Magazine article Industrial Management

Mutual Risk Can Redefine the Customer-Provider Relationship

Magazine article Industrial Management

Mutual Risk Can Redefine the Customer-Provider Relationship

Article excerpt

A contract between customer and vendor generally leaves little doubt about their relationship: the former is to be served; the latter is to provide the service. But when the venture is fraught with peril for both sides, these traditional roles often must be reassessed.

Such was the case when Technicolor and Airborne Express joined hands, as they found their way together through unchartered territory - bound by mutual risk, mutual obligations and the haunting prospect of an exclusive market.

For decades, Technicolor has been the premier film duplicator of the movie industry. Surprisingly, Technicolor usually produces less than 5,000 copies of a film - even for a blockbuster. Those copies were distributed all over the country by a small Hollywood-based delivery service that had been in business since the golden age of silent movies.

Technicolor wanted more control of the sometimes haphazard, unreliable delivery process. It approached Airborne Express (now DHL) with the idea of delivering 4,000 to 5,000 film canisters to theaters all over the nation on the same day within a two-hour window.

Airborne Express execs were known for accepting daunting shipping challenges. But to even dream of meeting Technicolor's unprecedented requirements, Airborne would have to invest hugely in its own infrastructure. Technicolor also would have to expand its operations, taking on responsibilities well beyond that of a film duplicator. And, in the beginning, Technicolor had only one studio willing to give their new distribution system a try - if and when Technicolor found a reliable carrier.

The negotiations between Technicolor and Airborne Express took six months, culminating in an all-nighter just hours before the studio in question needed Technicolor's assurance that a carrier had signed on. Wisely, each organization appointed an advocate from its own side to look out for the interests of the other side, for only a win-win solution would make long-term implementation profitable. It was clear to the Technicolor and Airborne Express execs that the traditional customer-vendor relationship was evolving into a joint venture. An agreement was attained at sunrise, but only after the opposing negotiating teams agreed to help each other.

Airborne Express agreed to ramp up its fleet of trucks to distribute the thousands of 50-pound film canisters all over the country every week. …

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