A Conversation with Joe Gallick
Senior Vice President, Sales, Penske Logistics
and Tom McKenna
Senior Vice President, Engineering and Technology, Penske Logistics

LQ: What are you doing to develop more connectivity capability in terms of best-of-breed software from your clients and your own systems? (Russ Doak) Joe Gallick: Seamless integration of our business process solutions and our customer’s supply chain architecture is critical in achieving the desired results of any logistics outsourcing engagement. While 3PLs have successfully developed or acquired the necessary software to execute transportation and distribution activities, the connectivity with the shipper’s enterprise or functional planning systems is a key requirement of success. At Penske we have invested heavily in our people, processes and technology
to address this need.
For instance,we have successfully hired and trained more than 160 associates in business systems analysis, system/data integration,Web application development, data/telecom network management and risk and contingency planning.These experts, located throughout the world and working collaboratively with our customers and trading partners, are supported by six Sigma-trained project managers who ensure that our integrations are properly mapped,tested,piloted and installed. Using state-of-the-art EDI, XML and proprietary technology, we’re able to process millions of orders and transactions flawlessly, bring them into our data translation and work-flow environment, and direct them to the appropriate tactical-solution
software (TMS,WMS, Cellcom) for execution. Afterward, closing the information loop via secured intranet and extranet applications returns the necessary information to the customer’s host system to enable critical visibility and business intelligence requirements.
Tom McKenna: Increasingly we are also being asked to send financial data directly to our customers’ ERP and general ledger systems, so we have also taken the step of having our transportation management processes SAS 70–certified. This auditing standard is for service providers who can demonstrate they have adequate controls and safeguards when hosting or processing data belonging to their customers.
LQ: What are you doing to ensure your customer is educated about your comprehensive end-to-end supply chain capabilities and integrated handoff of IT expertise and delivery?  (Russ Doak)
Joe Gallick: Communicating with customers would seem at first glance like a natural and somewhat simple activity. Yet numerous studies have revealed lack of effective communication to be one of the leading contributors to failed outsourcing engagements. We use three key formal tools to understand our customers’ business, capture and communicate customer satisfaction, and develop and present continuous improvement initiatives. Voice-of-thecustomer (VOC) surveys allow us to regularly gauge the pulse of the relationship by promoting an open and honest, outside-in assessment of account performance. Customer account retention efforts (CARE) involve quarterly reviews that include quantitative and qualitative assessments, goal resetting and relationship management at the operational and functional levels.
The best way a customer can achieve a full understanding of Penske's supply chain capabilities is through our dedicated customer experience teams (CETs). Each of these multifunctional teams is chartered to develop an in-depth understanding of our customer’s business, proactively pursue improvement initiatives and innovation, and expand the collective knowledge base and experience with the customer.As a result,natural areas of expertise for 3PLs, such as warehousing and transportation, are seeing expansion into the domains of demand planning, supplier resource management (SRM) and strategic replenishment— in a sense, an end-to-end supply chain.
Tom McKenna: Whether our solution includes only the core technology applications needed for our standard logistics management processes or includes technology extensions that customize that solution for any individual customer, the communication tools described by Joe enhance collaboration among our customers’ supply chain, logistics and IT departments. In our experience, such collaboration is vital to successful implementation of every one of our solutions.
LQ: How central is information technology to the value proposition that you offer to customers? Do you feel you enjoy some distinct advantage as a result of the technology you offer? (Tom Goldsby, Ph.D.)
Joe Gallick: In the information age we now live in, it’s become a reality that businesses will flourish or fail based upon the performance of their supply chain. Needless to say, technology is core to this reality and the enabler of the value proposition we present to our customers. The challenge we all face in this environment is to make the correct IT decisions in a dynamic  marketplace.Who are the best providers?
Who will offer the most support? How customizable are the technologies to our customers’ needs? Should we develop the capability internally?
Tom McKenna: Should we consider application service providers (ASPs)? And how do we transition our current systems to a service-oriented architecture (SOA) that promises even greater flexibility?
Joe Gallick: All of these decisions, of course, must address and balance the voice of the customer with the voice of the shareholder (ROI). The distinct advantage we have to offer our customers is the fact that we’ve lived through and made these decisions already, allowing them to receive the full benefits of digitization in real time and with minimum investment and performance risk. Our approach has been a blended one, leveraging best-in-breed technologies with internally developed software and creative middleware to enable specific business processes— customized to fit the needs of each customer, yet within standard platforms that enable us to leverage scale and repeatable processes among many customers.
LQ: Do customers look to you for technology solutions or enhanced process performance — performance that may be enabled through technology?
(Tom Goldsby Ph.D.)
Joe Gallick: This question very much gets to the heart of the preceding one. Oftentimes a customer will come to us with an RFP for a specific technological solution. This is usually the result of a business process assessment that has specified the need for a particular technology (for example,TMS,WMS) and has assigned sourcing this need to a procurement group to address the purchase/ outsource alternatives. Over the years we have learned to resist the obvious temptation and to probe deeper to understand the rationale behind the request, and challenge accordingly.
Logistics service providers must have the necessary IT tools to be considered by any serious buyer. More important, however, is the capability and experience the provider must have to fully understand the underlying processes this technology will support and the performance improvements it is projected to enable.
Additionally, value-stream mapping the processes the technology will support, as well as the preceding and resulting ones,is critical in ensuring the ultimate adoption and usefulness of the tool.
This exercise sometimes achieves a valuable result.While certain technologies may be more robust and have the latest features,a more flexible and nimble solution, tailored specifically to the customer’s processes, may yield the best ROI and results.

Questions for this Executive Interview were prepared by LQ’s board members:
Russ Doak, Director, Supply Chain Logistics, Heli-One and Tom Goldsby, Ph.D., University of Kentucky.

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