Looking for a work-related New Year’s resolution? How about transforming the way you establish and manage your outsourced logistics relationships with 3PLs? As I have written many times before, many 3PL-customer relationships, particularly those that are in their fourth or fifth year, seem to be stuck in a rut. Yes, in most cases these relationships are going okay, cost targets are being met and service levels are acceptable, but there’s also the nagging feeling at both parties that they are simply going through the motions and missing out on additional opportunities to generate value. Sound familiar?

Last month at The Logistics & Supply Chain Forum organized by Richmond Events, I conducted several think tanks on maximizing the value of 3PL-customer relationships. I am in the process of writing a report on the key takeaways from the sessions (and the results of a related web survey), but if I had to summarize what I learned in one sentence, here it is:  Not all outsourced logistics relationships need to be strategic, but most companies have a 3PL partner or two where both parties, after working together for several years and establishing a certain level of trust, recognize that they are on the cusp of “taking it to the next level” but they don’t know how to take the first step (i.e., how to overcome the status quo and the constraints that bind them).

The step before the first step is attending our seminar on Performance-based Outsourcing (aka “Vested Outsourcing”) this coming February 9-11 in Orlando, Florida.

Since we first announced the seminar back in September, the response has been great, and the agenda is now almost complete. Here is a summary of the speakers and sessions we have lined up so far:

  • Kate Vitasek, founder of Supply Chain Visions and a faculty member at the University of Tennessee’s Center for Executive Education, will present “Vested Outsourcing: Five Rules that will Transform Outsourcing.” Vested Outsourcing is a new business model that is based on a research study with the University of Tennessee and the United States Air Force in a search for a better way to outsource. Vested Outsourcing transforms outsourcing relationships into business partnerships that drive innovation to achieve what most normally think of as tradeoffs when trying to achieve costs and performance improvements. Kate will share the top ten critical (and of­ten invisible) flaws inherent in almost all outsourced business relationships and will show attendees the five game changing rules of Vested Outsourcing that will help organizations build true vested partnership with their provid­ers and customers —the only partnership worth having.
  • Stan Dubbert, Director of Supply Chain Operations at Whirlpool, will present “Aligning Leadership, Objectives, and Metrics between Whirlpool and its 3PL Partners.” Stan will take you through a process that Whirlpool and its core 3PL providers have implemented to align 3PL management and labor to Whirlpool’s service, quality and productivity objectives every shift, day, week, month and quarter for every distribution center. The process is centered on common metrics that encompasses simple visual management tools that engages warehouse labor on a daily basis, and a series of quick and efficient review sessions that ensures alignment of Whirlpool and 3PL senior leadership teams. The discussion will also focus on the agreements Whirlpool has with its 3PL providers that align financial rewards for achieving overall service, cost and quality objectives. This process has resulted in a 4% improvement in on-time delivery while reducing labor costs by 19% – delivering higher service at a lower cost and is simple and cost effective to implement.
  • Jim O’Brien, former Vice President of Global Logistics at Thermadyne Holdings, will share his perspective on the topic as an executive with over 20 years experience in distribution operations, transportation, planning, and logistics within the CPG, health care, and industrial sectors, as well as the 3PL industry, having worked at Exel.
  • Richard MacLaren, General Manager North America at Unipart Logistics, will present “Unipart’s Journey (So Far) to Performance Based Outsourcing Relationships and Outcomes.” Richard will take you through Unipart’s journey and experience in performance-based outsourcing highlighting its long standing relationship with Jaguar and other global brands. Through this journey, Richard will highlight lessons learned, growth of the relationship into other global markets, the customer successes and then take you through a recommended framework for making PBO work (based on Unipart’s experience) and the future outlook.
  • George Abernathy, Executive Vice President and Chief Operating Officer at Transplace, will present “Lean Six Sigma: A Long-term, Strategic Approach to Outsourced Logistics Relationships.” George will demonstrate how Transplace has incorporated Lean Six Sigma (LSS) practices into its customer relationships, along with the deployment of a business intelligence solution, to continuously identify, analyze and deliver added value. George and a customer (to be named soon) will provide insight to how LSS is acted upon in operations and how this has manifested to ongoing cost reductions and incremental service performance improvements.

Steve Banker and I will also present ARC’s research in this area. The agenda also includes think tank sessions for the attendees and presenters to network and discuss the opportunities and challenges associated with performance-based outsourcing and how to address them.

Space is very limited, and about a third of the slots are filled, so early registration is encouraged (click here to register online, and check the website for pricing and other event details). Priority will be given to logistics and procurement executives at manufacturing, retail, and third party logistics companies. Consultants and technology vendors that are interested in attending please email us (info@arcweb.com) and we’ll place you on a reserve list in case space is available.

Most New Year’s resolutions fall by the wayside after a few weeks. You can either continue to “go through the motions” with your 3PLs next year, or you can work together to transform your relationships in 2010. The choice is yours. I hope to see you in Orlando.

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