A Supply Chain of Relationships
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Anyone working in supply chain and logistics right now can speak of the challenges that have become the new normal of the post-pandemic world. The global supply chain has always had the same fissures (namely disconnected or opposing incentives for the stakeholders), but the stress placed on it through increased imports, labor shortages of various causes, and increased government oversight have brought to light the seemingly powerless reality of anyone trying to move goods into the United States.

We have been at the center of the transportation and logistics industry for decades and have found a key difference between successful logistics teams and those who fall short. Simply, the difference is relationships, but at a deeper level, the difference is the ability of the logistics team to LEAD their logistics partners. Let me explain.

I had the opportunity to work as the Terminal Operations Manager at a large container terminal in the Port of Los Angeles during the 2014 longshore contract negotiations. In this role, I was responsible for all operations at the facility including our customer service department. Through the course of the negotiations, the ILWU workers began to slow down and not dispatch certain key skilled equipment operators to the terminal. This resulted in a massive backlog of cargo on the facilities and a long line of ships waiting to enter the harbor to be unloaded. Managing a supply chain through this period was a difficult leadership challenge for anyone in the industry, but I can say with certainty that one organization did it better than anyone – Target.

Target had an innovative leader managing their logistics network and suppliers who clearly demonstrated that relationships, and thus leadership, was the key to navigating through the crisis. Target’s team followed the TSOR Leadership Model in the following ways:

1)    They build trusting relationships with their logistics partners. They sought to understand the challenges the logistics partner faced and took time to understand what the partner needed to be successful. They never threw their weight around as “Target Corporation” and simply relied on individuals getting to know individuals.

2)    They shared their vision and mission. They clearly articulated what they were trying to accomplish so it was clear what their expectations were. This was not an edict; it was a statement of vision where the suppliers were invited to participate.

3)    They delegated authority. By building trust and sharing their vision, they were able to allow their suppliers to collaborate on the best way to move Target’s merchandise through the ports and out to the distribution centers. This brought the suppliers into the problem-solving process and gave them ownership over the outcome. This was a stark contrast to other large importers.

4)    They evaluated progress of the shared strategy and outcomes through review meetings and brainstorming sessions. While many large importers would share KPI’s with their suppliers, due to do the disconnected incentive structure in the industry, the only time people would really care about the KPI’s was if there was a relationship with the importer. Target, unlike other large importers, was able to drive effective change because they had started with supplier relationships instead of starting with supplier KPI’s.

Clearly, Target is a large organization with a well-developed logistics team, but these same principles apply to any organization regardless of size. Whether you are handling your logistics in house or outsourcing to a 3PL or freight forwarder, here are some key questions to ask to gauge your organization’s logistics maturity and resilience to supply chain disruptions:

–       In a crisis, could you or your logistics provider call key contacts at vessel / terminal / rail / truck vendors to help expedite your cargo? Do these people know who you are and enjoy talking to you?

–       Do your logistics partners know your vision and get excited to bring it to fruition, or do they just see another container, pallet, or bulk commodity?

–       Have you collaborated with your logistics providers and given them the autonomy to create innovative solutions that fulfill your greater company vision?

–       Do your service review and KPI meetings bring about real improvement?

Logistics can be difficult, but a relationship-based approach is a sure way to achieve supply chain success. Remember, your company’s dreams for future growth and present viability are loaded in that vessel. No matter how many containers you move, the vessel operator, terminal, or trucking company just sees another steel box. It takes relationships to change their perspective and see your goods for the truly valuable item that they are.

Let’s rise above and lead.

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