RELOCATION AND THE SUPPLY CHAIN: OPPORTUNITIES FOR GREATER COLLABORATION
By: J. Chris MacKenzie, Vice President, Sales & Marketing
Most of us can envision a traditional manufacturing supply chain from suppliers' suppliers to customers' customers. Now try to envision all providers, phases and exchanges in the relocation process. The corporate client, Relocation Manager, buyers and sellers of real estate, property surveyor, household goods moving company, specialty crating company, auto transport provider, temporary housing accommodations, spousal support services, pet transporter, auditor, satisfaction surveyor, and more. Despite the emergence of relocation management companies, all of the previously mentioned providers become members of the "Relocation Supply Chain", and are factors in the total mobility spend. In our industry, it is a constellation of companies with multiple degrees of information systems, individual protocols, varying levels of sophistication, expertise, and independent best practices. Every handoff, or "exchange" in this chain requires time consuming and costly introductions, information transfers, education and invoicing.
Presume for a moment that you are a President/CEO/Owner of this entire supply chain. In order to create and deliver the best total service possible, while maximizing your revenue, would your service model mirror the scenario outlined in the previous paragraph?
In the early 1980's, the discipline was developed to integrate key business processes, and companies in the network to exchange information, and cumulatively plan all activities in the delivery of a product or a service: A true value innovation. The realization is that disruptions or redundancies add costs to the final product/service, and common gains are experienced by all members of this coordinated network. Members share mutually beneficial technologies and best practices in environments that contain overall market pricing pressures, consumer demand for excellence and competitive pressures.
A conventional supply chain is a linear set of linkages between firms and service providers with the ultimate goal of delivering a service or a product in a seamless manner. In our industry, significant percentage of service failures, redundancies and cost increases are a function of exchanges in our supply network. No singular company, or Group has visibility, or control over the entire mobility process. Even when each member of the chain is brilliant in their performance, opportunities for failure increase with each hand-off. This is not an endorsement for a massive consolidation, yet a challenge/opportunity for our industry to initiate comprehensive, standardized integrated solutions and threads that will increase service levels and communication among members of the supply network.
In an environment where extensive cost containment pressures are combined with commoditized pricing and 'product or service sameness,' service providers are looking internally for ideas and innovation. The market will not bear charging higher prices. Relocation budgets are not increasing. Charging more for services that others will provide for less (with little or no apparent decrease in quality) is business suicide in this hypercompetitive market.
We should collaboratively reconstruct and redefine market boundaries in order to redefine the 'rules of engagement' of our supply network.
In this highly competitive arena, service providers have two primary business options:
1. Create and delivery such a unique, high quality experience that is measurably better than the rest of the market. This capability should not be easily duplicated by competitors, ad clients should be willing to pay more, yet despite shrinking budgets.
2. Develop means to collaborate upon delivering a flawless experience to the transferee, at prices already dictated by the market, yet determine means to strip supply costs without compromising the service demands of our clients.
Many providers focus upon Option #1, and dedicate substantial amounts of research and development resources trying to create that 'distinctive experience.' And when we do, we then own the unenviable task of presenting this new innovation to clients and prospects, professing its merits to charge more. Reality of the marketplace sets in, and most include innovation, at the same price as their competitors, with the hope that volume will offset the increased costs of the delivering the service. Sound familiar?
New ideas and service innovation should be a business priority for all of us, but internal service differentiation should not be our singular focus.
Option #2 is curiously a less visited option by most of us, primarily due to the fragmentation in the overall supply chain, and our individual lack of visibility of the entire landscape. Granted, some clients have created formal integration processes and protocol that all providers must follow in order to participate. Many of these client-specific systems have decidedly strong interface capabilities, and are exceptional examples of intelligent thinking. They streamline consistent, best practices through each exchange, with the intent of minimizing redundancies in the mobility process. Unfortunately, most providers do not serve only one client, and therefore conform to multiple practices, technologies and authorization procedures which can actually add costs, and minimize functional expertise.
The mobility supply chain has evolved into a wide-ranging network of companies/competitors with varying levels of sophistication. Ironically, many of our clients professionally participate in the art of activity-based-costing and supply chain optimization within their own discipline. Our industry could solicit their expertise, investigate the practice of looking 'beneath' the invoices for hidden costs, and begin to calculate the immeasurable number of repeated activities and transactions for one transferee.
Obtaining consistently high performance, while economically collaborating with other providers is a feasible and proactive reaction to current market conditions.
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