The Importance of Partnerships in the Logistics Industry

 

 

Partnerships in the logistics industry helps companies achieve a level of performance above what they could achieve on their own. Successful partnerships are a special form of business relationships tailored to encourage openness and trust. Partner companies share risks and in turn share rewards. Effective partnerships comprise a complete logistics system that makes the whole more than the sum of the parts.

Partnership Drivers

Several elements initiate and drive the decision of individual companies to form a partnership or to change the dynamics of an existing partnership. One of the first of these is the partnership drivers. A list of drivers forms the compelling reasons for a company to expand its capabilities through partnering. These can include:

• Asset/cost efficiencies.
• Marketing advantages.
• Customer service improvements.
• Profit or growth stability.

The strength of these drivers determines the potential of a partnership. The drivers set the expectations of all participants.

Facilitators

Facilitators are the essential ambient factors that nurture partnership growth. Each business relationship has its own set of facilitating factors that influence the long-term success of the venture. The facilitators that measure the ability of partner companies to mesh can include:

• Compatibility of management philosophy.
• Perspective of the individual partners.
• The alignment of corporate cultures.
• The level of symmetry between the firms.

These facilitators can exist when partner firms share a competitor, have the ability for an exclusive relationship, share a common end user, the firms are located nearby, or that the firms have had a prior relationship.

Outcomes

Partnership drivers set the expectations for the outcomes, in other words, the extent to which the resultant performance meets the initial expectations.  These can be organized into three areas:

• Specific process outcomes – can include improved reliability or reduced costs.
• Global performance – leading to profit stability or growth.
• Competitive advantage – can include a more advantageous market position, increased market share or a stronger market presence.

Partnerships can use feedback from outcomes to evaluate expectations and devise ways to enhance the partnership venture.

 

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