- THE MAGAZINE
Ads for online dating sites notwithstanding, the process of making a good match is complicated.
Businesses know this and take a formal approach when looking for suppliers. They present the “must-have” and “nice-to-have” traits in their request for proposal process. They review prospects and issue the formal invitation in the form of the RFP.
The prospects line up — some self-eliminate, based on issues they see in the RFP. Some won’t have the requisite competencies. Others will find the terms limiting. And a few won’t like the financial compensation.
Of the remaining group, the company issuing the RFP will mirror the process and start eliminating “applicants” with insufficient resources, those who lack key skills, the financially weak or overpriced, etc.
The World Trade 100 Logistics Directory offers a starting point for companies looking for suppliers and partners with the right core skills.
The mix of players keeps changing. On a larger scale, there are mega-matches being arranged among supplier companies. The fiscal caution that many companies exhibited during and just after the official end of the latest economic downturn has left many companies with substantial amounts of cash. This has led to a rise in merger and acquisition activity.
Arguably, the downturn tended to thin the herd of the weakest players and strengthened the survivors. Sure, it’s cliché, but it’s not uncommon these days to hear the phrase repeated, “What doesn’t kill us makes us stronger.” In many cases, it’s true. The companies who weathered the economic storm have emerged leaner and more muscled.
With cash for investment in expansion, many logistics providers are in the market for acquisitions that will further strengthen and grow their businesses. ABF’s acquisition of Panther is an example of a company expanding its portfolio to position for growth. XPO and 3PD focusing on last-mile logistics services is another just-completed deal.
What this means for the buyers of logistics services is that the capabilities of the companies they know are continually changing. They were shedding and are now gaining core competencies and expanding some of the strengths of their offerings.
In January, WT100 discussed what 3PL mergers meant for users of logistics services (see: 3PL Mergers WIIFM). The topic is back this month with a look at mergers and acquisitions from the perspective of the 3PLs involved. Looking at the mechanics of how these deals should work provides good lessons for users on where to look for gaps and weaknesses.
One of the major differences between an RFP and a 3PL merger? With an RFP, the customer is applying the yardstick to the deal and trying to ensure the best fit in need and capability. When your 3PL acquires or is acquired by another company, it should be communicating on your terms what the deal will mean in new capabilities but also — and more importantly — how it expects to maintain and improve the service you have already been getting.
It turns out the secret to a good choice is not only asking a lot of the right questions but also listening closely for the right answers.
Perry A. Trunick, Editor-in-Chief