How to Conduct a Successful 3PL Quarterly Business Review (QBR)
At Rush Order, we believe in the power of communication and partnership in managing successful third-party logistics (3PL) relationships. One of the most effective ways we maintain this is through our Quarterly Business Reviews (QBRs). These QBRs are crucial to ensure alignment between our goals and those of our clients, and to track our performance and progress.
This post will elaborate on this QBR template you are welcome to download as a starting point. Typically, your 3PL should create this or something similar to it for each of your QBRs.
Regular QBRs with your 3PL can lead to many positive outcomes. Here are the top ten benefits you can expect, followed by a comprehensive QBR guide and downloadable template to help you achieve these outcomes.
Alignment of Goals: QBRs help ensure that your 3PL's performance and strategic objectives align with your own business goals.
Performance Transparency: Regular reviews provide a clear picture of the 3PL's performance against the agreed SLAs and KPIs, promoting transparency and accountability.
Improved Communication: QBRs facilitate regular, structured dialogue between your team and your 3PL, fostering improved collaboration and communication.
Continuous Improvement: The reviews can help identify areas of improvement and set the stage for initiatives aimed at enhancing service quality and operational efficiency.
Cost Optimization: By reviewing spending and benchmarking against industry averages, QBRs can uncover opportunities for cost savings and efficiency improvements.
Risk Mitigation: Regular reviews can help identify potential issues or risks early, allowing for timely mitigation strategies.
Improved Customer Satisfaction: By reviewing end-customer metrics and feedback, QBRs can lead to initiatives that enhance customer satisfaction and loyalty.
Strategic Planning: QBRs provide a forum to discuss future plans, new projects, and strategic shifts, ensuring the 3PL is aligned with your evolving business needs.
Enhanced Relationship: Regular, structured interaction through QBRs can help build a stronger, more collaborative relationship with your 3PL. Building trust in any mission-critical partnership will pay dividends down the road.
Competitive Advantage: Ultimately, all these benefits can lead to a more effective and efficient supply chain, giving your business a competitive edge in the market.
If you're considering working with a 3PL like Rush Order or looking to improve your relationship with your existing 3PL, understanding the QBR process is key. Here's a comprehensive guide to conducting a great 3PL QBR, which will ultimately help achieve the 10 outcomes listed above.
1. Service Level Agreement (SLA) Performance
The first area to focus on is how well the client / 3PL partnership is meeting the Service Level Agreement (SLA). Are the promised key performance indicators (KPIs) such as order accuracy, on-time delivery, and inventory accuracy being met? This section should include a detailed analysis of the SLA performance, identifying areas of success and those that need improvement.
SLAs are a critical component of any 3PL partnership. They set the expectations for service delivery, provide a clear definition of success, and establish the metrics by which performance will be measured. Here are seven of the most common SLAs that should be discussed during the QBR. For a full list of SLAs and KPIs, download Rush Order’s sample 3PL scorecard.
Order Accuracy: This metric assesses the percentage of orders shipped without errors. It's vital for maintaining customer satisfaction and minimizing costly returns.
On-Time Shipment & Delivery: This measures the percentage of orders delivered to the end customer within the agreed-upon timeframe.
Inventory Accuracy: This refers to the alignment between the physical inventory and the records. High inventory accuracy is essential for effective supply chain management. Your 3PL should be cycle-counting through your inventory regularly.
Order Cycle Time: This SLA measures the amount of time it takes from when an order is received to when it's delivered. Shorter order cycle times often lead to higher customer satisfaction.
Return Processing Time: This metric evaluates how quickly returned items are processed and restocked or disposed of.
Dock to Stock: This measure the amount of time it takes for your 3PL to receive new inventory, increment stock in its system (and perhaps your internal system), and make that inventory available for outbound shipments.
Cost per Order: This SLA measures the total cost incurred by the 3PL to process and deliver an order. It's crucial for understanding the financial efficiency of your 3PL partnership.
Sample SLA performance QBR slide
Each QBR should include a detailed analysis of the SLA performance, identifying areas of success and those that need improvement. Remember, a robust set of SLAs is key to driving performance and ensuring your 3PL is meeting your business needs.
Implementing a 3PL scorecard can be an effective way to measure and provide feedback on SLA performance. A scorecard presents an easy-to-understand visual snapshot of how well the 3PL is meeting each of the SLAs. It can be tailored to include the specific metrics that are most important to your business.
At the end of each quarter, you can fill out the scorecard and share it with the 3PL. This provides a clear, quantifiable measure of their performance and helps identify areas that need improvement. It's a valuable tool for fostering accountability and driving continuous improvement.
To help you get started, we've created a sample 3PL scorecard you can download and customize to fit your needs. Remember, a well-structured scorecard is a powerful tool for managing your 3PL relationship and ensuring they're delivering the level of service your business requires.
2. Key Metrics Review
This section involves a deep dive into various metrics that provide insight into the operational efficiency and effectiveness of the 3PL. Metrics could include order cycle time, cost per order, return rates, warehouse efficiency, and more. These metrics should be compared against industry benchmarks or the agreed upon targets to determine how the 3PL is performing. Again, download our sample 3PL scorecard template for a full list of key metrics to include in your QBR discussions.
3. Spending and Cost Control
An essential aspect of a successful QBR is a thorough review of spending and cost control. This allows for a comprehensive understanding of where your money is going and how efficiently it's being used.
