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Insight: One stop shop

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First Things First

Insight: One stop shop

February 6, 2023

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Every week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of an on-going series. Each article aims to share a little insight into what's going on that week, and to help foster discussion amongst industry professionals across levels, geographies, and companies.
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Here's a great article by Paul Berger of the The Wall Street Journal about C.H. Robinson.
When C.H. Robinson (CHR) purchased Phoenix International back in 2012, it was seen as a win/win for both companies. Bill McInerney, who founded Phoenix in 1979, was looking for a company who could take his company to the next level after he left. C.H. Robinson was looking to expand into the International space, and offer their customers a one stop shop. By most measures it was a success, with both the domestic and International divisions showing good growth in the last 10 years.

That strategy is now under attack by an activist investor called Ancora Holdings, who would like to see C.H. Robinson sell the International division. They would like to see the nearly $25B company focus more closely on their domestic brokerage business, and the challenges posed by upstart 'digital' brokers. C.H. Robinsons CFO, Michael Zechmeister defends the status quo, citing 50% of their current customers using both divisions, and a 4% lift in revenue for clients who use both services vs only one.

In the midst of the debate, the former CHR CEO is gone, and they are in the midst of a search for a new one.

While domestic brokerage and global forwarding are too very different businesses, the allure of a one stop shop is a big one. However, from experience, it's much easier said than done. The two businesses are fundamentally different, and the purchasing managers for these services are often different as well.

I'm curious to hear what others think. One-stop-shop or separate?
Mercado | Insights - The $2.8T international supply chain visualized
"In an 'ideal' world, an importer would have at least one backup country, and one back up supplier for every critical product... All of this sounds good on paper, however it's actually incredibly difficult in practice."
One key reason is the dominance of China. Many importers are concerned about China as a sourcing point due to increasing tensions between the countries. However, the reality is that China dominates mfg in Asia, and they are very good at it.

As a result, quitting China is hard, as you will see in the excellent analysis below by Rita Rudnik.

A second reason is much more mundane. Most importers lack a robust database of their suppliers, and their supplier's suppliers. On the surface this sounds ridiculous, however we have gone through decades of 'predictable' supply chains where this wasn't a priority. Using the example above, most of the bike importers I spoke to were simply not aware of how reliant their suppliers were on Shimano.

My guidance to all importers is to address this database issue quickly. Beyond resiliency, knowing a lot about who makes your products, and who makes their parts, is also critical for understanding things like cost, ESG, and sales.

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About the author

Rob Garrison, Mercado CEO

Rob Garrison

A highly accomplished Global Supply Chain executive with 25 years of experience, Rob Garrison has provided strategic vision and leadership to Fortune 500 companies. Rob has an impressive history of building agile, technology-enabled supply chains, and he has an established track record of forging high-growth partnerships, positioning organizations for success and launching innovative technology solutions that significantly improve end-to-end supply chain efficiencies.

Rob is currently CEO and founder of Mercado Labs.
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