A Sound Investment

CGT Staff

1/1/2004

International Data Corporation (IDC), a global market intelligence and advisory firm, predicts that by 2005, investments made by businesses on services that boost supply chain performance could hit $83 billion, up 260 percent from $23 billion in 2000. Add projected investment for supply chain management technologies ($21 billion) and outsourced logistics ($424 billion), and it pushes the projected global market for supply chain management over a half trillion dollars by 2005.

Several factors in 2003 have fueled these trends including:

* Increased focus on "just in time"
* Higher use of outsourced logistics
* Carrier consolidation
* Increased globalization of business
* Shift to collaborative commerce
* Creation of robust supply

Chain Visibility and Event Management Tools

Further research also reveals that investments in services and technologies that improve supply chain performance continue to pay solid dividends for businesses. This investment, however, should not be deemed a luxury but a necessity, especially as more retailers take control of inbound freight, according to John Fontanella, analyst, AMR Research.

"We're seeing Wal-Mart do this on products from Asia, using Maersk as the consolidator. Many of the grocers are doing it too. A company called ES3 is doing consolidation for both retailers and manufacturers to provide JIT delivery," says Fontanella.

Here are the key 2003 highlights in supply chain services:

Admirable Qualities

In February, UPS was rated the "World's Most Admired" company in its industry in a Fortune magazine survey, in the process ranking in the Top 10 among all companies on five of the nine attributes evaluated. The recognition by the magazine -- the fifth in a row -- followed a similar ranking in which UPS was rated "America's Most Admired" company in its industry for the 20th consecutive year.

In May, Lucent Technologies, which designs and delivers networks for the world's largest communications service providers, announced the signing of a five-year agreement with UPS Supply Chain Solutions covering the management of Lucent's logistics operations in the Europe, Middle East and Africa (EMEA) and Asia-Pacific regions.

In July, Birkenstock Footprint Sandals Inc., the 100 percent employee-owned company and U.S. importer and distributor of Birkenstock footwear from Germany, said it would shorten special-order handling time by weeks and increase its product offering in U.S. retail stores through an agreement with UPS Supply Chain Solutions.

In August, UPS unveiled a newly enhanced service, called Supplier Management, that coordinates the logistics activity of international vendors and suppliers on a customer's behalf for a seamless supply chain. The service was introduced at MAGIC, an international apparel show.

Joining Forces

In September, FedEx Supply Chain Services Inc., a subsidiary of FedEx Corp., joined forces with Cap Gemini Ernst &Young US LLC in launching a new integrated technology platform that enhances the industry-leading supply chain capabilities of FedEx. The new platform creates a single point of access for customers, providing access to proven FedEx fulfillment and transportation-management solutions. Platform solution benefits for customers include the ability to view orders as they move through the supply chain, a short, cost-effective implementation cycle, user simplicity and flexibility. With annual revenues of $23 billion, FedEx Corp. is a leading global provider of transportation, e-commerce and supply chain management services.

In July, Genco Distribution System (GENCO), a full product life cycle supply chain provider, expanded its transportation management services with the addition of Green Bay, Wisconsin-based IOgistics, a leading non-asset transportation and logistics company. Genco transportation services will be fueled by proprietary IOgistics software called ShipIO. The software's capabilities include shipment rating, mode selection, LTL to truckload consolidation, freight payment, audit and customized Web-based reporting. Through ShipIO applications, shipments are routed, consolidated and optimized. ShipIO also creates multi-stop truckloads to provide cost savings and improve service levels.

Riding High

Ryder System Inc. signed a distribution and transportation management contract in July with Nestle Argentina S.A., a manufacturer, distributor and vendor of a broad range of food and beverage products. Under the multi-year contract, Ryder will manage a 160,000 square-foot, multi-customer distribution center with an inventory of 8,500 pallets of finished products located in Tortuguitas, Argentina. Ryder will manage the outbound transportation of 20 to 50 vehicle loads per day from the distribution center to more than 320 Nestle customer locations throughout Buenos Aires and the surrounding area, including supermarkets, distributors and wholesalers. Utilizing a warehouse management system and hand-held radio frequency equipment, Ryder will optimize Nestle's inventory levels, improve order accuracy and efficiency, and provide consistent levels of customer service.

In September, Ryder announced the launch of Ryder Logistics Release, a patent-pending automated process that enhances transportation management capabilities. This combination of proprietary systems and methods integrates and optimizes supply chain performance in the areas of shipment planning and execution.

The Web Grows

At the beginning of the year, PFSweb, this year's Best-In-Class winner for customer experience, announced its selection of V-Order Management -- Vcommerce's distributed order management solution -- to enhance PFSweb's current Entente Suite offering of supply chain operations and management solutions. In May, PFSweb expanded its partnership with Roots Canada, Canada's number one authentic athletic lifestyle brand, to provide order fulfillment, distribution and call-center support for Roots' 2004 Olympic apparel. The agreement further solidifies the ongoing partnership between the two companies. The U.S. Olympic Committee recently announced that Roots will be the official outfitter for the U.S. Olympic team at the next three Olympic Games.