Courage, Patience, Trust and Loyalty in Logistics Outsourcing

Although I’m relatively new to blogging, it’s remarkable how much blogging is going on here in cyberspace. There are even blogs about blogs and it seems that everyone, individuals and companies alike, have their own blogs in addition to Twitter, Facebook and LinkedIn accounts.

It’s truly a brave new world of networking opportunities and one can spend a good part of the day sifting through all of the blog content available. It’s almost overwhelming; that’s why Google Reader is a godsend and why I wanted to point out a very good blog you should add to your list.

Adrian Gonzalez regularly posts for ARC Advisory Group’s Logistics Viewpoints newsletter/blog with thoughtful and insightful comment on the logistics industry. A recent post last month piqued my interest because of the way it dovetails with the Vested Outsourcing message of collaboration and trust between contracting parties for mutually beneficial outcomes.

Gonzalez’ post is about “courage, trust and patience in logistics,” qualities embedded in the Five Rules of Vested Outsourcing.

He talked about how a Fortune 500 company could have saved major bucks in transportation costs by putting its freight out to bid. This company (which must remain nameless) instead decided to honor its current rates with carriers.

Now why would a company willingly hurt its bottom line in this way? Gonzalez explains the company “knows that capacity will tighten again down the road, and when that day comes, it expects its carriers to maintain their commitments to them and not abandon them for other shippers offering a cent or two more per mile.”

Is this company naive to believe that will happen? Quite possibly. It’s a strategy that could backfire.

“Time will only tell and it will come down to one thing: if the trust the company placed in its carriers is well founded,” Gonzalez writes. “If carriers back away from the handshake agreement, the company will have to revisit how it defines a trustworthy partner. And for the carriers who follow the path of short-term money instead of long-term partnership, they won’t know the value of what they’ve given up until the next downturn arrives.”

The message: Have the courage to manage for the long term against the pressures we face today for instant results.”

That thought is from Richard MacLaren, General Manager North America, Unipart Logistics, who began and ended a recent presentation at an ARC Logistics performance-based outsourcing/Vested Outsourcing seminar with those words.

You can see why this excites me. In the world of Vested Outsourcing companies move past the drive for the immediate “win,” the need for short-term gratification based on lowest-transaction costs, to loyalty, cooperation and performance-based outcomes that create the “win-win.”

Trust involves a high degree of risk; it takes courage and patience and won’t always work out, especially given the vagaries and pressures of the global economy. As Gonzalez notes, it takes courage to go against the grain, as the company he talks about did, along with the patience to stick to it.

“But the payoff is arguably greater and more sustainable than following that worn out path that serves as a shortcut today but often leads you back to where you started tomorrow.”

I’d add it’s a more sustainable path for the long term. A corollary to the Gonzalez’ conclusion is this saying: “If you keep on doing what you’ve been doing, you’ll keep on getting what you’ve got.”

Vested Outsourcing goes beyond self-interest and just settling for what you’ve got to a space where participants work together to ensure their mutual success.

It moves us from ‘What’s in it for Me?’ to ‘What’s in it for We?’ Why split up the pie when you can work together to bake a bigger pie?  And isn’t that a better place to be?

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