Integrated Logistics Services is a term that has been tossed around quite a bit lately, but what is it exactly; how does the conversation begin; and what should you look for in a real 3PL or 4PL solutions provider?
By definition, an Integrated Logistics Services Provider or ISP is a company that performs a variety of end-to-end logistics-related service activities like air, ocean, road and rail transportation, warehousing and other value-added services that make up a total logistics services package.
Firms that provide such services must have an intuitive understanding of not only their customers’ operations, but also their culture and their business objectives. Cost savings are a component of the directive, but it is not the only basis for a truly strong partnership. The provider should be able to consolidate logistics services to bolster their customer’s bottom line, and have the knowledge and expertise to identify weak points in the supply chain, providing solutions that streamline the process.
This is why the vast majority of successful ISP partnerships begin with an existing customer/provider relationship. Often, the provider who has been working with a customer for some time is brought in to look at another part of the supply chain where the customer is facing challenges.
A good ISP will look at the entire logistics aspect of their customer’s business from raw materials or components, through manufacturing to warehousing, and on to the final delivery of finished product to dealers, distributors and end users. These relationships are built on trust and a deep understanding of the customer’s operations, markets, values, and culture.
Naturally, no one company—regardless of its size—can provide every solution on every continent. No logistics services provider is number one in every market—although some may say they are. Each provider can claim dominance in certain methods, be they air, ocean, rail or road, but not on every continent or in every country where their customers are doing business.
This is where a team approach is most successful. Honest ISPs will build on their strengths and solicit the assistance of other best-in-class providers with specific expertise in areas where they themselves are not as strong. In some cases, team members from other providers may even be competitors. Here too, long-standing relationships and trust are the keys to success. Familiarity does indeed help breed excellence.
When you have built a successful relationship with your logistics provider and trust them with your internal directives and goals, ask yourself if they have a breadth of experience across a variety of specialties: intermodal transportation expertise, value-added warehousing, logistics planning, measurement and transparent tracking.
Look for a company that has a strong financial position and a global reach with dedicated people in your key geographic markets around the world. In order to attract the best team partners in areas where they do not have the required experience, your provider should have strong name brand recognition.
Finally, and most importantly, your ISP should be culturally sensitive to the way your business is run and hold values similar to your own. Do they understand your strategic objectives? Can they see your business from your perspective? Can they look at how you have been doing things and suggest new, better, and more cost-effective alternatives? Do they help you run your business more effectively and help you meet your targets?
In the end, when you think about your ISP partner and say, “I’m glad I chose them because they know our supply chain better than we do,” you’ll know that you’ve chosen the right partner.