The Future of 4PLs: Creating Value with Relationships

American Motors, Brown Shoe, Studebaker, Collins Radio, Detroit Steel, Zenith Electronics, and National Sugar Refining.

Do you know what these companies have in common?

Think Dodo bird!  All 7 companies were on the very first Fortune 500 list.  Now they’re gone.  They’re extinct.

Today, only 12% of the original Fortune 500 remain on the list.  By 2027, 75% of today’s companies will vanish.  The churn isn’t slowing.  And it shows no signs of stopping.

The Fortune 500 invokes images of stability. But today’s dynamic times conjure images of uncertainty spurred by constantly changing trends. 

Yet, businesses crave predictability and assurance.  Interestingly, businesses can find certainty by embracing changing trends. One trend gaining popularity in the logistics industry is strategic, long-term, relationship-based contracts.

In this article, you’ll find out how to thrive by pursuing strategic, long-term relationship-based contracts instead of transactional, short-term contracts with 4PLs/NVOCCs.

 Long-term Partnership. Strategic View. Tactical Mindset.

 Traditional, transactional-based logistics service providers may soon join the Dodo bird. With the increase in global competition, companies must think strategically and execute flawlessly. There is little room for error.

With the unrelenting advances in technology and the endless pace of innovation, today’s businesses must work smarter, not harder. Working harder only takes you only so far, before your business reaches a breaking point.

Let’s look at the alternative.

The alternative is to enter into a relationship-based contract with a 4PL/NVOCC. Relationship-based partnerships have many advantages over transactional-based companies.  We’ll get to those in a minute.

Transactional-based companies focus on the here and now. They look at executing specific transactions without regard to the how their work contributes to the enterprise. They fail to look at how their work fits into the big picture. They focus on transactional execution.  That’s because they get paid to do just that.

A transactional-focused service provider emphasizes efficiency over effectiveness. That promotes behavior that seeks the lowest rates in the business.  However, in today’s world of uncertainty that short-sightedness is not a recipe for success.

A strategic-focused company, meanwhile, takes a long-term view. It looks beyond making the sale and getting the lowest price. Instead, a strategic-focused company sets its sights on its client’s strategic goals.  A 4PL that aligns its strategic goals with its customer’s, indicates a preference for value creation over price.

That said, once a strategic-minded 4PL sets a long-term strategy in collaboration with its client, the 4PL employs a tactical mindset in executing that strategy – flawlessly.

How to Identify a Relationship-based 4PL/NVOCC that Helps Create Value

Four traits help identify a strategic-minded 4PL from a transactional-minded one: (1) long-term contracts; (2) Customized customer-centric solutions ; (3) Tailored technology support; and (4) a culture of innovation.

Long-term Contracts: To gain an edge over your competitors, you should focus on long-term contracts. Focus on developing partnerships rather than task-oriented relationships.  Long-term partnerships allow a value-oriented 4PL the opportunity to understand your needs, challenges, and priorities. 

 That means looking beneath the surface to understand how your business runs. A deeper understanding of your business will help the 4PL uncover your most pressing issue. Once your service provider identifies the root cause of the problem, you can be assured your business will improve. 

 Customization.  A good service provider is a consummate problem-solver. When a 4PL gets to know your business – inside and out – it will solve your problems with customized solutions. In today’s environment, out-of-the box solutions fall short. 

 Customized solutions, however, will help you thrive in today’s competitive marketplace.  And a 4PL can only create a customized solution, if it has a deep understanding of your business.  

 Your supply chain will benefit from streamlined processes and procedures. They’ll fit your business like a glove.  There’s no waste. And that means reduced costs. And the value realized from that is only made possible with a long-term relationship.

Technology: Just as customized business processes work best and achieve greater value, the same applies to technology solutions.  Out-of-the box solutions likely won’t satisfy all your business needs.

 But when you have a deep partnership with a 4PL, you can depend on a technology solution that meets your needs.  A tailored technology solution will meet your unique needs, deliver improved performance and realize cost savings. Customized technology solutions give you increased value, as they provide only the functionality you need. 

 Innovation.  Effectiveness and efficiency will easily set you apart from transactional-based companies. Changing trends and modernization drive innovation.  So, to achieve an industry-leading advantage, you must innovate. 

 Therefore, you need original solutions. You need solutions that remove obstacles and drive your business.  Developing innovative solutions stems directly from a deep understanding of your goals, objectives, and challenges.  It all boils down to a 4PL pulling its capabilities together to optimize your supply chain. 

  Long-term Partnerships with 4PLs/NVOCCs Help You Work Smarter

 Long-term partnerships allow you to focus on growing your business, while considering the obstacles, expected and unexpected. With a trusted partner by your side, you’ll collaboratively resolve issues before they become problems.   A trusted partner also creates value by bumping up its operational tempo to adjust to yours to support surges as they arise.

 You have unique challenges. A good 4PL/NVOCC will take a fresh approach to your unique challenges and bring the entirety of its of services and solutions to bear on your issue. While a 4PL focuses on managing your logistics operations, you can focus on your core competency. 

 When you find a 4PL/NVOCC that can deliver the total package of its services and capabilities, you’ll achieve even more value. Specifically, a partner with comprehensive, customized, and innovative supply chain solutions will give you the flexibility and agility you need to need compete.  

By embracing the changing trend towards long-term contracts, you’ll work smarter, not harder.

Conclusion. 

When you have a long-term contract with a 4PL/NVOCC, you’ll rise above the unpredictability of the marketplace. 

You’ll enjoy peace of mind that a comes from a well-thought out strategy. 

You’ll have confidence in your partner’s long-term service support plan. 

You’ll realize even greater value as your mutual trust grows.

Companies that fail to embrace long-term partnerships will find themselves fighting extinction.