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Logistics Quarterly Magazine - Volume 16, Issue 2, 2010


A Conversation with Jim Butts, Senior Vice President, Transportation, C.H. Robinson Worldwide, Inc.

Interviewed by LQ Executive Editor, Nicholas Seiersen

LQ: How does your firm set about becoming the best customer for your clients?

Jim Butts: We would look at it as an opportunity to be the best transportation provider or supply chain partner, depending on our role. There are a lot of things that we have to take into consideration when we enter into any customer relationship. One of the first things is that C.H. Robinson is non-asset based. When you don’t own the assets then everything looks like a resource. The question becomes: What is our value-add to any customer as we are doing business with them? Frequently, it’s our people. If the strength of our organization is our people, then the way that becomes real to our customers, who we define as both carriers and shippers, is through account management. That’s the daily care of the customers — finding out what their needs are, their expectations — and fulfilling them from an execution standpoint.

LQ: Your assets are your relationships. How do you manage those relationships?

Jim Butts: It is based on a combination of our people having a great understanding of the customer, their needs and expectations, and the nuances of their business. They have a great understanding of the customer’s industry, or sometimes a competitive position within that industry. We take our knowledge of what we assimilate through surveying 35,000 shippers and 47,000 asset owners, in terms of carriers, whether they’re truckload carriers, LTL carriers, steamship lines, or airlines. We take that knowledge and blend it in such a way that we provide some pretty unique solutions for our customers.

LQ: The new competitive arena is innovation. What are you doing?

Jim Butts: It’s a challenge, and we understand that all of our customers have to have, in some way, a competitive advantage or seek to establish a competitive advantage through supply chain practices. We talked about our people being our assets. The other asset that we bring to the table is our technology. When you take the knowledge of our people, their understanding of the customer through account management, and our special application of technology (depending upon the customer situation), we feel that innovation is the true value-add. As a service-based company, what we’re attempting to do within the industry is develop intellectual property. What we bring to the table is not the physical asset to move their equipment, although we do that through the relationships that we have. The actual value-add we have is the knowledge of the customer, and what we understand of the industry, and applying practical ideas. It’s ideas and practical input that we can give to a customer so that they can make meaningful changes within their supply chain, and develop a competitive advantage.

One of the things we’ve noticed is that a leader can continuously improve and remain competitive. But many of the customers out there don’t feel that they are in a leadership position; they either feel that they are in the middle of the pack, or some of them feel that they’re a laggard. If you are a laggard or if you are in the middle of the pack and you want to establish a competitive advantage, you’ve got to do that through innovation. That takes sharing of information, and a true partnership approach, and a situation where I, as a transportation service provider, need to have a good understanding that the ideas and the innovation that I collaboratively produce with you as a customer, is something that is going to be valued by you, not only today, but tomorrow. My role is fairly secure going forward, based upon my own performance. But I have to have an adequate reason to bring to you the best practices that I have an understanding of.

As we talk about innovation and how we enter that process with a customer, we must have a good understanding of where the customer is; are they seeking tactical or strategic solutions? Innovation is a challenging responsibility. We’re asked frequently: “Come to us with your innovative ideas.” The best way we’ve been able to do that with customers is through a rhythm of review where perhaps every quarter during a typical business review we’ll come up with three or four ideas on things that we see would really make improvements within their supply chain. If our role is just to be a plug and play transactional provider, it’s difficult for us to do that. For one thing, we may not have a good understanding of the ins and outs, and the true operational scope of their supply chain. Also we look at our ideas as something that we provide as great value to the industry. To a certain degree we’ve got to be selective about where we bring that information and how is it used within our customer portfolio.

LQ: Can you give us an example of something you’re really proud of?

Jim Butts: There are numerous case examples, for instance, a blending of transportation modes, expedited stack train service, having steamships skip ports using fruit boats. It’s always a blend of what that customer is looking for, what the specific requirements are, and what the relationships are that we are able to plug into effectively to make an improvement within their supply chain.

LQ: It has been suggested by one pundit at today’s symposium that 3PLs are not always innovative leaders. What would you say to that?

Jim Butts: I think it depends on who you ask. If you ask people who are looking at the industry as a whole, then you’re going to have trouble finding examples, because it is difficult, based upon the differences within each customer’s supply chain to have what you would call an aggregate innovative solution. However, if you look at specific industries, there are examples, particularly specific customers, which is what we focus upon. How can we help this customer through innovation, through creativity, through the application of practical ideas and our technology; how can we help that customer establish a competitive advantage? Frankly, it wouldn’t be our role within the industry to take credit for an innovation solution, because we believe in a collaborative perspective. You want the customer and the people within the organization that had to take responsibility to usher the ideas in, and to get all the credit for the results.

LQ: Have you succeeded at bringing external ideas in? What are the challenges and some successes you’ve had?

Jim Butts: When we talk to customers about innovation and setting the stage within their organization so that innovation is welcome, we often learn that there are only very specific areas where innovation is going to be welcome. Sometimes it’s a trust issue, sometimes it’s a pride issue, which reflects in the “not invented here” perspective. What we find, in order to be innovative, is you’ve got to have somebody within their organization that’s going to be responsible for the results — usually somebody from senior management that’s paving the path for the innovation — and a process by which the innovation is implemented, tracked, and measured going forward.

LQ: What are your closing thoughts?

Jim Butts: I think innovation is going to be the key value-add of transportation providers going forward. I think, as no employer can tell any one employee everything that needs to be done, no organization can tell its transportation or supply chain partners everything that needs to be done in order to achieve their supply chain goals. So it’s the setting of expectations, clear communication, and empowering your supply chain partners to make decisions on your behalf, that leads to a beneficial outcome for you. I like to compare it to a neighborhood watch program, where your supply chain partners work in such a way that they prevent bad things from happening in your neighborhood supply chain.

 

(This interview is an abridged and edited edition of LQ’s Executive Insight Interview Series, held on June 10, 2010, at the Toronto Board of Trade’s Country Club.)

 


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