3PL Partnerships: You're In Good Company

Tags: 3PL, Supply Chain Management, Partnership, Logistics, Third-Party Logistics, Supply Chain, Lean Logistics

As product demand continues to rise, companies of all industries are partnering with third-party logistics providers and sealing the deal with on-time and cost-effective delivery to customers.

Regardless of a company's size or industry, supply chain management remains a complicated process that requires top-notch service from talented experts, whether companies are delivering products to or from a city near their headquarters or shipping them halfway around the world. And, as customer demand for timely deliveries continues to rise seemingly daily—while technology also advances at similar rates—some sort of supply chain assistance from an outside partner is virtually a necessity for most companies.

As a result, third-party logistics (3PL) companies across the United States are partnering with organizations to ensure they are able to exceed their customers' delivery expectations, in spite of constant changes in product shipment volumes, aptness, and capabilities. In turn, 3PLs are proving their value to their customers by providing 24/7 access, time and cost savings, and timely responses to shipment delays and inaccuracies, among other key offerings.

In recent years, the following four companies—a sporting goods and leisure activities provider, an automotive aftermarket product developer, a pharmaceutical maker, and a building materials distributor—have partnered with 3PLs to achieve a variety of objectives. Some 3PLs provide their customers a freight audit and payment software system that reduces audit costs and tracks expenditures, while others offer inventory management assistance that improves supply chain efficiency and optimizes routing and scheduling.

Other companies have also received lean and end-to-end supply chain solutions from their 3PLs. Lean supply chain solutions often increase productivity and empower employees, as they create a culture of continuous improvement, while the end-to-end solution decreases order to delivery times and streamlines inbound logistics throughout the world.

In every case, the results are evident. The benefits of partnering with 3PLs are wide ranging and long lasting—and available to companies of all areas of expertise as they strive to deliver products under budget and ahead of schedule.

Escalade Sports: Game on

For more than 80 years, Evansville, Ind.-based Escalade Sports has been dedicated to providing sporting goods and leisure activities for homes, including table tennis and game tables, as well as Ping-Pong. To decrease its order-to-delivery times, reduce claims for North American home deliveries, and streamline its inbound logistics from Asia, Escalade Sports needed assistance from a 3PL.

Its product is typically oversized, resulting in significant merchandise damage, as well as extended transit times and missed delivery appointments. So Escalade Sports partnered with SEKO Logistics, a 3PL based in Itasca, Ill., for direct-to-consumer home deliveries within North America.

Through SEKO Logistics' commitment to providing Escalade Sports an end-to-end supply chain solution, it was able to generate a wide array of benefits for the sporting goods and leisure activities manufacturer, including reducing total landed costs, particularly through consolidation and supplier management services. In addition, Escalade Sports has reduced shipment claims—especially for all direct-to-consumer deliveries within North America.

Claim to Fame

"SEKO Logistics was a huge help in dramatically reducing our claims for home delivery in the United States, while also improving our order-to-delivery turnaround times," says Ken Vinson, purchasing manager, Escalade Sports. "SEKO also reduced our claims for direct-to-consumer deliveries by 60 percent and improved the consistency of our delivery times considerably.

"As a result, we asked SEKO to assist us with our inbound logistics from Asia," he adds. "Since then, they have been a tremendous help, as they have brought visibility and enhanced distribution services to our supply chain."

The inbound logistics program in Asia, including highly populated cities such as Hong Kong and Shanghai has provided Escalade Sports assistance with supply chain management. It also supports inbound 3PL services at strategic service centers, so that Escalade is able to consistently fulfill holiday rush orders to retail partners.

SEKO Logistics has also implemented supplier management services and training at Escalade Sports' China-based origin vendor locations, along with 3PL distribution services. Those services are strengthened primarily by MySEKO, a suite of applications and utilities that provides reporting in real time, including shipment information. Escalade has deployed the software for simplicity and visibility at various strategic service centers.

Since partnering with SEKO Logistics, Escalade Sports has enjoyed a successful relationship with the 3PL, especially with regards to its extensive reduction in claims for all direct-to-consumer deliveries in North America, as well as its decline in buyer's remorse and uptick in sales and customer service.

"SEKO Logistics' inbound consolidation program has also accomplished a decrease in transportation costs—with less frequent inbound shipments—as well as a better delivery performance from vendors in China," notes Brian Bourke, vice president, marketing, SEKO Logistics.

