COVID-19 has changed the needs of many businesses for ever; and that is before we know the outcome of Brexit. For many, the old ways of working are out as companies have to adapt to changing customer requirements resulting in a demand for different logistics services. Selecting a logistics partner is now a critical decision requiring careful analysis and detailed consideration.
Successful Contractor Selection
So, what are the key things that a company can do to maximise the likelihood of a successful contractor selection process:
Define your current and future needs
The time and effort required to appoint a new contractor is considerable and therefore, ideally, companies should plan to remain with the successful contractor for a minimum of five to ten years even if the contract is for a much shorter period. For this to happen it is essential to try and anticipate your future operational requirement.
Identify suitable contractors
As part of finding a suitable partner, undertake a comprehensive review of the market place to identify those contractors that have the resources, quality standards and skills to meet both current and future needs. Determine which contractors are committed long term to the services you require and whether they have the financial resources to be a leader in their chosen sector.
Document your requirements
A clearly defined statement of requirements and data set will be crucial in evaluating competing contractors and will be core to the contractual agreement. When things change, as they will, it is essential to have a ‘touchstone’ to commence discussions.
Determine the most appropriate pricing system
A good pricing mechanism is fair to both parties but encourages the contractor to reduce costs and improve productivity to the benefit of both parties. This can be tariff based, open book, activity based or a combination.
Ensure a structured and rigorous approach to the tender process
It is essential that the process is well structured with all contractors being provided with the same information and sufficient time to respond. In a complex tender process it is all too easy to land up comparing ‘apples’ with ‘pears’.
Encourage contractors to provide creative and innovative solutions
Whilst contractors should respond to a common brief they should be encouraged to provide innovative and creative solutions. Avoid designing yesterday’s solution for the needs of tomorrow.
Prepare a comprehensive legal agreement
In addition to standard legal obligations, the agreement should clearly define each party’s operational responsibilities, performance standards and reporting requirements. A successful relationship should not require constant reference to a legal agreement but it will depend on establishing solid foundations.
Visit the contractors operation and meet the people
Take time to see where the operation will be based, the systems to be used and the people that will be responsible for the operation. Complementary cultures play a key role in successful relationships.
Follow up on references to gain a greater insight as to the culture and standards of the short listed contractors
Find out how things have been handled when things have gone wrong. You will only know how good a contractor is when things have gone wrong not when they have gone right.
Ensure a comprehensive implementation plan is prepared
Ensure that tasks have been clearly identified with named individuals and timescales and include within the legal agreement for both the contractor and the company.