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| 1 minute read

Cutting out the middlemen – how direct relationships have helped businesses navigate supply chain chaos

The pandemic has exposed the frailties of the global supply chain. A relentless focus on efficiency meant there was little wiggle room once major disruption occurred and the continuing challenges demonstrate how little flexibility was left in the system. Resilience had been all but ignored and in many businesses the supply chain was a cost-of-doing business that barely registered in the boardroom. It had been taken for granted or ignored. Until now…

There is much to do to address the long-tail issues in the global supply chain. Near-shoring is back on the agenda (we explored the renewed attractiveness of Mexico for US businesses last summer) as companies look to mitigate against future disruption.

One area that warrants deeper exploration is the use of intermediaries. We have for many years relied on intermediaries to secure our needs, allowing us to take advantage of availability in labor and capacity in the market. The end-service providers are struggling to serve their direct clients with the current labor shortages, forcing lower service levels on intermediaries who are then unable to deliver services as agreed upon. Shifting the model and moving back to working directly with end-service providers, building personal relationships and disintermediating the process has proven effective at restoring some order in a critical and volatile arena.

Many companies who have maintained these direct relationships over time have experienced fewer challenges in supply in the current market environment. These contracts are being prioritized in order to preserve the existing relationships that are viewed as less transactional than those with intermediaries. For those trying to disintermediate, working on building genuine relationships, based on trust and transparency and supported by genuine interest and appreciation for the services being provided can have lasting effects. For those struggling to secure services, this is a great time to reestablish direct links and reinforce relationships to stabilize your supply chain.

Those shippers who have taken the time and effort to establish a direct relationship with a carrier (or driver when we’re talking owner-operator) and understand their preferences (where he or she lives, what constitutes “weekend” or non-regular hours, full truck, partial-truck, loading/unloading versus using lumpers and so forth) have seen lower levels of disruption. Relationships matter, and where we have seen shippers reduce their reliance on intermediaries, preferring to focus on a direct (or more direct) relationship with a carrier or driver, their results have improved in terms of cost, on-time-delivery, and reliability.

Tags

operations, supply chain, logistics, transportation
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