July 2001 | Commentary | Checking In

Jack the Giant Killer

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In the fabled tale of old, Jack the Giant Killer, a smaller, more wily competitor (who also has a friend with special powers) whips a larger, more powerful foe. It can happen in modern times too, logistically speaking. Let's consider a real-world example of how using a 3PL helps a company operate successfully against competitors 10 times its size.

MicronPC builds screamers—superfast servers and PCs. I know, I have one. Fast, cheaper than the competition, solid, and delivered to my specs within two days.

How does MicronPC do it? Does logistics excellence support marketing enough to allow the smaller company to compete successfully with Dell and other PC-making monsters? Yes it does, as supply chain excellence keeps costs low and customer service high.

One key driver of MicronPC's supply chain excellence is the man in charge: John (Jack) Janson, MicronPC's smart and skilled vice president of materials and logistics. I don't know Jack, but as you'll see from the story on page 76, Jack knows logistics. He uses his wits to outsmart companies bigger and more powerful than his own. His friend with special powers? northAmerican Logistics (NAL).

Four years ago, when Inbound Logistics broke the "Dell model" story, Dell's inventory days of supply fell from 33 to six in two years. That was phenomenal. But in this issue, you'll see how the much smaller MicronPC beats the giant's record (operating without all the media notoriety accorded Dell). MicronPC's finished goods inventory runs an average of one day of supply!

northAmerican Logistics administers a JIT program that allows MicronPC to build to specs and sell instead of building to stock. NAL runs a supply logistics center across the street from MicronPC's plant. A VMI program with 70-plus suppliers having near real-time visibility is integrated with the 3PL's Asset Management System, which connects enough dots to let MicronPC meet demand cheaply and quickly. The same system gives enough information to vendors to allow them to precisely match supply and manufacturing capacity to MicronPC's needs. Walking that tightrope is easier for vendors without blinders on.

Beyond having a quick turn rate, another benefit to vendors is the ability to restage inventory to other customers quickly when MicronPC's needs are satisfied. Selling to other customers might normally be a sore point, but 3PL involvement provides a level of insulation that puts vendors at ease. The quick turn rate, combined with this ability to restage inventory to other customers thanks to the 3PL's involvement, makes MicronPC a more profitable customer for vendors to do business with. It means lower prices for MicronPC and a better lock on suppliers in a volatile segment.

All of this would be difficult to do without outside help. In this case, a 3PL uses its logistics capabilities to help a small company slay giants.

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