Although it's easy blame the logistics service provider for the breakdown of an outsourcing arrangement, most of the relationship difficulties I've observed result from poor governance on the client's part.
"You don't manage people; you manage things. You lead people."
— Admiral Grace Hopper
In the course of my real job, I occasionally get involved in consulting assignments and litigation that involves the breakdown of an outsourcing arrangement. Although there can be any number of causes, it seems that more and more of these disputes result from a deterioration of the relationship itself. The flawed relationships then lead to poor cost control, loss of efficiency and productivity, lack of communication, and other problems.
Although it's easy to lay the blame at the feet of the logistics service provider (LSP), most of the relationship difficulties I've observed result from poor governance on the client's part. Granted, when a company outsources a logistics function, it should feel confident that the task will be managed efficiently. But too often we forget that the relationship requires continuous management and allow ourselves to slip into the "outsource it and forget it" mode.
We talk a lot about partnerships, but the fact is, while a client and a provider should share some common goals in their relationship, each party also has goals of its own. Inevitably, differences in priorities and expectations arise, which is exactly why these arrangements must be managed on a continuous basis. What a number of companies fail to do is separate leadership from management. Many logistics professionals have experience in warehouse operations, transportation, or information technology, yet they lack the leadership ability necessary to manage a relationship.
Several years ago, veteran supply chain consultant Bob Sabath summed up the dilemma with admirable succinctness: "Successful managers of (outsourced) relationships need to be problem solvers, innovators, facilitators, and negotiators who have exceptional people skills and the ability to get things done," he said. "Most managers who take the traditional logistics career path never have the skills required to be a good relationship manager. Nor do they have an interest in them."
What makes someone a good relationship manager? To begin with, he or she must be both a logistics problem solver and a leader who can motivate and facilitate superior performance by the LSP. He or she must be accessible, willing to listen, and a good communicator. As supply chain management becomes more technical, it's easy to lose sight of what good communications really mean. When a provider has a problem that requires the client's attention, voicemail messages and e-mail communications simply are not good enough. The manager must be available for a phone conversation, or if necessary, a face-to-face meeting. Unfortunately, too many of us have become so enamored of our ever-more-fun message devices that we lose sight of the messages themselves.
Once contact is made, the manager must be willing to listen carefully to the provider's questions and concerns and give a thoughtful, researched response. A hasty, uninformed answer will do more harm than good.
Finally, the relationship manager should have a strong sense of integrity. Many times, problems with the outsourced operation are the fault of the client; and too often, client representatives are unwilling to accept responsibility for their own actions (or lack thereof). The manager must be honest and forthright in dealing with issues and be willing to place responsibility exactly where it belongs.
He/she must be able to negotiate and exert influence internally as well as externally. Some internal personnel will be quick to criticize and even undermine; and the relationship manager must have the standing within the organization to counteract these negative forces.
I think almost everyone in our industry would agree that collaboration is the key to successful supply chain management. What is not so clear is whether we are staffed to achieve it.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.