Collaboration in the logistics industry aims to ensure reliable supply and optimize processes for all stakeholders. This can be achieved through transparency and cooperation among logistics providers. Currently, there is a lack of collaboration, which is why someone needs to take the lead to introduce future-oriented improvements. And that someone is you, our fellow logistics professionals!
In this article, we present an innovative model for how partner management can be structured in logistics in the future. Systematics, collaboration, and integration make the difference, providing logistics professionals with practical recommendations as a best-practice approach.
Table of Contents:
- Partner Management in Logistics
- Selection Process for External Providers
- Getting Collaboration Underway
- Successful Partnerships Through Performance Monitoring
- Taking Performance to the Next Level
- Worst & Best Case
- Preparing Logistics for the Future
Partner Management in Logistics
In the past, partner management was unfortunately in short supply in the logistics sector. Suppliers were left to the purchasing department, the focus was simply on moving goods from A to B, and companies were often happy just to know the names of their counterparts. However, supply shortages and declining resilience in global supply chains have dramatically changed the rules of the game. Mastering and managing supplier relationships (Supply Chain Management) and actively collaborating with partners are now key competencies in logistics.
More than ever, every company must actively ensure that its requirements regarding products, services, and processes are met. This shift in perspective requires effective mechanisms for coordination, monitoring, control, and improvement of relevant logistics and supply processes with partners.
This approach is also known as "partner management" or, for all certified companies committed to ISO 9001, as "relationship management."
Combined with the principles of a "process-oriented approach," "evidence-based decision-making," and "continual improvement," this results in a modern, professional approach to collaboration and partner management within our companies.
The process-oriented approach shifts the focus from "suppliers" to "partners," thereby extending it to include logistics service providers. Utilizing data-driven insights requires transparency—through consistent monitoring, early detection of deviations and risks, and rapid response. This allows sources of error to be identified and corrected, and processes to be optimized.
The concrete operational implementation of these principles inevitably creates opportunities and requirements for the logistics provider to participate. Following the lifecycle of a partnership, there is a need for logistical involvement in the following phases: selection, onboarding and enablement, monitoring and evaluation, improvement and development, and termination or re-nomination.
Selection process for external providers
We are looking for partners who offer fair terms and reliable supply. Therefore, a clear statement must be made during the supplier selection process, including from a logistics and supply perspective.
Make your logistics requirements a binding part of your supply and purchasing terms and your tenders. Qualitative logistics requirements include, for example, packaging, transport, or process guidelines. Quantitative requirements focus on performance indicators such as delivery capability and on-time performance. These requirements should always be documented in writing.
A sustainable supply process should also be efficient for your partners. Therefore, discussions should take place between logistics teams rather than just between purchasing and sales. This helps create a win-win situation.
Reliable data from ongoing operations can help in evaluating existing partners. For new potential partners, experience and expertise should be used to predict whether they will be able to meet your requirements.
A modern and effective selection process should include a right of veto for the logistics department. If a potential partner cannot meet the logistics requirements, the logistics team should have the authority to issue a "no-go" in the procurement process.
Getting the collaboration off the ground
Immediately after selection, the concrete implementation of the collaboration begins. The nature and scope of this depend heavily on the business. In any case, exchanging contact details and introducing the parties involved is essential, followed by defining how the partners will work together, including process clarifications and ground rules for handling issues. Digital process integration—setting up information and data exchange—also plays a key role.
Depending on the industry and the nature of the partnership, it may be necessary to support new partners to ensure smooth collaboration. In more complex supply relationships—such as in the automotive industry—a qualification process leading up to the start-up and ramp-up phase is standard. Especially with new partners or those from outside the industry, proof will need to be provided that logistics requirements can be met and logistics concepts confirmed, for example regarding capacity availability, performance tests, delivery capability, and safety stocks.
Pilot shipments and a controlled ramp-up secure this phase. Progress is monitored with the involvement of the logistics team through on-site visits and audits.
These measures allow problems to be identified and resolved at an early stage. Project managers can provide support here to drive implementation and maintain an overview.
Successful partnership through performance monitoring
Once the collaboration begins, continuous performance monitoring using logistics KPIs is essential. Effective collaboration tools like TradeLink already include such performance and partner cockpits. The KPI system should be structured so that you always have a drill-down for every KPI, allowing you to see individual partner contributions (like a league table) and evaluate each partner individually when needed (partner performance).
Operational metrics such as on-time delivery or service levels play a role, as does tracking "logistical quality," such as compliance with or deviations from packaging, transport, information, or delivery agreements. Coordinating with your quality management colleagues can provide further insights. This systematic performance tracking feeds into data-driven partner evaluations, such as a 5-star rating system.
Taking performance to the next level
Every identified disruption or deviation in logistics performance should lead to an immediate complaint commensurate with the risk of the error. Furthermore, it is important to make an overall assessment of performance and communicate it to partners regularly. Show every partner where they currently stand, and be fair enough to expect that areas for improvement on your side will also become transparent.
Ideally, performance data is provided as a logistical fingerprint, automated and made available primarily to the partners' logistics managers. These objective evaluations form the basis for annual partner performance reviews (supplier meetings) at the management level—naturally with the active participation of the logistics team.
Deviations can be systematically classified using reason codes. When viewed over a longer period, the evaluations reveal recurring error patterns and trends. Use this transparency to hold problem-solving discussions with the affected partners and initiate improvement measures. Please anchor successful process improvements as lessons learned for the future—internally through process agreements and externally by adjusting your purchasing and delivery terms.
Be prepared for the fact that appropriate interventions will be necessary in the event of blatant performance deviations and for recurring "chronic" issues. Systematic, hierarchically structured escalation processes (an "escalation pyramid") with clearly defined and communicated steps are suitable for this. Such escalation models are best established in collaboration with purchasing and management.
Worst & Best Case
In the worst-case scenario, chronic performance deviations and unsuccessful attempts at improvement require you to consider how long this partnership or supplier relationship can or should be maintained. Incorrigible cases of poor performance should be followed through to their logical conclusion. Ultimately, exit scenarios should be defined in the collaboration and escalation model to allow for parting ways with such partners. However, the better partner management has functioned in the preceding stages, the less frequently this option will need to be exercised.
Ideally, those who have proven themselves in previous collaborations should be given priority in the bidder list for future tenders. Grant a bonus to reliable and proven partners in the process.
This is where partner management runs into a classic corporate conflict of interest, as procurement is typically incentivized to secure the lowest prices, while logistics is focused on stable supply.
Therefore, synchronize your goal system cross-functionally at the corporate level by including not only procurement costs but also partner and supplier performance—or logistics supply targets—in the procurement scorecard. Use a bonus-malus system in your vendor ratings as well, and grant high-performing 5-star partners a points-based or financial bonus. This allows you to objectively compare high-risk, low-cost offers against low-risk, best-performance offers, ensuring you find the best overall value for the company.
