After months of planning, we finally held our seminar on performance-based outsourcing (PBO) in Orlando this week. Great presentations from Kate Vitasek (whose book “Vested Outsourcing: Five Rules that Will Transform Outsourcing” was just published) and representatives from Whirlpool, Del Monte, Penske Logistics, Transplace, and Unipart Logistics. Equally informative were the discussions the attendees had during the think tank sessions. In the days and weeks ahead, Steve Banker and I will share our key takeaways from the seminar. But here are a couple of quick observations:

• The attendees (mostly logistics executives from 3PLs and client companies) want to explore this topic further, and they want to expose their colleagues, including upper management, and partners to PBO/Vested Outsourcing. This is one of the action items ARC will address soon.
• Lean Six Sigma (LSS) was a common thread between all of the companies that presented. Does this mean that having a LSS culture is a prerequisite for engaging in vested outsourcing? This was one of the many questions the attendees discussed. The consensus: having a culture that embraces continuous improvement is probably a requirement, but it doesn’t necessarily have to be LSS. I believe, however, that LSS facilitates the alignment process because both companies will be speaking a common language and using similar tools and methodologies (I commented on the link between lean and PBO last year in “Cost Reduction vs. Waste Reduction”).

Here are some other news items that caught our attention this week:

• Ryder and Cargo Services Far East Limited Enter Strategic Partnership
• SAP Returns to Co-CEO Structure with Bill McDermott and Jim Hagemann Snabe
• FedEx Trade Networks Continues Global Expansion by Opening Six New Offices
• U.S., Canada Set Deal on ‘Buy American’ (from Wall Street Journal)

Ryder’s announcement is aimed at strengthening the company’s value proposition for North American retailers, an industry segment Ryder is targeting for growth. According to the press release, “the solution [operating as Ryder Supply Chain Solutions Asia] will provide Vendor and Purchase Order Management, Inland Transport Services, Export Consolidation and Order Fulfillment Services, including Distribution Center Bypass and Store-Ready Pallet Construction from Asia to North America. It builds upon Ryder’s recent acquisition of CRSA Logistics, which manages Trans-Pacific end-to-end transportation management and supply chain services for Canadian retailers, including consolidation services in key Asian hubs and deconsolidation operations in Canada.”

The SAP announcement was somewhat surprising, considering that Léo Apotheker had been sole-CEO for less than a year (although he had been with SAP for more than 20 years). But as we highlighted in our news roundup a couple of weeks ago, SAP had very disappointing financial results in 2009, so from that perspective, the move is not surprising. The role of CEO will now be shared by Bill McDermott and Jim H. Snabe. But as the press release makes clear, Hasso Plattner will have his hand firmly on the rudder too. (I wonder what Shai Agassi, who left SAP in 2007 after reportedly being skipped over for the CEO position, thinks of all this). As Mr. Plattner says in the press release, aligning product innovation with customer needs is a key objective for SAP moving forward. I’ll have a better sense of SAP’s plans in supply chain and logistics after I attend the SAP Insider event later this month.

Finally, I wrote several pieces last year about “Buy American” which created quite a stir with our Canadian friends (see “(Not) Walking the Talk on Protectionism” and “Canadians Against ‘Buy American’ (Dark Shadows on Global Trade)”). According to the WSJ article, “The U.S. and Canada, its largest trading partner, reached a preliminary deal to settle what had become an acrimonious dispute over “Buy American” provisions in the U.S. stimulus package. The deal, if approved, will give companies on both sides of the border access to government procurement contracts at the state and local levels.”

Have a great weekend!

(Note: SAP, Transplace, Ryder, and Unipart Logistics are ARC clients)