WERC  36th  Annual  Conference  3PL  Selec)on  –  Demys)fied!  

Robert  Ulery,  Vice  President,  Johnson  Stephens  Consul@ng,  Inc.  

Hello!  

• Who  is  this  guy?  

• What’s  his  background?  

Should  I  Listen  to  Him?  

1.  I’ve  worked  on  several  sides  of  3PL  

2.  It  might  be  awkward  to  leave  now  

Today’s  Goals  1.  Learn:  –  How  to  engage  a  3PL.  

–  What  to  share  with  them.  

–  How  to  ask  for  (and  get)  accurate  proposals  and  pricing.  

2.  Understand  how  3PL  works:  –  When  does  it  make  sense?  

–  When  does  it  not?  

3.  Illustrate  a  proven  selec@on  process.  

Why  Outsource?  

Good  Reasons:  

•  Capacity  •  Flexibility  •  Access  to  technologies  

•  Capital  avoidance  

Bad  Reasons:  

•  Save  money  

•  Transfer  risk  

The  Matrix  Strategic  V

alue

 

Non-Core

Competency  

Outsource  

Retain  

Offer  to  Others  

Improve  or  Outsource  

The  Tradi@onal  Approach  

•  Approach  a  3PL  to  test  the  waters.  •  Ask  for  “direc@onal  pricing.”  •  Decide  to  get  two  or  three  more  quotes.  

•  Receive  quotes  in  different  formats.  

•  Put  together  an  RFP  and  try  again.  •  3PLs  begin  to  lose  faith.  •  Make  a  selec@on  based  on  price.  

Lessons  Learned  

•  RFIs  can  be  a  waste  of  @me.  

•  “Direc@onal  pricing”  doesn’t  exist.  •  3PLs  need  several  weeks  to  respond.  •  You  need  to  specify  the  commercial  structure.  

•  You  have  homework.  

•  Don’t  use  that  old  RFP  everybody  passes  around.  

Project  Objec@ves  

•  The  objec@ve  is  to  find  a  business  solu)on,  not  benchmarking.  

•  This  is  more  of  a  solu)on  design  process  than  a  typical  procurement  process.  

•  Your  approach  should  provide  the  3PLs  maximum  flexibility  versus  a  predefined  technical  solu@on.  

•  You  need  to  determine  what  each  3PL  will  do  versus  what  the  candidate  can  do.  

•  Understand  the  sensi@vity  of  cost  versus  improved  service  levels  and  capabili@es.  

Beaer  Approach  

STEP  1  Admit  you  have  a  problem.  

Beaer  Approach  

STEP  2  Assess  the  market.  

Beaer  Approach  

STEP  3  Establish  project  @meline.  

Beaer  Approach  

STEP  4  Understand  your  opera@on’s  work  content.  

Beaer  Approach  

STEP  5  Gather  lots  of  data.  •  Details,  not  averages  

•  Weekly  volumes,  not  annual  

•  Inventory  history,  not  average  turns  

Beaer  Approach  

STEP  6  Create  a  custom  Request  For  Proposal.  

Beaer  Approach  

STEP  7  Give  the  market  @me  to  respond.  

Beaer  Approach  

STEP  8  Tour  bidders  through  your  opera@ons.  

Beaer  Approach  

STEP  9  Create  scoring  criteria,  including  objec@ve  

and  subjec@ve  factors.  

Beaer  Approach  Objective

Beaer  Approach  Subjective

Beaer  Approach  Composite

Beaer  Approach  

STEP  10  Select  finalists.  

Beaer  Approach  

STEP  11  Meet  the  key  people.  

Beaer  Approach  

STEP  12  Pick  the  provider  you  like  best.  

Aber  The  Selec@on  

1.  Nego@ate  a  fair  opera@ng  agreement.  

2.  Expect  the  best,  prepare  for  the  worst.  

3.  Invest  in  the  rela@onship.  

Call  Me  if  You  Get  Stuck!  

Robert  Ulery  Vice  President  Johnson  Stephens  Consul@ng,  Inc.  robertulery@johnsonstephens.com  678-­‐778-­‐7630  www.johnsonstephens.com