Improving Shipper and Logistics Service Provider (LSP) Relationships

Transcription

1 The Supply Chain Leadership Forum 2011: Walt Disney World Resort, Lake Buena Vista, FL Improving Shipper and Logistics Service Provider (LSP) Relationships Valerie Bonebrake, SVP, Tompkins Associates & Susan Evans, Managing Director - EMEA, Tompkins Associates

2 Session Scope The focus of this session will be: The state of the global supply chain and LSP s continued, expanding role Strategic LSP issues, challenges, and leading practices What strategic relationship means to both shippers and LSPs Shipper and LSP relationship models for success 2

3 State of Global Supply Chain Managing and leading supply chains in the global world of the 21st century has become one of the most challenging executive positions in the industry. The effectiveness of supply chains can make or break a company, or a product line. Not only is shareholder value impacted, but a company s image and reputation can be damaged for months or years. Global supply chains for all industries will continue to be complex. Supply chain innovations are required, while at the same time maintaining near perfect execution. In response, many LSPs are responding with full supply chain services, not just warehousing and/or transportation. Procurement Supply Management Demand Planning Sales Data Build Plan Component Suppliers Manufacturers Distribution Customers 3

4 Integrated Model for Logistics Management Logistics leaders in global organizations want to reduce complexity in their networks to be more responsive to the needs of the business. Best Providers Best Total Cost Reporting and Metrics Optimized Network Keeping Score! System-wide Visibility Reduced Inventory, Higher Fill Rates, Improved Customer Satisfaction Shared Facilities and Transport 4

5 LSP Business Overview Estimated world LSP market in 2011 ~ $597 billion* Projected to surpass the $1 trillion mark in 2015 Global expansion by marketplace has driven LSP evolution: Major players expanding globally Significant merger and acquisition activity New players entering markets Top LSPs differentiating factors: Broad geographic coverage IT systems capabilities Country-specific experience Top tier customer service Truly consistent/integrated global network, not locations * Source: Armstrong & Associates 5

6 Strategic LSP Issues and Challenges Issues Structure of LSP Industry Market Pressures/ Global Recession Integrated Supply Chain Solutions Profitable Growth Sustainability Challenges Industry consolidation Private equity participation Globalization Competition Pressures on pricing and margins Growing client/customer expectation Volume fluctuations/business volatility Market turmoil Clients desire fewer providers Clients desire for innovation More than supply chain execution, want supply chain planning as well Management of subcontractors Client churn Client perspectives of LSP IT limitations Customer intimacy Competitive mandate Doing the right thing Product life cycle perspective Holistic view of sustainability 6

7 Strategic LSP Issues & Leading Practices Issues Structure of LSP Industry Market Pressures/ Global Recession Integrated Supply Chain Solutions Profitable Growth Sustainability Leading Practices Clear brand identity Clear merger and acquisition plan Clear focus and alignment on their strategic plan Growth of talent and organization effectiveness Continuous improvement Prioritization and active benchmarking and best practices Deeper relationships Speed, agility, responsiveness and accountability Broader service offerings Partnership with other solution providers Standardized industry-specific solutions Lead Logistics Provider (LLP) and seamless solutions Integrated marketing, sales and service delivery teams Implementation discipline, performance excellence and management of expectations Integration of client/provider IT and excellence in supply chain visibility Dual process for Recovery clients (cost savings) and Comeback clients (strategic asset) Helping clients go beyond reduce, reuse, recycle and include re-imagine and redesign Offer green services Promote carbon, water and waste management and energy use Pursuing and promoting the financial benefits of sustainability 7

8 How Do We Get Out of Our Industry Rut? Strategic relationship is just a term, not today s reality Is it the same as preferred provider? Does it mean no RFQs? Does the contractual relationship change? Shipper viewpoints: LSPs don t bring new ideas to the table. LSPs claim they struggle to establish strategic relationships. And, from the LSPs: Partnership just means hold or cut my rates. 8

9 Strategic Relationships Not all outsourced logistics relationships need to be strategic, however Most companies have an LSP partner or two where they have Worked together for several years Established a level of trust Recognize that there is another level to be reached But don t know how to Take the first step Overcome the status quo and the constraints that bind them 9

10 Strategic Relationships Defined Stra te gic (adjective) /strə-tējik/ Relating to the identification of long-term or overall aims and interests and the means of achieving them. Carefully designed or planned to serve a particular purpose or advantage. Agreement between two or more entities to conduct specified activities or processes, to achieve specified objectives. Strategic relationships The working relationships you have with individuals and across organizations that are vital to achieving long-term business or professional goals. Relationship management Your ability to jointly and proactively define, build, maintain and leverage strategic relationships so that your business outcomes are optimized. 10

11 Shipper/Provider Relationships What kind of relationships do shippers and LSPs really want? Are relationships moving toward partnership? Are partnerships reserved only for a few key relationships? Can a partnership model scale? What other models are working? Apples-to-apples Short term Procurement focus Arm s length Rates Lack of trust Fire fighting/reactionary Vendor Relationship Unique capabilities Strategic Results driven Collaborative Total cost /margin improvement Trust Innovative/proactive Partnership 11

12 Shipper/Provider Relationships Model for Success Performance Management Continuous Improvement Goal Alignment Processes Practices Decision Making Dispute Resolution Health Check KRIs 12

13 The Supply Chain Leadership Forum 2011: Walt Disney World Resort, Lake Buena Vista, FL Discussion