Outsourcing 13
Structured Knowledge Commercial Design Implement Go-Live Post Go-Live Revisit Look for Develop
Approach of the 3PL Facilitation Validation Solution Support Optimisation Solution Synergies Culture
Figure 1: The ten post-RFP steps.
30 Days 60 Days Up to April 2006
• Board sign off • Commercial frameworkscoped • Communication of 3PL’s roles
• Communication both interal and external • Negotiation project plan built within implementation and contacts
• Discuss commercial framework • Mobilise 3PL designers • Commercial agreement
• Identify commercial tasks • Define 3PL implementation plan • Implementation and transition planning
• Agree Outsourcing Team role • Agree resources
• Agree and sign off letter of intent

Figure 2: A typical high-level process for 3PL integration.
Contract negotiations should be fact example, the Paragon model derived by influence them. Integrating the 3PL into
based to remove emotion and foster a the 3PL’s commercial team may differ the overall budget process will gain the
partnership (Figure 3). The information from the 3PL’s operations scheduling 3PL’s buy-in to hit the final budget.
should be a blend of industry in live operation. Clients should not just
benchmarks and historical data from concentrate on the 3PL solution, but
the client’s operations. The client should allow the 3PL to challenge ‘as-is’ ways Implement Solution
complete the contract building prior to of working to maximize the potential of
negotiation and send this to the 3PL the solution. A project plan must be developed
for review. The client should internally External advice often bridges the with the buy-in of all stakeholders.
agree a Best Alternative to a Negotiated 3PL’s solution team and the client. A consultancy can offer an effective
Agreement (BATNA) prior to negotiating Standing back and reviewing the overall Project Management Office (PMO)
to know when an agreement is not picture enables the work output to be process, providing impartial and
mutually beneficial. co-ordinated in line with the project independent relationships with
External experience in contract plan. The iterative design process stakeholders. The PMO should be
contents, timescales and the mechanics should have an agreed date to be responsible for tracking and publicizing
of how the 3PL will look at the contract base-lined. The final design should performance and budget to plan. These
on a commercial basis, especially be documented to include nine key data should be used during the ongoing
around Return on Capital Employed areas, including all assumption data. 3PL contract management meetings.
(ROCE), allows the client to concentrate This design will be budgeted and A Joint Planning Committee (JPC)
on achieving the best result for both implemented allowing the operational should be created, feeding into the
parties. External benchmarking data teams to sign off acceptance. The nine PMO. The JPC provides cross-3PL
further develops the right solution for key sections of the documents should and client representation from each
both the 3PL and client and can reduce include the following: of the delivery functions. The JPC
negotiation timescales. A facilitator
■
Property should meet at least on a weekly basis
or independent ‘voice of reason’ is
■
Facilities and Layout with the primary role of obtaining a
often required to allow the two sides to
■
People/Organization joint understanding and resolution of
understand the culture that needs to be
■
Equipment potential delivery issues.
fostered by the commercial agreement.
■
Business Processes
■
Performance Metrics
■
Transport Go-Live Support
Design Validation
■
Transition Plan
■
Facility-specific Operations. The go-live period is critical to long-term
The RFP solution is not the final design. project success. Tight project framework
Both parties should develop the The 3PL should be brought into the should be independently governed by
response, which is often “blue sky,” budgeting and planning process to gain the PMO. The decision to go-live should
to the client’s exact requirements. For an understanding of factors that will be validated through a
June 2007 Supply Chain Europe
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