strategicinsight
tinuing operations, he says.
Says Clifford F. Lynch, executive
vice president of CTSI, a freight payment and technology firm, and
author of the book Logistics
Outsourcing—A Management Guide:
“I think the primary reason [3PLs
offer consulting services] is they
hope that they’ll get the work after
they do the analysis. … It’s a vehicle
for getting new business.”
But hold on—isn’t that like putting the fox in charge of the henhouse? Won’t a 3PL consultant
inevitably design a solution that
guarantees business for its parent or
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sister companies?
There’s nothing wrong with getting new
business as a result of a consulting assignment, say 3PLs, provided they truly are
the best choice to handle those responsibilities. Besides, consultants that steer
business to their parent or sister companies at the expense of their clients won’t
be around for long, says Marc Heeren,
senior director of Maersk Logistics Supply
Chain Development. “If by favoring your
own organization you don’t provide
advice that really leads to the best efficiency and performance, then you will get
very few projects before you have to close
up shop,” he says. “Credibility is critical.”
Which is best?
It’s clear why a 3PL would want to offer
logistics and supply chain consulting
services—although, as Aimi points out,
few have been successful at forming profitable consulting organizations whose
results can be accurately measured. But
why would a shipper choose a 3PL over a
traditional consulting firm?
For one thing, there’s the appeal of
working with a known quantity. “The
most prevalent kinds of consulting projects generally are with existing clients,
where the 3PLs have already proven themselves,” says Aimi. “They have seasoned,
competent talent who know the operation
as well as or better than the customer, plus
they can pull in ideas from their outside
experiences with other companies.”
There’s also the matter of cost. Armstrong
notes that much of this type of consulting is
done at less than market prices because it
creates opportunities that lead to other
business. Some 3PLs will carry out a consulting project, and if they are chosen to
implement the project and handle subsequent operations, then the shipper pays little or nothing for the analysis. If the shipper
does not hire the 3PL, then the shipper pays
for the consulting work. That offers some
protection for the service provider, too, adds
Lynch. It’s not unheard of for shippers to
gather as much information for free as they
can, and then walk away.
For their part, 3PLs say there are two big
advantages for shippers. First, the provider
will recommend only what it knows can be
successfully implemented, says Heeren,
