Logistics Networks: Exclusivity or non-exclusivity – Is it really the question?
Most people who think that exclusivity is the best way to design a network usually fall into a trap thinking that if they joined such a group that the business from all other members in the network will fall automatically into their lap. I can tell you though that isn’t true in the least. There is a reason why the most successful networks are non-exclusive and that is that non-exclusive groups allow their members the greatest opportunities to find like-minded partners. And exclusive networks would actually serve as hollow promises. Why would I say that? I’ll give you some examples:
- Let’s assume that you need help with a specialized cargo from one of your most important customers from an unfamiliar location halfway around the world. But assume that your “exclusive” partner at that location doesn’t handle that kind of cargo? Then you have to go outside of the network for your agent. What good has an exclusive agency done for you in this case?
- How about if there is a personality conflict with your exclusive agent? They don’t get along on a personal level with you or even worse, with your customer. You’d have to go outside of the network for your agent.
- What happens if the agent in an exclusive network on the other side has a ten plus year relationship with your local competitor in your market long before you joined this exclusive group? Not only will you not get their business in your market but where do you go for help on your cargo in their market? Again, in an exclusive agency you’d have to go outside of the network.
- What if you have a price sensitive quote and the exclusive network partner can’t meet your price points? Do you throw up your hands and turn down the business? I dare say that in most cases you’d look outside the network.
You can see why smart money says that exclusive arrangements aren’t rational to the way the logistics industry actually conducts business at the end of the day. And these points alone aim at the inefficiency of the exclusive groups. What about the efficiency that is created by non-exclusive groups?
- Your opportunities for getting chances to quote from other members are greater.
- Your chances of getting good rates from people who are doing similar business to you are greater.
- You will be able to network with more “like minded” companies at the annual meetings.
- Your chances at overall success in gaining business go way up.
- So you can easily see why non-exclusivity is the way to go.
- Still not convinced?
Can I ask you this…?
As an independent forwarder do you really work with only one option per country? Or are their locations you are working with more than one option? And even in those places where you have agents already, do you turn down business from people in that same market? Of the two scenarios I painted above which situation would you rather find yourself in?
I think with honest responses the answers are clear. Non-exclusivity wins. Hands down.