Logistics networks: No references? Find another playground, amigo!
One of the things that I find extremely hard to understand when doing our jobs occasionally happens during the application process. Quite often we find established companies who refuse to fill out reference information on the contact forms. When we follow up on this blank part of the form they tend to get a little indignant. Yes, we run into this quite often. Normally with this we get a smug response like: “We have been around for thirty years and everyone in the market knows us. If you can’t take us in on our reputation then we just won’t join.”
My friends, this kind of statement is boneheaded. Simply boneheaded. I cannot count how many “well established companies” I have known of who have gone belly up just in the past few years alone.
When I get this kind of response I generally give these people food for thought by flipping the question back: Would youwant to join a network where none of the members actually ever have any references checked? What would you think of a group who does no background check but only takes companies only on their reputations?
Of course, you wouldn’t want to be in a group that doesn’t check their new members out.Even the most solid groups however have to face risk. And though there is no way of stopping risk coming into a network there are definitely ways to help mitigate the risks. And it is our job that during the vetting process that we do as much as we can all the time.
One point that generally comes up in these conversations is that the applicants get to hand pick their references, so the references would be slanted. That sounds true, but in fact many times this simply doesn’t work out that way. Very often, in fact several times per year, poor references are returned and applicants are rejected.
I will be the first to admit, there isn’t a perfect way to vet potential members. I welcome any questions, comments and suggestions about this issue. However, reference requirements are definitely the best way that I have seen to be able to move forward with an application. We gain lots of valuable insight in the process. We take the matter very seriously. And it is a front line protection for other members who will be meeting together with them and hoping to develop business. We ask questions about the company’s financial dealings, sales cooperation and follow up, operational capabilities and communications. We believe these are the things we need to know about before someone from the outside can join our group. And we believe that there needs to be a record of these responses in case any issues or matters come up later on.
And we believe that the current members, all of whom have gone through this vetting themselves, wouldn’t have it any other way.