We’ve teamed up with senior figures in transport and logistics operations to give a view on what’s happening in our industry. It’s anonymous so you can be assured it’s heartfelt personal comment, uncoloured by considerations of corporate or professional consequences.
This month, our Industry Insider lambastes suppliers to distribution businessses appealing to them to add value instead of profiteering. This piece was first published in Motion Magazine.
Reflecting on the liberating nature of being asked to write an anonymous piece on a key matter for our industry I am left feeling like Donald Trump – I wonder if he realises that tweets are not anonymous?!
Invariably, as part of the distribution and logistics industry you are likely to be some way down the business food chain. Presently that is leading to a significant flux within our industry. Regardless of sector there is a marked increase in the number of customer demands to review price downwards, and there are many customers in our industry sector testing the market, with tenders and RFQ’s currently in abundance.
As a supplier, our business has to react to these commercial challenges and we have the same choice as any company supplying distribution services; we can reduce margin or we can be brave and hold our price, or even increase the price.Or we could seek ways to add further value to our customers; affecting a change – perhaps modifying the service to reduce cost, or increasing the scale of a relationship to drive economies of scale. These choices are open to all of us at any time in a business-to-business environment.
Brexit uncertainty has increased costs for many businesses. The exchange rate impact on costs is real for our customers – but also for distribution providers. Add in a glut of legislative changes – living wage, apprentice levy, insurance premium tax – and we are in a very definite period of cost inflation.
So, the challenge I have is to those businesses who supply distribution and logistics businesses. We need to work together and collaborate to find innovative solutions to our challenges; to attract talent and to find smarter solutions.
There are many suppliers who do this who are proactive and spend time trying to understand our needs to drive value.
However, there are three groups of supplier who in our experience could do more to understand our business and the things we need – and who seem to treat their products as a commodity and us, their customers, with a degree of contempt: truck manufacturers, trailer manufacturers and agency labour providers.
We deal with truck sales representatives who know little or nothing of their product let alone our business. We have dealt with five trailer manufacturers in recent years, all of whom have delivered late. We understand problems arise, but none of them have communicated accurately or transparently. Agency labour providers are profiteering from the Agency Worker Directive and whipping up ‘driver shortages’ to drive up price and their margins! Have you ever failed to cover a delivery or load due to inability to find a driver? They are treating skilled labour as a commodity!!!
So, my conclusion. Suppliers to distribution businesses – how can you add value and help us innovate?