basictraining
food processor that radically rationalized its supply base,
based on relationship potential. The leaner and meaner combinations, working together, took millions of dollars and as
much as 20 percent out of supply costs. Downstream, manufacturing savings also accrued through better engineering
and packaging design. And the company quickly created a
price/performance gap between itself and its key competitors.
LOGISTICS SERVICE PROVIDERS
The role of third-party logistics service providers (3PLs) in
supply chains presents special challenges and opportunities
in leveraging the power of relationships. You may use 3PLs
for transportation management and/or execution. You may
use them for storage and distribution—and value-added
services. They may work with you on an arm’s length transactional basis, or they may be the face of your company as
far as the customer is concerned.
The opportunities in this arena for things to go wrong are
legion. The power of things going right is enormous. But it
requires building and actively managing relationships, with
structured and disciplined processes as well as aggressive
mutual approaches to the outcomes the relationship is
intended to deliver.
The what-ifs are compelling: cost improvement; quality
and accuracy gains; dependable performance without redun-
dant, non-value-adding oversight. Imagine the focused pay-
back involved in dealing with a limited number of compati-
ble, reliable 3PLs. Imagine not having to worry about the rig-
ors of going out for bid year after year because the relation-
ships that were built right at the beginning are long-lasting.
WHERE ARE WE, AND WHERE ARE WE GOING?
So, let’s assume that all these ideas make sense for you, your
company, your customers, and your suppliers (including
service providers). How do you figure out how well you’re
doing now? How do you get a handle on where you’re good,
and where you’re not good yet?
The answers might lie in a term that only a CPA could
love, an audit—a clear-eyed, no-holds-barred assessment
of where relationships really stand.
In fact, you really ought to begin here in any case. The
things you suspect aren’t going well may be the result of
problems either upstream or downstream, so trying to deal
with superficial symptoms may not get at the bedrock
issues in existing relationships.
AND YOUR POINT IS?
Look, this is hard work, but it isn’t brain surgery. It takes an
organized process to find the right starting point. Building relationships in a vacuum can pay off, but integrating the processes of relationship management throughout a supply chain is
the real key to unleashing the power that lies within them.
We think that those organizations that make the right
moves in supply chain relationships today are those that are
going to prosper in the supply chains of tomorrow—in
good times and in bad. ;
Art van Bodegraven, practice leader at S4 Consulting, may be reached at (614) 336-
0346 or avan@columbus.rr.com. You can read his blog at http://blogs.dcvelocity.com/
the_art_of_art/. Kenneth B. Ackerman, president of The Ackerman Company, can be
reached at (614) 488-3165 or ken@warehousing-forum.com.