"In addition, the utilization of SEKO Logistics' key U.S. distribution locations has provided just-in-time delivery services, as well as a decrease in delivery costs, to significant Escalade Sports clients."

FRAM: Filtering Out Waste

In 2013, FRAM, an automotive aftermarket product developer based in Lake Forest, Ill., decided to partner with a 3PL—Miami-based Ryder—to implement a lean supply chain solution in its Hebron, Ky., distribution center. At the time, the 710,000-square-foot DC filled an average of 900 orders—about 30 truckload shipments—per day.

Among other key objectives, the lean supply chain solution was designed to create a culture of continuous improvement, engage and empower FRAM's workforce, and ensure the developer, particularly known for oil filters, would have a more effective distribution and operations process.

"As market churn for FRAM's products had decreased by nearly half of what it was historically, due to longer lasting products, we needed to capture more market share by being exceptionally customer-centric, and drive our diverse distribution channels to their optimum performance," says Steven Crowthers, director of distribution, FRAM. "This required more tools to perfect our distribution process—tools that would also help fill the potential profit gap on filtration products, which have even tighter margins."

In addition, omni-channel distribution had changed the landscape of FRAM's industry to the point where it needed transparency, as well as the ability to be more flexible. It also had to amp up innovation, a skill set that required a strategic partnership with a 3PL such as Ryder, which provides supply chain services to retailers in more than one dozen industries.

"A common theme is to 'focus on your expertise,'" says Steve Sensing, president, supply chain solutions, Ryder. "With our experience, we bring to the table best practices from a broad set of customers, which is a unique opportunity.

"This allows us to partner with companies, provide them the visibility to be able to respond to challenges, and create a positive experience with their customer base," he adds.

Uptick in Pick Accuracy

Since partnering with Ryder, FRAM has achieved 99.8-percent pick accuracy, as well as a 100-percent increase in productivity. It has also improved its units per man-hour (UPH) from 33 to 68, while reducing year-over-year supply chain costs by seven figures.

"Meeting the demands of consumers is becoming increasingly more difficult," notes Jimmy Fitzpatrick, group director, customer logistics, Ryder. "With more consumers shopping online, and many others still shopping at brick-and-mortar stores, delivering the products they want—when they want them—is vital to keeping loyal customers and turning profits.

"The way to deliver long-term customer value and outstanding business performance—quarter after quarter, year after year—is to nourish a lean culture where every step in every process adds value for the customer," he adds. "If it doesn't add value, it is eliminated."

FRAM's partnership with Ryder has been completely transparent, as the 3PL fully understands FRAM's customers' needs and is part of its strategic planning and budgeting both day to day and for the long term. Consequently, the partners are able to challenge each other as they pursue daily improvement in an environment of connectivity.

In addition, by outsourcing operations to Ryder, FRAM's representatives have been able to derive more value from their supply chains, as they have increased their focus on their core competencies. Customer service levels have also improved, along with flexibility, end-to-end visibility, and talent management, each a direct result of Ryder's and FRAM's collaborative nature.

"Ryder and FRAM are one unit; their goal is our goal," Crowthers says. "In our DC, you can't tell a Ryder employee from a FRAM employee."

Hospira: Freight Audit Solution Cures Complexity

Some people think freight audit and payment is simple, but it's not," says Robert Sentz, manager of logistics planning and freight audit at Hospira, a Lake Forest, Ill.-based pharmaceutical maker that recently became a division of Pfizer. "We have very detailed contracts with carriers, especially regarding surcharges."

Hospira currently ships more than 2,000 different products annually to markets around the world. To better manage such complexity, Hospira has implemented a freight audit and payment software system from Cleveland-based CT Logistics. The 3PL modified the system specifically for Hospira, and enabled integration into its own servers, rather than installing the software on Hospira's hardware.

As a result, Hospira now saves more than $500,000 on audit costs each year, as it is able to use CT Logistics' software as a financial system that conducts accruals. Hospira employees are able to track exactly what the company spends and then compare its revenue with expenses. Likewise, Hospira employees can also review carriers' rates, which are featured in the system and constantly updated on the network.

