Friday, June 30, 2006

Why Not Outsource in West Virginia?

U.S. importers could curtail overseas outsourcing, logistics exec says

U.S. companies need to think carefully about outsourcing to Asia because the complexity of international trade and extended supply chains means that saving money by outsourcing production to countries with low-cost labor is not guaranteed, logistics experts agree.

Now higher fuel prices and transportation rates, as well as concerns that a terrorist incident or natural disaster can disrupt the continuity of far-flung business operations, may begin to tilt the equation in favor of production in Central America, Mexico or even the United States itself, said Michael Stolarczyk, senior director retail business development in the Americas for logistics provider Exel.

"Why not outsource in West Virginia, why not outsource in Ohio and create some jobs and stability in your supply chain that way?" he said.

Retailers could look at switching to domestic or regional suppliers, especially when it comes to finding reliable sources for their own brands, Stolarczyk said during a panel at an "eyefortransport" third-party logistics conference in Atlanta.

"We are closer to that than a lot of people think."

"I've got no problem with globalization. But I also respect the opportunity to create some cash flow and create some opportunity here in the United States as well," he said.

Wednesday, June 28, 2006

Niche Logistics Companies Play Important Role

Niche logistics providers still play important role, shippers say

Small, regional logistics providers are still viable in an era of consolidation spurred by large multinational companies’ demands for global logistics providers that can manage all aspects of international supply chains, according to several logistics professionals who spoke at an industry conference in Atlanta.

In the past year, DHL has merged with UK freight forwarder Exel to create the largest logistics company in the world, Kuwait-based PWC Logistics bought Santa Clara, Calif.-based forwarder GeoLogistics, UPS acquired piece shipment truckload carrier Overnite Transportation and Schneider Logistics acquired deconsolidation and transloading specialist American Port Services. Smaller freight forwarders are also making acquisitions to get bigger and offer a wider range of logistics services.

But big is not always better.

"Many shippers are looking at a variety of service providers when we consider outsourcing logistics," said Robert Brescia, vice president of logistics for tire manufacturer Michelin, at a logistics conference organized by eyefortransport.

Smaller logistics providers have the advantage of having top management that is accessible and can quickly focus on customer problems, whereas in large outfits executives are stretched across a large number of logistics accounts. Smaller companies are likely to provide more attention because the customer represents a bigger chunk of their business, he said.

Michael Stolarczyk, a senior director for Exel, tipped his hat to the niche logistics providers, saying that his company is constantly evaluating how best to adapt to national and regional third-party logistics providers "who are making an impression on customers."

Dupre Logistics, a small company that specializes in serving the chemical industry, knows its customer base and its own capabilities, "and does not go after customers who need a global provider," said Tracy Pellerin, director of logistics.

Technology provider HP has a strategy to use global 3PLs, but will use specialist logistics providers in countries where the large provider is not strong, John Daniels, a logistics manager for the company said on the sidelines of the conference.

But even smaller companies need to provide a broader range of services because shippers are reorganizing their own businesses at a rapid clip and streamlining the number of service providers they use so they can better manage their logistics, said Genco CEO Herb Shear.
"When I got in the business, it was not uncommon for a business to deal with 300 to 400 carriers, and 30, 40, 50 warehouses. Today, it’s rare for even the largest company to have that many suppliers," he said.
This is direct from the AmericanShipper daily news break...

Tuesday, June 27, 2006

Yeah, this is kind of cheesy, but I am going to post a few American Shipper News breaks from the 3PL Summit...yeah, yeah...but I'm quoted!

Thursday, June 22, 2006

4th Annual 3PL Summit in Atlanta - June 26th to the 28th

Next week is the big, and getting more influential 3Pl Summit in Atlanta. This is the 4th year of the event, which seems to get bigger and better each year. It will be held at the Intercontinental Buckhead from June 26th until June 28th. I will be participating on the following panels:

Monday, June 26, 2006

14:00 - 15:00

Pre-Summit Workshop 1: Open debate about performance metrics and pricing strategies. Hear how your customers measure your peformance and what matters most to them. Learn how to work with your customers when creating performance metrics. Find out how to devise a pricing strategy that's easier for your customers to accept. Discover how your customers assess logistics service provider network where more than one 3PL is involved. What is a fair price? Are you charging your customers too much - or too little?

