Supply Chain Relationships: Growing from Transactional to Strategic. September 13, 2012

Transcription

1 Supply Chain Relationships: Growing from Transactional to Strategic

2 ABOUT SF GLOBAL INSIGHTS Bob Fredman established SF Global Insights in 2012 to serve the needs of government, economic development and planning agencies, and supply chain owners. Assisting Federal, state and local clients to better understand the impact of supply chain trends, the needs of industry, and to determine how best to invest in and leverage their logistics-related assets. Held key planning, operating and project roles with Limited Brands, Battelle Memorial Institute and Distribution Centers, Inc. Managed international logistics network of over 50 countries (air, ocean and CFS), distribution centers and domestic transportation networks. Developed strategic vendor relationships. 2

3 WHAT WE LL DISCUSS HERE Performance metrics used in carrier and 3PL services How strategic relationships differ from transactional relationships, and how they can be evaluated The impact of freight infrastructure in site selection decisions and role of 3PL s 3

4 FROM TRANSACTIONAL TO STRATEGIC HOW TO CREATE WIN-WIN OPPORTUNITIES THAT SHARE RISK, REDUCE COST, AND IMPROVE SERVICE TRANSACTIONAL agreed rates, terms of service, agreed procedures, standards and metrics COLLABORATIVE increased transparency, effective communication, involvement in planning STRATEGIC - unveil synergies, identify and leverage complimentary business values and strategies. Focus on the long term. 4

5 PERFORMANCE METRICS TRANSACTIONAL Cost o Actual, to budget Productivity Service o Lead and transit times o On-time performance o Accuracy and errors * short list COLLABORATIVE Balanced Scorecard Shared metrics o Booking timeliness o Key initiatives 5

6 BUILDING ALIGNMENT BETWEEN SHIPPER AND SERVICE PROVIDER Unveil synergies, identify and leverage shared business values and complimentary strategies. Focus on the long term. Synergies realized through: Core competency matches service requirements Geographic coverage matches shipper patterns Shipper s contribution to business volume Not too much, not too little Compliments other traffic (lanes, commodities, seasonality) 6

7 IDENTIFYING AND MEASURING STRATEGIC RELATIONSHIPS Using a decision support matrix to evaluate relationships and identify those which should be: built upon improved (and where), or discontinued 7

8 DECISION SUPPORT MATRIX 8

9 STRATEGIC RELATIONSHIPS: PARALLELS WITH THE INTERNATIONAL AIR FREIGHT EXAMPLE Which of your service providers possess the qualities for developing a strategic relationship Shared values Complimentary strategies Organizational strength Operational strength Market strength 9

10 SITE SELECTION: SHIPPER AND 3PL ROLES Decisions are predominantly made by the Shipper A 3PL or warehouse services provider may bring expertise the Shipper lacks In strategic relationships, the service provider is more likely to be involved in the process 10

11 NETWORK ANALYSIS MODELS Pct stores served: 1-day = 55% 2-day = 26% Pct stores served: 1-day = 91% 2-day = 6% Savings per carton = $.05 11

12 SITE SELECTION: IMPACT OF FREIGHT INFRASTRUCTURE AND ACCESS Network analysis iterations may select locations that are sub-optimal for the company Further iterations are run to test results of alternative locations o Indianapolis vs. Toledo Factors: o o o Infrastructure and Interstate Highway access Leverage other supply chain relationships Workforce and community 12

13 KEY TAKEAWAYS As the relationship between a Shipper and service provider becomes more strategic, factors use to evaluate the service provider evolve. Metrics used to evaluate performance, however, do not change. It s still about performance. Service providers may be involved in site selection decision, but it rests with the Shipper at the end of the day. The quality of a region s infrastructure, and how well they tell their story, matter a great deal in site selection. 13