LLC Law

Hi Tech & Electronics Supply Chain European Summit

September 2007

Creating innovative customer centric 3PL & 4PL

service contracts &

collaborative frameworks whilst raising profit: realising

the elusive "Win-Win"…

Focus:

• 3PL & 4 PL

• Innovation

• Customer satisfaction

• Increasing Profit

• Win-Win

• Creative frameworks

Comm Corp Comm Corp Corp Comm

• 3PL & 4PL

Supply Agmts

Outsourcing

TSA

WSA

T&WSA

T&W+VASA

IT Agmts

LogisticsLogisticsLogisticsMHEMHEMHE £££ PrivatePrivatePrivate

EquityEquityEquity

Our Work…

LLCLLCLLC

• MHE

Procurement

Outsourcing

Agency, distribution, franchise

IT Agmts

• M&A Deals

Joint Ventures

Partnerships

Share/Business SalesInvestment AgmtsShare Option Agmts

Checklists

LLC’s Contribution…

• leveraging negotiating position

• Improve ROI

• Reduce risk

• Grooming for growth/investment/exit

• Understand, apply & deliver…

Frameworks…

• Contracts

• Adversarial

• Risk averse

• Point scoring

• Profit focussed

• “I-Win” c.f. “Win-Win”

Market Backdrop

• Services transactional

• Margins eroded

• Outsourcing growth

• Complexity…

Time delays

Variance in demand

Order

batching

Duplicationof activity

Risk aversion

processes

Large

stockpiles

Poor OTIF

operating

Product

commoditisation

Globalisation

…Market Backdrop

• Services transactional

• Margins eroded

• Outsourcing growth

• Complexity

• 25 % dissatisfaction…

• Leveraging opportunities

Transactional Logistics

• Transport

• Warehousing

• Container handling

• Stevedoring

• Shipping

• Freight forwarding

• Customs clearance

• Inventory

management

• LSP selection

• Coordination (4PL)

• Reverse logistics

• Parts management

Transactional SLAs & KPIs

• Time compression

• Service Costs

• Service quality

• Flow of product

• Lower unit cost

• Capacity utilisation

• OTIF

Adding Value…

• Project management

• Info management

• IT solutions

• Product customisation

• Compliance (e.g. WEE)

• +

• +

• Product re-processing Local sourcing

• Packaging reduction

• CO2/ case delivered

• RFID support

• Returns logistics

• +

• +

Adding Value…

• Effective processes…

• Consumer focussed… ?

CollaborationCoordinationCooperationOpen Market

Negotiations

Framework Roadmap…

≈ Price based≈ Adversarial

≈ Fewer suppliers≈ Longer term

contracts

≈ Info links≈ WIP links≈ EDI Exchange

≈ S/C integration≈ Joint Planning≈ Technology sharing

Collaborative Team’s Objective

• Optimise solutions

• Product features

• Service features

• Reduce misalignment

• Info flows

• Manpower

Collaborative Team’s Objectives

• Re-align asset utilisation

• Diagnose opportunities

• Integrated action plan

• Pro-active follow-through

• Engage in differentiation

e.g. postponed customisation@ UK warehouse by 3PL

Collaborative Value Add No 1

e.g. on-location spare partsfitting by in-bound transport 3PL

Collaborative Value Add No 2

Collaborative Value Add No 3

e.g. Transport LSP reduces Retail Usercarbon footprint

Collaborative Environments…

Create a culture of collaboration

Create the opportunity formanagers to think collaboratively

Create a framework forcollaboration

Direction of Collaboration

• Vertical &

horizontal

collaboration

• Holistic - source to

end-consumer

• Non-transactional +

transactional Externalcollaboration(customers)

Externalcollaboration(competitors)

Internalcollaboration

Externalcollaboration

(suppliers)

Externalcollaboration

(otherorganisations)

Source: Adapted from Barratt 2004

HorizontalCollaborativeeg transportmanagement

VerticalCollaborationeg transportmanagement

Plan for collaboration

Traditional Frameworks…?

• Not the main LSA

• Negotiated arm’s length, adversarial

• Formal – ITT, contract, renewal/termination

• Not geared to “possibilities”

• Transactional by nature

• Often relatively short term

• Risk averse

• Transactional SLAs & KPIs c.f. effectiveness

• Resource specific & constrained

• Traditionally static for term

CFAs – a framework for Collaboration

• Constitution

• Steering committee

• Objectives

• Contributions

• Cost recovery

• IP ownership

• Liability

• + Rules / Code of Practice

• + Ops Guidelines

Characteristics of CFA’s…

• Trust & relationship based

• Planned goals

• Prescribed participation

• Resourced by Sponsor(s)

• Shared management

• Limited risk & liability

Characteristics of CFA’s…

• “Own account” participation

• Shared responsibility

• Multi-party c.f. dual party

• Multi-channel communication

• Specific outcome applications eg IP

• Joint guidelines eg IT

Characteristics of CFA’s…

• Strategic objectives -possibilities

• Reasonable endeavours

• Know-how sharing

• Confidential

• Shared benefits & rewards

• Long term

• Dynamic & flexible

Characteristics of CFA’s…

• Competition compliant & enhancing

• Non-solicitation codes

• Data protection

• Non-binding & Binding + dispute ADR

• Expulsion eg code breach

• Exclusion of agency, joint venture & partnership law

• Process & Consumer focussed c.f. cost

Collaborative Value Add No 4

e.g. pooled IT applicationssourced from participants…

• ASN advance shipment

notification

• Automated storage & retrieval

systems (AS / RS)

• Electronic data interchange (EDI)

• XML / EDI

• Bar coding

• RFID tags

• Voice input services

• Portal technologies

• Internet applications

• RF communications (wireless

LAN)

• Electronic market places

• Extranets

• Intranets

• Satellite communications

technology

• Decision support systems (DSS,

data warehousing)

• Warehouse management systems

• etc…

CFA’s

Conventional Contract -LSA, TSA, WSA etc

Conventional Contract vs CFA…

…some outcomes extend LSA

Mission of S/C Collaboration

• Sponsor’s competitive advantage

• Customer focussed

• Improved processes

Non-CollaborationDirect:

• De-selected from bidder

list

• Profit / margin erosion

• Loss of business

• No investors, sale or exit

Indirect:

• EU WTD

• WEE Directive

• Congestion charges

• Loading restrictions

• H&S compliance

• Price of fuel

• Driver shortages

• Insurance premiums

• Poor asset utilisation

• Environmental

vs Collaboration…Upside:

• Relationships reinforced

• best practice spread

• Contracts & business grows

• Profits increase

• Value grows – business, investor & exit

• “Win-Win” not “I-Win”

Creating innovative customer centric 3PL & 4PL

service contracts &

collaborative frameworks whilst raising profit: realising

the elusive "Win-Win"…