Saying goodbye in any personal or professional relationship is often difficult. Both parties invest time and money, often over a lengthy period. Everyone wishes things could have been different. The relationship between pharmaceutical 3PL (Third Party Logistics) providers and their clients is especially sensitive because it concerns patient health.
To succeed, relationships require constant attention from both parties. For pharmaceutical manufacturers, there are five recurring situations that predict it’s time to move on from their current 3PL provider.
Don’t be the last to know it’s over!
LOST IN THE CROWD: TOO SMALL TO NOTICE
What happened? Communication with the client was responsive before the contract was signed. But when the ink was dry, the contact dried up too.
When smaller pharmaceutical manufacturers try to work with 3PL industry giants, their voice is often only as loud as their impact on the bottom line. From the large 3PL point of view, clients sometimes vary in importance according to their value to the company. From the small manufacturer’s point of view, lesser importance may be tolerable, but that generosity doesn’t extend to being treated as unimportant.
According to Adam Runsdorf, President of WDSrx, a pharmaceutical third party logistics provider based in Boca Raton, FL, “Clients feel comfortable when treated respectfully before and after the agreement is signed. A smaller client feels the same sense of urgency as a larger client for their 3PL provider to manage their products efficiently. We often devote additional time to smaller clients because they may rely on us for our 3PL expertise to grow their business.”
ROADBLOCKS TO SUCCESS: SERVICE CHARGES THAT INCREASE COSTS
A sweet relationship with their pharmaceutical 3PL provider went sour quickly for a client negotiating a renewal to their agreement. A new policy from the 3PL required a significant payment to reserve space in their cold-chain facilities for the entire year regardless of whether the client company had product that required refrigeration.
The manufacturer was faced with the prospect of paying to reserve space based on the possibility that they may have products requiring refrigeration at some point during the coming twelve months. The client realized it was really getting the cold shoulder.
Another tactic contributing to unreasonable price increases, or ‘fee-creep,’ occurs when some 3PL providers adopt the bare-fee airline model. When travelers purchase a flight on some airlines, they may be surprised that the cost of the ticket does not include a seat or carry-on baggage!
Some pharmaceutical 3PL providers charge similarly. Although initial contract prices may seem very favorable, it may be due to the fact that fees for services are broken up into separate components. “I’ve seen several examples of fee-creep that clients who now work with us used to experience at their previous pharmaceutical 3PL provider,” says Runsdorf. WDSrx charges a set fee for storage and handling.
Fee-creep 3PL providers break out storage and handling into several components, each with a separate fee. When the invoice is issued, the client is often upset when presented with an over-complicated and overpriced bill.
REPORT RESISTANCE: A BLACK-OUT FOR DATA TRANSPARENCY
When new contracts are signed between a 3PL service provider and pharmaceutical manufacturer, both parties understand each other perfectly. Things run smoothly and information flows constantly. The client feels that their 3PL fully understands their business priorities. It’s a match made in heaven.
Sometimes, the situation suddenly falls back to earth.
In one example, when a client requested a report from the account representative that differed from their standard report menu, the 3PL service provider was unable and unwilling to find a solution. Clients must present reports internally that match their company requirements. When data in standardized reports from vendors present different data, it must be customized to meet client expectations. What the client expects to be a short explanatory phone call to review report parameters with their 3PL sometimes drags out for weeks or even months without closing the understanding gap.
When service providers take advantage of their clients’ patience, relationships begin to unravel. “Reputable 3PL service providers start with client needs and adapt their services around them,” states Runsdorf. “It’s important that the 3PL service provider have prior experience as a client to appreciate the demands of the job. The best 3PL providers go beyond expectations and often develop new services and capabilities to put their clients first.”
MANAGEMENT LAYERS: SEPARATING THE CLIENT FROM THEIR INVENTORY
The best pharmaceutical 3PL service providers help clients feel they are in direct control of their product. Problems occur when 3PL firms place obstacles between the client and their inventory.
These roadblocks are often due to various departments and employees interacting with the client. The client may interact initially with an account representative. After the agreement is signed, the same client may be passed on to a client service person with responsibility for multiple accounts. Each layer of communication creates more distance between the client and their product. The more distance the client feels, the more apprehensive they become.
“When clients feel they are losing control of the situation, it may be too late to repair the damage,” Runsdorf states. Clients bombarded with several points of contact often find that no one at their 3PL understands the total scope of their business. At WDSrx, each client has complete access to senior management who are empowered to get answers and solve problems. “Our success is built on eliminating barriers between clients and their pharmaceutical drug products,” adds Runsdorf.
WE’LL GET TO IT SOON: TAKING THE ‘SERVICE’ OUT OF CUSTOMER SERVICE
One of the worst situations for any relationship is when one party takes the other for granted. When the relationship was new, you enjoyed everything about each other. At some point however, feelings cooled. For manufacturers marginalized by their 3PL providers, this situation is especially stressful.
Runsdorf related a case where a client could not reach their contact at their previous 3PL to make an immediate change to an outgoing order. “They left a voicemail and tried to reach anyone who was familiar with their account on the warehouse floor. For several hours, the client waited without a response.
This level of poor service is unacceptable in any business, particularly when patient health may be at risk,” states Runsdorf. When poor client service pervades the culture of a company, an “Us vs. Them” mentality damages the relationship between third party logistics firm and the client and almost always results in a change in 3PL provider.
Runsdorf recommends researching potential 3PL providers thoroughly to determine their corporate culture. “Check their social media feeds. See whether their website is current with topical news and information. Are they active at trade shows and industry events? When taking a facility tour, take time to speak with people in every position in the organization.” Service is a personal as well as a business priority, so choose a 3PL with a positive culture that projects a sense of urgency.
CHANGE IS PAIN
Relationships are tricky. Some people are afraid to leave a bad relationship. It’s difficult to make a break and seek new options. When the decision to leave is made, new choices make it possible to create a bright future built on shared expectations for business growth.
Pharmaceutical manufacturers must regularly evaluate their 3PL services to make sure they are contributing to the efficiency of the pharmaceutical supply chain. If 3PL service providers treat clients with indifference, add hidden service charges, demonstrate a lack of understanding for client priorities, are set up with a top-heavy management structure, or provide poor client service, then clients should raise their concerns immediately.
If the response is inadequate, then the best potential new 3PL service providers will work with the client to streamline the changeover process to the new facility, minimizing costs and additional fees related to the switch.
“Reputable pharmaceutical 3PL service providers earn the confidence of their clients every day,” states Runsdorf. “We understand our important place within the pharmaceutical supply chain.”