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Ocean: supply-demand balance getting ‘structurally looser’?
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There is a profound shift underway in the relationship between shippers and their logistics providers.
The former, faced with the continual, will-sapping uncertainty of today’s economy is understandably seeking to eliminate as much cost as possible from every area of their businesses; while on the other side forwarders, carriers and other logistics suppliers – all as equally perturbed as shippers by the commercial gloom – are seeking to cement and deepen their relationships with their key customers.
But these two ambitions are ...
Comment on this article
Michael Kusuplos
August 14, 2012 at 6:17 pmMost of those on the procurement side really do not understand the logistics function of supply chain management until the problems start to occur.
Then they are left standing like a deer in the headlights, absolutely clueless as to what to do.
This is what happens when the “Spread Sheets” gain the control over the logistics function of supply chain management – Price, Price and Price are all that is considered. Relationships are really never thought about and the service to the client both internal and external is what suffers.
Andrew F Smith
August 15, 2012 at 2:22 pmI think this very much depends on the procurement professionals. I have worked in this area as well as the supply chain and I have found some very good procurement professionals who know the industry, as well as others who are far less competent. When heading a procurement function I took care to recruit people from the relevant industry, we then taught them the procurement tool-kit. There is a reason why so many selling companies would rather not negotiate with procurement people; this often is because they tend to get a better deal when they are not negotiating with ‘experts’ (those responsible for the supply chain in a business do not always make the best decision for the shareholder; often it is more about their own preservation). It can also be argued that procurement functions also open up businesses to new suppliers that would otherwise not be the case without a tender (in which case incumbents would continue to prosper regardless of the value they provide). The harsh reality in today’s global economy is that price is an extremely important factor. For me the optimal solution is to ‘front up’ procurement alongside supply chain experts, working as a team. If both parties agree, it normally is the right decision.
Niamh Allan
August 16, 2012 at 6:51 amProcurement is the entire process used to select suppliers and negotiate contracts for delivery of goods or services. Procurement logistics typically form a major part of the contract with material suppliers.
Adriaan Groenendijk
August 17, 2012 at 12:38 pmProcurement staff for Logistic Services should be the enabler not the decision making unit, that much should be true indeed.
But to characterize Procurement as mere bean-counters not knowing what they are dealing with is too far fetched. Recruiting procurement staff from relevant industries/knowledge is indeed the key-word and can off course, be equally good or bad in relationship-management.
Michael Kusuplos
August 17, 2012 at 3:28 pmBelieve that comments on procurement making logistical determinations has been seen by some as them vs. us situation. Feel that ” Silo Thinking” is somewhat in place in the comments.
The goal of any supply chain management system, yes, procurement is part of the supply chain, is to obtain the lowest landed cost, i.e., the cost that is incurred to deliver the product to the specific destination, in manner that meets the organization’s requirements for the procuring goods and/or services for the commodity that is being acquired.
To reach this goal, collaboration is required amongst ALL PARTIES in the supply chain. Accordingly, all factors must be considered in obtaining goods and/or services.
Simply “Recruiting procurement staff from relevant industries” does not guarantee that those individuals are knowledgeable on logistics operations.
Propose that procurement teams include representatives of both procurement and logistics to make the best purchasing decision for their clients, both internal and external. Isn’t this the type of process that assures that collaboration is in place?
David Atkinson
September 12, 2012 at 8:25 amPaper clips, toothbrushes, frieght…. These procurement professionals only buy tactical products and services, don’t they?
Well, no. Depending on the sector, procurement can be a strategic as you can imagine, and tactical as you might caricature them. When 75% of the cost of a Honda motor car is made from product sourced from thrid party suppliers, you can predict that procurement is very much near the top of the stratgeic agenda.
The idea that procurement doesn’t understand value (the implicit argument of this piece) is risible. Of course, the most obvious KPI is cost reduction but it’s never the only measure for professionals.
The solution for sales people, whether they’re in logistics or elsewhere, is to truly understand how procurement works; their organisation designs, their targets, tools, processes and professional aspirations. Sadly, few on the supply side take the time to invesitigate this and so remain in the dark, accusing procurement of not understanding the business.
It’s a tough gig being a salesperson at the moment; you need all the advantages you can develop, just to stay in the game.