The question before the conclusion.
- Lens
- logistics
- Journey
- 9 decision points
- Reading
- 8 min
There is an awkward moment in almost every conversation we have with logistics providers. We ask: ‘does an urgent repacking operation requested by a customer on a Tuesday afternoon end up on the invoice?’
Silence. Then: ‘it depends who was there’.
The contract says one thing; the warehouse does another
A typical 3PL contract provides for three or four billing lines: pallet storage per month, receiving per unit, picking per line or parcel, and sometimes shipping.
Actual operations produce far more than that:
noncompliant receipts that require sorting, an additional count and a documented dispute;
changes in packaging, repacking and specific labelling;
movements requested by the customer—consolidating, isolating or moving a batch, preparing for an audit visit;
exceptional inventories on request;
returns that must be checked, assessed, returned to stock or destroyed;
floor-space occupancy beyond the contracted volume, often tolerated without being counted;
administrative rework: reissuing documents, extracts and ad hoc reporting.
Most of these services are provided for in the contract, often with a rate. They are simply never captured.
Why capture fails
Three reasons, in descending order of frequency.
The service has no system trigger. Putting a pallet away generates a movement and therefore a record. Spending twenty minutes rewrapping a damaged pallet generates nothing. What leaves no record leaves no evidence, and what leaves no evidence is either not invoiced or is invoiced and disputed.
The request arrives through an informal channel. A call to the team leader, a message in a WhatsApp group, a word in passing on the dock. The operation is legitimate and the requester is identifiable, but there is no object—a work order, service order or ticket—to which the time spent can be attached.
No one wants to invoice a strained customer relationship. This reason is human and rarely spoken aloud. When the relationship is fragile, the operations manager prefers to absorb the cost. The problem is that absorption becomes the norm: after six months, the customer regards the service as included, and invoicing it becomes a negotiation.
The right question is not ‘how much are we losing?’
It is ‘what do we do that leaves no record?’
We often suggest the following exercise, which takes one week and requires no software. For seven days, every team leader notes on a sheet every intervention outside the standard flow: what was done, for which customer, at whose request, approximately how long it took, and whether it was covered by the contract.
At the end of the week, classify the entries: what is invoiced, what is billable but not invoiced, and what is not covered by the contract. That third column is generally the most instructive—it contains the contract amendments that were never made.
This small survey replaces every estimate. And for the first time, it provides a factual basis for discussion with the customer: ‘this is what we do for you; this is what the contract covers; let us discuss the rest’.
What a system can genuinely change
Once you know what is escaping capture, the mechanism is simple: every billable service must have an event that creates it.
That requires four things.
A service catalogue. Not a price in a PDF contract, but a list of named activities with their unit of work—per hour, parcel, pallet, movement or case. Without this catalogue, nothing can be captured because no one knows what to capture.
A point of entry on the warehouse floor. The operator doing the work must be able to declare it in three actions on the device already in their hand. If declaration requires returning to the office or opening a spreadsheet, it will not happen—not on a busy Tuesday, and not ever.
Separation by customer. A multi-client provider does not invoice services; it invoices services to someone. Inventory, movements, rights and configuration must be segregated by principal. Otherwise, allocation is reconstructed from memory at month-end and the original problem returns.
A controlled draft invoice before issue. Upstream review is better than a downstream credit note. Anything disputed by the customer after receipt costs twice: the concession and the loss of trust.
The issue no one discusses: floor space
Storage is almost always billed by the pallet. The warehouse itself is paid for by the square metre.
A customer whose pallets are oversized, cannot be stacked well, or require a dedicated access aisle because of their turnover occupies far more space than its pallet count suggests. That difference appears nowhere: not on the invoice and not in margin by customer—because margin by customer is usually not calculated.
This is probably a logistics provider’s first profitability project: understand what each contract earns, including the space it really occupies. Many discover that one of their largest customers by volume is one of their poorest by margin.
One final point about the customer relationship
Invoicing what you do is not a hardening of the commercial relationship. It is the opposite.
A provider that documents its services precisely can demonstrate the value it adds, argue for a price review with facts and—most importantly—decline an out-of-contract request without conflict, because the scope is written down and shared.
