Excerpt from: China Supply Chain and Logistics Strategy
|
 |
| December 21, 2006 | | Specifying China 3pl Expectations According to Supplier Segments | In a previous post (see link below) I discussed how companies in China can employ a range of transportation procurement strategies appropriate for the different behaviors of their logistics service suppliers. By segmenting 3pl suppliers in China your company will be in a better position to leverage and match the capabilities of logistics service providers with the service demands of your customer segment(s).
China Marketplace
Many of the multinational companies selling in the domestic market operate in competitive marketplaces. Customer loyalty is low and the main concern is to increase volumes and distribution channels. Their markets are established and growing. Multinationals typically employ an operational strategy, in which the emphasis is on providing focused and practical approaches which are responsive to customer needs.
As such, the majority of multinationals in China will be seeking relationships with 3pls in China that fall into the ‘Rising Stars’ and ‘National Stabilizers’ categories outlined in my previous post.
It is important to understand this in order to avoid outsourcing problems.
When evaluating, selecting, and negotiating your service contract with a 3pl in China it is important to determine and communicate effective service level specifications which are linked to the business outcomes achieved. By conducting due diligence your company will be able to avoid typical outsourcing problems.
For example, according to the 2005 Logistics User Survey conducted by the China Supply Chain Council and supported by Maersk Logistics, only 18% of respondents consider 3pls in China as “solution providers”. It is important to clarify the meaning of “solution provider” with each of the supplier segments under consideration in order to prevent outsourcing problems. To suppliers in the ‘Rising Stars’ category, solutions will be more innovative, whereas for the ‘National Stabilizers’ solutions will tend to be process oriented. If the buyer has an unrealistic expectation or is not prepared to clearly identify business objectives and desired outcomes of the outsourcing relationship, then the relationship may lead to failure. | | |
|
|