5 proven tactics to ensure you're never forced to charge less than the market rate

Top tips to provide your customers with additional cost savings

Dave Mabon SVP Sales and Marketing Contract Logistics Kuehne + Nagel
Michael Stolarczyk Senior Director Exel
Herb Shear CEO GENCO
Jeff Conover VP Supply Chain DSC Logistics
Robert Brescia VP of Logistics Michelin
Kieran Ring CEO GIL (Moderator)

Tuesday, June 27, 2006

15:30 - 17:00

Sourcing in China, the supply chain challenges:

This session hosted by the Global Institute of Logistics, Maritime Logistics Council will be a candid, interactive discussion and debate on the opportunities and challenges for both shippers and logistics service providers in building supply chains to support sourcing in China .

“ Shippers are realizing significant cost advantages through their China sourcing programs. Typical consumer goods and retail companies have been able to realize annual savings ranging from 9 to 46 percent on selected items sourced from China . Yet such savings can come with negative hits to supply chains, such as longer lead times, unreliable delivery, and slower turns on inventory ”

This session led by industry experts from both sides of the Pacific share what in their experience had become standard operating procedure and best practice by the early adopters.

Wilmer Aguilar - Executive Director GIL Maritime Logistics Council & Yantian International Container Terminals, Paul Goldsbrough - Executive Director GIL Maritime Logistics Council & Hellmann Worldwide Logistics, Marc Castagnet - Executive Director GIL Maritime Logistics Council & SGT, Michael Stolarczyk - Executive Director GIL Maritime Logistics Council & Exel Inc., John Kok - General Manager HPH, Ben Cook - Manager Supply Chain Security & Global Risk Oversight The Home Depot, and Kieran Ring - CEO Global Institute of Logistics
Wednesday, June 28, 2006
How to profit from booming low cost country markets84% of users buy 3PL services internationally and many are currently manufacturing and/or selling in China. Find out how your company can best exploit existing and future opportunities. Have your major accounts moved operations off-shore? Learn how to respond to the changing geographical needs of your customers.

China, India and other emerging territories: Where is your next cash cow?

How to ensure your company profits from the burgeoning business opportunities that off-shoring gives the 3PL industry. Different options for effectively providing your 3PL services in overseas markets: advantages and disadvantages of joint ventures, local acquisitions, setting up new regional offices and networks.

Michael Stolarczyk Senior Director Exel
Rich Forte Partner American River International
Peggy LaRue Global Logistics Director Harman
Warren Cohen Director Supply Chain & Global Transportation BD
Greg Aimi Research Director, Supply Chain AMR Research (Moderator)
The event is going to be awesome, so come on down to Georgia (or over, maybe) and check it out. I'll give you a recap next week.