CT Logistics' freight auditing technology also offers Hospira business intelligence capabilities that are very granular—to the point at which the pharmaceutical maker can determine the exact impact that even minor moves, such as relocating a distribution center, will have on costs. Hospira can conduct these types of what-if, ad hoc scenarios entirely by using the information it has acquired while processing payment information in its financial supply chain.

Due to companies' various needs, budgets, and comfort levels with regards to operating freight audit and payment software in-house, CT Logistics currently offers its customers three options:

  1. Business Process as a Service (BPaaS). In return for a monthly fee, end users receive 24/7 access to personal and secure software, as well as the latest information about rates and business rules, via CT Logistics' own servers. In addition, CT Logistics personnel perform most contract rate entry and audit functions, so that customers' employees have more time to focus on other responsibilities.
  2. Purchasing software. Users can also choose to have CT Logistics' software package, known as FreitRater, installed at their offices. Often, customers will also receive subsequent software support from CT Logistics personnel after the software has been installed.
  3. Software as a Service (SaaS). Customers' own technical staff members may also perform all contract rate entry and audit functions themselves—without any assistance from CT Logistics personnel—while also receiving secure, 24/7 access to the FreitRater service, via servers maintained by CT Logistics, for a monthly fee.

As evidenced by Hospira's shipments around the world, the demand for freight payment audit software is just as high outside the United States as it is within. In fact, CT Logistics' sales are now rising at double-digit rates in foreign markets.

To address this growing demand overseas, freight audit software available in the United States is becoming increasingly globalized in content and targeted at companies that conduct business across borders.

"By auditing bills in various currencies and languages, while also converting measurements in and out of the American and metric systems, the FreitRater software is able to help companies such as Hospira manage the complexity of their shipments as they continue to expand operations and services throughout the world," explains Allan J. Miner, president of CT Logistics.

Winsupply: Building a Strategic Delivery Roadmap

To decrease the size of its shipments—while also increasing the speed of their delivery—Winsupply Inc., a nationwide distributor of building materials based in Moraine, Ohio, sought a 3PL partner to help scale its business operations to prepare for a changing marketplace. At the same time, it was also interested in maintaining its longstanding commitment to focusing on each of its individual locations across the United States, and empowering their financial success.

"Our goal was to create a best-in-class supply chain that allows our individual locations to more effectively utilize our distribution center network, while also shrinking the order-to-delivery timeline," says Rick McCann, vice president, supply chain for Winsupply.

As Winsupply prepared to boost shipment delivery time, while also reducing shipment size, it encountered a variety of supply chain management challenges: managing inventory across approximately 600 locations, optimizing scheduling and routing on asset and non-asset transportation, and maintaining overall landed cost while increasing velocity.

Unique Network Design

Winsupply found a 3PL partner—Columbus, Ohio-based ODW Logistics—that was uniquely positioned to help it overcome supply chain management challenges and improve its shipment capabilities. Due to its infrastructure, which includes warehousing and asset-based trucking, non-asset transportation of all modes, freight planning and optimization, and engineering personnel, ODW Logistics was able to design a supply chain network specifically for Winsupply.

To prepare for this network design, ODW Logistics first needed to understand and replicate Winsupply's business activity—a nearly six-month process of onboarding, as well as the implementation of technology integration and online portals and processes, such as carrier score carding and in-transit exception management. After this process was completed, an array of value-added phases followed, including distribution center location analysis modeling and redesign, increased trailer utilization, route design for reduced lead time, and truckload pool distribution.

"For a best-in-class supply chain, we needed to first determine the right number of distribution centers that would optimize service level and total logistics cost, with certain variable constraints," McCann explains. "ODW Logistics helped us form the strategy roadmap and deliver the dynamic modeling that guided us to the most appropriate short- and long-term outcomes."

As a result of ODW Logistics' assistance, Winsupply now maintains a more efficient and repeatable supply chain process that has improved its delivery speed without increasing its cost-to-serve. Since partnering with ODW Logistics, the relationship has continued to flourish—from the time in which it began to implement new online portals to its current strategic plan for long-term growth and cost reductions. That plan, according to ODW Logistics, is a value-driven service that is utilizing the strengths of both organizations for future success and growth.

"We are proud of the relationship we have had with Winsupply, as we have demonstrated our commitment to continuous improvement," says John Weber, vice president of sales, ODW Logistics. "Winsupply representatives have challenged us to provide a continued stream of solutions, and we have been able to exceed their expectations."