It’s all about adding value and becoming a partner

JOY ORLEK
WHEN Kintetsu World Express director Keith Horn predicted in 1999 that traditional freight forwarders would be faced with a major changing role in their service delivery to customers, there were some who disagreed. A few years down the line his view has gained popular acceptance with industry gurus agreeing that the role of the clearing and forwarding agent has to change. They are no longer required merely to move freight but rather to manage their customers’ inventory at rest or in motion right through the complete supply chain. ”The aspect of adding differing values for customers while their inventory is en-route to the consumption point has also become of paramount importance,” says Horn. Value adding is not just about reducing the freight rates and agency fees raised for traditional service provision. “Clearing and forwarding agents need to provide services that will meet and support their customers’ defined supply chain and logistics strategy,” says Horn. In his ‘Changing Role of the Traditional Clearing and Forwarding Agent’ presentation at a conference in 1999, he said agents would be required to provide services which would simultaneously reduce total logistics costs within the supply chains of their customers while significantly improving customer service delivery levels to the consumers generally. “In addition, agents need to acquire a holistic end-to-end realisation of their customers’ complete business aspirations and provide supply chain visibility and events management solutions that enable their customers to become more competitive in the markets they serve.” In short, clearing and forwarding agents need to become facilitators of supply chain solutions for their customers. And this demands a more proactive approach with the agent becoming a partner rather than merely fulfilling the functions of an agent. “Above all clearing and forwarding agents need to acquire the appropriate intellectual capital required to provide the necessary supply chain integration consulting capabilities being demanded by customers,” says Horn. Competition is no longer between companies - it’s networks that are competing and the winner is the supplier company with the best supply chain network. The agent is therefore required to play a far more consultative role. He needs to understand the customer’s business strategy, co-ordinate supply chain activities and look for areas of improvement. He needs to manage the upstream and downstream activities and continually measure performance and improve operating processes. Ask any freight forwarder to name his strengths and you’ll find superior service at the top of the list. But many companies today are deluded about their service provision to customers, says Horn. A survey undertaken by Bain & Company in 2005 revealed that of 362 firms interviewed, 80% indicated that they considered they delivered superior service levels. But only 8% of these firms were in fact found to be delivering superior service. This means that only 8% have embraced the changes required and are delivering additional values to their customers. The success of this 8% sample was attributed to a range of factors. “Most importantly these firms considered the entire supply chain. They got to know all the supply chain partners and collectively, as a team, added value for their mutual customer. “They also introduced meaningful process measurement criteria with systematic innovation for continued improvement.” KWE’s primary focus is the aerospace and motor vehicle vertical markets where the company has put its supply chain consultancy and collaboration skills to the test through a tender awarded by the national carrier some five years ago. The project initially involved the consolidation of inventory in excess of 200 000 line items from several stores within the technical complex of Johannesburg International Airport and the transfer of these items into a mega-store from where the company operates one of its logistics warehouse and distribution models. Parts traceability, logistics information management and stringent service level agreements are some of the key performance indicators that KWE is required to achieve. It’s the practical application of all that Horn has been preaching for many years. That the clearing and forwarding agent, in collaboration with all other strategic partners in the supply chain, must provide integrated end to end logistics solutions which ensure the seamless flow of products into the market place for importers, exporters and consumers.