and encourage the passion for work that optimizes productivity. All of this ultimately benefits you and your product, giving you a fantastic service that constantly improves. 

How your partner measures success — and how you measure its value to your business — should be something you continually evaluate and refine as your business grows. In the final installment of our five-part series, we will look beyond distribution to see what else the best 3PLs can offer.

Read part four now.