When we talk about supply chain and logistics, we often focus on new and emerging business processes and technology — and those are certainly important and critical things for success — but at the end of the day, anyone who has been in this industry for a while recognizes that supply chain management is a relationship business, and relationships are critical for the success of any company.
There are many different types of relationships that play an important role in supply chain management, both internal relationships (e.g., between supply chain operations, IT, and the executive management team), and external relationships with suppliers, customers, third-party logistics providers (3PLs) and other trading partners.
What defines a healthy relationship between all those functions? What are the main barriers to building strong relationships and how do you overcome them?
“When you think about the [various internal functions involved], it boils down to a couple of key things for me,” said Brent Nagy, VP Enterprise Customer Strategy at C.H. Robinson in a recent episode of Talking Logistics. “First is alignment and really understanding the customer and their needs and challenges, and then synchronizing how the work is done and prioritized. You can’t have one function tripping over the other, each with their own agenda, working in silos…It’s really understanding who owns the relationship, how the relationship from an alignment standpoint cascades down to operations, and having clearly defined roles and responsibilities for everyone involved.”
Nagy compared it to the New England Patriots and their formula for success: “The Patriots way of doing things is that everybody on the team understands their role [relative to the overall goal] and they execute on it. It’s no different here. It’s really understanding why you’re doing what you’re doing, why we need you to do what you’re doing, and ultimately how that iterates and changes over the life of the relationship.”
Alignment and synchronization also applies to external relationships, as Nagy explains:
Treating your trading partners as an extension of your synchronization and alignment process is just as important. If you stop at your four walls and don’t extend it externally, you’re really opening yourself up to an environment where your partners don’t understand your strategy and needs, and if you compound that problem by myopically focusing on driving down prices, you will miss out on [opportunities to achieve greater value and benefits]. You can have the best and most aligned strategies on the planet internally, but if you don’t translate that externally…you’re opening yourself up to a big risk relative to how well these partner networks align with yours.
Of course, you can’t talk about relationships without also talking about the importance of communication. On this point, as you can see in the short clip below, Nagy emphasized the importance of face-to-face communications and not using email and social networking tools as a crutch to avoid having difficult conversations.
I encourage you to watch the rest of my conversation with Brent for additional insights and advice on this topic, including how you build trust in relationships and how to overcome problems when they arise. Then post a comment and share your perspective on what it takes to build successful supply chain relationships!