Shipper affiliations with core providers are, by definition, close and mutually rewarding, but some companies take these relationships a step further by physically locating a third-party team in their organizations.
It’s a bold leap for many shippers, but the potential paybacks are huge (for more on this see the Stepping Up to the Onsite Option and Four Ways to Build Successful Onsite Relationships posts).
Is such an onsite team the right solution for your organization?
A resident group of transportation experts that functions as an extension to your logistics department is very different from a traditional, arms-length relationship with a provider.
Here are three key questions to consider when evaluating the onsite option.
How comfortable are you in welcoming an outside company into your business?
Not every organization is culturally attuned to working with outsiders who are also insiders.
For instance, how do you feel about taking advice and detailed analyses from an in situ third-party team, particularly if they have the leeway to tread on sensitive ground? Are there members of your department who are insecure about such an arrangement?
It’s important to understand that the new team will likely interact with other disciplines, which may include customers and senior management. For example, they might have to work with procurement to persuade vendors to enter load information into a portal for inbound shipments. Or present the financial implications of route guide leakage to the CFO. Providing input during critical customer review meetings is another possible scenario.
By demarcating the limits of the team’s scope of operation – both in terms of who it will interact with and how – before the engagement begins, you can set internal expectations ahead of their arrival.
How hands on/off are you in your team?
It is also important to decide the extent to which the provider team will work directly with your staff members.
One of the most powerful features of an on-site placement is a collaborative think tank, where the outside specialists brainstorm with in-house personnel to develop creative solutions and make quick decisions.
This requires a high level of personal, free-flowing interaction between the individuals involved, however. Is this desirable from your point of view, or do you prefer a more formal exchange of ideas that is oriented towards reports and timetabled meetings?
In addition, these groups are most effective when they execute ideas quickly. Are you organized to take full advantage of their creativity?
The way external and internal people relate to each other also depends on how they communicate up and down the management hierarchy. Rigidly enforced lines of communication may not be conducive to the type of free-flowing discussions described above, for example.
Are you physically set up for an on-site team?
A critical feature that is easy to overlook is whether you have the physical space and office support to accommodate a third-party team.
In addition to providing enough square footage, consider where these individuals will be located. Logistics management tends not to be a quiet, pedestrian activity; avoid housing the team in an area where it may be deemed as intrusive.
Also, what level of IT and general support does the team require? Usually they are self-contained units, but there will probably be situations where the provider’s personnel have to request in-house resources in areas such as IT.
If an onsite team is a real possibility, understanding how it will interact with your organization helps to set the relationship up for success as well as the task of taking your supply chain to the next level.