InFocus Sharpens Logistics Strategy
To implement the logistics changes needed to bring inventory more in focus with sales flow, InFocus' president empowers his team to partner with a 3PL.
About a year ago, InFocus Corporation, a provider of digital projection technology and services based in Wilsonville, Ore., began taking a hard look at its inventory and logistics management practices. The company sought ways to increase velocity, reduce inventory, and boost its ability to compete in the marketplace against larger vendors.
A global company, InFocus has balanced revenue in Asia, Europe and the United States. Products, used largely in the commercial arena, are manufactured primarily in China, and distributed to customers through four key regional distribution centers.
The Americas customers are served through the Oregon distribution center. Asia is served through satellite DCs in Singapore and Hong Kong. Roermond, The Netherlands is the site for the EMEA DC. InFocus also has a repair component, with product sent to a central location for repair or refurbishment.
As part of the search for a competitive advantage, "we looked at various internal solutions, then at potential partners," recalls Kyle Ranson, president and chief operating officer of InFocus.
After evaluating internal and external options, InFocus made the decision to outsource logistics operations. The company then talked with more than a dozen potential partners, eventually winnowing this group down to a short list of third-party providers that could handle the company's complex logistics requirements. Then, late last fall, InFocus selected UPS Supply Chain Solutions (SCS) as its 3PL provider.
The Right Start
The two companies began laying the groundwork for a successful transition even before their contract was signed. "This is not a customer-vendor relationship," Ranson explains. "It's a strategic partnership.
"Our relationship is a journey," he says, "a very managed journey"—and a long one, too, as InFocus intends UPS SCS over time to assume responsibility for global repair and refurbishment, logistics, and transportation services. Top management at both organizations are focused on establishing a firm commitment to this relationship.
"Early on, we established an executive relationship that allowed for sponsorship at the CEO level. We wanted to make sure that, if we needed resources and escalation to get the job done, we would always come back to the common vision of what we wanted to accomplish," says Paul Gettings, UPS SCS vice president of business development for North and South America.
This executive commitment, in addition to ensuring both executive teams have a common vision and a mutual understanding of the project's goals, is key to the complex project's success, Ranson says.
"With the level of integration we're striving for, and the capability between systems, the sheer complexity means that we will face problems and challenges," Ranson notes. "It's how the teams work through and overcome these challenges that is my measure of how well this project is going."
Such a challenge arose during the project's early stages. "Initially, the leadership team drove too much vision down to the implementation team," Ranson explains, "which created a stall because of how overwhelming it was."
But the teams managed through the stall and got the project back on track with two clearly defined pilots. The first involved fixing a product distribution need in Europe, which was handled quickly and successfully. The next phase, which went live in late 2003, was implementing a reverse logistics pilot for a specific set of products in the United States.
In addition to solving two operational challenges, these discrete pilots gave the two partners the opportunity "to work together in a live environment, allowing some fire-testing of the relationship" before moving into the next, and far more ambitious phase, Gettings notes.
The partners are currently transitioning to InFocus' new global network, which involves closing the Oregon DC and opening distribution and repair centers at UPS SCS facilities in Louisville, Ky., the Netherlands, and Singapore. "The product will come in from contract manufacturers through the UPS facility, and shipped from there to our customers," Ranson says.
A joint InFocus/UPS SCS project team, led by project director George Gomes (InFocus's director, worldwide transportation and logistics) worked long and hard during InFocus' busiest season to ensure that "everything worked flawlessly and invisibly to the customer," says Ranson.
The team is made up of "the best and brightest from all functional areas of the company that this project impacts," Ranson says.
InFocus and UPS SCS have mirrored resources from key areas working together to implement the project. While not all project team members are dedicated, many are—including the functional leads—and all team members understand that the project is their top priority.
InFocus executive management also gives top priority to the project, with Ranson and the company's CFO serving on the executive steering committee. As the project approaches go-live, the steering committee is briefed weekly by Gomes and the project team.
In addition, InFocus and UPS SCS executive teams participate in biweekly conference calls to discuss project status and challenges.
"The folks responsible for the implementation know that both sets of executives are reviewing the good, the bad, and the ugly," Ranson says. "There's no hiding, no ducking."
Raising potential issues early on enables executive leadership at both companies to allocate resources and make decisions necessary to move past those issues.
Ranson expects that outsourcing logistics will realize significant financial benefit. While the long-term gains are still down the road, the intense work is paying off now. "We're already seeing the benefit in Europe," he says.