Gene Tyndall is executive VP of global markets and E-commerce for Ryder Systems Inc., the Miami logistics company that is making a name for itself as an IT savvy, full-service shipping and fulfillment provider. Before joining Ryder, Tyndall spent 20 years at Ernst & Young, ending up in charge of global supply-chain management. Tyndall, who's as close to a "guru" of supply-chain methodology as there is in the industry, is the author of Supercharging Supply Chains: New Ways To Increase Value Through Global Operational Excellence (John Wiley & Sons, 1998).
InformationWeek senior executive editor John Soat recently spoke with Tyndall about the challenges of collaborative business and the ethical responsibilities of the parties involved.
InformationWeek: How does collaboration work in the logistics business?
Tyndall: Usually, there's more than one logistics provider [on a project]. Most big companies want a lead logistics provider and subcontracts with other companies to do pieces of the supply chain. Therefore, there's collaboration because you're sharing information, sharing knowledge.
The subcontractors can then use that information to try to sell more business to the customer. That's called back-selling. I think this is one of the most prevalent unethical practices out there [because] people are still struggling with the differences between partnerships and alliances, and what can exceed those bounds. Those words--partnership, alliance--have been around forever. People use the terms interchangeably all the time. But they don't know what they mean, or what they imply. Their answer is "we didn't know we shouldn't do that--what's wrong with that?"
InformationWeek: Would you sue someone for improperly using data?
Tyndall: We would if there's a violation [of a contract]. If there's a violation we get into the legal stuff. That's unusual, though. Most of the time when people are doing collaboration, especially over the Net, there aren't contracts; it's just people shaking hands.
InformationWeek: Is there a lot of litigation in the logistics business?
Tyndall: A lot of it pops up in the transportation industry because shipments are lost. A shipment is owned by seven or eight different companies along the way. Who's responsible [for the loss] can become a major case. In transportation you have a lot of those kinds of disputes. Then there's just out-and-out theft.
InformationWeek: How do you handle your collaborative relationships?
Tyndall: We make sure there's a partnership first. That's done at the highest level we can. We want them to think of us as partners. You will see people from the customer's company and suppliers and Ryder people working together and you won't know the difference. Once you get that teamwork, partnership going, it's far less likely that you'll see any abuse of collaborative information or knowledge.
InformationWeek: What's holding back collaboration?
Tyndall: Technology-wise, everybody could be doing it now. Trust and partnerships--that's what's holding back its potential now. People grew up saying, what we do stays within these four walls. That's breaking down, but it's slow.
I helped put Wal-Mart and Procter & Gamble together in 1990, and it took them three years to build a partnership. By 1993, Wal-Mart was showing huge gains. It takes a long time because of this lack of trust.
Take public exchanges, like Covisint. The pick-up rate on that is slow. The [automotive] suppliers are saying, we don't trust the automobile manufacturers. Partnerships and trust--ethics comes under those. If you don't have partnerships, you're relying on people for their ethics, because you don't have organizational ethics, and some people are ethical and some aren't.
InformationWeek: How does Ryder handle that?
Tyndall: Ryder is a lead logistics manager for Dell Computer. Dell says, we'll share our production schedule with you, but you agree that you'll only use that to advance Dell. Then, if you want to be a supplier for us, you share that responsibility with us. That's heavy-handed collaboration. Ryder is a supply-chain "champion"--we'll tell the suppliers what they should do on behalf of the customer; we don't need the customer to tell us to do that.
We had this happen just recently in Asia. The customer asked us to have one of its logistics providers work for us. Well, they're not performing; they're not stepping up to the plate. We told the customer, we agreed to work with one of your favorites, but they're not working hard enough--we're the manager, they're the subcontractor, and they're not living up to their performance requirements. We've done everything we can except take it over. We tried to re-invent the partnership with this customer; we could've redone the work they did, or put our people in it. It isn't resolved yet.
The supply chain is filled with plenty of customers, any of whom could be a champion. And there are different examples of people stepping up.
InformationWeek: Are there different degrees of cooperation in a supply chain?
Tyndall: The three stages of supply-chain development are visibility, collaboration, and optimization. Visibility into the supply chain means visibility into the flow of goods. That means a lot of cooperation among a lot of different companies. It means hooking up with the shipping lines, airlines, distributors, customer brokers, all these middlemen. It's still not there, but it's getting better. People have gotten over the hurdle of telling people where things are.
What they have to get over, what they have to work through now, is tracking things in collaboration. For example, if things get hung up in Italy--a customs broker in Italy stops something--companies need to communicate about that and then collaborate to get it worked out.
The technology is there now, but the people aren't ready. People need to trust. It's a mindset--understanding what partnerships are, understanding win-win propositions. If you get too far into the legal area, that will slow things down. Contractually, there are some things that can help, but you don't want to be too legal. Yet you don't want to be wide open, either. You need balance. We've learned how to collaborate inside companies; what we're slowly learning is collaboration between companies.
InformationWeek: Does this require a new way of thinking?
Tyndall: You know this whole area of "coopetition," partnering with a competitor? For example, Samsung makes parts that go into Dell computers. When Dell gives out competitive secrets to Samsung, they could use it against Dell. But Samsung the manufacturer doesn't give that information to Samsung the PC vendor. That's a new way of thinking.
InformationWeek: What's your advice to companies starting out with collaboration? Tyndall: Trust your partners, or get new ones. We have a master agreement with Dell that protects [its] data. We warrant we will use that information only to serve Dell. You shouldn't have to do that. You shouldn't need contracts to collaborate--that means lawyers and lawyers mean time and money. Partners don't need contracts. We don't like to work with suppliers that can't be good partners. There are some logistics companies we won't work with--we don't trust them. Just like there are some software companies we wouldn't trust.
Tyndall: Trust your partners, or get new ones. We have a master agreement with Dell that protects [its] data. We warrant we will use that information only to serve Dell. You shouldn't have to do that. You shouldn't need contracts to collaborate--that means lawyers and lawyers mean time and money. Partners don't need contracts. We don't like to work with suppliers that can't be good partners. There are some logistics companies we won't work with--we don't trust them. Just like there are some software companies we wouldn't trust.