Managing Your Supply Chain With a Vertical Twist
When a runner wants to take his or her performance to the next level, a logical course of action is to consult a running coach. In much the same way, a shipper in a specific industry that wants to improve supply chain performance needs relevant expertise within that vertical.
That’s why enlightened logistics service providers are turning vertically in the hunt for ways to help their shipper customers raise the performance bar.
It can be argued that supply chains geared toward particular markets still share the same basic principles of efficient operation. In which case, why should service providers need specialist knowledge to support shippers in their quest for higher levels of efficiency?
It’s a fair argument—but only up to a point.
Let’s refer back to the running analogy. Some sports, such as basketball and soccer, involve a lot of running. Coaches in these areas can offer valuable advice to runners who want to improve, but only to a limited degree. Some demands are special to running and go beyond the soccer coach’s experience. Also, a running coach can expose the athlete to the collective wisdom and experience of others in the same sport—an advantage that experts in basketball and soccer can’t offer.
Similar pros and cons hold true for supply chain management. A shipper in a vertical can seek out general supply chain know-how, but there are business nuances that the generalists will miss. And the opportunity to share experiences and best practices with a community of shippers in the same vertical is priceless, but not readily available in broader circles.
In short, vertical expertise helps you achieve your performance goals faster.
In a series of posts, we will explore the importance of vertical knowledge in the supply chain domain.
To set the scene, this first post lays out the general case for this type of expertise. The next two posts will explore the same theme, but in the context of specific industries.
Here are seven key reasons why vertical expertise is critical to supply chain competitiveness.
1. Logistics alignment.
Each vertical has a different freight transportation profile. Companies that organize around these profiles are able to establish deeper working relationships and develop solutions geared to the demands of their businesses. For example, in a consumer-facing industry, service-oriented metrics—such as on-time performance to the appointment—might be a high priority, whereas other industries may allow delivery windows over multiple days.
Although each individual supply chain in a vertical is unique, the freight moved by member shippers and suppliers is roughly similar in terms of the modes used and the service features that they deem important. Customers within the same vertical can harness this commonality through cross-industry collaboration and synergistic initiatives, such as leveraging carrier capacity to help lower costs and shrink carbon footprints.
3. The power of community.
Managers in each vertical can meet in roundtables or other forums to discuss the issues that affect them, share best practices, and exchange views and market updates. They are able to explore key industry topics, including important regulatory changes, as well as critical questions such as how to address driver shortage issues. These conversations are most valuable when the information that is discussed is brought back and shared with customers.
The community aspect is also important in relation to new initiatives. New projects or enhancements—even those with clearly defined ROIs—require resources that have to be justified. In many cases, a customization that is requested by one customer in the vertical would likely benefit others. This allows for a collaborative approach when it comes to IT projects and customization that requires input from more than just one client.
4. The power of education.
Committing to specialist groups of shipper clients enables service providers to enhance their industry expertise by, for example, attending more external conferences and applying acclaimed research that is relevant to each specific vertical.
5. Talent management dividend.
Developing, hiring, and retaining talent is generally recognized as one of the more critically important responsibilities in the supply chain profession. Members of industry verticals can use their expertise to identify the skills that are in need and ensure that training resources are aligned with those needs. Specialized learning and development plans can equip industry experts with the tools necessary to return the most value to the customer.
6. Go the extra mile.
Vertically-oriented service providers can help shippers “think outside of the truck” because they combine broad industry expertise with deep industry knowledge.
The shift toward supply chain specialization is likely to become even more pronounced over the next few years. At the same time, ever-increasing customer demands put more pressure on companies to raise performance levels.
Broad-based logistics solutions will always have a role. However, the innovations that enable companies to stay ahead of the competition will rely more and more on the deep industry knowledge of supply chain experts within each vertical.
Next week we will look at the demands of the manufacturing vertical.