Execution – Delivering the 3PL Promise

For today’s guest columnist we welcome back Norman H. Adriano. He is another past president of the Supply Chain Management Association of the Philippines (1995-96, DMAP days). An industrial engineer, he has more than 25 years’ experience in end-to-end supply chain management. He is now connected with Synnovate Logistics, a logistics company he helped set up. Email him at norman.adriano@synnovate-logistics.com.ph. During the early years of DMAP, he helped pioneer warehousing seminars with Malou Santos and myself. — Ed Sanchez, Executive Director

In an earlier article about a 3PL’s value proposition, I claimed that no matter what a 3PL’s business model is, or what it claims it could do, the proof is in its execution. Business models can be copied shamelessly; what makes a 3PL a keeper is its excellent execution of what it claims it is capable of doing.

Execution is key in the 3PL business. It makes or breaks a 3PL company. Excellence in execution is what ensures the business success and continuity of the 3PL company.

Let me share my thoughts on the ingredients necessary to achieving excellent execution:

1. Know, understand and agree with the customer’s requirements and how performance would be measured. Document processes. Documented and updated Standard Operating Procedures (SOPs) help ensure repeatability of the desired outcomes.
2. Align with the service providers. Their service contract clauses must support the customer key performance indicators (KPIs) and liability requirements. Train their leaders and staff. Do regular business reviews with them. Assess performance based on KPIs. Reward the desired behaviors.
3. Align your Operations leaders’ mindset with the customer requirements. Certify staff on SOPs and skills, such as equipment operation. Know the scope of work as well as the out of scope. Do KPI-based performance assessment. Be uncompromising on safety standards. Manage risk.
4. Use the Plan-Do-Check-Act (PDCA) cycle. Continuous improvement is a must and a process must be in place and implemented.
5. Demand transparency. Bad news should not be filtered but reported upwards very quickly. A process of bad news reporting or escalation must be in place.
6. Top leaders must be visible, constantly ask relevant questions and do random checks. Operations become always audit ready if the leaders consistently check, validate and show keen interest in what is going on.

While it is the sales team that sells the service promise to the customer, it is the operations group that is tasked to deliver the service. Therefore, operations must be well informed, well trained and with the right mindset towards the business. Operations leaders and staff should have the twin ‘can do’ and ‘whatever it takes’ attitudes. They should have the initiative to always walk that extra mile for the customer.

Note that it is very important that both the sales and operations teams must be on the same page when it comes to understanding the service promise and how it will be delivered.

Finally, always keep in mind that that the ultimate judge of performance is the customer. Thus, even if your KPIs tell you that you are delivering your promises excellently, if the customer tells you otherwise, he is right.

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email secretariat@scmap.org. For more information please go to SCMAP website www.scmap.org.