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A Conversation with John Motley
CEO and founder, LOG-NET, Inc.

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LQ: How feasible is it for a 3PL that serves a multitude of customers in disparate industries to develop a single technology platform to address customers’ distinct needs? (Tom Goldsby, Ph.D.)
John Motley: The majority of top 3PLs have technology infrastructure that enables them to support a broad variety of distinct customer needs. However, it is important for users of these services to understand the offering and the value proposition of the particular 3PL.LOG-NET is a provider of such a technology solution.We have spent years enabling a configurable application that is just as happy moving pork products as it is handling the logistics of Tickle Me Elmo.The benefit of such a highly configurable application is that it removes many of the technology constraints of a single platform by using simple customization. However, this quickly makes differentiation among the excellent 3PLs an issue of expertise and execution capability. Armed with a toolkit like LOG-NET, 3PLs can create an enormous number of system solutions for clients.There are three key areas of staff expertise that users of these services should look for:

  1. process management staff who understand the customer’s business and how to adapt the system to support that business,
  2. data and systems engineering staff who are fluent in the e-commerce of the trading partners that is to be implemented, and
  3. staff in the locations that the customer needs who are fluent in support and day-to-day management of both the customer’s business processes and the technology infrastructure used to support it. 3PLs with this type of staff and IT infrastructure typically offer three distinct levels of services,which are usually based on the cost of the service and the level of customization that the customer will be provided. Broadly speaking, these can be described as follows.
  1. Adjunct Services: This offering is an add-on to core transportation, forwarding or brokerage services. It is typically a structured program offered in a broad variety of locations.
    As this is a mass service offered as an add-on, it is typically lower-cost and less customized. A major benefit to this type of service is that it is structured and usually has broad training around the globe, supporting the probability of high quality of service with lower training needs. This is usually identified within the 3PL as a corporate service as opposed to a separate profit-and-loss center within the organization.
  2. Boutique/Customized Services: The boutique service will provide highly customized services where the 3PL integrates with the customer and the procedures and processes are predominantly driven by the customer. These services will be separately priced and will involve custom e-commerce and process integration. Many 3PLs have set up separate integrated or global logistics divisions to cater to this market.These provide benefits that include tremendous alignment with customers’ goals and revenue or cost-reduction objectives.The trade-off is that the custom nature of this type of solution requires more aggressive staffing and management to both deploy and maintain.
  3. Hybrid Custom/Add-on Solutions: Some 3PLs will enable clients to mix and match their core, add-on and custom services. The trade-off in this environment can involve blurred lines of accountability within the 3PL that may not be in the best interest of the customer. Customers should make diligent efforts to understand and clarify roles and accountability for a delivery that may be shared across transportation, forwarding, warehousing and brokerage entities within a 3PL.They should insist on a single point of contact for problem resolution in any area.
    From a technology perspective, applications such as LOGNET are supporting all these types of 3PLs, but there are differences in the size and breadth of technology and process management staff within each 3PL.

LQ: What is the likelihood of technology providers being able to successfully combine ERP and supply chain functional software? Who are or will be the leaders in making this happen? (John Langley Jr., Ph.D.)
John Motley: The end client of the 3PL is clearly driving this set of requirements. In the past 12 months we have seen a major increase in the volume of clients moving to build collaborative frameworks between best-of-breed 3PL and supply chain technology to extend the capabilities of the ERP infrastructure.
Many ERP users are ending their wait for the ERP suppliers to build out their multimodal or international logistics capabilities. The result is requests for deep integration with how the leading ERP applications are being deployed. To the 3PL and supply chain technology providers this means gaining a deep understanding of the data and business process models that the ERP applications operate.
By way of example,we recently deployed several international multimodal solutions for SAP clients.This is an area in which SAP provides very limited fidelity.LOG-NET has built a deep understanding of how SAP uses things like material numbers and line numbers on orders to manage manufacturing, apparel, hi-tech, retail and pharmaceutical clients.This enables us to create fluent dialogues between the SAP instance and the trading-partner community. Significantly, we can also be a layer between the trading-partner community and the ERP application.
When enabled with a 3PL, we can extend the enterprise infrastructure and management process from the clients to their suppliers, using our configuration capability to provide the homogeneous environment the ERP seeks while accommodating the heterogeneity that typically permeates most trading-partner communities.
The leaders in this industry will be those suppliers of 3PL and supply chain IT that provide the highest level of configurability, domain expertise and proven execution in multi-enterprise integration and management. ERP applications are setting benchmarks of business practices,and the 3PL community is responding aggressively to maintain their positions of excellence in supply chain IT.
Questions for this Executive Interview were prepared by LQ’s board members:

Tom Goldsby, Ph.D., University of Kentucky, and John Langley Jr., Ph.D., Professor of Supply Chain Management, Georgia Institute of Technology.

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