Page 61 - Linkline Autumn 2015

the course of sourcing, building and managing the sustainable success of business relationships.
The key points illustrated in Figure 1. are as follows.
1. An outsourcing partner whose scope of
activities is in line with your core skills
and capabilities should be attained. Their expectations from this collaboration should be ascertained, and as part of this step their reputation must be reviewed.
2. Once this relationship is established a distinct understanding of the partners vision and values must be formed. Does it align with your own vision and values? If there is alignment the relationship should advance. Visions and values should explicitly re ect the basic beliefs and aspirations of the organisations (Davidson, 2005).
3. If there are no alignments this will be an ineffective relationship, leading to little learning and innovation; this can only be viewed as an ineffective supply chain,
with short-term transactional exchange only. Innovation in supply chains can be signi cantly affected by closer relationships and learning (Panayides and So, 2005).
4. An evaluation must be made at this point
of existing transaction by transaction business, selecting the most pro table of these customers to preserve while discarding the less favourable; they are consuming resources that could be used in achieving supply chain performance. A comparison level of alternatives is performed to compare the best quality of outcome available from the best available relationship partner (Blois, 2000).
5. In advancing the aligned relationship sequentially the development of the relational orientation can be reviewed as either a “win- win” arrangement or a “zero-sum game” based on an adversarial relationship.
Having an ability to develop, maintain and manage relationships, that is, being a value-creating partner, will cause a rm to be sought after by partners (Blois, 2000).
The SME 3PL situation in Ireland
In order to develop an understanding of the industry perspective a piece of empirical research was conducted involving four leading Irish SME 3PL rms. These four were chosen to be interviewed as each of them exhibited a spread of service offerings. The main results, conclusions and concepts expressed by these four 3PLs in the semi-structured interviews were interpreted into a number of common recurrent themes. Direct quotes from the 3PLs are included.
The Importance of Customer Relationships
Customer relationships are seen as being crucial to the 3PLs businesses and their core customers have
been with them in all cases since the establishment of the businesses. With some contacts extending to 45 years this has not only developed
to social relationships, but even further to the point where in some cases they have become family friends. New managers trying to make a
mark can be a problem, however, ‘it is a fact of business and all that is required is the development of a new relationship with the new employee to cement the collaboration into the future.’ Personal relationships were deemed to make more loyal relationships, ‘procurement could be faceless (not personal) and impossible to form a relationship with.’ This nurtured no loyalty from either party, which in turn appears to create its own inef ciencies. At the end of the day ‘people deal with people, a planner deals with a freight forwarder or a manufacturing dispatch manager’. If they cannot get on there will be no longevity to the business relationship.’ This nding corroborates Sweeney’s (2007) ‘Fundamental Four’ as key to relationship management of long-term agreements is the development of trust and commitment. Further, ‘Fundamental Two’ is also apparent, with a lack of ef ciency and effectiveness as a result of poor interfaces.
Pro t Distribution
When operating in a more specialised market customers are happy to see you ‘with continuous non-excessive pro t;’ they appreciate that for the 3PL to continue their service they must have a pro table business. This is not the case in the more general markets. Sweeney’s ‘Fundamental Four’ is clearly supported as not being a zero-sum game based on adversarial relationships, rather a win-win philosophy based on partnership approaches.
Pricing as an Order Winner
Price alone would not secure custom and was never the main variable in negotiations. ‘If you are reasonable within the market you will get that extra bit for being better at it.’ This again demonstrates the win-win approach of the ‘Fundamental Four’.
Customer Service as a Driver for Business
Service to their customer was ultimately the key driver for the success
of the 3PLs businesses. ‘A business strategy based on being best in their class’ secured loyalty from their customers. Sweeney’s ‘Fundamental One’ is clear here, supply chain management objectives with customer service being about meeting and exceeding the required or demanded level, with clearly understood requirements which are different for each customer.
Customer Service as a Core Differentiator
Quality of service is the number one reason why their customers
use them and not another organisation. This corroborates Sweeney’s ‘Fundamental One’ on customer service. However there is evidence of over service, one 3PL having ‘a near mantra of never saying no to the customer.’ What is the cost of never saying no? ‘Fundamental One’ also mentions the service/cost conundrum being very important not to ignore.
Joint Strategic Visions and Strategies
Strategic alliances were seen as a worthy option as long as the alliance ‘made sound business sense.’ These alliances are slowly appearing, with shared sites for facilities being considered. Again ‘Fundamental Four’ is clear here, with strategic partnering evolving.
Problem Solving and Sharing of Knowledge
This was prevalent mainly in two guises, one being that joint problem solving based on the knowledge and core competencies of the 3PLs giving solutions to their customers was evident. A second example of joint supply chain learning is the auditing process by the 3PL customers which directed a 3PLs business to become the market leaders. The cooperative problem solving through the strategic partnering mentioned in ‘Fundamental Four’ is clear to see.
Supply Chain Innovation in Practice
There was evidence of innovation in the 3PLs own supply chains, such
46 The CharTered InsTITuTe of LogIsTICs & TransporT
SME 3PLS