When it comes to achieving growth and success in the freight and logistics industry, one of the most important strategies is establishing and maintaining relationships that are built on trust and transparency.
Sometimes in the supply chain world, terms like “vendor” and “partner” are used interchangeably when talking about these business relationships. But what do these terms actually mean in practice?
Not all agreements with other organizations are created equal. To maintain, adjust, and expand your expectations, goals, and strategies, it’s important to know what kind of relationships you have — and what kind you want to form in the future.
Here, we’ll dive deeper into the differences between strategic supply chain partnerships and supply chain vendor relationships.
Supply Chain Vendor Relationships
Your relationship with a supply chain vendor is usually based upon trying to achieve something specific in a limited timeframe.
For example, in the case of an LTL contract, you might create a contract based on the amount of goods to be transported in a certain timeframe. If you need an API developed, you might create a project-based contract with a software development company.
A vendor’s main goal is to sell their products and services and provide them at the bare minimum level described in your agreement — thus, the focus of these contracts tends to be on limitation of liability and indemnification.
The supply chain vendor relationship is typically cut and dry, focusing on resources, services, or technology products — not expertise or strategy.
Often, you’ll opt for a predetermined package or tier of services. If you need to scale up later on, your options include moving up a tier or finding a different vendor (leaving little room for flexibility or custom solutions).
Reporting and Communication
With average supply chain vendor relationships, you’ll probably end up responsible for monitoring performance, as your vendor may provide very limited reporting. The burden of communication is also on you — typically, there will be little to no proactive communication from your vendor unless there’s a specific issue that needs to be resolved.
Strategic Supply Chain Partnerships
Think of strategic supply chain partnerships as an extension of your business management. A strategic partner is committed to supporting you in reaching the growth, revenue, and efficiency you want to see from your organization.
Your strategic partner’s main goal should be to support your success and make sure you get what you need from the relationship, offering strength and business continuity even amid uncertainty. Through challenges like a supply chain crisis or a pandemic, a strategic partner will work with you to keep things running smoothly and mitigate service interruptions.
Strategic supply chain partnerships are never one-size-fits-all. These partners offer flexible service offerings, scale with you as your needs change, and work alongside you to form a contract based on your unique challenges, needs, and goals.
Like vendors, strategic partners provide resources, services, and technology. The key difference is that partnerships also provide consultation, expertise, strategy, and custom solutions. From contract to execution, strategic partners provide guidance throughout the whole process and collaborate with you to come up with solutions for your pain points.
Strategic partners are also proactive, looking months or years down the road to see what’s in store for your business, and asking how they can help you effectively plan ahead and navigate forward.
Reporting and Communication
Check-ins are far more frequent — and helpful — with a partner organization than with a vendor. Communication is proactive, not reactive, with constant updates to keep you informed, address your concerns, and flag any potential challenges.
An ideal strategic partner will also offer robust, custom reporting so you can continuously monitor the outcomes of your relationship and adjust your agreement as necessary.
In the world of freight and logistics, not all relationships are created equal, so it’s key to be clear on the types of relationships you are entering. You’ll need to adjust your expectations based on whether you’re working with a vendor or a strategic partner.
If you’re seeking a relationship that will drive your business forward and help you achieve your goals, you’re looking for a strategic partnership. This type of relationship offers more flexibility, support, collaboration, accountability, transparency, and communication. With a solid partnership, you don’t have to gaze into the crystal ball alone — a strategic partner will aid you in planning for success both today and into the future.
DDC FPO is a trusted strategic partner for transportation and logistics companies worldwide. Contact us to learn how we can support your success.