World Trade - January 2009 - (Page 22)

SUPPLY CHAIN INTEGRATION A and B.” Digging deeper to ask such questions creates an environment in which the supply chain becomes a competitive advantage. Take watches, for example. The raw materials for Citizen, Seiko and Timex are about the same, and the costs of manufacturing them are about the same, Fowler suggests. “Therefore, they must compete on the strength of their supply chains—the ability to get raw materials and ﬁnished goods to the right place at the right time,” he says, which necessitates looking at the issue from an enterprise perspective. Because a 4PL manages the entire network, it is well positioned to develop meaningful metrics in a common format using terms and deﬁnitions that are standardized across the enterprise and its supply chain. With such a system, shippers can see the big picture as well as the details of individual lanes, routes and facilities. Working with a top 4PL also exposes shippers to best practices and encourages innovation through the supply chain. When a shipper works with a 3PL, the shipper determines what is needed. “But what if you don’t know what needs to be done?” Fowler asks. That’s when a 4PL can be especially beneﬁcial. Because 4PLs work with a wide variety of companies in the U.S. and beyond, they are well positioned to see a wide variety of approaches to issues and to assimilate the most effective into best practices that may be applied to their own customers. When Menlo is ﬁrst brought in, “We follow the money trail,” Fowler says. “Where is the spending? Most companies really don’t know.” They can’t present a consolidated report that details spending or the reasons for it. So, he says, “We unravel the mess.” As an example of how 4PLs can drive efficiency, Fowler uses a freight forwarding example. Freight forwarders deal with chartered weights and actual weights, so the goal is to minimize the difference between those weights and thereby get better unit prices, he explains. A good 4PL takes the analysis beyond transportation, however, to involve packaging engineers and product engineers, too. It often takes the collaborative environment of a 4PL to pull these groups together to optimize the aspects that affect the supply chain. Changing the structure of the network is an approach 4PLs typically take. Charlie Covert, vice president of global solutions implementation at UPS, advocates optimizing the supply chain network, including warehouse and distributions center locations, staging and transportation nodes. “These are primarily one-time savings, but are important,” he insists. He also recommends taking a critical look at transportation modes and shipment times. Fluctuating economics may require changes to modes of shipment. “What combination of modes is appropriate from a tactical approach?” The decision to collaborate with a 4PL is what Fowler calls the “make versus buy” decision. “On a basic level, anything that can be done by a 4PL can be done internally,” according to C. John Langley, professor of supply chain management at Georgia Institute of Technology. The question, though, is whether it can be done as well or as efﬁciently. “Is it more effective to improve supply How Penske Logistics Saved Whirlpool $40 Million Whirlpool Corporation chose Penske Logistics as its 4PL about three years ago and realized savings of more than $40 million from one brand alone. Those savings may have been outside the norm because the newly acquired brand was being integrated into the company. But even so, that wasn’t the only savings. Within a few months of signing on with Penske Logistics, Whirlpool saw increases in on-time loading, departures and deliveries by 12 to 13 percent. “Our clients got better visibility into our capabilities, and we’re better at telling them what we can and can’t do,” Brian Hancock, vice president, supply chain, Whirlpool Corporation, says. Whirlpool had worked with Penske before, using the company as its sole 3PL. “We have a complex footprint,” Hancock says, with more than 60 manufacturing and research facilities throughout the world, and a direct sales force in more than 170 countries. When management took a customer-centric approach to analyzing its supply chain and to benchmark others’ to identify best in class practices, it realized its global customers could be better served with multiple 3PLs. So, to ensure that the supply chain remained homogeneous from the customer’s perspective, Whirlpool hired Penske as its 4PL. The decision came with some caveats, though. Penske completely separated its lead logistics provider operations from Penske 3PL, including ﬁnancial statements, technology systems, human resources and physical locations. Whirlpool worked closely with Penske to determine what information could be shared, developed a code of conduct and a process of signoffs. “There is an agreement at the very top that people won’t be mistreated for being objective,” Hancock says. Working with a 4PL doesn’t mean you can just hand-off management to the 4PL entirely, Hancock stresses. “You need a different skill set,” he elaborates. “Rather than being good at managing routes, you have to be good at managing a vendor. You have to trust but verify.” capability 4PLs typically offer, which allows managing the supply chain on a more data intensive basis. For example, the question of whether deliveries arrive safely and on time is expanded to also determine whether distribution points have the right inventory and right inventory levels, Jordon elaborates. “Optimizing the supply chain is no longer a question of getting a great rate between points A and B,” notes Carl Fowler, senior director of 4PL solutions. Instead, “The question is why goods are shipped between points 22 WORLD TRADE JANUARY 2009

Table of Contents Feed for the Digital Edition of World Trade - January 2009

World Trade - January 2009 Contents Supply Chain Finance Conference: The Right Stuff at the Right Time! Is the Dollar's 'Exorbitant Privelege' as the Global Standard at Risk? Supply Chain Watch Tradewinds The Rise of the 4PL An Evolving Tech Backbone Makes 4PL Service More Effective The Changing Landscape of U.S. Railroads Intermodal Grows Up Port of Hamburg Grows as Distribution Point to Eastern Europe Outsourcing Without Fear Measuring the Carbon Footprint

World Trade - January 2009

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