My direct employer is a large company that specializes in 3rd Party logistics solutions. Our customer is a large company that has endless resources.

In a 3rd party situation, each field location acts as its own company with its own profit and loss reports.

How do you find the right balance between your employer's requirements, protocols, procedures, etc., and your customer's satisfaction, requirements,etc?

Run the business in alignment with your employer and you lose the focus of what you are there for in the first place - satisfying your customer.

On the other hand, concentrate on your customer's needs too much, and a new manager will be put in your place that has the employer's interests on the front burner.

-- Samuel C. Leeper (Sam_Leeper@MSN.com), September 27, 2000

Answers

Outsourcing (as in 3rd party logistics) is a form of alliance, and began in earnest in the logistics field in the mid to late '80s. What was lacking then, and from your comments is valid in your particular situation, was a true partnership relationship between the supplier and the customer of services . . . a relationship in which common objectives are sought, agreed and committed to.

Much of business today is about alliances, call them strategic if you like. The only reason for creating an alliance relationship is so that both business enterprises will benefit. In order for there to be benefit for both, there must be mutual understanding and sharing of objectives and strategies. First and foremost, this means communication, possibly at a number of levels of management and operation - both central (Head Office) and regional - in order to build relationships that matter when things go wrong, as they inevitably will.

Secondly, because of the size and what is obviously a regional spread of operations, common processes and procedures should prevail. The customer should get the same 'feeling' of service endeavor everywhere.

The processes should be seamless, in that they appear as complete end- to-end processes within the business relationship, rather than between two entities (your company and the customer). I suggest you develop a 'process model of the relationship', one that illustrates the end-to-end commercial and support processes that give the business relationship meaning - i.e. those core processes, such as "Manage Orders" that can define where your comapny adds value. Besides helping you show the customer (and your own people) where you add value, such a model gives you targets for problem analysis and process/operationsl improvement.

Today, the growth of the ASP phenomenon is taking the outsourcing concept to another level. You should look at how these ASP relationships are working today and what, other than new technology, is helping them thrive.

One aspect of the development of the ASP marketplace is that Service Level Agreements (SLAs) are being entered into. These SLAs provide the measurement system by which the provider of services (your company) and the receiver of services (your customer) agree to operate and should be something that is established already in your company's business realtionship with its customer - these SLAs can be integrated into the relationship via the business process model, whereby the process measures are the SLAs themselves.

NOTE: Whether 'open book' accounting is used or not, SLAs must be toatally visable to all parties.

All of the above is well and good, and necessary in a commercial relationship, BUT unless the intent is there for both parties to benefit and grow together, then it will always be a problematic business relationship. If management at all levels for both organizations has been set up so that they are able to gather around a table and deal with the issues that affect the business relationship, then you have the potential for success. The relationship that is set up needs to be conciliatory, not adversarial. Issues will always exist and will need to be dealt with. Accept this fact and create a forum in which they can be dealt with. This also holds true for your comapny's own internal issues, some of which you will not want to necessarily share with your customer, i.e. your own 'dirty washing' (e.g. the differences of opinion among field locations). Here again, they need to be dealt with in the same manner, particularly if there are regional 'rivalries', wherein, as you say, "...each field location acts as its own company with its own profit and loss reports."

That's about all can offer without knowing a little more about the detail. Hope it helps in some small way.

-- John Hargreaves (jchargreaves@pobox.com), October 16, 2000.