Competition for business is fierce, particularly in Southern California. When talking to and working with a 3PL provider, you may hear the term “horizontal alliance.” If you’re not familiar with 3PL-specific lingo, it may sound like an entirely new language. But a horizontal alliance is a good thing to have between logistics service providers and can be a great benefit for your company.
Horizontal Alliance Defined
It’s a mutually beneficial relationship between two or more companies that are generally competitors. These types of alliances are seen frequently in high-tech markets but are also used in the transportation industry.
In the case of a 3PL company, a horizontal alliance involves one company working with another (or several) to share resources such as transportation, warehousing, and others to offer better packages of services to their customers. A 3PL horizontal alliance can also include sharing of knowledge bases and technology, increasing the knowledge and experiences of both companies to provide even more services to customers, better.
Another benefit to a horizontal alliance is that while the companies share resources, knowledge, information, risks, and ultimately profits, they can do so without stalling with issues such as ownership and control. Both companies can gain access to new customers, sometimes without much effort. But like any venture, there are also risks to horizontal alliances, and most companies will work to minimize them by working with good partners.
These types of alliances between logistics companies are nothing new. The Harvard Business Review was reporting on these arrangements back in 1990, long before the advent of Amazon.com and other online retailers.
Vertical Alliances
You may also hear the term “vertical alliance,” which is similar, but works in the other direction. Whereas “horizontal” means exactly what it implies, lateral competitors working together, vertical indicates companies working with other companies upstream or downstream, such as distributors to provide better products and services to customers at a better price. An example of this would be car manufacturers collaborating with companies that supply parts to them, as well as related services, such as electrical components, upholstery and other essential pieces.
In the 3PL world, a vertical alliance could include things like distribution, packaging and warehousing through separate companies. But as a customer, you would see everything as if it were under one company. These companies may or may not be subcontractors. Together, these companies also offer customers better services, coverage, and a better rate than they would get otherwise.
Collaboration Vs. Competition And Other Benefits
Nearly everyone competes—for jobs, in sports, for attention. In business, competition is inherent, and it’s usually about being better than another company. That’s certainly true in 3PL.
But collaborating with a competing company also adds to the benefits your company has to offer, without an increase in capital outlay. Working together with a competitor opens up a world of more resources that you and your customers might otherwise have to pay for—or not access at all.
This blog post from the nonprofit fundraising website Classy offers insight into how collaboration can be much better than competition, and the results of applying it.
Let 3PL WorldWide Help With Your Supply Chain
When you work with 3PL Worldwide, you’re working with a wide network of suppliers, logistics service providers, warehouse facilities and other companies that come together to provide all the services you need with one phone call. We handle your supply chain logistics, and leave you to take care of your company.
3PL can offer your company additional services like call center services, warehouse space on the east coast and the west coast, and transport to every place in between. We’re located right here in Southern California, so contact us today at (888) 456-1920 or use our online contact form.