Skip navigation
2011

In my last post I discussed collaboration and the importance and value that can be delivered to your business and partnership through a mutually beneficial collaboration program.  This can be extremely difficult in the beginning and you should look at this objective as a journey to help you maintain your focus.

 

So now in order to ensure that your partner collaboration is mutually beneficial you must develop service levels and key performance indicators to objectively measure the success as your second step in the successful 3PL journey.  Effective service levels will also help you to measure and guide your progress in your collaboration and continuous improvement program!  In fact, effective and measurable service levels are a critical step to implementing a continuous improvement program in addition to a critical step to solidifying your collaboration program.

 

The key to success for this program is to implement a set of mutual service levels and key performance indicators to measure the service levels.  This could be one of the single most difficult steps to successfully implement and the second point is that it is probably one of the most critical steps for success.  I would argue that this single factor provides the reason and performance measurements to develop a successful partnership, collaborative environment and improvement program. 

 

It is critical that the service levels are implemented for both partners, in order to develop a strong and lasting partnership the gains and pains must be mutual.  You will never develop a successful partnership that provides value based on a ‘screw your buddy’ attitude.  In addition to mutual service level measurements, I believe it is also critical that you be open to stepping up first and offering to up meaningful penalties for your misses, and then of course if you miss the service level you must also stand up and accept the responsibility.  If for some reason the service level is unattainable, then you can petition to revise it, after you’ve accepted responsibility!

 

I was given an important piece of advice earlier in my career, its very simple but at the same time very powerful.  That advice was ‘assume innocence’.  I’ll be the first to admit that earlier in my career I did not follow that advice very well or consistently, after all I think its almost human nature to blame someone else for your problems.  I will guarantee, however, that if you work at this advice you will find that more often than not ‘assume innocence’ will be the factor that carries you through challenges and allows you to develop strong and lasting partnerships.

 

In my next post I will in more detail; developing a mutual performance improvement program.  I know I discussed the program from a high level in this posting.  In my next post I will get into more detail and provide some suggestions for getting started that I have found to be beneficial in my career.

 

Now folks please take a moment to provide your feedback.  This will become even more value with robust participation!

 

Now for the audience participation portion of this program……

 

How would you define your relationship with the Third Party Logistics Provider?  Is it a traditional customer / vendor relationship that focuses on one-sided benefits and short term objectives? Or, is it based on a partnership that provides mutually beneficial benefits and long term objectives?

 

Do you see organizational benefits and opportunities to improve based on the partnership relationships that I describe above?

 

If you see the benefits to this type of relationship, will you be taking steps to implement this type of relationship?

 

Would you say that your focus is long term and strategic, or short term and tactical?

In this follow-up to my last story I will discuss collaboration with the 3PL partners to improve your supply chain capabilities.  The definition that I choose to focus on here is ‘developing a mutually beneficial partnership through a robust two-way sharing of information, methods, research and industry best practices’.  In this discussion I will ignore the definition of collaboration that focuses on integration of the partners’ networks.  I choose to ignore this aspect because I believe that when you focus on a two-way open and sharing community, the network integration is a foundational requirement!  In addition, network integration is moving more towards a commodity type of service and shortly will become the price of admission to the market.

 

As an interesting aside relating to the network integration commodity concept I am seeing an increase in publications related to the concept and practice of ‘integration-as-a-service’.   Logistics technology service providers like Descartes are extending and enhancing their capabilities in B2B integration through acquisitions of integration network service providers.  In an earlier post I mentioned the concept of these logistics and 3PL service providers extending their services to provide more pervasive services and capabilities through building out their partner network integration.  This enhances their offering and services along with their partners’ abilities through the secured and extended partner integration in a community.  In other words, the more partners that connect into the ‘integration-as-a-service’ technology service providers, the easier the partner community can collaborate within the community.  The ‘integration-as-a-service’ technology provider ensures the availability and the security of the integration network as a foundation and their partner community reaps the benefits!

 

Now, in order for the community to reach the next level of maturity they must extend their collaboration into developing a mutually beneficial partnership through a robust, two-way sharing of information, methods, research and industry best practices.  This collaboration practice will be encouraged and improved with the growth of the community, in other words, the larger the community, the greater the benefits to the community as a whole that this collaboration will provide. 

