The work and research developed by Kate Vitasek, in conjunction with the University of Tennessee, aims to answer that question in the recent book, Vested Outsourcing: Five Rules That Will Transform Outsourcing. Vitasek, lead researcher and faculty member of the University’s Center for Executive Education, introduces the concept of vested outsourcing to help create a true vested partnership that will deliver transformational results. I recently finished reading this book and was captivated by the premise and message.

Consider: most often companies are developing supplier and outsourcing agreements that don’t allow for innovative partnerships that strive to help solve real logistics and supply chain problems. These kinds of agreements more than likely do not produce satisfying results. Companies that are frequently bidding out business just to capture the best market price may be inhibiting innovation from their suppliers. This is because most suppliers will not risk investments in innovation or new processes for fear of the business being bid out and “taken away.” Suppliers are unable to justify the investment or collaboration because they may not realize the ROI.

Instead, vested outsourcing requires both partners to assume a degree of risk and reward to drive transformational behaviors and results. Vested outsourcing adds order through its “rules” and provides a roadmap for creating mutually beneficial agreements. The goal is to create a true vested partnership whereby the economics of the deal structure drive, and reward, transformational behaviors and results. This type of collaboration is a win-win for both partners by ignited innovation, improved service, lower costs, and increased profits.

The book also shares 10 Ailments that can affect achieving a true vested partnership and how to lay the foundation for a vested approach. If you are seeking a way to improve your partnerships, I recommend picking up a copy of the book.

Have you ever read it? Share your thoughts.

-Jennifer Johnson, National Account Executive

We hope we’ll meet you at the 2010 Commercial Construction Show next week at the Minneapolis Convention Center June 9-10. This is our first year exhibiting at the event where we will showcase the comprehensive, smarter logistics services Koch offers to the commercial construction industry that help customers overcome challenges to improve supply chain performance.

At Koch Logistics, we understand how important it is to manage a project as efficiently as possible and keep crews on schedule, especially with the rigorous demands of commercial construction and design build. This is why we maintain our 99% on-time pick up and delivery rate. Logistics plays an increasingly important role in project delivery methods and we work to identify ways to make your scheduling more efficient with flexible, customized solutions to meet the unique needs of your job site. Koch Logistics customers have a dedicated account team to manage your project delivery process from start to finish, including coordinating carriers and supplies, tracking and tracing delivery status, and tackling any issues that may arise.

Attending the show? Stop by the Koch Logistics booth #1203 to learn how our 3PL approach can help you solve your complex logistics challenges and concerns. If not, please call or email. I look forward to talking with you to discuss your specific logistics needs in commercial construction.

View a schedule of events here.

-Tom Hall, National Account Executive

Our challenging global economy over the last year and a half has demanded many changes from our industry. The new normal now requires that we do more with less. However, one component is unchanged: on-time pick up and delivery remains a top priority for shippers.

We know that on-time pick up and delivery is not only important but more critical than ever before. Koch Logistics recently completed a survey among both retailers and hospitality firms. We asked what their most important factors are when selecting a 3PL provider. These responses were compared with a similar survey we conducted with our customers two years earlier. From our analysis, we were able to assess what has changed as a result of economic changes – and what elements of supply chain management have remained constant.

Koch is proud of our industry-leading 99% on time delivery rate. And that’s why Koch Logistics has the systems in place to arrange precision delivery to meet the most important needs of our customers.

Proactive response to problems has increased in importance since our last survey in 2008 and now ranks as the second most important factor for retail and hospitality providers. Many customers begin a new 3PL partnership with Koch because of past logistics headaches or problems. When customers choose Koch Logistics, they get a dedicated account team that deftly coordinates multiple carriers, vendors and the inevitable last minute changes. And if something goes wrong, we’ll make it right.

We are excited to share our insights and key findings with you. Check back to our blog over the next couple weeks for expanded findings and please share your top priorities or factors with us.

-Jeff Faust, Vice President & General Manager

We enjoyed meeting and reuniting with so many of you at the NASSTRAC Logistics Conference last week. For the third year, Koch Logistics was a premier sponsor of the conference which saw a boost in attendance this year, as nearly 400 shippers and carriers gathered.

At the conference sessions we gained insight and perspectives on navigating global shipping regulations, new challenges facing global organizations that affect supply chain and logistics planning, and next steps for moving toward a positive future. Sessions highlighted shipper-carrier relationships, perspectives from motor carrier CEOs, and a recap from Wall Street on the freight recession and forecasts for 2010 and beyond. Discussions included the importance of a strategic partnership – particularly during a challenging economic climate – and how to streamline supply chain management. In the wake of market shifts, maximizing supply chain value has become imperative for businesses to succeed.

The expo floor provided an intimate venue for networking with attendees and vendors and continuing to build relationships with current clients. With key decision makers and major shippers as well as transportation providers in attendance, the open forum was helpful for networking and table discussions.

If you attended the show, feel free to share your thoughts. View photos and session recaps at nasstrac.org.

-Meg Schmidt-Duncan, Manager of Carrier Relations and Karl Fillhouer, Director of Operations

Earlier this year Inbound Logistics Magazine released its “Ten Tips for Using Social Networking for Logistics.” Rule number six reminds social networkers and online visitors to “Decipher the negative.” In other words, “Social networking can provide information about a potential partner, but you need to know how to discriminate between posts (for example a true negative analysis versus a disgruntled consumer or employee.) Examine criticism and positive online comments about a provider whose services you are considering.

When it comes to logistics services, our research with both retailers and non-retailers affirms the importance of references or referrals when selecting a 3PL partner. These references may be hard copy or on a website, but be cautious about seemingly vague references such as testimonials that don’t list an actual company or contact name and title. This provides the reader assurance that the referral is credible and real.

