Global Logistics and Supply Chain Strategies - April 2008 - (Page 54)

grow incrementally, but are also ideally suited to handling promotional sales surges. “Two of the laundry detergent businesses we purchased from Colgate-Palmolive are highly promotional, so we need flexibility in storage and distribution capability,” says Sullivan. Laundry detergent is a bulky product, so when Phoenix does promotions its logistics requirements balloon, but only for a short time. When Phoenix is planning a promotion, it shares its product forecast with Menlo, so both parties know when, where and how much additional space and transportation resources will be needed. For example, normal daily shipping volume for a laundry detergent brand may be 20 to 25 truckloads, but during a three- to five-day promotion, it will ship an additional 300 loads. “Menlo’s multi-client distribution centers allow us to have additional warehouse space just when we need it to support these promotions,” says Sullivan. “Our outsourcing strategy, especially with Menlo’s multiclient facilities, has worked for us to keep our costs in line as well as keep our customer service where we need it.” Flexible Outsourcing Other companies have successfully embraced outsourcing as a strategic answer to business challenges in their industry. Lam Research, for example, is a Fremont, Calif.based semiconductor equipment manufacturer that struggled with side effects of the chip industry’s cyclic nature until it adopted a serious outsourcing strategy in 2002. “Our CEO had an epiphany,” says Ballan Campeau, managing director, global logistics for Lam Research. “When times are good in the semiconductor capital equipment business, they are very good, and when they are bad, they are awful. Our CEO looked at the highly cyclical nature of our industry and realized that we needed a different way to handle non-core functions.” Because its business cycle is so volatile, a key element of Lam’s outsourcing strategies was to find large outsourcing partners that could stand the wild gyrations in volumes endemic to the business. “We cannot deal with a constant churning of suppliers and providers,” says Campeau. “Turnover involves a lot of startup cost and wasted time.” Also, Lam decided that it did not want to expend resources in areas that were not its core competency, which is helping its customers create better semiconductors. Lam Research equipment etches and cleans wafers for the world’s major semiconductor manufacturers. It sells multimillion-dollar machines and aftermarket parts throughout the industrialized world. It uses Menlo Worldwide Logistics to handle its warehousing and related supply chain functions. Menlo manages Lam Research’s local and global warehousing functions at a shared facility in Fremont, in close proximity to Lam’s manufacturing plant. The warehouse supports Lam’s production and assembly operations and its spare parts as well. Menlo’s Fremont distribution center allows Lam to utilize just the amount of space its needs, which can vary depending on its business cycle. The flexible space capability also allows Lam to make its logistics cost more variable based on the number of transactions that actually move through the facility. The benefit of a multi-client facility has 54 APRIL 2008

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Global Logistics and Supply Chain Strategies - April 2008 Contents Editorial GL & SCS Exclusive Fast Forward Up Front Cover Story: Continuing to Add Ever More to Their Offerings, 3PLs Are - At Your Service Over the Long Haul Opinion: Freight Audit Bill Can't Show All Mistakes that Hurt the Bottom Line Opinion: The ‘Good-Freight’ and ‘Bad-Freight’ Trucking Customers Industry Voices

Global Logistics and Supply Chain Strategies - April 2008

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