For many companies, however, having an in-house logistics department can really put a dent in a company’s bottom line.
That’s why third party logistics providers or 3PLs have become so valuable.
In selecting a 3PL, a company (the shipper) will usually broadcast a request for proposal or RFP.
An RFP works as an executive summary of what’s to be expended in moving the shipper’s products around the world.
While there are many ways to approach an RFP, it’s important to be sure that the terms of a successful RFP are incorporated into the contract governing the transaction.
To this point, there’s an excellent article by Mary Shacklett in Global Trade Magazine, What Shipper CEOs and Execs Should Know about 3PLs.
In the article, Mary lays out 10 points to consider when dealing with a 3PL.
While they are all excellent points, point no. 7 stood out for me: Always Develop an RFP and Move it Into Your Service Contract.
This point stood out for me because, over the years, I’ve seen several 3PL contracts where the shipper’s in-house counsel fails to incorporate the terms of the RFP (on-time shipments, no damaged goods, etc.) into the contract.
You can avoid this by matching the contract terms with the terms of the RFP during the drafting process. Doing so will go a long way to preventing a dispute down the road.
Be sure to read my earlier related post, Global Supply Chain Logistics: How to Negotiate a Contract with a Third Party Logistics Provider.