How important is it for supply chain partners to trust in order to collaborate?

While outwardly logical that building a relationship of trust between the customer and the 3rd party logistics (3PL) operator is key, many "engagements" between the client and the 3PL fail because the client does not trust the 3PL operator.

Truly successful outsourcing relationships depends on a high level of trust between both parties in the business relationship. Rather than being "engaged" and in effect withholding trust until proved, the successful players in this arena start with an "Open Kimono" approach to all joint operations, including internal costs of the provider and the client. By operating where there is open transparency between the two, the client and the provider are able to "see" the opportunities to eliminate waste, to reduce costs, to take advantage of ways to add value and share the profit.

A real "Win - Win" attitude is required for real success. As more companies decide to outsource logistics to Third Party Logistics providers, the quality of outsourcing has improved. In the early days of the logistics outsourcing movement companies typically shed trucking, converting private fleet operations into "dedicated" fleet operation. The motive would be to shift liability risk and the notion that the trucking companies were the trucking experts.

But many of these moves failed to live up to the promise. A key reason was the lack of clear communication of expectations from the client to the provider. Even when providers worked hard to "drag" the expectations from the client, what the client told the provider was often wrong. In some specific cases I have witnessed the client was the cause of the "marriage" failure, almost always due to internal communications and leadership faults.

3PL providers did not help their position with the distrust, often because they did not recognize the root cause of the problem being the internal management issues of the client. So instead of insisting on a "Win-Win" relationship, the provider accepted the situation in an effort to continue to make money, and eventually lost the business because the client looked at the relationship as a short term event.

As the use of Logistics Outsourcing expanded from trucking to transportation management services, from public storage to fulfillment services, more points of contact between the client and the 3PL are made. Each point of contact requires an effort to develop trust. While it is sometimes hard to create trust between two individuals, imagine what it takes to get everyone on the same page where that are many "relationships" in the relationship. But clients that have created a healthy structure of trust within their organization are able to build a healthy structure of trust with their 3PL providers.

Key to this is the understanding within the client organization that there is a single set of goals, and that all efforts are to support those goals. These goals have to cross functional areas and there has to be a commitment in each of the functional areas to not only support the goals, but to "live" the goals. Once a client has created this infrastructure of trust within the internal organization, then the relationship between the client and the 3PL can start to produce the magnified value, a true "Win-Win". Once evolved to this point, clients are able, with the intimate help and knowledge of the 3PL, to create huge savings.