Walk into a special section at an Ozburn-Hessey Logistics center and you may think you've somehow stumbled into someone's living room. In fact, you would have walked into a professional photography studio operated by OHL on behalf of a large internet retailer of home goods. When new products for this customer arrive at the logistics center, they are positioned, lighted and shot by a commercial photographer for the retailer's online catalog. Digital images then are uploaded directly to the client's marketing department.
"We are the first people to see this customer's goods as they come in from an offshore manufacturer," says David Gordon, executive vice president of Nashville-based OHL. "We uncrate them and a trained photographer does the creative work." The in-warehouse studio includes several different rooms "that are pretty much like a film set," he says.
Shift to a distribution center managed by Seko Worldwide, Chicago, and the scene might be of white-coated technicians working on sophisticated medical equipment. The equipment, owned by Philips Medical Systems, is housed at several Seko DCs, where Philips' trained technicians come in to inspect and maintain it between short demonstrations at hospitals and clinics. Seko also arranges the delivery and return of the equipment to and from demonstration sites. "Typically we will warehouse three to five units at smaller depots; some larger depots may have 20 to 40 units," says Kelly Knight of Seko's Baltimore, Md., facility. "We not only provide typical warehousing, we also provide the clean room space that Philips' technicians need to work on the equipment."
These examples of value-added services are indicative of an ongoing trend by 3PLs to expand their offerings well beyond traditional warehousing and transportation.
"There is a constant push for 3PLS to offer services that will differentiate them in the market, because otherwise they will become a commodity, subject to continual downward price pressure," says Brooks Bentz, a partner in Accenture's Supply Chain Management practice, based in Boston. "Value-added services allow them to make a little extra money by offering something different," he says.
The definition of "value-added" can be a moving target, however. Many services that used to fall into that category-things like kitting, sequencing and repackaging - have become more or less embedded in standard warehouse offerings, says Joe Gallick, senior vice president of sales at Penske Logistics, Reading, Pa. "A lot of value-add services that are emerging today are outside the boundaries of activities we have done in the past," he says.
Many of these newer value-added activities are driven by globalization of supply chains.
"Globalization has made supply chains much more complex and difficult to manage, says Bentz. "A manufacturer may have five component suppliers offshore and have to bring all that stuff together, assemble it at a regional hub, ship it across the pond, do all the customs and cross-border work and then all the domestic distribution activities. Having an integrated solution with end-to-end visibility and a single provider is very attractive to a lot of companies that don't have the human capital and technology to do it themselves."
Customers looking for end-to-end global solutions pushed the international side of Menlo Worldwide's business up 53 percent last year, says Bob Bianco, president of the Redwood City, Calif.-based company. As a result, he says, Menlo "is spending a lot of resources building out our international capabilities."
One Face to the Customer
One role that customers increasingly ask Menlo to play is that of global forwarder manager, says Bianco. "For years we have been managing inland transportation, but now more and more customers are asking us to manage forwarders on intercontinental moves in order to get that end-to-end control," he says. Menlo's forwarder solution follows its proven transportation management model, he says. "We take the requirements of each customer-volumes by lane and product flows-then with our understanding of the strengths and weaknesses of different forwarders, we bid out the business and put together a solution using multiple forwarders across the world."
During shipment execution, Menlo aggregates information feeds from each of the forwarders to provide full visibility to the customer. "It is much easier for our client to go to one point of contact for this information than to try and manage the many different parties that make up the supply chain," he says. "This approach also meets customers' demands for a consistent approach, consistent systems and consistent performance wherever they operate."
DHL Solutions, Plantation, Fla., also underscores this point. "Customers definitely are looking for fairly consistent service and quality across the globe, which is something that not many providers can offer," says Rolf Habben Jansen, DHL's managing director for global business development. "We believe it is an advantage to us to be able to provide one face to the customer in the many parts of the globe where we operate."
Scott Szwast, marketing manager at UPS Supply Chain Solutions, Atlanta, puts it more bluntly. "Customers like to have 'one throat to choke,'" he says. "One of the great truths of supply chain management is that if bad things happen, they tend to happen at transition points. There are a lot of transition points in a global supply chain, which is why you inevitably see a lot of finger pointing when something goes wrong. The beauty of integrators like UPS is that we provide that single source of accountability."
|"We do a whole host of services around vendor performance."|
-Tony Zasimovich of APL Logistics
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