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Management of 3Pl document sample
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Logistics: 21st Century
Competitive Advantage
How good are you?
Harry Drajpuch
Executive Vice President & General Manager
USCO Logistics
USCO Logistics Overview
Business unit of Kuehne & Nagel International AG
Leading provider of supply-chain solutions
35 years’ experience
Manage 15M sf in 70+ facilities
Process 1.9M lines monthly
Integration with 75+ client enterprise systems
Partner to 36 of top 100 global companies*
USCO Corporate Distribution Center KN Corporate KN Global Reach
Hamden, CT Reno, NV Schindellegi, Switzerland Pacific Rim
Page 3
*BusinessWeek Global 1000, 7/9/01
KN Global Contract Logistics Reach
Locations: 70 Locations: 150 Locations: 100
Logistics Space: 15 M sq ft Logistics Space: 15 M sq ft Logistics Space: 10 M sq ft
Employees: 3,000 Employees: 3,600 Employees: 3,100
Locations: 320
Logistics Space: 40 M sq ft
Employees: 9,700
Global reach & local know-how
Page 4
USCO Core Services
Integrated Supply Chain Management Solutions
Information Logistics
Warehousing Transportation Order Global
Solutions Management Management Logistics
• Dedicated & shared • Delivery solutions • Online order placement • Kuehne & Nagel
• Flexible & scalable • Non-asset based • Fulfillment & call-center • 180 multi-client DCs
• Largest NA network • Optimized service services in 90 countries
of distribution centers & savings • Supply chain visibility
010010110011100
• Lead logistics service provider
• Information driven
8G • Collaboration & visibility
Page 5
North American Network
Edmonton
Calgary, Alberta
Winnipeg
Portland OR Dorval, Quebec Montreal, Quebec
Ottawa, Ontario
Shakopee MN Franklin MA
Toronto
Port Clinton OH Jersey City NJ
Allentown
Sheffield OH Bridgeport NJ
Chicago IL Joppa MD
Gaithersburg MD
Reno NV
Denver CO Baltimore MD
Hayward CA Independence, MO
Louisville KY
Lenexa KS Durham NC
Zebulon NC
Nashville TN
Ventura CA
Ontario CA Charlotte NC
Memphis TN
Cerritos CA Atlanta GA
Dallas TX
Lewisville TX
Lakeland FL
Miami FL
Monterrey
Shared Distribution Centers Guadalajara
Mexico City
Dedicated Distribution Centers
Page 6
Industries & Customers
Integrated Supply Chain Management Solutions
Healthcare / Consumer /
High Tech Retail
Pharmaceuticals Industrial
Page 7
Impact of Companies Like USCO
Link world’s businesses & people through
globalization
Connect North America
Reduce economy-wide inventory
Lower business-cycle risks
While information technology makes global &
national linkages virtually possible --
companies like USCO make them physically
possible.
Page 8
Brush-Fire Management
Typical focus is on daily operating problems, sales
& marketing promotions, & service issues, etc.
How often do you review logistics functions?
• What’s overall impact & interaction with rest of business?
Does logistics function:
• Respond directly to present & future needs?
• Support primary business mission?
• Drive most cost-effective & customer-service support?
How can you find out?
Page 9
Recommendation
Conduct a self analysis of your logistics strategy
• Focus on what your logistics activities should be doing to
support your business
• Consider the following 7 key areas
Page 10
Logistics Strategy – Self-Analysis
Company Markets
• Have you moved into new markets?
• Has there been shift in customer shipments? (I.e.,
wholesalers, distributors, retailers, etc.)
Company Products
• Have you added or deleted product lines?
Customer Service
• Has representative customer survey indicated service
problems?
• Have there been any systems or order processing
changes that have affected order cycles?
Page 11
Logistics Strategy – Self-Analysis
Logistics Operations
• Have labor or facility costs resulted in changes to location
or operations?
• Have type, quality or size of product packaging changed?
• Have you reached capacity in existing distribution
facilities?
Transportation Operations
• Has the profile of product shipments changed? (i.e.,
UPS, full truckload, less-than-truckload)
• Do you move inbound & outbound products across
common shipping lanes?
Page 12
Logistics Strategy – Self-Analysis
Product Operations
• Have you changed or introduced new source points for
products?
• Has product capacity changed at existing production
locations?
Other
• Have distribution & transportation costs increased as
percent of sales?
• Have there been internal structural changes?
Page 13
Assembling the Jigsaw Puzzle
Customer relationship
Order Management EAI management
e-Logistics Int’l trade & compliance Internet Global
Portals + TMS in-transit
3PL visibility
ASP
Warehouse management
LLP Event management
Transportation planning
& management Supply chain
collaboration
e-Fulfillment
Merge-in-transit,
All freight – diversions
All modes –
ERP Private vs. public exchanges
All over the world
Single command &control center
Page 14
Develop In-house? Outsource?
Significant investment & development required
to support evolving supply chain. Best source of your $?
Real-time logistics Predictable,
management reliable & rapid
capabilities transport
Integrated logistics
network
Scaleable,
Common (global)
Variable-cost
processes
infrastructure
Page 15
Why Outsource?
Manufacturers are now embracing third-party
logistics providers (3PLs)
• Alternative to running their own distribution operations
3PLs have been providing distribution operations to
companies for years
• Most have roots in transportation, warehousing or freight
forwarding
Providing 3PL logistics services a $56B industry*
• Increasingly seen as distribution option by companies in
range of industries
* Armstrong & Associates “Logistics Management & Distribution Report” 7/02
Page 16
3PL Benefits
Although not right answer for every company, where it’s “right” it can
provide cost, service & strategic benefits
Cost Service Strategic
•Lower cost warehousing •Quicker delivery •Allows management to focus
(scale economies) on core business
•Increased geographic reach
•Lower cost transportation — closer to customer or •Rapid ramp-up (and ramp-
manufacturing site down) capability
•Flexibility — pay for what
you use •Access to leading-edge •Minimizes company assets
information technology tied up in non-core
•Network optimization —
operations
wring costs out of all supply- •Customization to specific
chain links needs •“Best of Breed” applications
can provide competitive
•Specialized services at lower
advantages
cost
Page 17
3PL Usage Rates Growing
Percent Using or Considering 3PLs
100.0% 84.3%
80.0%
80.0% 68.8% 70.4% 67.9%
60.7%
60.0%
40.0%
20.0%
0.0%
Auto Chemical Computer Consumer Medical Retail
“What’s ahead for 3PLs?” Modern Materials Handling, 4/01
Page 18
Evolutionary Cycles Continuing
• Greater Functional Integration
• Boarder Operational Autonomy
Business Process
Client Management
Client
3PL
LLP Client LLP
Provider
1990s-2000s
IT Service
Provider
Outsourcing
3PL
1980s-1990s Client
Provider
In-sourcing Internal Logistics
1970s-1980s Client Operations
Source: Adapted from John Gattorna 1998
Page 19
QUESTIONS?
Example: “Designed In” Flexibility
Forward
Buys
3PL
3PL
Seasonal
3PL Overflow
Seasonal
Overflow 3PL
Disaster
Sampling of Wal-Mart’s own distribution centers Relief
Page 21
Example: “Designed In” Flexibility
Rapid marketplace changes
“Time to money”
Page 22
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