By Clifford F. Lynch
Logistics Management & Distribution Report, April 2001
I'm very loyal in a relationship. Any relationship. When I go out
with my mom, I don't look at other moms. I don't go, "Oooh, I wonder
what her macaroni and cheese tastes like."
- Gary Shandling
Much has been written about logistics service providers; i.e., how to identify,
select, manage, and motivate them. Yet it's important to keep in mind that
the third-party provider represents an equal partner in an outsourcing
relationship and should be treated as such. That means maintaining open
communication with that third party as well as making a long-term commitment to
Andrew Carnegie once said, "As I grow older, I pay less attention to what
men say." Clearly, verbal communication in his era was as
untrustworthy as it tends to be in our own. Complicating matters, people
who profess to maintain a keen sense of integrity in their personal lives at
times are unable or unwilling to apply that same code of ethics to a business
situation. Yet in the outsourcing relationship, honesty is the only
More than one third-party provider has heard words to this effect:
"Your handling invoice is in Accounts Payable, but a lot of the people
there have been out of the office at a meeting."
The translation of course is, "We have a company policy of paying invoices
in 45 days, not the 15 agreed to in the contract, and I am reluctant to admit
that to you."
In his book, Is Lying Sometimes the Right Thing for an Honest Person to Do?,
author Quinn McKay draws an interesting distinction between "personal
ethics" and "gaming ethics." Under the rules of personal
ethics, McKay says, "Most of us generally would agree that it's wrong to
deliberately mislead or deceive another person..."
In gaming ethics, however, "deliberately misleading and deceiving others is
not only allowed; it's an essential skill for winning." These are the
ethics that encourage running a play over the weak side of the line in a
football game, raising the bet on a worthless poker hand, or taking advantage of
an opponent's chess move.
Most business executives practice gaming ethics in the routine discharge of
their responsibilities, but these actions usually are directed at
competitors. They should not be practiced in outsourcing
relationships. The provider should be a partner striving for similar
goals. It is not the enemy and most certainly is not a competitor.
If that provider is doing a good job for you, moreover, it deserves not only
open communication, but also your loyalty. Some clients feel that keeping
a provider feeling insecure about the relationship's future is the best way to
manage it. They believe that constant, subtle threats to cancel the
agreement will make the provider strive harder for perfection. Although
this may be effective over the short term, eventually the arrangement will fail.
In other cases, clients will seek new proposals every time a contract
nears expiration, even when the third party is providing good service.
More often than not, the last thing they want to do is relocate the operation,
but they believe that this strategy will force the provider to keep its skills
What it actually does is reduce what should be a long-term, continuously
improving relationship to a series of short-term planning cycles. A
provider never will feel a true commitment to a client who views it as a
short-term associate with possible renewal options.
Back to top