Transportation Management Report 2011 - Capgemini

19
The main interests for an LSP are
network optimization and capacity
utilization of human resources and
assets (warehouse/trucks) so that
high profit margins can be achieved.
They also need to keep an eye on
other customers’ interests. The LSP’s
main interests are reflected by their
behavior in the relationship:
• Overpromising – a pitfall in every
sourcing project – by the LSP
who is eager to win the deal and
so promises more than can be
delivered
• Not able to coordinate all activities
(for different customers)
• Poor implementation of the
contract due to limited project
management capabilities and loss
of focus
• Unreliable KPI reporting
The main interest of the shippers
is lower costs while maintaining or
improving service levels. Secondarily,
they require flexibility, order status
visibility, control, prevention of
proprietary information leakage,
and in-depth knowledge loss. These
interests are reflected by the behavior
of the shipper in an LSP relationship:
• Lack of open communication and
protectiveness of data to ensure
competitive advantages
• No sharing of ideas and vision
on business and, supply chain
developments and, more
specifically, on requirements of the
LSP contract
• Over specification, which limits the
capabilities of the LSP to innovate
or leverage best practices
• Sourcing logistics services without a
clear outsourcing scope
• Providing unreliable volume
forecasts to anticipate LSP behavior
(e.g., forecasting higher volumes to
guarantee capacity)
After looking at the different interests
and resulting behaviors, it should
come as no surprise that there is
often dissatisfaction associated with
an outsourcing project. The question
is how to change your own and your
counterpart’s behavior so that these
outsourcing problems can be solved
and a more beneficial relationship
can be created.