Dan Montgomery, director of warehouse management, western region and Latin America for APL Logistics, is clear about starting off right in an outsourced logistics relationship. “Typically, my suggestion would be that a potential user would get out and visit some existing sites that a 3PL runs.” That sounds pretty standard, but it doesn't always happen.

Montgomery suggests more than a walk through to have a look at the facility and systems. “Spend some time with the local management that runs those sites. Possibly ask some questions of folks working on the floor and those who are operating equipment. Also visit with the people responsible for running systems in the office — all in addition to talking to the local management.”

Another suggestion Montgomery has is senior management involvement. Have someone from senior management spend some time with the 3PL. “That's another way to get a feel for the culture,” says Montgomery. There are definite metrics to examine, like the safety record. For instance, Occupational Safety and Health Administration (OSHA) accident frequency records indicate not only performance but can show a safety culture. “Our industry standard's probably six to eight on an OSHA frequency,” says Montgomery. APL Logistics (APLL) uses it as a selling point that it is running at about a 2.0 over the last couple of years. “Safety is not something you put in a document, it has to be a culture that's developed over a long period of time. So that's really important.”

There are other more visual clues on how an operation is run and the organization's culture. “If you happen to be a food grade warehouse,” says Montgomery, “lots of our food grade warehouses are inspected by AIB, the American Institute of Baking.” Those inspections will provide a lot of documentation and require a number of procedures which senior management at a 3PL can put together as key performance measures. “But if it's not a culture that's lived and breathed by the lowest-paid person in the facility, it won't be successful,” Montgomery points out. Yet even a non-food-grade warehouse can exhibit many of those same positive qualities of being clean, neat and orderly. And that would suggest another facet of a quality culture.

A third area to look is lean management. Lean produces a lot of documentation, and so does ISO (International Organization for Standardization) quality certification, “but again, the lowest paid person in the facility has to understand the direction — and it needs to be a lot more of a culture — to be successful,” he points out.

“When you're walking the floor as a potential user, you need to ask somebody on the floor, what their thoughts are or what they know about the programs,” says Montgomery. If all of these factors that represent quality are present and understood, they are probably ingrained in a quality culture at that facility and at the company.

Culture, especially a quality culture, isn't something that senior management simply drives down through an organization. In fact, you don't want to drive that top down Montgomery points out, you want it coming from the bottom up. Improvements come from the people on the line who are doing the job every day.

Regardless of how the 3PL is compensated, look at how the workers are rewarded. “Whether you're in a cost-plus environment, a combination of fixed and variable, or a totally variable environment, incentive and gainshare programs are another key thing to look at as far as a cultural fit.” The reward system shows a 3PL's dedication to eliminating cost,” he notes. But, a gainshare and incentive program should include payment to the employees, not just the 3PL.