Building relationships

There is a trending by customers of public refrigerated warehouses (PRWs) to turn to the request for proposal (RFP) processes to manage their own logistics. This makes it difficult for logistics providers to compete, unless they can offer a complete package of services, including both warehousing and transportation.

Companies whose core competencies may not include managing assets, such as a large truck fleet or cold storage facility, can better compete by creating strong warehousing and transportation partnerships.

In the convention focus session, Managing PRW and Refrigerated Truck Carrier Relationships, Rich Kappmeier, senior vice president of VersaCold/Atlas Logistics, and Chris DiSilva, chief operating officer of DiSilva Taunton Express (DTE), discussed how their companies make their relationship work.

The two companies created a partnership in 2002 to help each other, said Kappmeier. At the time, P&O Cold Logistics, the predecessor to VersaCold/Atlas Logistics, had a trucking operation that was struggling. DTE previously had a warehousing operation and understood some of the dynamics of a warehouse-trucking relationship.

The companies began cooperating with each other “based on mutual trust,” to provide refrigerated logistics services, Kappmeier said. “We are now partners in service to the customer. We generate sales as a team.”

“DiSilva Taunton Express operates in the background providing seamless service,” DiSilva added. “We're basically an extension of VersaCold/Atlas Logistics.”

The relationship works, the two agreed, because of open, honest communication, respect for what each company does and contributes, and because of invisible lines of division.

Since partnering, the business has grown steadily. DTE makes some 1,300 deliveries per week of refrigerated, frozen, and dry products to 67 VersaCold/Atlas Logistics customers. That is up from 555 deliveries each week to 37 customers in 2002.

The fleet has expanded from some 75 tractors and nearly 200 trailers to more than 120 tractors and 300 trailers.

DiSilva noted that “DTE is a partner with VersaCold/Atlas Logistics, not just a provider of on-time deliveries. We manage out volatility, manage regulatory compliance and reforms, and manage transportation costs, such as insurance, fuel, equipment, and labor.

“We work and prove together that excellent service doesn't have to come at a higher price.”

Certain contractual arrangements must be spelled out when creating a business relationship, DiSilva and Kappmeier said. Key among them: define the scope of the relationship expectations and objectives and identify liabilities and remedies. Flexibility also is necessary to amend any arrangements on request.

“Obviously, the partners need to honor the agreement,” said Kappmeier.

It also is essential to measure the health of the business relationship in order to improve performance. Toward this end, DiSilva and Kappmeier recommended establishing key process indicators (KPI) for evaluation. These need to include measures for gauging productivity, on-time delivery, and event management.

The key to a successful warehouse-transportation partnership is to keep customers happy, they concluded.

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