Over the years, Mark E. Richards has done a lot of thinking about the right way to choose a third-party logistics service provider—thinking he has now distilled into a simple six-step process.
In formulating those steps, Richards has drawn on his vast experience in logistics, having worked in the field for more than 30 years. His first job was with a multicity public warehouse company, Distribution Centers Inc. He went on to work for such companies as Nabisco, Gillette, and Oral-B. He is currently the vice president of Associated Warehouses, a consortium of more than 50 third-party logistics service providers (3PLs) operating over 110 million square feet of space in North America and Europe.
Throughout his career, Richards has been actively involved with industry groups like the Warehousing Education and Research Council (WERC), Council of Supply Chain Management Professionals (CSCMP), and International Warehouse Logistics Association (ILWA). He was appointed to the CSCMP executive committee at the 1999 Annual Conference and served as chairman of the board of directors during 2005 and 2006.
Richards met recently with DC Velocity Group Editorial Director Mitch Mac Donald to talk about how he fell into the profession and the six keys to win-win shipper/third-party relationships.
Q: What led you to seek a career in logistics and supply chain management?
A: It was a situation where the profession found me. My father was at Nabisco when I was in graduate school at Miami (University) in Ohio. I was going to spend a couple of days with my dad at the Warehousing Education and Research Council conference at Ohio State, just hanging out. I walked in and asked the first person I saw if they knew Rich Richards, and that happened to be Ken Ackerman. Ken put me together with my father and then later on at the conference, asked me what I was doing and offered to help me find a job. I said, "Thank you very much, but I don't want to do this." He was persistent and asked me to send a rÃ©sumÃ©, which I did.
A few weeks later, his company contacted me and asked if I would be interested in interviewing. Again, I said, "Thank you, but no thank you." They said, "Well, how about if you consider it a practice interview?" The next thing I knew I was working for Distribution Centers Inc. and Ken Ackerman.
Q: What changes have you seen over the past 30 years in the way businesses approach logistics and supply chain management?
A: More and more organizations are recognizing the critical role that logistics plays. One manifestation of that is Tom Friedman's assertion in one of his books that those companies that have the most effective and efficient supply chains are the ones that will "win." So here you have a general publication that is recognizing the importance of supply chain. Another popular expression of it is the advertisements that we see on TV now. Thirty years ago, you wouldn't have seen "I love logistics" and UPS and others promoting logistics.
Q: Do you think the failure to stay on top of emerging technologies could put a company at a competitive disadvantage?
A: Definitely. There are so many things that will revolutionize what we do and how we do it. Take robotics, for instance—the idea of a $20,000 investment in a robot that could handle picking and packing in a distribution center. I can also see a day where you have a third-party distribution center become a farm of sorts that would contain many, many 3D printers and all the ingredients that go into that printer. Someone places an order and that third party prints it, packs it, and ships it.
Q: What's the value of being active in industry associations like WERC, CSCMP, and IWLA?
A: You have to not only take from the profession but also give back to that profession and be willing to invest yourself in hopefully making the profession better than when you entered it. My father and mother raised me with the whole idea of giving back. Even beyond that, I just believe that none of us has all the answers. I have been involved because I knew that it would expose me to different perspectives, different thinking, and different experiences and that could only be good for my personal development.
Q: You have come up with a six-step process for selecting a third-party provider that allows everybody to win. Could you summarize those six steps for us?
A: One of the first steps is to understand yourself. Someone will contact us saying they need help looking for a third party and what's the price. I'll say, "Well, we can get to that, but can you tell me what you are trying to do with this and what your objectives are? Why are you even thinking about outsourcing?" Really, the first step is understanding who you are as a company and what your objectives are.
Another key is getting as many people as possible within the organization involved in the process. There again, I see people that want to outsource, and they start down that path but with minimal or no involvement from people in human resources or IT or finance or sales and marketing. To me, that is a mistake. You get those people involved from day one and your solution can be so much better.
Q: What are the next steps?
A: Another key part is communications. Remember, you cannot overcommunicate. I'm a believer in communicating in a variety of ways: via phone, via text, via e-mail, via printed material. As you do that, you will be amazed. You have to kind of chuckle, "My goodness, I've said that to you, shared that with you six times and you are just now hearing it?" Because that is how we all are.
When you go to select a third party, another key consideration is the culture and cultural fit. That's probably the most important factor. You can teach anybody a technical process, but if there isn't a cultural fit, the result is not going to be as good as it could be. Part of that is asking questions that you might not typically think of. You need to be asking more of the "soft stuff" to understand the organization from a cultural standpoint and again, getting people involved in that process. It shouldn't be a one-person process. You should have other people visit the facility.
Q: And the next step?
A: The next step concerns the implementation process. It's an area that I think a lot of people take pretty lightly. They need to have a plan that everybody can rally around and agree upon.
The final step is maximizing the results. Now that you have this partner, you really need to consider it an extension of your company and treat it just as you would someone within your organization. You need to share your expectations. You need to train. You need to have ongoing contact and communication with them, and you need to celebrate successes. I am a big believer in that.
Q: What advice would you offer a young person considering a career in logistics and supply chain management?
A: Be actively involved and always give. When you give of yourself, you will be amazed at what comes back.