Transport Systems Inc of Basking Ridge, NJ recently accomplished the pinnacle of a customer relationship with one of their largest paper manufacturers. Transport Systems Inc is a non-asset based logistics provider of integrated warehousing and transportation services management in the Northeast and Midwest. With a warehouse in Chicago, PA warehouse and NJ warehouse coupled with their nationwide transportation foot print established another customer relation success story. To understand how this occurs requires an explanation of the customer relationship pyramid.

Customer relationships, specifically logistics providers of warehousing and freight trucking companies can and do get measured by them and their customers. Some call it score-carding, matrix’s, key performance indicators and other acronyms that get put on the wall soon to be forgotten until another day. Unfortunately businesses can’t wait for another day since every hour of every minute of every day is about building their business and choosing suppliers who can help them achieve their business goals. So this is where we start – at the bottom of the Customer Relationship Pyramid. This would be the everyday tactical execution of the business. In other words the day-to-day grind. Simple low hanging stuff such as meeting customer expectations. Responding and completing requests to do something. Making it easy for them to do business with you and your team. You provide perceived quality as measured by – “no one complains”. This is just called plain jane everyday account maintenance between the supplier and the customer. I mean maintenance in terms of both parties attitude and actions. Each subscribes to the same principal of it’s working so don’t fix it mentality. This is ok if you have a monopoly with no competitors within miles of you selling a product that can sustain life for the people who buy it.

Most of us would wish for this scenario but as we all know short of Mr. Gates we have to work for our money by being innovating and relevant to our customer every day of every year. This takes us to our next layer towards the top of the pyramid. Call this layer “we do do the everyday stuff well with no complaints AND we actually exceed in some areas which the customer did not expect us to perform.” This is called going “above and beyond” the call of duty. You did something as a supplier that was not expected. Something that exceeded a preconceived expectation by your customer. How did you do this? How can this be? Well the answer is simple – you communicated beyond the boundaries of just doing the task. You provided process, people or systems that made it easier to communicate, work, make decisions etc…You did all this not because you were asked but because you did it without being asked. So as we are getting closer to the pinnacle of the pyramid we still have a few more things to do.

We have just shown the use of basic tools such as communication, processes, automation, and people to do something for your customer without being asked to do it. As a result, it improved the relationship and each others business. Now the hard part. How can we sustain this effort and mindset by looking farther out than the current day-to-day and week-to-week business cycle? What can we do to gain a competitive advantage by leveraging the skills of both companies working in collaboration? To do this we must anticipate farther out in the market. This could be determining the life cycle of a product or service. This could be product obsolescence. This could be new competitors with a similar or exact product. There are many different reasons to look and plan months or years ahead to gain strategic advantage. In the suppliers case, the supplier also needs to anticipate not only the needs and requirements of their own business but that of their customer.

To do this is very difficult and nearly impossible if you don’t have the basic business relationship foundation established and firmly in place. This is not an overnight achievement but something built over time. Mutual trust and respect is non negotiable. Regardless of what either party suggests you can help each other by not cooperating and sharing information and resources. It is always amusing to hear a client say “it’s your job to know my business”. Well that’s nice but I can’t do it alone. For someone to understand the customers needs requires an understanding that they will cooperate when asked but also when they are not asked. For example, a company is developing a new product but it is still early in the developmental process. It may seem too early to engage any supplier at this point but what happens if the product is shelved because the logistics cost is too high making the target retail price too high. The company may have calculated its logistics cost based on its current suppliers and footprint. That’s an assumption any company could and will make but not before consulting with its largest strategic logistics supplier. While in most instances the company does not engage its logistics supplier. The result can be a lost opportunity to change the current logistics model with a result of lowering over logistics cost be optimizing the network integrating the new product with current product to the same customers. These co-loading opportunities need to be taken into consideration because volume synergies could not only lower the new products logistics cost but also the existing product. In this case, the company had two strategic opportunities and lost them both because the logistics provider couldn’t anticipate a need by the company because it wasn’t even part of the discussion. Strategic thinking can not be done in a vacuum. The first strategic layer of any pyramid needs to have cooperation on both fronts to then anticipate and meet a need for strategic planning purposes.

Before we get to the last layer of the customer relationship pyramid let’s recap some of the important components of the pyramid. The most basic layers of the pyramid is really the day-to-day maintenance and task completion. Hopefully as the relationship matures it moves up the ladder by providing additional tools and components that make life easier for both companies. Once this has been proven successful and there becomes a basis for mutual respect and trust we can then proceed to anticipating by cooperating on the longer term objectives and needs of the customer AND the provider. Big Note: Just pause a moment. Don’t you think the provider is just as important as the customer? What happens if the provider wants nothing to do with the proposed strategic direction of the customer. What now? Well a true strategic relationship model would step back and understand both perspectives and adjust accordingly. If it is just benefits one and not the other then don’t call it what it is not – a strategic partnership. If it can be revised based on the best interests of both companies then proceed. If not, don’t bother.

Now getting back to the last layer or the pinnacle of the customer relationship. Let’s call it customer and supplier loyalty. Yes, customer and supplier loyalty. You can’t have one without the other. It’s just the culmination of all the layers of the strategic customer relationship pyramid. Simple, right?