BY ART VAN BODEGRAVEN AND
KENNETH B. ACKERMAN
basictraining
Goin’ to the chapel
“WE’RE GOIN’ TO THE CHAPEL, AND WE’RE GONNA GET
married,” sang the Dixie Cups in their 1964 mega-hit. The song was
covered by such giants as the Beach Boys and the endearingly rowdy
Bette Midler. Today, we talk a lot about deeper relationships among
supply chain partners and entering a redefining era of collaboration.
Clearly, the old model of relationships with logistics service
providers (LSPs)—which could best be characterized as adversarial
transaction management—is facing a sea change, although it will be
with us in some degree for a long time to come. More and more,
though, service providers and their clientele (or suppliers and their
customers) are goin’ to the chapel to establish a broader, more
intense, and more strategic relationship.
Why do we bring this up? Because it has implications for the way
companies choose their LSP partners and build
working relationships with them. Although
dozens (at least) of excellent guides for building
LSP relationships have been published, many
were written some time ago and do not reflect
the realities of business today.
Supply chains are changing, thanks to sourcing shifts, right-shoring initiatives, growth in e-supply chain activity, and the emergence of
mobile transactions. Then there’s the trend
toward closer collaboration and sophisticated
relationships, as well as the possibility that older
models might need a little burnishing to shine in
the (relatively) new century.
So, we thought it might be useful to put a few items on the table
that are not found in the older approaches or could benefit from
additional emphasis. They are as follows:
▪ Vesting is not about three-piece suits. Maybe, as a service relationship is being contemplated, this is the time to assess whether the
work and commitment involved in constructing an outcome-based
relationship is the right approach. In the universe of options for
incentivizing high performance, performance targets have been the
norm, often accompanied by some form of gainsharing.
Outcome-based metrics and targets don’t ignore traditional per-
formance indicators but provide the possibility of much more
robust options, including asset utilization, customer satisfaction,
and revenue generation. There is a growing body of implementation
success stories, involving a number of supply chain innovators and
leaders. The conceptual train left the safe station of academic
research quite some time ago.
