To ensure your partnership’s success, new or old, take time to define the meaning and principles behind your partnership.
Check out our top 8 tips for creating a vetting framework that shippers and carriers can agree on, implement and live by.
In the business world, and especially in logistics, the word “partnership” gets thrown around a lot (to say the least). It’s often overused but undervalued.
Throughout the logistics process, partnerships are discussed, from the early RFP stages to when goods are actually moving. Good partnerships are built on understanding, respect and confidence that your partner will be there during the good and hard times. And truly great partnerships act as extensions of one another’s businesses and bring mutual benefit. To ensure your partnership’s success, new or old, take time to define the meaning and principles behind your partnership.
Check out our top 8 tips for creating a vetting framework that shippers and carriers can agree on, implement and live by:
Treat partnerships as a two-way street
Going into a new partnership, or even when maintaining current ones, understand that your relationship is a two-way street. Too often, in full truckload scenarios, one party feels they have more leverage than the other creating imbalance.
Solid business relationships should be built on equality, understanding that leverage can quickly shift as market conditions change or become volatile. When partners come to a mutual understanding of equality, vetting can become open and honest.
Bring meaning to your words
The second step to creating a meaningful partnership is to sit down and talk about what a trust-based relationship will look like. These open and honest conversations allow carriers and shippers to make basic determinations on things like corporate culture and operational fit.
Operate under the “Always Be Vetting” principle
Rather than approaching partnership vetting as a one-time event that happens during an RFI (request for information) or RFP, consider vetting an on-going process. Given quick changes in market conditions, corporate structures and financial stability, continuous vetting can give a better overall perspective on business and partnership health.
RFIs and RFPs
RFPs and RFIs, typically used as a process to learn about potential partners and update knowledge on existing partners, can be great vetting tools. During these processes, ask for information on items like:
- Business Model
- Corporate Culture
- Geographic Coverage
- Asset Base
- Driver Count
As a shipper, and for deep vetting purposes, be sure to ask for at least four references as a mandatory component of your RFP. As for carriers, references are important as well and can help determine a customer’s creditworthiness.
Take advantage of technology
Consider expanding your vetting research online. Something as simple as a company website or Linkedin page can show you a lot of information like new investments, acquisitions or technology roll-outs. If the shipper or carrier is publicly traded, study their annual or quarterly earnings reports to learn more.
Get a broader frame of reference for vetting by utilizing newsfeeds, industry publications and other market-research databases. These free or subscription-based services provide consistent content about the trucking and logistics industry, as well as geographical insights.
Relationships still matter
Though “Old School,” the best way to approach vetting is still to develop close, professional relationships with selected customers. True partnerships have an element of human interaction (at least by Zoom or phone), so take time to nurture and get to know these contacts. Relationship-based vetting can encourage honest conversations and may reveal information that would not likely be shared between strangers.
Put your KPIs to work!
Make KPIs and put them to work! KPIs should reflect what’s important to the shipper from an operational, service and financial perspective. They are the best way to ensure operational execution is aligned with goals and can bring a quantitative element to the process that might otherwise be absent.
The great thing about KPI’s is that they can be used in various ways to vet current and potential carriers. Here’s an example of using KPIs to build transparency:
- Ask carriers to provide their internal KPIs that they use to measure their performance. This is a great way to see what metrics are important to carriers and how they judge their own performance.
- Conversely, shippers should consider publishing KPIs to quantify their compliance to agreed-upon metrics like load cancellations, wait time and amended bills of lading for carriers to review.
When reviewing your partnership, make sure to include these quantitative assessments, rather than relying on one-off events or anecdotes. This will give you a much clearer and broader perspective into how your partnership has progressed.
Conduct quarterly business reviews
Depending on your business’s volume, consider hosting a formal quarterly business review (QBR) to review all aspects of your operational partnership. If volumes are too low for a formal QBR, consider rolling “operations calls” with carriers.
The goal for these discussions should be to review performance and identify ways to improve mutually, not to look for “gotcha” moments. Historically, QBRs are used to go over the most recent quarter, but also use the time to discuss upcoming changes to either parties’ businesses, like if a shipper opens a new plant.
We all know that it’s easy to be a good partner when things are going well. A true sign of a lasting, healthy partnership is the ability to work through tough times together.
Both shippers and carriers have to develop an approach to vetting that best suits their needs. With that said, specific vetting activities should be based on achieving mutual respect, trust, understanding and a willingness to stand by one another through the good and the bad.