February 2014 | Sponsored | Knowledge Base

Scaling Supply Chain Partnerships

Tags: 3PL, Partnership

Chris Timmer, is SVP of Marketing & Strategy, LeanLogistics, 616-796-6400

Partnerships are an interesting phenomenon in business. It astounds me that so many companies look for partnerships to remain static over time, even as market conditions change. Partnerships can't maintain a status quo, regardless of the industry. They need to evolve. Scaling your supply chain can trigger some significant adjustments in the requirements of nature of your partnership. Change isn't easy, especially in the context of a complex transportation network. Navigating your own ship can be tough, but also synchronizing with your supply chain partners adds another dimension of complexity.

Here are a few steps for looking at your supply chain partnerships with scalability in mind.

1. Start with technology. When you integrate a partner into the mix, how compatible is your technology? Will it scale as your joint businesses scale? Does it allow you to connect with other partners, as well?

Many questions come up when trying to pick a technology, so it's not always as simple as answering these questions. But in the supply chain, the technology you select needs to be able to scale and support crystal clear visibility with your partners. Scalability might be required due to mode shifts, acquisitions activity, or capacity constraints.

In one case, a global food business operating in 19 countries tried to work unsuccessfully with disparate systems that provided minimal visibility. When the next acquisition arose, they chose a TMS that facilitated the evolution of new freight profiles. The result was four standalone companies were merged into one cohesive transportation unit, gaining the scalability that was critical to their success.

2. Lean on partner expertise. Your partner should be providing insights and advice based upon their mastery of not only your supply chain, but of the broader market. Supply chain conditions change; that shouldn't surprise anyone. The technology supporting your supply chain should be backed by experts who know what to do when conditions change. If network changes reduce product profitability, perhaps you can lean on one of your partners for strategies to trim down costs.

A client of ours, a manufacturer for retail and foodservice channels, reached out for an expert opinion to standardize their transaction processes. Our shared technology platform allowed us to provide insights into their specific supply chain. In the end, our partner implemented freight pre-audit and payment processes which increased billing accuracy and cut down internal resource time.

Successful partnerships are built on a foundation of shared expertise. This is required by both of the partners, collectively working toward a common goal to build better supply chains together.

3. Scale the partnership. You're well aware of your most successful partnerships. The partner is constantly bringing new ideas and innovations to your doorstep. How can you capitalize on those partnerships? What else can they do for you? In some cases, you can retain strategic ownership while passing day-to-day execution to the partner.

One example is a long-standing client that was strategically seeking to maintain carrier relationships, but outsource the daily transportation activities. Because of the technology foundation, the strong partnership, and desire for growth from both parties, it was an easy transition. The client reduced their internal costs for the transportation, but maintained the visibility and control of their supply chain. The results have been extremely successful allowing the client to scale their supply chain, while also continuing to generate savings.

When questions about scaling the business occur, a critical error is to assume that the supply chain can simply do more the same way. Another assumption that should be challenged is that you can drive all changes within your own walls. Perhaps we need to look at our partners with fresh eyes and recognize where their expertise lies. A supply chain is only as strong as its weakest link.