LQ: What are the advantages and potential disadvantages of “one-stop logistics,” where the customer counts on the 3PL to provide a range of integrated logistics/supply chain solutions? (John Langley Jr., Georgia Tech)
Gregory Werner: The advantages of single source freight management and logistics programs are numerous. Among the most significant advantages are reduced systems integration, as 3PLs oftentimes take on the role of integrating with vendors, carriers and other supply chain partners. Reduced internal administration costs and personnel related to load planning, mode selection, shipment tendering, tracing, freight audit and payment and compliance are all advantages to consolidating supply chain management to a single provider. Freight cost reductions can be achieved in most cases where the single source provider has the ability to leverage and integrate other managed freight into their clients’ network. This creates efficiencies in capacity utilization and volume leverage in certain modes. Drawbacks to a one-stopshop can include selecting a single source provider that cannot grow and evolve their solutions to match the business changes of their clients. Simply put, some businesses outgrow their 3PL. Additionally, there is risk of engaging a 3PL with suspect financial strength that prevents them from investing and keeping pace on the technology front or reduces their ability to weather tough financial times in slow freight environments.
LQ: What are the advantages of an “asset-based” 3PL versus a “nonasset” 3PL? (Russ Doak, Kodak)
Gregory Werner: Simply put, the ability to back the design up with actual implementation and hard asset capacity is what separates assetbacked organizations from a more consultant-based model. In addition, the design itself is often superior because asset-based organizations have learned from years of actual freight movement experience and supply chain involvement instead of a more academic or insulated approach, which results in many theoretical-only approaches.
LQ: What are the characteristics of your most successful customer relationships — successful as defined by both your customer and your business? (Kurt Ritcey, Deloitte)
Gregory Werner: The key to having successful customer relationships as a 3PL is ensuring expectations and definitions of success have been clearly established throughout the sale and implementation of the project. Equally important is having open, ongoing dialogue around what issues and barriers exist with both parties and working in concert to overcome those issues. Finally, a 3PL’s success is ultimately defined by driving true value to its customers’ bottom line, which will always help maintain or improve the long-term relationship.
LQ: What are the strengths that distinguish your company? What efforts have you made to understand your customers’ business? For what companies have you solved problems? (Russ Doak)
Gregory Werner: Our overriding strength is that we take a unique view of every customer’s business to provide the best overall solution. For instance, we were presented with a bid from a large retail company that showed approximately 6,300 container movements from Asia to the U.S., originating from multiple points in China going through specific ports. We could have just priced the business as presented and hope our price going head-to-head was competitive. Instead, we analyzed the data and developed a solution, which involved consolidation of loads in China, moving through different ports. In doing so, we dropped the overall containers needed from approximately 6,300 to approximately 5,033. Simply working to drive improvements through rate negotiations or lower prices will not be enough in today’s more competitive landscape. Through the combinations of quality front-end analysis backed up by assets and the ability to implement the tactical component, we feel our blended product is able to better meet our customers’ needs.
LQ: What steps are 3PLs taking to ensure they provide customized solutions that meet the needs of the customer?(Russ Doak)
Gregory Werner: Successful 3PLs ensure their ability to provide customized solutions by transitioning more and more of their IT capabilities to proprietary solutions. An additional key element is the provider network for distribution centers, consolidators and crossdock operations. Having a diverse network of providers in terms of size, capabilities and geographic locations allows 3PLs to design an optimal supply chain plan and implement it independent of fixed asset utilization considerations.
LQ: As 3PLs continue to consolidate, will their business focus shift to targeting larger “Fortune 500” type organizations as opposed to small to medium sized organizations? My concern is the consolidated 3PLs will become less flexible in service offerings and less agile. Please address this issue. (David Faoro, International Group)
Gregory Werner: Because small to midsized organizations often do not have the buying power of “Fortune 500” companies and do not have the corporate barriers to change inherent in many large organizations, they tend to be more open to creative solutions for their network, which we can provide. Our philosophy and business model is unique to many logistics companies in that we take a ground-up approach with each customer and spend more time in our fact finding and implementation phase to insure we build the right system and solutions for each. We do not try to fit a customer’s supply chain solution into a pre-designed box; rather we determine their supply chain needs and build the solution to fit. In doing so, the amount of on-site work and customer consultation is often greater than some of the larger logistics integrators are prepared to commit to when working with the small to midsized target customer.
LQ: Today there is a growing need for specialized knowledge and execution capabilities to adequately support cross-border logistics activities. Please elaborate on these factors. (John Langley Jr.)
Gregory Werner: Cross-border activity is increasing every year when compared to the true domestic logistics network. There is a growing perimeter pressure in the U.S. right now from both the north and south borders, as well as through the ports. Today’s 3PLs need to understand the origin and destination complexities in the supply chain and be able to capture the best-in-class capacity options in both countries while providing cross-border visibility throughout. In addition, today’s supply chain customers expect their 3PL to have capacity options throughout, but also to be a collaborative partner in everything from vendor and PO management to customs consultation and clearance — and ultimately final mile delivery to the store shelf. Very few providers can excel across the supply chain like Werner.
LQ Board members who have prepared questions included in this interview with Mr. Werner include John C. Langley Jr., Ph.D., The Logistics Institute (TLI), Georgia Institute of Technology; Russ J. Doak, Director, Global Logistics, Kodak; Kurt M. Ritcey, Partner, Deloitte Consulting; David Faoro, Director, Supply Chain Management, International Group.