Wyse Technology would have gotten around to outsourcing its logistics functions eventually. But the Y2K crisis hastened the decision.

With dual headquarters in San Jose, Calif. and Hsin Chu, Taiwan, Wyse is among the leading providers of so-called "thin client" technology - network computer terminals that lack hard drives, depending instead on centralized servers at sites remote from users. Last year, Wyse reportedly shipped six times as many Windows-based terminals to distributors and manufacturers as its closest rival. Worldwide, its installed base numbers more than eight million terminals and thin-client devices.

Wyse, which recently went public on the Taiwan stock exchange, proudly offers a range of products that are Y2K-compliant. But its own logistics systems were less sophisticated, and to upgrade them would have involved spending money in an area that was not considered to be among Wyse's core competencies, said Director of Operations Sharon McCorkle.
Instead, Wyse went looking for a third-party provider that could handle a wide range of supply-chain activities while erasing assets from the balance sheet. At the same time, the company hoped to streamline its information systems and eliminate any lingering Y2K problems.

Following a six-month selection process, Wyse chose Emery Worldwide Global Logistics, a subsidiary of CNF Transportation Inc. based in Redwood City, Calif. Under a three-year contract, Emery will manage much of Wyse's North American distribution, including both inbound and outbound transportation. Value-added services include product testing, customer support, management of returns, repairs and final assembly. The result, Wyse hopes, will be reduced handling of its product, shorter cycle times, and improved customer responsiveness.

Emery's center of operations for Wyse is a 170,000-square-foot facility in Milpitas, Calif. There, Emery maintains a customer service center and repair operation. It also reconfigures and customizes units shipped from Wyse's manufacturing plant in Taiwan. By relying on Emery's expertise in logistics, Wyse hopes to increase the ability to enhance product at the last possible moment.

	The contract features generous incentives for Emery. "To bring about change and promote efficiencies, both companies must be rewarded." - Don Cox of Emery Global Logistics

At the heart of Emery's offering is a Y2K-compliant information system for documentation and inventory control. Although the system will operate on Wyse's thin-client model, it will be owned and maintained by Emery. To develop up-to-date warehouse management software internally, Wyse would have had to spend up to $1.5m, said Don Cox, managing director of Emery Worldwide Global Logistics.

Emery relieved Wyse of some existing overhead by shifting the client's 63-person distribution staff onto its own payroll. Culture clashes were avoided, and the entire transition smoothed out, with the help of personnel from Emery's Electronics and Computer Technology group.

Wyse retains control over its supply chain by continuing to perform worldwide planning and purchasing of logistics. "That's a core competency," said McCorkle. The company also oversees the process of postponement and configuration, telling Emery how each shipment must be altered according to individual customer needs. Order administration and the management of finished goods continue to be handled by Wyse employees as well.

The transition to Emery management is being carried out in two stages. The 63 Wyse employees moved over to Emery's payroll in mid-April. Emery's information and warehouse management system was scheduled to hook up with the Wyse operation in July.

Wyse was equally careful about the selection phase. It started out with six candidates, then narrowed the field to three. McCorkle said the company wasn't interested in a standard vendor's demonstration of generic abilities. "Rather than having a cookie-cutter approach, we looked at their willingness to adapt to our business."

The final choice, made by a nine-member, cross-functional team within Wyse, was unanimous. "Emery impressed us up front," McCorkle said. "It provided both content and form." The third party called on skilled engineers from within its ranks to help create the level of mutual trust that is essential to any long-term logistics partnership.

Wyse was equally committed to a team approach, said Cox. Initially, it would compensate Emery for services on a cost-plus basis. But the contract also features generous incentives for the provider, built around cost savings and improved productivity. "To bring about change and promote efficiencies," Cox said, "both companies must be rewarded."

In fact, both sides were reporting tangible benefits in the first weeks of the new arrangement. "It's gone incredibly well," McCorkle said in early May. "We're looking forward to the transition."