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What Does a Successful Supply Chain Outsourcing Relationship Look Like?

When you have mastered the skills of outsourcing supply chain, what will a successful relationship look like? When client and 3PL provider are truly acting as one, cultures are aligned and communication is transparent, a supply chain outsourcing relationship is on the right track. It’s also important to align with client expectations.

In this 6-minute video, LEGACY Supply Chain Services President Mike Glodziak discusses the elements of successful supply chain outsourcing relationship and how to align expectations for a stronger relationship.

Adrian:           How do you measure how well an outsourcing relationship is going? What do you do when you hit those bumps in the road when those expectations aren’t being met on either side?

Mike:             That’s another great question. Let me just go back to that comment you just made on that relationship managing. Part of the role they play, without a doubt and I think this is the art side of it versus the science side of it, is they really do act like Switzerland at times. They are that middle piece between the pointy end of the spear that may be coming from the client and ourselves, the provider. You’re right they’re very soft skilled as you called it. They have a lot of soft skills. We call that being Switzerland. They’re good mediators. They’re good understanders of people. You’re right Adrian. That’s a great point.

The question on expectations, how do you know when you hit Nirvana? How do you know when things are really good with the client? We are service providers, so like any service provider in any industry in the world be it supply chain or something else there are bumps in the road. There always will be bumps in the road. That’s what makes this profession very interesting for me.

The way I like to liken it in the analogy I use is you know you’ve got there. Again, the analogy I look at is if we look at a conference room. There’s a table in that conference room. There’s four client representatives sitting around the table, and there’s four provider representatives sitting around that table. We’re reviewing the last month or the last quarter. Perhaps it’s a planning session. If I could go in there and I could tear the ceiling out of that conference room and look down into that conference room around that table and I could quietly observe and I could visually look at that table and look at the interaction between that group of eight individuals. You know you’ve hit it when you can’t disseminate between the client and the provider when they’re truly operating as one, as a soul operating that supply chain. That’s when you know you’ve got there.

I know that sounds like a bit of a flippant answer to your question, but we have those relationships. When you’re sitting in that conference room, and you’re sitting around the table and you have that relationship you know it. It does feel very different and there’s no more them and us. You are together the operator of that supply chain. For me, that’s when you know you’re hitting it out of the park, you hit a home run. That’s absolutely Nirvana.

The other thing I’ll say too is that in real estate they call it location, location, location and we often hear that term. In our business in supply chains we like to call it culture, culture, culture. You know, to make the expectation piece work if you have that strong cultural mesh. I referred to that earlier, again, with so may of our clients we have that strong cultural mesh. We work together very, very well. To have that strong culture, to have an open relationship, a transparent relationship, a strong communication plan and to have that client accept you as one of their own, and we absolutely do have those scenarios, again, you’re hitting it.

That’s all of the good news, but you’re right Adrian. Occasionally, there are some bumps in the road. We do hit those bumps in the road. What do you do when expectations aren’t being met? I say to our people, I say to our building operators that make this happen for our clients and make this happen for Legacy all day long, “Hey, guys, bad news does not get better with age.” It just doesn’t, so when there’s a bump in the road it’s incumbent on you to pick up that phone and call that client. Don’t let it fester. Don’t let it sit. It’s just going to make a bad situation worse. I think that’s the first learnings I’ve had on expectations.

Beyond that we’ll review scope together with the clients. There could be a scope change. There could be a new dimension to the business that we’re not realizing, so it is about reviewing scope.

We’ll do an expectation review occasionally with a client. We’ll do a quarterly review. At that quarterly review we’ll ask the client, “Are we hitting expectations? Where am I off? Where do I have a flat spot in my tire?” Ninety nine percent of the clients are willing to offer up where we need to pull our socks up. That’s great. We appreciate those open conversations.

Additionally, what we’re finding now is that, again, the clients that are very good at outsourcing and have that outsourcing competency will reverse that question back to us and say, “Hey Mike, that’s great. Here’s what you need to do, but if we could ask you the same question, what is it, Mike, that we need to do better to be a better outsourcer to continue to develop our competency with outsourcing?” So we have some really interesting conversations. You get the client asking you, “What can I do better for you, Mike?” And you know you’re getting to a good spot. It certainly helps. I think at the end of the day as supply chain providers we all face turbulent waters. That just comes with the territory, and it’s how you embrace that. It’s how you get through those turbulent waters and get to the other side to the smooth waters.

I’ll tell you this, and it’s a phenomenon that I do occasionally see is, to get into turbulent waters with the client because you’re not meeting expectations and to embrace that and find your way out of that, typically, what happens through that is your relationship strengthens. It’s a chance for you as a provider to show your steel and show what you’re made of. We have been in a couple of tough spots, and we’ve always gotten out of it. It does end up strengthening your relationship. Not hitting expectations at times can be a good thing, a good test of the relationship.

 
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