by Dean Gionis
It happens to many companies. They start small but, before they know it, they have grown into a business or department of significant size. The question then becomes: Is their software provider and technology scaling with them or are they now inhibiting further growth? Part of the answer can be found by looking at four key areas:
- Impact on Your Profit and Loss (P&L) Statement
- Agreement/Contract Terms
Remember: For a vendor relationship to work, there must be a good fit between both partners, and both parties must benefit.
As you review your vendor relationship in light of the areas below, consider the level of fit and the benefiting party.
The logistics arena is a 24×7, dynamic environment where information must be available at all times. When you need support from your vendor, how is it acquired? Must you phone, search help files or fill out a web ticket? If you speak with a live person, does that individual possess industry knowledge or is he/she just following a canned script to answer your question? Is support handled by your vendor or is it outsourced to a third party? Have you essentially become self-supporting through your vendor’s use of web tickets or user manuals? If that is the case, think about how many hours a day/week/month you are focusing on technology rather than closing new clients and/or delivering services to existing ones.
Anything short of in-person communications with a skilled staff professional capable of diagnosing and correcting your issue means you are not exacting value from this vendor relationship.
The technology issue is more complex, and many factors must be considered. Is your vendor providing the integration resources you need to maximize efficiency or are you just living with what you have and adding more bodies? Is your vendor capable and experienced in interfacing with major ERP/WMS systems so that you can win new business or have new projects approved? How scalable is your vendor’s technology? What does it take – and how long – for you to expand your existing platform to accommodate additional users, clients, offices and so forth?
Let’s now consider technology in light of broker/forwarder operations and actual application software.
- How quickly can you file a PGA entry?
- How about a 200-line entry?
- How long does it take to import hundreds or thousands of parts into your database?
- What about shipment tracking? Can you automatically notify your clients of shipment status or must they speak with your staff to obtain this simple information?
- How many different software systems do you use to run your business? Are they interoperable or must you reenter data multiple times in various systems?
These examples are but a few potential cash-burning inefficiencies that can erode revenue quickly.
Impact on Your P&L Statement
Your technology evaluation might reveal a lot of “busy work” being done relative to data entry. Inefficiency can translate into hundreds of thousands of dollars in lost revenue and severely impact your P&L as well as your business’ ongoing viability.
Consider the time and money you could save if your technology wasn’t letting you down. With maximum automation – and the right technology partner – your business could go up against the “big guys” and win. What would that do for the P&L?
There are many important components to your technology provider agreement including deliverables, responsibilities, confidentiality of data, term, costs, termination, etc. With a hosted or cloud-based software agreement, it is wise to negotiate a provision for early termination. If your provider is unable to keep up with compliance or can no longer support a critical capability, then you have the flexibility to make a change, if necessary.
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After your evaluation is complete, communicate with your software provider and explain the issues as you see them. Give the provider a chance to fully understand your concerns and suggest a solution. If your provider doesn’t offer a remedy or seems indifferent, then it is definitely time to say goodbye.