When choosing a third party logistics provider more and more companies are beginning to award 3PLs for continuous operational improvement. By using a “pay for measured performance” strategy with your provider you will ensure that the management of your company’s supply chain will get incrementally better as the relationship with your 3PL grows.
Companies that don’t reward their logistics company with incentives for performance improvements will over time begin to notice operational stagnation as well as diminished value of service provided. This typically happens when contract pricing is fixed at one rate over an extended period of time.
Like anything else in business if you give your provider incentive to keep challenging themselves with your account and continue to create new opportunities for operational efficiency you will be much more satisfied with your service level and will have a much stronger partnership with your 3PL.
Now this isn’t to say that if you don’t move to a “incentive based” program you won’t receive excellent service, but it is definitely a proven method not only in third party logistics but in business in general.