harry drajpuch executive vice president & general manager usco logistics logistics: 21 st...

Harry DrajpuchExecutive Vice President & General Manager

USCO Logistics

Logistics: 21st Century Competitive Advantage

How good are you?

USCO Logistics OverviewUSCO Logistics Overview

Business unit of Kuehne & Nagel International AG Leading provider of supply-chain solutions 35 years’ experience Manage 15M sf in 70+ facilities Process 1.9M lines monthly Integration with 75+ client enterprise systems Partner to 36 of top 100 global companies*

USCO CorporateHamden, CT

Distribution CenterReno, NV

KN CorporateSchindellegi, Switzerland

KN Global ReachPacific Rim

*BusinessWeek Global 1000, 7/9/01

Locations: 70Logistics Space: 15 M sq ftEmployees: 3,000






Locations: 320

Logistics Space: 40 M sq ft

Employees: 9,700

Locations: 320

Logistics Space: 40 M sq ft

Employees: 9,700

Global reach & local know-how

KN Global Contract Logistics ReachKN Global Contract Logistics Reach

USCO Core ServicesUSCO Core Services

Integrated Supply Chain Management SolutionsIntegrated Supply Chain Management Solutions

GlobalLogistics

OrderManagement

TransportationManagement

WarehousingSolutions

Information Logistics

010010110011100

• Dedicated & shared

• Flexible & scalable

• Largest NA network of distribution centers

• Delivery solutions

• Non-asset based

• Optimized service& savings

• Online order placement

• Fulfillment & call-center services

• Supply chain visibility

• Kuehne & Nagel

• 180 multi-client DCsin 90 countries

• Lead logistics service provider

• Information driven

• Collaboration & visibility

North American NetworkNorth American Network

Shared Distribution Centers

Dedicated Distribution Centers

Ontario CA

Cerritos CA

Reno NV

Hayward CA

Portland OR

Denver CO

Lenexa KS

Dallas TX

Lewisville TX

Shakopee MN

Chicago IL

Memphis TN

Nashville TN

Lakeland FL

Miami FL

Dorval, Quebec

Port Clinton OH

Sheffield OH

Franklin MA

GuadalajaraMexico City

Louisville KY

Charlotte NC

Durham NCZebulon NC

Jersey City NJ

Bridgeport NJJoppa MD Gaithersburg MD

Atlanta GA

Ventura CA

Calgary, Alberta

Monterrey

Baltimore MD

Ottawa, Ontario

Montreal, Quebec

Allentown

Independence, MO

Edmonton

Winnipeg

Toronto

Integrated Supply Chain Management SolutionsIntegrated Supply Chain Management Solutions

Industries & CustomersIndustries & Customers

RetailConsumer /Industrial

Healthcare / Pharmaceuticals

High Tech

Link world’s businesses & people through globalization

Connect North America Reduce economy-wide inventory Lower business-cycle risks

While information technology makes global & national linkages virtually possible -- companies

like USCO make them physically possible.

Impact of Companies Like USCO

Brush-Fire ManagementBrush-Fire Management

Typical focus is on daily operating problems, sales & marketing promotions, & service issues, etc.

How often do you review logistics functions?

• What’s overall impact & interaction with rest of business? Does logistics function:

• Respond directly to present & future needs?

• Support primary business mission?

• Drive most cost-effective & customer-service support? How can you find out?

RecommendationRecommendation

Conduct a self analysis of your logistics strategy

• Focus on what your logistics activities should be doing to support your business

• Consider the following 7 key areas

Logistics Strategy – Self-AnalysisLogistics Strategy – Self-Analysis

Company Markets

• Have you moved into new markets?

• Has there been shift in customer shipments? (I.e., wholesalers, distributors, retailers, etc.)

Company Products

• Have you added or deleted product lines? Customer Service

• Has representative customer survey indicated service problems?

• Have there been any systems or order processing changes that have affected order cycles?

Logistics Strategy – Self-Analysis Logistics Strategy – Self-Analysis

Logistics Operations

• Have labor or facility costs resulted in changes to location or operations?

