Executive Briefings

SPECIAL ISSUE: GLOBAL SUPPLY CHAIN PARTNERSHIPS - CNH Global: Schneider Wins Logistics Contract In U.S., Now Looks to Europe

It was like something out of "Gladiator." When Case Corp. and New Holland N.V. merged in November 1999, forming CNH Global N.V., their former lead logistics providers were pitted against each other. The one that did a better job would get the combined company's business.

The winner was Green Bay, Wis.-based Schneider Logistics - but not before it had gone head to head with its rival for a full nine months. When the dust settled, Schneider was CNH's full-service logistics manager in North America. Now the vendor is working to convince CNH, the global manufacturer of farm and construction equipment, that it can do a similar job in Europe.

Schneider, a subsidiary of truckload carrier Schneider National Inc., had been serving Case prior to the merger. But even that contract was hard-won. In 1996, Case shook up the logistics community by choosing three vendors - Schneider Logistics, Fritz Companies and GATX Corp. - to manage its supply chain, without naming any of them as lead logistics provider. Schneider, which was given control over domestic trucking, was later tapped by Case to manage its trucking and materials flow in Europe.

Newly merged CNH didn't look far for a third-party logistics provider. "It made no sense to consider any others," says Stephen Erb, senior director of logistics for North America. "We felt we were dealing with two of the best in the industry." What's more, the two 3PLs had agreements with their respective customers that ran along the same time line. So their existing relationships with Case and New Holland suppliers were kept intact during the trial period.

Schneider's responsibilities on behalf of Racine, Wis.-based CNH have evolved since then, says John Vesco, vice president of operations. Acting as lead integrator of a multitude of vendors, Schneider manages the flow of raw materials to the customer's plants, and the outbound movement of finished goods and aftermarket parts to dealers. It also oversees imports and exports of finished product. CNH's North American supply chain includes 17 manufacturing centers and 22 parts distribution facilities.

Individual tasks include carrier selection, freight contracting and payment, receiving, material-handling management, line-side replenishment, port management and tracking and tracing. The freight side is controlled by Schneider's own transportation management system, known as SUMIT. For Schneider, CNH represents "the broadest set of services we provide to any of our customers," says Vesco.

The value of Schneider's services in North America is "considerable," Erb says. The vendor has cut costs through the consolidation of less-than-truckload shipments. It has also struck better deals with underlying carriers. The result, says Erb: "double-digit" reductions in logistics expenditures over the past two years.

According to Vesco, Schneider cut CNH's costs in that area by nearly $8m in 2001. This year, he says, it is on track to generate between $8m and $10m in additional savings. CNH's total freight bill, including for imports and exports, is around $160m a year.

Schneider hopes its prior success with Case in Europe will help it to secure CNH's logistics business in that region. CNH delivered one positive signal recently, when it asked Schneider to begin managing components destined for central Asia and the nations of the former Soviet Union.

Schneider's competition is mostly European-based logistics providers. But Case didn't hesitate to bring Schneider to Europe, even though the vendor had no prior experience there. And Erb suggests that local entities are lacking in the scope and level of competency that CNH demands.

CNH prefers to hire non-asset-biased 3PLs to manage underlying transportation and distribution. Schneider Logistics may be tied to the nation's largest truckload carrier, but it relies heavily on outside entities.

Transport deregulation has helped to foster the growth of independent 3PLs in the U.S., Erb says. "That hasn't caught hold in Europe yet. There's very much an asset-based mindset." In addition, most of Europe's trucking companies lack large fleets of vehicles, let alone sophisticated information systems for documentation and shipment monitoring. CNH prefers to utilize one lead logistics provider in a given region wherever possible.

CNH is looking for partners to help it drive out additional costs, Erb says. Companies today are demanding a quicker return on their investments in systems and services. And the sluggish global economy has given them an even greater sense of urgency.

In the end, says Erb, CNH's choice of a logistics provider for Europe will come down to three basic elements: "people, process, and technology."

It was like something out of "Gladiator." When Case Corp. and New Holland N.V. merged in November 1999, forming CNH Global N.V., their former lead logistics providers were pitted against each other. The one that did a better job would get the combined company's business.

The winner was Green Bay, Wis.-based Schneider Logistics - but not before it had gone head to head with its rival for a full nine months. When the dust settled, Schneider was CNH's full-service logistics manager in North America. Now the vendor is working to convince CNH, the global manufacturer of farm and construction equipment, that it can do a similar job in Europe.

Schneider, a subsidiary of truckload carrier Schneider National Inc., had been serving Case prior to the merger. But even that contract was hard-won. In 1996, Case shook up the logistics community by choosing three vendors - Schneider Logistics, Fritz Companies and GATX Corp. - to manage its supply chain, without naming any of them as lead logistics provider. Schneider, which was given control over domestic trucking, was later tapped by Case to manage its trucking and materials flow in Europe.

Newly merged CNH didn't look far for a third-party logistics provider. "It made no sense to consider any others," says Stephen Erb, senior director of logistics for North America. "We felt we were dealing with two of the best in the industry." What's more, the two 3PLs had agreements with their respective customers that ran along the same time line. So their existing relationships with Case and New Holland suppliers were kept intact during the trial period.

Schneider's responsibilities on behalf of Racine, Wis.-based CNH have evolved since then, says John Vesco, vice president of operations. Acting as lead integrator of a multitude of vendors, Schneider manages the flow of raw materials to the customer's plants, and the outbound movement of finished goods and aftermarket parts to dealers. It also oversees imports and exports of finished product. CNH's North American supply chain includes 17 manufacturing centers and 22 parts distribution facilities.

Individual tasks include carrier selection, freight contracting and payment, receiving, material-handling management, line-side replenishment, port management and tracking and tracing. The freight side is controlled by Schneider's own transportation management system, known as SUMIT. For Schneider, CNH represents "the broadest set of services we provide to any of our customers," says Vesco.

The value of Schneider's services in North America is "considerable," Erb says. The vendor has cut costs through the consolidation of less-than-truckload shipments. It has also struck better deals with underlying carriers. The result, says Erb: "double-digit" reductions in logistics expenditures over the past two years.

According to Vesco, Schneider cut CNH's costs in that area by nearly $8m in 2001. This year, he says, it is on track to generate between $8m and $10m in additional savings. CNH's total freight bill, including for imports and exports, is around $160m a year.

Schneider hopes its prior success with Case in Europe will help it to secure CNH's logistics business in that region. CNH delivered one positive signal recently, when it asked Schneider to begin managing components destined for central Asia and the nations of the former Soviet Union.

Schneider's competition is mostly European-based logistics providers. But Case didn't hesitate to bring Schneider to Europe, even though the vendor had no prior experience there. And Erb suggests that local entities are lacking in the scope and level of competency that CNH demands.

CNH prefers to hire non-asset-biased 3PLs to manage underlying transportation and distribution. Schneider Logistics may be tied to the nation's largest truckload carrier, but it relies heavily on outside entities.

Transport deregulation has helped to foster the growth of independent 3PLs in the U.S., Erb says. "That hasn't caught hold in Europe yet. There's very much an asset-based mindset." In addition, most of Europe's trucking companies lack large fleets of vehicles, let alone sophisticated information systems for documentation and shipment monitoring. CNH prefers to utilize one lead logistics provider in a given region wherever possible.

CNH is looking for partners to help it drive out additional costs, Erb says. Companies today are demanding a quicker return on their investments in systems and services. And the sluggish global economy has given them an even greater sense of urgency.

In the end, says Erb, CNH's choice of a logistics provider for Europe will come down to three basic elements: "people, process, and technology."