At Rush Order, we break down costs into various categories such as transportation, warehousing, labor, and overheads. For each category, we provide an analysis of the spend, variance from the budget or forecast, and a comparison with the previous quarter.
In addition, we provide benchmarking data for these spend categories. Comparing your costs against industry averages and peers can provide valuable insights. With over 150 clients, Rush Order uses client-wide averages to help each individual brand identify areas where they are doing well and where there might be opportunities for further cost savings.
For instance, if your receiving or returns costs are higher than the benchmark, it might be worth investigating whether there are inefficiencies in your operations or if you are utilizing your 3PL optimally. Your 3PL should be able to answer “why” your spend in a particular category is higher than most others and help guide you (or its own team) toward improvements that can be made.
We believe this focus on cost control and benchmarking helps our clients make informed decisions, manage their spending better, and ultimately increase their profitability. A successful partnership with a 3PL isn't just about successfully handling logistics and customer service – it's about working together to improve your bottom line.
4. Projects Completed and In Progress
This is usually a very tactical discussion point. Highlight the projects that were completed during the quarter. This could include system integrations, process improvements, new custom reporting, facility upgrades, new services initiated, or employee training initiatives. In addition, provide an update on ongoing projects, highlighting the progress made and any challenges encountered.
5. End-Customer Satisfaction Measurement
This one is less obvious but we’ve found it to be very enlightening and helpful in the course of Rush Order’s QBRs. Your 3PL plays a huge role in your customer experience. And, practically everyone in your organization will agree that end-customer satisfaction is paramount. Review metrics like your Net Promoter Score (NPS), customer satisfaction score (CSAT), Average Response Time, and first call resolution (FCR) rate with your 3PL. Share feedback from customer surveys, and discuss how the 3PL plans to address any issues identified, and of course celebrate victories along the way. Here are a couple examples where tracking these metrics with Rush Order led to positive outcomes for our clients and their end-customers:
Example 1: An ecommerce brand continuously experienced slow response times and stubbornly low CSAT scores. By bringing this to light in a QBR, it was identified through constructive dialogue that the brand’s customer service team was using the wrong email address to contact the 3PL about shipping-related requests such as address changes, item changes, and cancelations. By correcting this very easy issue, the client’s support agents were able to respond much more quickly to customers and avoid expensive returns due to missed address corrections and last minute cancellations. Additionally, Rush Order made the client aware of its live chat functionality and ability to integrate a Slack channel together for even faster responses.
Example 2: An environmentally friendly product brand continuously encountered low NPS results. By bringing this to light in a QBR with Rush Order, we helped identify a change we could make in our shipment packaging that would appear to be more eco-friendly. The current packaging was already eco-friendly, but it wasn’t as obvious and this resulted in customers being less likely to recommend the brand to a friend. With the new packaging in place, NPS surprisingly jumped by a significant margin.
6. Client Feedback
QBRs are not just about the 3PL presenting their performance; it's also an opportunity for the client to provide feedback. This can be collected through surveys, scorecards, or direct conversations, and should cover areas such as communication, problem resolution, and overall service quality.
Client feedback is an integral part of the QBR process. It provides valuable insights into the client's perspective, highlighting the areas where the 3PL is excelling and where there may be room for improvement.
At Rush Order, we believe that a successful partnership involves open and honest communication, and that includes understanding our clients' views and experiences.
Here's how Rush Order typically approaches client feedback during the QBR:
Preparation: Before the QBR, we typically request clients to fill out a feedback form. This is an opportunity for them to provide their thoughts on various aspects of our service delivery. Questions may cover topics like communication quality, problem resolution, overall service quality, and how well we meet their expectations.
During the QBR: The feedback collected is presented and discussed in the QBR. If there are any areas of concern, we discuss potential solutions and make plans for improvement. If there's positive feedback, we make sure to acknowledge and celebrate the team's hard work and dedication.
Post-QBR: We don't just collect feedback and discuss it; we act on it. After the QBR, we work on the areas identified for improvement and regularly update the client on our progress.
Regular Check-ins: We don't wait for the next QBR to follow up on the feedback. Regular check-ins are scheduled to ensure we're on track with the improvement plans, and that the client is noticing positive changes.
Remember, your feedback is invaluable to your 3PL. It's not just about us presenting our performance; it's also about listening to your experience, understanding your needs, and working together to create the best possible partnership. It's this two-way communication that makes QBRs so valuable and effective.
7. Future Planning
Discuss the goals and initiatives planned for the next quarter. Are you looking to expand to new geographic markets? Launching new products? New sales channels? Any creative promotions? Ensure that your 3PL's future plans align with your own company's strategies, goals, and objectives. Filling in actual projects in real-time in the QBR slide deck or doing so quickly after the QBR ends and sharing as a follow-up is a general best practice.
Sample QBR slide: Future roadmap
8. Summary and Action Items
End the review with a summary of the key takeaways from the QBR, and a list of action items to be addressed before the next QBR. This should include who is responsible for each action item and the deadline for completion.
Remember, a successful QBR is a two-way street. It’s not just about the 3PL presenting information; it’s also about listening and responding to your feedback and needs.
Again, to help you get started with your own QBRs, we've created a QBR template you can download. For an editable version of this file, please contact us.
At Rush Order, we're committed to transparency, continuous improvement, and a strong partnership with our clients. We believe that our approach to QBRs is a crucial part of that commitment, and we hope this guide helps you understand why.
If you have any questions or would like more information about how Rush Order can help manage your logistics and customer service needs, please don't hesitate to contact us.
