Executive Briefings

Partnering vs. Procuring Logistics Services

Price is always important, says Jim Jones, vice president of business development and relationship management at DB Schenker. But the emphasis should be on obtaining the best overall solution. That pays huge dividends in the long run.

Jones says he's been in the logistics business for more than 30 years, and on both sides of the fence, and the focus has always been on getting the best price. That seems fine until unexpected things occur. He uses a construction project to illustrate his point: In every case, he says, specs are missed or modified some way; perhaps upgrades are required. When that happens, the contractor charges more than originally agreed on. The same thing happens with service contracts. Providers' prices are based on expectations that are mutually agreed upon. Isn't there a better way of doing things?

He says true partners "sit on the same aide of the table." They need to determine the broader issues that will allow them to take cost out of the supply chain. That, he says, is better than saying, what's the best price you can give me.

In the RFQ environment that logistics managers exist in, they are responsible to their bosses and shareholders to get the best deal for their company. Historically, the best deal has been price. "But I suggest it's now to get the best solution for the overall relationship. Focus on getting to know providers better and understanding the cultural fit in order to get better solutions. Yes, you have the rate quotation in the background, so you've met your financial requirement, but now you're looking at who can take me to the next level."

Moving a truckload of product can be bid out transactionally. "But what you need is someone to find a better solution for your business, a provider who can show you how to take cost of the supply chain, as opposed to just telling you how to move from point A to point B."

To view this video interview in its entirety, click here.

Jones says he's been in the logistics business for more than 30 years, and on both sides of the fence, and the focus has always been on getting the best price. That seems fine until unexpected things occur. He uses a construction project to illustrate his point: In every case, he says, specs are missed or modified some way; perhaps upgrades are required. When that happens, the contractor charges more than originally agreed on. The same thing happens with service contracts. Providers' prices are based on expectations that are mutually agreed upon. Isn't there a better way of doing things?

He says true partners "sit on the same aide of the table." They need to determine the broader issues that will allow them to take cost out of the supply chain. That, he says, is better than saying, what's the best price you can give me.

In the RFQ environment that logistics managers exist in, they are responsible to their bosses and shareholders to get the best deal for their company. Historically, the best deal has been price. "But I suggest it's now to get the best solution for the overall relationship. Focus on getting to know providers better and understanding the cultural fit in order to get better solutions. Yes, you have the rate quotation in the background, so you've met your financial requirement, but now you're looking at who can take me to the next level."

Moving a truckload of product can be bid out transactionally. "But what you need is someone to find a better solution for your business, a provider who can show you how to take cost of the supply chain, as opposed to just telling you how to move from point A to point B."

To view this video interview in its entirety, click here.