At Koch Logistics, we are proud of our client relationships and are building a library of case studies for others to gain insights about our work. We hope you will visit this resource and return as new content becomes available.

-Jennifer Johnson, National Account Executive

Often we hear the terms “broker” and “3PL” used interchangeably. While both serve as a liaison between shippers and carriers, on closer comparison, there is certainly differences between the two. The term broker usually refers to an agent for truckload shipments, matching smaller shippers with carriers. Brokers are increasingly internet-based and price driven. Beyond the seemingly lower upfront cost, they may not offer the value-added services a 3PL provider can, and their knowledge of customers and their unique needs is more limited.

The CSCMP (Council of Supply Chain Management) defines logistics management activities as including (but not limited to) inbound and outbound transportation management, fleet management, warehousing, materials handling and order fulfillment, and many others. In addition, 3PLs are typically involved in all levels of planning and execution and are an integrating function that coordinates and optimizes all logistics activities with other functions including sales and IT.

A 3PL offers brokerage services but many more value-added services. 3PLs take a look at the entire supply chain and offer in essence a “one stop shop” to customers for their supply chain management functions. A 3PL provider will customize programs for each customer and match unique customer needs to carrier core competencies. With access to a greater number of industry contacts they offer flexible, customized solutions. In addition, as a 3PL focuses on your business, they work to identify ways to make your supply chain more efficient, which ultimately saves cost and improves performance.

Although it may be easy to interchange the terms broker and 3PL, remember that a 3PL partner invested fully in your business will have a positive impact on your organization’s future.

-Thomas Hall, National Account Executive

At Koch Logistics, we take great pride in developing partnerships with our customers. Through mutual trust and dedication, we are able to provide turnkey services that create both lasting value and tangible savings.

Please read our newest case study that highlights our work with Minnesota Rubber & Plastics, a privately held company that provides difficult-to-manufacture rubber and plastic parts and assemblies for diverse industries including medical, electronics, pharmaceutical, fluid power, agriculture, food and beverage. Koch Logistics has managed MN Rubber’s transportation services for more than six years and helped generate results like an on-time delivery rate increase of 20%.

-Jennifer Johnson, National Account Executive

An optimum relationship with your 3PL provider will develop where there are shared expectations, common goals and values — all elements of a shared culture. A recent Inbound Logistics editorial explained, “If one party has a mentality of ‘good enough is fine,’ and the other has a ‘dazzle me’ expectation, no one will be satisfied.” A shared culture is a key element of a successful logistics partnership and this is especially critical in today’s economy as strategic alliances become a matter of survival.

A shipper should seek a 3PL that will fully invest in the relationship, while setting common goals and objectives. Partner with a provider who can meet the same expectations you have of your employees. Besides the delivery of goods, this often means focusing on the delivery of solutions as well — allowing a 3PL to offer better insight into how they can best solve customer challenges. This approach is based on trust and accountability as information is shared between parties. By engaging fully with its customers, Koch Logistics becomes actively involved in their success.

We believe sharing common values and philosophy is vital to a successful and lasting relationship between customers and third-party logistics providers.

-Darren Nelson, National Sales Manager

As you well know, and our proprietary research confirms, claims management is an important element in logistics management. For Koch Logistics, while only a small percentage of the total shipments that we coordinate result in claims, we partner with our customers in this complex area to simplify claims management and claims administration.

Knowledgeable Support

As part of our value-added services, we assist our customers through the claims process. This starts with tracking the legal deadlines and reminding our customers to provide us with timely information to preserve claim rights. We then proceed to file and administer the claims on behalf of our customers. We also will assist in negotiating settlements with carriers and filing in conciliation court when claims can not be settled through the negotiation process.

While this certainly makes the process easier, we believe the most important component of claims management is claims prevention. The dedicated Koch Logistics team tracks and reviews claim data for all of our customers. Depending on the claims trend, we will work closely with our customer transportation team to determine if possible changes are needed.

The Customer/Carrier Relationship

We will review the reason(s) for claims and how that may relate to product packaging or type of transit. At times, we may recommend the use of a dedicated truck in lieu of a LTL transportation service to reduce the amount of product handling or to reduce the exposure to other freight that may damage the product. We perform due diligence on a wide range of carriers and we regularly evaluate them so we can recommend a “best match” depending on the varying needs of our customers. Discussed in further detail in our Process Mapping blog post, we closely examine the core capabilities and strengths of vendors. And our process doesn’t end once freight is delivered—we routinely explore our carrier relationships for successes and areas of improvement to further minimize claims.

We know from speaking with customers the importance of simplifying the claims processes and prompt follow-up. We want our customers to be able to navigate this often arduous process with ease, knowing they can count on a partner like Koch.

-Tom Torreson, Director of Administration

We are pleased to announce that Yvonne Ecklund and Stan Lau have recently joined the Koch Maritime team to help customers meet international freight forwarding requirements as efficiently as possible.

Yvonne Ecklund’s previous work experience includes more than twenty-five years at DB Schenker USA. Most recently, she worked for Resource Logistics as domestic sales manager. Yvonne will focus on import/export operations for Koch Maritime. Previously a business manager residing in Shanghai, China, Stan Lau brings fluency in both Chinese Cantonese and Mandarin and will concentrate on container freight station (CFS) operations at Koch Maritime.

Yvonne and Stan bring their knowledge and skill to further establish our ability to address all international shipping requirements—and to come through for customers when it matters most. We hope you’ll get to meet Yvonne and Stan shortly.

-Larry Garaghty, COO
Koch Maritime, Inc.