 

This will require a dramatic shift in the concept of ‘proprietary’ information in order to gain the greatest benefits for the community.  This will be a challenge for many but it is not without precedent.   It was not too long ago that the concept of vendor managed inventory was unheard of and in fact, was viewed as a major threat to the viability and success of an organization.  Then something interesting happened; and a major retailer to change their definition of ‘proprietary informaiton’ and opened the sharing of sales and product forecasts and the rest, as they say, is history.  Now, vendor managed inventory is viewed as an industry best practice!

 

I don’t think I’m going out on a limb here when I predict that the integration-as-a-service especially in the logistics industry will drive an explosion in the levels and types of collaboration in their communities.  This explosion in collaboration will also create a second explosion of increased value to the members of the community that embrace these increased levels of collaboration.  In addition, as the security of the network is developed, the levels of collaboration will naturally extend and the community membership will also explode.

 

This will bring us to a new age of supply chain outsourcing capabilities and value!

 

My next posts will focus on the second factor to developing a successful partnership. 

 

Now for the audience participation portion of this program……

 

How would you define your relationship with the Third Party Logistics Provider?  Is it a traditional customer / vendor relationship that focuses on one-sided benefits and short term objectives? Or, is it based on a partnership that provides mutually beneficial benefits and long term objectives?

 

Do you see organizational benefits and opportunities to improve based on the partnership relationships that I describe above?

 

If you see the benefits to this type of relationship, will you be taking steps to implement this type of relationship?

 

Would you say that your focus is long term and strategic, or short term and tactical?

I apologize for the extended length of time since my last post!  I will make it up through some additional posts to cover my thoughts over the next week.

 

I’ve been thinking, and reading, a lot lately about the 3PL market and the varying levels of 3PL partner capabilities.  In addition I’ve also been reading about challenges with collaboration and integration efforts as they are related to developing a 3PL relationship.  As I mentioned in an earlier post, I believe that we are entering into a shift in both the capabilities, and more importantly, expanded expectations of 3PL partners.  This shift will further differentiate the ‘full service’ Supply Chain Outsourcing partnerships that you can develop with a 3PL ‘partner’ and the 3PL ‘provider’ that simply acts as a service provider. 

 

This shift is being brought about by some rather fundamental, and in some cases, drastic shifts in expectations and practices in this market.  Don’t get me wrong, I believe there will always be a place for the basic service ‘provider’ that will provide simple value add services or extended storage capabilities for seasonal fluctuations.  These shifts will be focused in the ‘full service’ providers that provide extended capabilities and focus on developing the partnership with their clients.  This is also the area where you can gain the greatest value, long term, and strategic, value in the relationship. 

 

Developing a strategic, long term, partnership requires the greatest effort, but the potential benefits can make up for the effort and the risk.  The greatest benefits will be gained when both parties enter into the engagement with a desire to develop the partnership.  This means that each party must have the opportunity to gain from the partnership, remember your focus is on the long term benefits of the relationship and not short term, one sided benefits.  This can be very difficult in the current environment that is focused on short term gains. 

 

The first step to a successful partnership is collaboration.  This can be extremely difficult in the beginning and you should look at this objective as a journey to help you maintain your focus.

 

The second step to developing a successful partnership is measurable and challenging service level agreements with key performance indicators help you maintain the service levels.

 

The third step to developing a successful partnership is a mutual performance improvement program to help you to institutionalize your improvements in a sustainable program.

 

My next posts will focus on these three success factors to developing a successful partnership. 

 

Now for the audience participation portion of this program……

 

How would you define your relationship with the Third Party Logistics Provider?  Is it a traditional customer / vendor relationship that focuses on one-sided benefits and short term objectives? Or, is it based on a partnership that provides mutually beneficial benefits and long term objectives?

 

Do you see organizational benefits and opportunities to improve based on the partnership relationships that I describe above?

 

If you see the benefits to this type of relationship, will you be taking steps to implement this type of relationship?

 

Would you say that your focus is long term and strategic, or short term and tactical?