• Have type, quality or size of product packaging changed?

• Have you reached capacity in existing distribution facilities?

Transportation Operations

• Has the profile of product shipments changed? (i.e., UPS, full truckload, less-than-truckload)

• Do you move inbound & outbound products across common shipping lanes?

Logistics Strategy – Self-AnalysisLogistics Strategy – Self-Analysis

Product Operations

• Have you changed or introduced new source points for products?

• Has product capacity changed at existing production locations?

Other

• Have distribution & transportation costs increased as percent of sales?

• Have there been internal structural changes?

Supply chain collaboration

Transportation planning& management

ASP

Internet

All freight – All modes – All over the world

e-Logistics Portals + TMS

Single command &control center

Merge-in-transit,diversions

Globalin-transitvisibility

Order ManagementCustomer relationshipmanagement

Warehouse management

Int’l trade & compliance

Event managementLLP

3PL

Private vs. public exchanges

EAI

ERP

e-Fulfillment

Assembling the Jigsaw PuzzleAssembling the Jigsaw Puzzle

Develop In-house? Outsource? Develop In-house? Outsource?

Real-time logistics Real-time logistics management management capabilitiescapabilities

Predictable, Predictable, reliable & rapid reliable & rapid

transporttransport

Scaleable, Scaleable, Variable-cost Variable-cost infrastructureinfrastructure

Common (global) Common (global) processesprocesses

Integrated logistics Integrated logistics networknetwork

Significant investment & development required to support evolving supply chain. Best source of your $?

Why Outsource?Why Outsource?

Manufacturers are now embracing third-party logistics providers (3PLs)

• Alternative to running their own distribution operations 3PLs have been providing distribution operations to

companies for years

• Most have roots in transportation, warehousing or freight forwarding

Providing 3PL logistics services a $56B industry*

• Increasingly seen as distribution option by companies in range of industries

* Armstrong & Associates “Logistics Management & Distribution Report” 7/02

3PL Benefits3PL Benefits

Although not right answer for every company, where it’s “right” it can provide cost, service & strategic benefits

Cost

•Lower cost warehousing (scale economies)

•Lower cost transportation

•Flexibility — pay for what you use

•Network optimization — wring costs out of all supply-chain links

•Specialized services at lower cost

Service

•Quicker delivery

•Increased geographic reach — closer to customer or manufacturing site

•Access to leading-edge information technology

•Customization to specific needs

Strategic

•Allows management to focus on core business

•Rapid ramp-up (and ramp-down) capability

•Minimizes company assets tied up in non-core operations

•“Best of Breed” applications can provide competitive advantages

3PL Usage Rates Growing3PL Usage Rates Growing

68.8% 70.4%80.0%

84.3%

60.7%67.9%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Auto Chemical Computer Consumer Medical Retail

Percent Using or Considering 3PLs

“What’s ahead for 3PLs?” Modern Materials Handling, 4/01

• Greater Functional Integration• Boarder Operational Autonomy

Evolutionary Cycles ContinuingEvolutionary Cycles Continuing

ClientIn-

sourcing 1970s-1980s

Internal LogisticsOperations

Internal LogisticsOperations

3PLProvider

3PLProvider

ClientClientOutsourcing 1980s-

1990s

Business ProcessManagement

Business ProcessManagement

3PLProvider

3PLProviderLLP

ClientClient

ClientClient

ClientClient

IT ServiceProvider

IT ServiceProvider

LLP 1990s-2000s

Source: Adapted from John Gattorna 1998

QUESTIONS?

Example: “Designed In” FlexibilityExample: “Designed In” Flexibility

Sampling of Wal-Mart’s own distribution centers

3PL

3PL

3PL

3PL

Seasonal Overflow

Disaster Relief

Forward Buys

Seasonal Overflow

Rapid marketplace changes “Time to money”

Example: “Designed In” FlexibilityExample: “Designed In” Flexibility

harry drajpuch executive vice president & general manager usco logistics logistics: 21 st...

Documents

logistics space

logistics functions

logistics strategyfocus

logistics activities

global companies

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