Long-term Relationships, ©123RF, Andrey Tolkachev

Four Reasons Long-Term Partnerships Are Superior to Transactional Relationships

Long-term partnerships aren’t new. But the value they deliver is more pronounced than ever.

As supply chain management has evolved, the need for long-term partnerships has grown. The increase in complexity, the increase in competition, the increase in teaming and the rise of pivotal trends are reshaping logistics. All together they’re creating a more challenging landscape.

The way forward into 2021 calls for customer-oriented, agile, and resilient supply chains. As with anything, there’s no panacea. However, to survive and thrive, long-term partnerships are proving to be indispensable.

Let’s look at the four reasons long-term partnerships will shape the future of supply chains.

 

#1 Increasing Complexity.  Let’s face it, doing business in today’s marketplace is loaded with complexity. That goes double for supply chain management. For example, organizational structures are changing. They’re getting flatter, especially as remote work becomes common- place.

To enable these changes, we rely on technology. Even though there’s a drive towards user-friendliness, technology is increasing complexity. As supply chain support gets closer to the customer, the level of granular detail required increases. That by itself increases complexity. One of the complexities deals with integrating stove-piped systems across organizations.

Besides technology, businesses need data to drive their processes. Greater customer focus requires new sets of data to support business process improvement. And implementing new business processes enabled by new data sets calls for active management.

Data show us Ecommerce is one trend that’s accelerating. And it promises to change business. Underlying this trend is the demand for customization by consumers. That calls for greater specialization in the delivery of services. And that invites greater complexity.

Yet, businesses are becoming more responsive, as they attune themselves to their customers’ needs. Even as managers begin to master complexity, competition will unavoidably increase.

 

#2 Increasing Competition.  Besides taming rising complexity, competition will heat up due to wild market swings. For example, as markets get buffeted by changes. in U.S. leadership and the attendant policy changes, businesses must position themselves to leverage change. This reset will increase competition. Advantage will go to those who adapt most quickly.

Innovative solutions represent another area influencing competition. Specifically, technologies that take your business to the next level will be in demand in 2021. Those technologies will focus on visibility, optimization, and analytics.

Businesses that incorporate these solutions sooner rather than later will thrive. They will surpass their competition. Yet innovative solutions aren’t restricted to technology solutions.

Innovative solutions also come from ingenuity. Innovative solutions also result from deep insights into a problem’s root cause. It also stems from looking at existing problems in new ways by taking a fresh perspective.

Both of these result from close working relationships. As you know, close working relationships don’t happen overnight. They’re built over time allowing trust to form.

As trust grows that enables the free-flow of information. That, in turn, enables greater insights into identifying root causes. With root causes identified, 3PLs can craft relevant, effective and efficient solutions. That eliminates waste and sharpens performance.

In short, competitiveness will heat up in already competitive marketplace. Learning from 2020, we know that businesses working together can compete more easily.

 

#3  The Growth of Teaming.  Going it alone is no longer a recommended strategy for success. As the New Normal takes shape, teaming is growing out of necessity. It’s no secret that there’s strength in numbers. When shippers and 3PLs team together they can benefit in many ways.

One way they can benefit is through improved communication and enhanced trust. Both lead to synergies that elude companies with transactional relationships.

As relationships develop, organizations become more proactive and engage in smarter risk-taking. Closer relationships also motivate employees to find meaningful solutions. An example of that is finding ways to protect space and shipping rates. That resonates with shippers who see adverse business conditions growing with no end in sight.

As complexity and competition increase, long-term partnerships are a simple, yet effective antidote. But that’s not all.

Other trends have emerged that promise to further promote teaming and the New Normal.

 

#4 Recent Pivotal Trends.  Recently, pivotal trends have emerged that will influence supply chains as we know them. I’m talking about agility, resilience, and customization. It appears all three will leave an indelible mark on supply chain management. They’re all combining to shape what we now call the New Normal.

They will have lasting effects because supply chain imperatives have changed. Agility and resilience allow supply chains respond and rebound at the speed customers demand. Now that customers demand customization, the days of mass production, as we knew it, are over.

These three trends were evident and growing before Covid-19. But after the pandemic, we’ve seen these trends accelerate tangibly. For example, Ecommerce sales increased 15% between 2015 and 2019. Then in 2020 with the impetus of Covid-19, growth spiked to 25%.

Furthermore, a report by Kearney, (Anand, Bahulkar, and Husain) projected that Ecommerce penetration of the retail market will reach 40%. That will further tighten already constrained capacity. And that will put upward pressure on shipping prices.

There’s no mistaking that these trends will continue to grow. Some of them have reached critical mass. Those that have will cause enduring changes to supply chains.

As these trends converge, the case for long-term partnerships is inevitable. More important, long-term partnerships will enhance competitive advantage. So, long-term partnerships are not only necessary, but they also make competing in a severely competitive market simpler and easier.

 

Taming the New Normal with Long-term Partnerships

Transactional relationships represent the old way of doing business. Long-term partnerships represent the new way. It’s the way to the future.

Complexity, competition, teaming, and recent pivotal trends all impinge on the delivery of seamless supply chain operations. Furthermore, long-term partnerships between shippers and 3PLs will set them apart from their competition.

That is, shippers and 3PLs who seek a long-term partnership will gain a competitive advantage. Uncertainty will persist, but you can overcome it with a long-term relationship with a 3PL.

The time to get on board this trend is now. If you’re serious about competing in today’s changing marketplace, look no further than American Global Logistics.

We don’t pursue transactional relationships. We seek relationships with companies who take the long view.

Contact us today to find out more about the benefits of working with us for the long-term.