By Clifford F. Lynch
- Admiral Grace Hopper
In the course of my real job, I occasionally get involved in consulting
assignments and litigation that involves the breakdown of an outsourcing
arrangement. Although there can be any number of causes, it seems that more and
more of these disputes result from a deterioration of the relationship itself.
The flawed relationships then lead to poor cost control, loss of efficiency and
productivity, lack of communication, and other problems.
Although itís easy to lay the blame at the feet of the logistics service
provider (LSP), most of the relationship difficulties Iíve observed result
from poor governance on the clientís part. Granted, when a company outsources
a logistics function, it should feel confident that the task will be managed
efficiently. But too often we forget that the relationship requires continuous
management and allow ourselves to slip into the "outsource it and forget
We talk a lot about partnerships, but the fact is, while a client and a
provider should share some common goals in their relationship, each party also
has goals of its own. Inevitably, differences in priorities and expectations
arise, which is exactly why these arrangements must be managed on a continuous
basis. What a number of companies fail to do is separate leadership from
management. Many logistics professionals have experience in warehouse
operations, transportation, or information technology, yet they lack the
leadership ability necessary to manage a relationship.
Several years ago, veteran supply chain consultant Bob Sabath summed up the
dilemma with admirable succinctness: "Successful managers of (outsourced)
relationships need to be problem solvers, innovators, facilitators, and
negotiators who have exceptional people skills and the ability to get things
done," he said. "Most managers who take the traditional logistics
career path never have the skills required to be a good relationship manager.
Nor do they have an interest in them."
What makes someone a good relationship manager? To begin with, he or she must
be both a logistics problem solver and a leader who can motivate and facilitate
superior performance by the LSP. He or she must be accessible, willing to
listen, and a good communicator. As supply chain management becomes more
technical, itís easy to lose sight of what good communications really mean.
When a provider has a problem that requires the clientís attention, voicemail
messages and e-mail communications simply are not good enough. The manager must
be available for a phone conversation, or if necessary, a face-to-face meeting.
Unfortunately, too many of us have become so enamored of our ever-more-fun
message devices that we lose sight of the messages themselves.
Once contact is made, the manager must be willing to listen carefully to the
providerís questions and concerns and give a thoughtful, researched response.
A hasty, uninformed answer will do more harm than good.
Finally, the relationship manager should have a strong sense of integrity.
Many times, problems with the outsourced operation are the fault of the client;
and too often, client representatives are unwilling to accept responsibility for
their own actions (or lack thereof). The manager must be honest and forthright
in dealing with issues and be willing to place responsibility exactly where it
He/she must be able to negotiate and exert influence internally as well as
externally. Some internal personnel will be quick to criticize and even
undermine; and the relationship manager must have the standing within the
organization to counteract these negative forces.
I think almost everyone in our industry would agree that collaboration is the
key to successful supply chain management. What is not so clear is whether we
are staffed to achieve it.