Over lunch with folks from a prominent third party logistics company at the Council of Supply Chain Management Professionals annual conference in
San Diego in September, I had a robust discussion about what the term collaboration actually meant.
Before you hit the snooze bar on this column because you can’t bear to read about collaboration again, hear me out. In the discussion we tried to really hone in on the correct definition of the word, and what we determined was that the definition of collaboration has changed.
Whereas transportation practitioners a decade ago might have been called upon to collaborate with their service partners—meaning a shipper working with its service provider or vice versa—that thinking is not only outdated, but probably incorrect.
The service relationship between a shipper and its carriers or 3PLs, or between a 3PL and its customers, should not be thought of as collaboration anymore. That’s like calling the daily routine between two spouses “collaboration.” The shipper-service provider relationship is itself the foundational relationship upon which collaboration must be built. A logistics company helping a shipper move goods or manage its IT is the service that it provides in order to be called a logistics company. Calling that collaboration is akin to celebrating a grocery store’s ability to collaborate on produce conveyance to its customers.
So if that’s not collaboration, then what is? True collaboration is when parties that ordinarily would have no reason to work together—or might even have a disincentive to work together—find a reason to work together to achieve a common benefit. And in the transportation and logistics world, it’s often IT that empowers these kinds of arrangements.
Let’s be more specific in terms of applications that enable collaboration with previously unconnected parties. One is Matchback Systems, a software provider that is addressing the long-running street-turn issue. That is, connecting the user of an import container with an export party that needs a container in a nearby area.
In many ways, this is the very essence of collaboration. The import entity avoids the need to dray the empty back to the terminal and the export entity avoids having to go to the port or some other container depot to pull a box, and dray it empty to its facility. What’s more, the container terminal operator or off-dock container yard avoids having two trucks clog its gates and the need to store the container. The ocean carrier benefits from this terminal fluidity as well, as do all the shippers and forwarders whose cargo is arriving at a theoretically less congested terminal. It all makes too much sense.
The only problem is, it’s hard to do. Not from a technology perspective, though. Matchback Systems provides solutions to match the parties that are about to release containers with those that need it, and encryption tools to ensure critical data is not shared with any party that doesn’t need it. Users of the system can set up relationship parameters, offering to alert a select group of trusted parties that a container is available. The company enables forwarders, for instance, to give first priority on an available box to another of its customers. If the box remains available, it can be released into that forwarder’s proprietary supply network of outside parties. And if it still remains available, the box could then be released to the general public of Matchback Systems’ users.
This is real collaboration because you have two unrelated shipper parties and their ecosystems of service providers sharing equipment to cut mutual costs and create mutual efficiencies. The added benefit is that parties totally unrelated to that transaction between unrelated parties also stands to gain.
So again, in the past, the technology has not been the hurdle—it’s been getting those unrelated parties to do business together.
Here’s another example. APL Logistics last month released its ShipMax Alliance product, a tool that helps connect shippers with similar domestic transportation patterns to co-load their cargo. Again, this is not a new concept, it’s just one where technology now bridges the gap between companies that may have been reticent to share volume information, lane details, and product characteristics with another company.
But collaborative tools have evolved to such a degree that even competitive products can be handled in the same deconsolidation center, ride on the same less-than-truckload vehicle, and be delivered to common customers without either shipper sacrificing critical information about its supply chain activity.
Modern supply chain managers have largely evolved from butting heads with their direct service providers over price and service terms. That’s great. But that doesn’t mean they’ve achieved collaboration – it just means they have developed more fruitful partnerships with their vendors. True collaboration means working with companies you would normally never think to work with to achieve a common benefit.
The IT is there, but is the motivation?
This column was published in the November 2015 issue of American Shipper.