Third-party risk management: best tips for a freight forwarder

Although most freight forwarders offer the integrated logistics service, not all have the infrastructure to completely fulfill their customers’ demands in-house. When this is the case, the forwarder usually counts on the assistance of external support from other logistics companies. And this is exactly the kind of scenario in which the need for third-party risk management arises.

Third-party risk management consists of a set of measures that every company benefiting from an outsourced workforce should implement as part of their processes. The purpose of these measures is to ensure that all stakeholders and service providers are on the same page throughout the course of an integrated logistics operation, avoiding risks and making the operation as streamlined as possible.

If your company relies on third-party assistance to get things done, then you really need to check out these risk management tips. They will surely be a lot helpful to you!

Third-party risk management tips

Know how to choose your third-party providers

The first step to an efficient outsourcing solution is to hire a good and reliable company in the logistics industry. Thus, before choosing your third-party provider, it is essential to request tax certificates, quality certificates, and references, as well as to investigate the financial situation of your future provider.

Pay attention to the details of the company’s budget and be aware of those who charge fees that differ a lot from the market average. These are usually signs of problems or failure to comply with legal obligations. It is also interesting to request ‘open cost sheets’ in order to understand the company’s price composition.

Once the provider is defined, make sure to request, monthly, proof of salary payment, benefits, charges, and taxes. These documents will allow you to check if the operation’s execution is in suitability with the law and have a confirmation that all outsourced professionals are receiving their labor rights.

Set goals and key performance indicators

Productivity-focused management must ensure that both employees and outsourced teams are aware of the company’s strategy and expectations. For this reason, your company’s macro goals must be divided into individual and collective goals, so that everyone can clearly understand what needs to be done.

On top of that, in order to follow the development of your logistics operations and projects, it is essential to use some key performance indicators. With KPI’s, you can measure the results achieved, perceive delays or losses in quality as well as identify and eliminate any other issue. This data allows you to act quickly and prevent your company from most risks involved in an operation.

Invest in communication

When indicators show problems in the results delivered by any of your third-party providers, it is also necessary to evaluate aspects related to your company’s communication efforts.

Having good productivity depends a lot on how well communication is going among all areas involved in the operation. Therefore, as a manager, it is necessary to provide guidance, share information, clarify doubts, direct efforts, listen actively and collaborate to solve problems. In other words, a big part of the manager’s job is to also be a competent communicator.

Reinforce integration

Despite the legal terms that rule the management of outsourced teams, it is necessary to reinforce the integration between your company and its third-party providers. Make sure that they know the history of the organization and understand the products/services delivered. The professionals should also be aware of all the rules in your company’s internal conduct.

This way, even with differences in the work model, it is possible to engage these professionals with corporate goals, creating a friendly and collaborative environment where everyone is on the same page as far as expectations go.

Were these third-party risk management tips useful to you?

With good third-party management in place, your company can not only boost productivity but also increase sales. Speaking of that, we have created a complete eBook with a ‘Practical guide to boost your logistics sales‘. Do you want to check it out?

Fill in the form below to download this exclusive material for free:

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