Auditing is your way of keeping vendors affordable and accountable. Here’s how RLG can help.
If one of your direct employees was underperforming and putting your returns and reputation at risk, what would you do? You’d either take the necessary steps to make them an asset to your operation, or you’d let them go.
The same vigilance should apply to logistics vendors who, in becoming your partners, are now major players in how your business performs and is publicly perceived. Freight audits and post-audit management are two ways to keep your vendors in line and protect your budget, and there’s more to consider.
In this blog, you’ll learn:
The obvious costs of underperforming vendors
Some less obvious vendor damage
Why vendor contentment can hurt you
How technology boosts your vendor vigilance
Reasons to choose RLG for one-stop vendor management
The obvious costs of underperforming vendors
Unaudited partners can hurt your operations in two main ways: Effects that you can plainly see, and the ongoing, background damage that slips under the radar.
Starting with the obvious, you’ll have no problem spotting complaints from irate customers if a vendor partner underperforms. The loss of further custom that’s likely to follow is another blatant warning that an audit is required.
If vendors don’t operate according to regulations, they could be hit with fines or suspensions, hindering or halting their service and paralyzing your supply chain (read our earlier article for an example that ranks among the Top 10 supply chain risks). Worse, they could potentially tangle you in expensive regulatory or legal matters. This feeds back into high-profile reputational damage and profit loss for your business.
The hidden damage of poor vendor performance
A more insidious drain on resources comes when vendors underperform not in spectacular ways, but in little ones that require frequent attention or correction. These quick but repetitive fixes slip under the radar in the moment, but long-term they stack up to become a major pain point.
Such slipshod service from a paid partner means your employees must pick up the slack. The wasting of valuable time amending ongoing vendor errors is a costly internal loss; one that lowers your production capacity and makes you an underperformer by association.
Another less than obvious vendor threat is how much of the operation they may be outsourcing; not every partner is 100% self-contained. How well do you know your vendor’s partners? Your business can manage direct vendors, but if those vendors fail to manage their own partners, that’s a weak link in your supply chain.
Why vendor contentment can hurt you
It’s not always good to be “happy enough” with your vendors. Familiarity breeds contempt, and if vendors know they won’t be quality-checked, they may try getting away with less than their best. Even if you’re content with your partners, we recommend auditing them regularly. Keeping them on their toes will remind them they have competitors.
Vendor contentment may mean cozy relationships, but it can weaken contracts, which are vital to successful vendor management. Businesses often blindly sign renewal agreements even when partners aren’t performing 100%. We understand that vendor relationships can be fragile things, but never sacrifice the highest possible performance for fear of losing a partner. You can resource, readjust, and get the service you deserve.
How technology boosts vendor vigilance
Today’s logistics are data-driven, and access to the right metrics can tell you everything about partner performance. It’s a lot to process, but keeping a 24/7 eye on vendors is easier than you might think. Transport Management Systems (TMS) are an excellent way to monitor vendors and many businesses are adopting these systems to gain money-saving data. Read our previous article to learn why a TMS is so helpful for vendor management.
Reasons to choose RLG for one-stop vendor management
Our team assists clients in determining whether to insource or outsource their freight auditing and payment functions and helps them source the best solutions. Beyond this, we’re also your ally in data provision and contract negotiations.
RLG’s years of experience managing the entire freight claims process saves companies time, money and effort dealing with vendor partners. We ensure you’re getting the value you pay for. We also assist clients in managing post-audit carrier claims to make sure they all get paid.
When it comes to powerful metrics, RLG’s global TMS platform provides the actionable data shippers need to vet vendor performance. These advanced analytics make your supply chain and logistics transparent, revealing where your partners may require some management. A TMS is also a great way to ease back-office administrative burdens and combat subtle administrative time sinks.
We can help at contract time and manage RFQ bids for all modes of transportation, ensuring you onboard the right vendors from day one. After this, we provide ongoing contract and pricing management, which keeps policy language current and clear. When annual price negotiations roll around, RLG can be there to provide insightful feedback toward choosing future partners.
If you’re ready to revitalize your audit practices, the RLG team is standing by.
Resource Logistics Group provides transportation and logistics advice combined with professional services and state-of-the-art technology. From contract negotiations to easing back-office burdens, we’re your ally in excellence. Connect with us on our contact page for a free benchmarking analysis.