Supply Chain Services

Supply Chain Services

The rise in overseas sourcing, particularly from China, continues to be a major theme for consumer goods in 2005 and 2006. As such, third party logistics companies are boosting investments in China with an array of supply chain services. A prime example is UPS, the Readers’ Choice leader in SCS, which announced plans for 20 additional facilities in major Chinese cities over the next two years, adding to the roughly 40 it has now and tripling its number of flights. FedEx Express, a subsidiary of No. 2 pick FedEx Corp., is building a new Asia Pacific hub at the Guangzhou Baiyun International Airport in Southern China to better serve its global customers doing business in and with the China and Asia Pacific markets. The facility represents a $150-million dollar capital investment and is expected to commence operations in December 2008. Similarly, DHL is establishing a dedicated Global Customer Solutions (GCS) regional team in Shanghai to develop new supply chain models and solutions for the Chinese market. The company is undertaking a $1.6 billion network infrastructure investment plan in Asia Pacific and has established a management training facility in Shanghai, the DHL Logistics Management University. These plans support the trend that using a 3PL “is the preferred model for going overseas” because many CGs lack the infrastructure to manage suppliers remotely, says John Fontanella, senior VP and research director, supply chain services for Aberdeen. “3PLs are working very hard to get transparency into supply chain events. They’re adding more flexibility to give customers options in case something goes wrong or the customer changes his mind — giving the [shipper] visibility and the ability to manage that inventory.”

Breakout Winners

Customer Experience
When Hershey Foods Corp. considered outsourcing distribution of marketing materials, display stands and product samples to about 2,000 sales representatives and brokers across North America, GENCO Distribution Systems offered a total solution. “There was a lot of preparation work and there were many meetings, but from the time that we said ‘go with this design’ to having it in operation, was not much over three and a half months. It made sense to partner with GENCO,” says Andy Bowman, manager sales fulfillment, Hershey Foods Corp.

Small/midsize business
For mid-market firms, a dependable logistics partner can sharpen competitive edge and level the playing field with larger operations that have their own sophisticated systems. “What [UPS and Trade Direct] affords is merchandise flow. I don’t have to overstock. I no longer have to worry about how merchandise will arrive, whether it will be held up in customs, and what carrier is retained,”says Glenn Kupferman, president, Windbrella. “We can really manage inventory and eliminate some of the spikes. In short, we no longer have the importing headaches.”

Transportation Management

The challenge of keeping costs in control is very different in today’s environment, says Greg Aimi, AMR Research. “We’ve seen a rise in automated transportation management systems to keep costs in check or find their best opportunities.” Manugistics formed business units in early 2005 to address transportation management challenges. In March, the company released a licensable version of the NetWORKS Transport Request For Quotation (RFQ) solution, which allows carriers and shippers to reduce time and costs associated with procuring carrier capacity and rates among other benefits. Manugistics also partnered with MARC Global to combined WMS and TMS functionality. No. 3 player Logility’s Transportation Planning & Management capitalizes on the Internet for collaboration, visibility and trading partner connectivity. The Coleman Company increased the selection of lower-cost carrier assignments by 15 percent within the first seven weeks of implementing the Logility tool. G-Log’s placement as No. 2 in this sector is good news for Oracle, which acquired G-Log in November.

Breakout Winners

Customer Experience
The right TMS solution can save millions. Manhattan Associate’s TMS is saving PPG Industries in excess of $2 million in transportation costs and it is shipping a greater volume in less time with fewer resources.

Small/midsize business
Manhattan Associates tended to the mid-sized supply chain needs of Thornton’s and Pearl Music Europe in 2005.