Viewpoint: New culture of collaboration
March 01, 2014 - LM Editorial
We’ve certainly been reading and hearing more about the benefits of improved communication and collaboration in logistics management—be it with our carriers, third party-logistics (3PL) providers, suppliers, and even competitors.
You’ve heard the basic collaboration axioms by now: Through more real-time contact with carriers we can cut driver detention time. By sharing long-term plans with our 3PLs, we can expand existing relationships, put more of their services to work, and create a strategy that benefits both parties. We can improve freight visibility and inventory management through collaborative planning with our suppliers. And we may even be able to cut rates and help our TL and LTL carriers improve service if we’re willing to fill more trailers with the help of our competitors down the street.
And that list is just scratching the surface. Collaboration can come in many shapes and sizes and now needs to happen at every level of supply chain management. The very foundation of e-commerce, for example, is built on the backbone of improved collaborative planning between distribution center operations and transportation. The most sophisticated order fulfillment operation in the world is useless unless the trucks are at the dock to move the goods.
Logistics Management has covered the growing culture of collaboration extensively through case studies and columns—and based on some of the results we’re hearing, we are not about to stop.
This month’s cover story is an inspiring example of the power of collaboration between a shipper and an existing 3PL partner. Starting on page 26, Executive Editor Patrick Burnson explains how international home and leisure goods giant Hermes-OTTO set out to re-launch the Bombay Company brand and expand in North America with the help of the 3PL partner that was with them at the start.
“In these situations, shippers are often faced with the difficult decision of either spreading the risk of network expansion among multiple 3PL players or sticking with the provider that got them there in the first place,” says Burnson. “It was refreshing to report that, even though Bombay considered other capable players, they decided to collaborate and build on the existing trust.”
By setting up new pricing arrangements and customizing the existing contract to meet Bombay’s needs in the region, the expanded 3PL partnership yielded a multi-channel supply chain built from the ground up. “They now openly share volume forecasts and are able to maintain a fully optimized fulfillment network with deliveries direct to stores, direct to customers, or back through the reverse loop.”
Beginning on page 32, Contributing Editor and Columnist Peter Moore offers his unique insight into the power of collaborative LTL contracting. According to Moore, LTL plays a critical role in our national supply chain network, yet all too often shippers look at these carriers as little more than a commodity—a perception that Moore contends is causing harm to the budgets of both parties.
“It’s time to toss out the traditional LTL contract and impersonal RFP,” says Moore. “Both the shipper and the carrier need to envision themselves sitting across the table from their mutual challenges.” The objective, adds Moore, is for both parties to share the benefit of optimized costs and improved service. What’s not to like about that?
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