Thursday, June 15, 2006

Marketing Efforts and Positioning of 3PL's

Growth in the 3PL industry continues to outpace the general economy...and it has become a fragmented industry with many players chasing the same customers. The situation calls for smart, strategic marketing that helps your company break through the clutter and create awareness that leads to more opportunities and more sales.
Here are five common mistakes 3PLs make in their marketing efforts. Avoid these and you’ll be a step ahead.
1. Marketing from the inside out.
The first place many 3PLs look when crafting marketing messages is the mirror. But what they see often describes most of their competitors, as well. For buyers of 3PL services, too much of the same information is confusing. If everyone says “we’re quality-focused, we’re easy-to-work-with, we can provide visibility to your inventory, etc.,” how does the prospect know who to buy from? She doesn’t and, for want of helpful information, the message is ignored and some portion of the marketing budget is wasted. The antidote: get inside the mirror. Look at the buying choice from your prospect’s point of view. Is it easy for your best prospects to recognize what sets your company apart?
The process of differentiating your service in the mind of the prospect is called positioning. Create a positioning statement that starts, “We want to be perceived as….” This statement is your marketing destination – the perception your communications are designed to create. If you’re thinking from the outside in, the positioning statement will be simple, believable, differentiating and relevant to the challenges of your best prospects. Before communicating, think about the position you want to occupy in your prospect’s mind and be disciplined about reinforcing this perception in all your communications.
2. Over-investing in sales at the expense of marketing.
Whenever we purchase something, whether a car, a candy bar, or logistics services, we go through the same cycle of buying:
Awareness, Acceptance, Preference, Choice.
While the cycle can be long or short, the buyer does not get to Choice before going through the other stages. The sales function – characterized by one-on-one interactions, is best designed to create Preference and Choice for your service. The marketing function, which uses the web, media relations, advertising and other means to communicate to a large target group, is the most efficient way to create Awareness, Acceptance, and broad understanding of your brand’s value, and to generate a good percentage of the leads that your sales professionals pursue. Sales’ job, a time-consuming and challenging one in the 3PL arena, should be to create Preference and Choice among the companies most likely to purchase your services. 3PLs that under-invest in marketing force their sales people to carry the weight of the entire buying cycle and create a far less efficient business development process.
3. Selling as the primary means to drive inquiries.
3PL lead generation efforts often consist of targeting groups of prospects (via mail, email or phone) with sales-oriented messages, hoping that their timing is right and that one or more of the recipients will have an immediate need. But hope is not a strategy and such efforts rarely yield a solid ROI. 3PLs should place more marketing focus on creating reasons for the prospect to contact them. Case in point: Since 1990, Gross & Associates, consultants in material handling logistics, has published its “Rules of Thumb” for estimating capital equipment costs associated with alternative layouts, operating systems, and equipment applications. Each year the firm receives about 2500 requests for this handy reference guide from the very people with whom it wants to build a relationship. With the prospect names and contact information in hand, the firm can continue to cultivate these relationships so that Gross is top of mind when the prospect is ready to buy.
Think about what you are an expert at, then stop selling to cold prospects and start educating. By providing helpful, substantive information, you will draw more people to your message, position your organization as an expert, and generate more leads than typical hard-sell marketing messages.
4. Underestimating the power of the web.
While logistics service providers still rely heavily on referrals for new business, buyers of logistics services increasingly look to the web for guidance. According to, which tracks keyword searches on the internet, about 205 searches are conducted daily on the term “warehousing” and about 576 on the term “logistics.” Add in additional searches on variations of these terms (e.g., value-added warehousing) and other logistics and supply chain-related phrases, and there are thousands and thousands of daily searches relevant to warehousing and logistics. Your prospects are on the Internet looking for help.
The question is, will they find your company during their search? Online marketing includes search engine optimization, or SEO (the science of getting your web site to rank high on search engine queries for specific keyword phrases), as well as keyword purchases, link building, advertising and other tactics to bolster your online visibility. It has become a complex discipline requiring specialized expertise. Most 3PLs lack the internal know-how to do this well and should seek outside help to assure they are leveraging this critical part of the marketing mix.
5. Delegating marketing responsibility.
As the 3PL industry has become more competitive, there is a greater need to identify new markets, differentiate the company and tell its story in a compelling way. But attracting people with the marketing skills to do these things well has not been a 3PL recruiting priority. In fact, the marketing function often is delegated to a manager in another discipline as an add-on responsibility. This may be the only option in a lean organization, and it can work. But don’t assume this manager can quickly develop the requisite skills needed to execute programs well. Provide the budgetary support to allow this person to hire communication specialists or source needed talent on the outside.
As a 3PL executive, marketing deserves your attention. Great service at an acceptable price are now table stakes and therefore difficult to leverage as a source of competitive advantage. You’ll need smart marketing to help understand the market, identify profitable niches, and create awareness and understanding of your company’s unique value among those most likely to purchase your services. But hey, it is no problem if you keep on doing it the same old way...all the better for Exel, DHL...
Look, the next two weeks are going to be busy for me...the 4th Annual 3PL Summit in Atlanta will be my destination the last week of June. I am on a few panels, and will be working with the Global Institute of Logistics on a new work group focused on end-to-end supply chain collaboration. Should be great...I will give you all the details of the conference next week.

Thursday, June 08, 2006

People, Process, and Productivity - Simple!

Okay, yes, I know...this is going to sound like a broken record...
You don’t need the latest ERP package or other SCM software to improve your distribution center operations. True, technology plays its part as an enabler; however, the majority of the savings are found in area often overlooked:
Processes (and yes, don't forget those people behind them)!

