The one stop shop – exploding the myths

Triangle Management Services’ Paul Jackson writes exclusively for World Mail Review. Many postal and logistics companies have convinced themselves that customers want a ‘one stop shop’, namely to buy all their mail, express, freight and logistics services from one provider. This concept is also beloved of high level strategy consultants.

Is this really what the customer wants?  For that matter, can the postal and logistics companies even organise themselves effectively to present a single customer face?  Can their staff adapt and learn the intricacies of the wider product range?  Are there really any economies of scales?

What does the customer want?

What he seems to want most of all, whatever his size or diversity of requirements, is quality of service, supported by more and more online information. There is no evidence he wants all his eggs in one basket.

Triangle was recently commissioned by Unisys to interview some fifty of the world’s global shippers. We found no support for the one stop shop (see better link).  Companies like to find and identify niche operators and to deal with people who know their markets.  In fact some large companies, such as IBM, for example, are returning to freight forwarders and those forwarders decide whether an integrator is used to meet the full service level specification, or a range of operators is more appropriate. Arguably the real requirement is a one stop shop honest broker or logistics consultant, rather than a one stop operator.

Organisation issues

Many companies, particularly massive organisations such as Deutsche Post and UPS, have created a full range portfolio of services in the belief that that the power of a common brand will bring one stop customer benefits plus economies of scale in networks, people and organisation.

Is this really so?  Mixing, for example, freight forwarding, a highly entrepreneurial buy and sell activity, with logistics or fixed cost express networks simply does not work.  The cultures are different, the people are different and therefore the management has to be different.  So different that you have to ask whether those large groups can actually be effective, particularly if the management want to control everything from head office, which is usually the case in large corporations.  TNT’s in/out excursion into freight forwarding showed a real lack of understanding of these differences–and the sale of its logistics division may provide an indicator that for them the one stop shop proved more myth than reality.

People

What about the staff?  What appears obvious to head office when trying to develop a one stop shop is that there are clearly too many people currently operating in separate boxes. Surely the business is simple enough for operations and sales staff to broaden their knowledge, particularly if the appropriate processes are developed to enable them to operate with confidence in their new areas of understanding?  Unfortunately, this simply does not work and one of the main reasons is that salesmen sell what they are most comfortable with. Even if they have ten other things in their portfolio to sell as a one stop shop, they will still go back to selling what they know best and probably what the client is already purchasing.  The salesman does not want to offer a wider range of services in which he is not confident and risk his current business/commission.

Economies of scale

Clearly so the argument goes, if a customer is buying four or five different services then he is paying four or five different profit margins.  If there is a one stop shop there is only one profit margin.  Again, that is theory and does not really work in practice.

Large organisations need to have independent profit centres. These encourage higher margins and better customer yield management but unfortunately rarely encourage cooperation across the one stop shop product portfolio.

Yes, there are economies of scale in marketing.  But sometimes the marketing is so macro that the customer does not feel any relation to it because he does not recognise the services being offered in the advertising that he sees every day.  There may be economies of scale in the back office, but in the front office, in marketing, sales and operations, they are rarely there.

Conclusions

Of course there is no simple answer, but what is clear is that it is better to start from the customer rather than from head office! Too often research is commissioned to prove a concept or strategy rather than understand customer needs.

In our experience at Triangle ‘listening to the customer’ is all too often way down a company’s agenda. In our opinion the best research is often to interview lost customers.  The results and conclusions are often ranked in order of importance, and many times they appear as an inverse listing to what our clients expect.  Badly handled invoicing is usually very high; the need for a one stop shop low.  There appears to be a need for one stop IT, but as soon as there is an exception to the process customers want to deal with motivated and knowledgeable people which means employees with focus.  One stop shop – don’t bank on it!