World Trade - October 2008 - (Page 24)

SUPPLY CHAIN SURVIVAL GUIDE Tweaking the Supply Chain to Optimize Value and Minimize Cost UPS The next stage in logstics outsourcing is to maximize the full range services of 3PLs. BY KAREN E. THUERMER W hen Toys “R” Us had to recall thousands of toys after learning Chinese manufacturers had violated U.S. lead paint regulations, the company faced a supply chain nightmare. Quickly, the retailer had to pull millions of products off store shelves, circumvent shipments already en route, and halt the fulﬁllment and delivery of new orders. In short, Toys “R” Us needed a plug in its pipeline—a feat made signiﬁcantly more difﬁcult these days to the high cost of fuel surcharges. So what are companies to do to stay aﬂoat in these tough times? “It’s now more important then ever to work effectively with your third-party logistics provider (3PL),” advises C. John Langley, Jr., Ph.D., professor of Supply Chain Management, Georgia Institute of Technology. “When times get tough it underscores the need to identify your company’s objectives and how to meet them. Shippers who cannot afford the higher cost of fuel should rethink what they are doing.” His collaborative study with Capgemini U.S. LLC entitled “The State of Logistics Outsourcing: 2008 2007 Third-Party Logistics” points to how most companies outsource traditional services like transportation and warehousing, but basically ignore customer-facing activities and other more strategic services. The reason: many companies see logistics as their own core competency and where, if outsourced, they would not save costs. In fact, the study indicates that those who employ 3PLs realize 13 percent cost savings. But even the mostly bigger companies using 3PLs are under-utilitizing available services. “The longer I’m in this business, the more jaded I’ve become about customers,” says a frustrated Langley. “Shippers want to outsource activities that are more routine and repetitive rather than customer-focused. As long as this continues, shippers are not exploiting the full range of services they can beneﬁt from.” So what are these under-used services available that can help companies in hard times? “First and foremost, engage logistics suppliers and transportation providers into your business as partners to jointly ﬁnd viable, sustainable and creative solutions,” Dr. Langley urges. 24 WORLD TRADE OCTOBER

Table of Contents Feed for the Digital Edition of World Trade - October 2008

World Trade - October 2008 Contents Tune Up Your Supply Chain Globalization: The Real Competitive Threat Supply Chain Watch Tradewinds Shippers and Providers Collaborate to Take on a Challenging Economy Tweaking the Supply Chain to Optimize Value and Minimize Cost Supply Chain Software Morphs Into Enterprise Management Can Warehousing Really, Truly Be Strategic? Everybody is Global Between the Devil and the Deep The Hidden Costs of ‘Free’ Translation Blowing Smoke

World Trade - October 2008

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