As you add on more suppliers, SKUs, customers who generate more complex order requirements, your organization often works around the complexity that these challenges bring, leading to inefficient processes. The result? Higher error rates, lower productivity and late orders. Here are three process areas that can improve the situation, and they can be implemented using your current staff.

Process area #1: Inbound - everything begins here
Is your Inbound area a constant bottleneck? Why? Lack of appointment scheduling, poor pre-receipt planning and documentation, and incorrect purchase order information will bring any dock to a halt.

This is the source of problems that, if not corrected, will precipitate and multiply their effects throughout your operation (exponentially), creating inefficiencies and ultimately affecting your end customer. Eventually, you have to fix the problem (e.g. wrong item shipped) later—adding even more cost. Why not fix the problem the first time around? Do you have documented processes for the following areas?
- Appointment scheduling
- Pre-receipt planning & document preparation
- Vehicle arrival & unloading procedures
- Quality control procedures

How well are they followed? Investing time to ensure that your associates are trained and aware of these processes will pay dividends later in the form of decreased credit invoices, less damages/returns and higher profitability.

Process area #2: Picking - the most costly activity in your operation
Since approximately 50% of laborbour hours are attributed to picking in a typical distribution centre, even incremental improvements will have a significant bottom-line impact. The largest component of picking time is travel time (the time it takes for the picker to get to the next pick slot). By reducing the travel time, the picker spends more time picking, less time traveling, thus, improving picking productivity. A number of solutions will facilitate this:

- ABC analysis to identify fast, medium and slow SKUs to re-profile layout
- Introducing flow rack for smaller items to free regular pallet slots
- Multi-level picking & shelving for very slow items
- Batch picking for small volume orders

How are new items slotted in the distribution center? Unless there is a defined process, usually everyone is “too busy” to do it properly with the end result being large traveling distances for pickers—and a corresponding loss in productivity.

Process area # 3: Realistic Work Productivity Standards - must be set
One operation I have visited measured productivity as cost per case. While this is an important managerial-level metric, it does not translate well to the distribution center associates. For example, when ten receivers are scheduled in Inbound, but only seven are available due to illness or holidays, the cost per case will increase (full-time absent workers are still being paid) for that period; however, the productivity may actually increase due to fewer associates dealing with more volume. Thus, management will observe a decrease in productivity when it actually increases during that period. Simple logic, that is often ignored, or just plain missed! Consequently, this does not motivate the team to improve.

Instead, it is important to measure cases per hour and set a target for the month. Compare this to last year’s actual productivity and year to date. These are meaningful numbers that can, when tied to an incentive program, motivate the team to increase productivity. If you currently use a time and attendance system (TMS), you can easily modify the reporting outputs to include departmental productivity, whether it is Inbound, Putaway, Replenishment, Picking or Shipping. Once again, by having a process to measure and monitor productivity properly, realistic expectations can be communicated to all associates. Don't forget about your people, people!

By implementing processes for the above three areas, distribution center operations will run more smoothly despite all the complexity that exists and continues to develop.
You know, it always comes down to people and process...yeah, yeah, I know...broken record. How about a few of you sharing your thoughts on these type of subjects!

Thursday, June 01, 2006

Marion, OH Partners with CSX and Schneider

Schneider to start dedicated Ohio intermodal service

Truckload carrier Schneider National said it will begin offering dedicated intermodal service to customers in the Ohio Valley by Monday in conjunction with CSX Intermodal, the Kansas City Southern Railroad and the Marion, Ohio Industrial Center.

CSX Intermodal is the shipping container and truck business affiliated with CSX railroad.

Schneider will provide local pickup and delivery and operate an intermodal ramp to load dedicated trains running from Marion to Kansas City, Missouri, with connecting service to California and the Southwest. Four trains will operate on the 700-mile route from Marion to Kansas City and back, six days per week. The new service is expected to slice a day off normal freight train transit times to the West Coast.

Schneider said it plans to expand the offering to include service to Dallas and Mexico later this year and is also exploring service to the Pacific Northwest. Marion may be going "back to the future" as a prominent midwest rail junction!