Logistics Service Providers Archives

SingPost – A Smart Transformation to E-Commerce Logistics Solutions

Logistics Outsourcing | By Clint Reiser • 11/09/2016

Two decades ago, I didn’t know postal operators in foreign countries unless I had a pen pal in the region. The role and range of services offered by postal companies have changed considerably since the advent of e-mail, the internet, and most importantly, the exponential growth of e-commerce. Singapore Post (SingPost) is one such domestic provider that has been in the press for its increasing presence in today’s digital economy.

In 2014, Chinese e-commerce giant Alibaba took a S$312.5 million stake in SingPost. Shortly thereafter, a Wall Street Journal article featured SingPost’s new S$182 million e-commerce logistics hub being built to support Southeast Asia’s burgeoning direct-to-consumer retail channel with parcel carrier and contract logistics services.

These developments piqued my interest in SingPost, and six months later I shared a session at HighJump’s user conference with Peet Leong Kok, the Deputy CEO of Quantium Solutions (Quantium), a SingPost’s subsidiary focused on e-commerce logistics business. This serendipitous meeting provided me with the opportunity to learn about the finer details of SingPost’s growing e-commerce business and the e-commerce logistics technology platform the company established to support its transformational growth plans.

Taking the Leap of Faith in E-Commerce Fulfillment
SingPost projected that its core postal business was in decline and that e-commerce logistics would be the growth engine of the future. The company was well-positioned with its existing logistics network to support the anticipated growth in e-commerce parcel delivery. SingPost also saw an opportunity to grow a complementary full-service 3PL business focused on e-commerce fulfillment. However, the company was established as a postal and parcel company, not a full-service logistics provider. The Quantium business unit would have to expand its facilities and information technology capabilities to support the complex requirements and expected growth of e-commerce fulfillment.

The company evaluated the throughput profile of e-commerce fulfillment operations, which led to several key findings like dealing with a high quantity of orders with a low number of items per order, a high number of SKUs, and a great deal of seasonality. The company would also have 3PL customers with distinct needs and others with similar requirements among them. Similar requirements would include a desire to get up and running quickly with connectivity between the warehouse management system (WMS), e-commerce store fronts, order management, parcel shipping, and other software to support the “order through last mile delivery” processes.

The Quantium E-Commerce Fulfillment Technology Platform

The Enterprise WMS Solution
The Quantium team looked at a number of warehouse management systems and the final choice was HighJump Warehouse Advantage to support Quantium’s logistics centers. The flexibility and adaptability offered by Warehouse Advantage and the Advantage Architect platform distinguished HighJump from the other WMS solutions. Adaptability was considered critical to Quantium’s needs, as the company knew that it would have to configure the solution to align its capabilities to support high levels of labor which are typical of warehouses in the Asia Pacific region. To efficiently onboard new e-commerce fulfillment customers, Quantium established standard procedures to be used “out of the box”. For unique customer requirements, HighJump’s adaptability allowed Quantium to easily specify and deploy screen changes and other modifications for its customers. The HighJump system’s adaptability and Quantium’s standardized on-boarding procedures enabled Quantium to shorten the customer implementation and on-boarding process to just three weeks.

Finally, Quantium found it comparably easy to maintain existing configurations and modifications during system upgrades. This is due to the ability to deploy screen changes and make deeper level process changes in the HighJump system without adjusting the source code. All of these WMS adaptability features significantly lowered the total cost of ownership for Quantium, and made it a strong fit for the company’s WMS requirements.

Increasing Efficiencies through Warehouse Automation
Most of Quantium’s warehouse workers utilize traditional RF (radio frequency) handheld devices to deliver and receive communications with the WMS. At the same time, Quantium realized that most workers and potential hires are already familiar with the Android smartphone operating system. Quantium decided to leverage the existing smartphone platform, and developed its own mobile warehouse application running on Android. The Android handhelds with the warehouse application deliver additional operational efficiencies by shortening employee training times and offering lower costs per device. Although these devices are not ideal for every worker, they are well-suited for certain operations and to help on board temporary workers quickly during seasonal peaks.

To reach the next level of efficiency, Quantium has deployed warehouse automation and is integrating the equipment with its WMS. Vertical lift systems are operational and the S$182 million regional e-commerce logistics hub is in full operation, with its warehouse automation linked to the fully automated parcel sorting system.

Integrated E-Commerce Technology Solution
To become a global leader in e-commerce logistics services, Quantium needed to do more than integrate warehouse automation to its WMS solution. It needed to offer a complete end-to-end solution. Integration with e-commerce front-end systems and last mile parcel systems is particularly important to e-commerce logistics. To achieve this, Quantium built a middle layer that natively connects with web stores for order extractions and status updates. The HighJump WMS is also integrated with the SingPost delivery system and order management systems, key Asian online marketplaces, and ERP (enterprise resource planning) systems.

Operational Results
Singapore Post Group operates more than 50 fulfillment centers worldwide with a global e-commerce logistics network spanning 19 markets across Asia, Europe and USA. The logistics revenue of the Singapore Post Group, of which Quantium Solutions is a part of, increased by 34.7 per cent to $626 million on the back of increased e-Commerce logistics activities as well as the integration of new subsidiaries into the Group’s e-commerce logistics network in the fiscal year ended March 2016. Planning for the future clearly paid dividends for Singapore Post Group.

3PLs, What’s More Valuable Than Another Twitter Follower?

Learning & Leadership | By Adrian Gonzalez • 07/31/2013

I have long argued that third party logistics providers (3PLs) should set themselves apart from the competition by fully harnessing the power and value of their customer and employee communities (see “If Operational Excellence is a Given, Then What Else Matters for 3PLs?” and “Operational Excellence is Not Enough–Why 3PLs Must Leverage Their Most Valuable Asset”). Take user/customer conferences as an example. While software vendors have been organizing user conferences for many years, the concept of bringing customers and employees together to engage in peer-to-peer learning and networking is still relatively new for most 3PLs.

But the tide is starting to change, as more 3PLs are either launching or expanding their customer engagement efforts this year. A couple of weeks ago, for example, I had the opportunity to speak at a forum organized by C.H. Robinson in Chicago (C.H. Robinson is a Logistics Viewpoints sponsor). The event was held at Loyola University of Chicago in an MBA-like classroom with stadium seating. The “look and feel” of the room aligned nicely with the event’s goal: to provide C.H. Robinson’s employees and customers (more than 100 attendees in total) with an educational experience.

To facilitate peer-to-peer learning, the program was structured to encourage audience participation. I kicked things off with a discussion on supply chain risk management, leveraging some of my research and writings on this topic (see “Many Companies Falling Short on Supply Chain Risk Management” and “Rethinking Supply Chain Risk Management”). I approached the session like an Executive MBA class, engaging the audience throughout for their ideas and questions — and they did not disappoint! In fact, the audience stole my thunder a few times by raising points I had planned to discuss later in my presentation.

Supply Chain Risk Management Challenges Companies Face (Source: Adelante SCM)

The highlight of the forum was the customer panel session. For confidentiality reasons, I won’t name the customers, but they represented a variety of industries and company sizes, and they work with C.H. Robinson in different ways. The conversation focused on four key topics: spend management, efficiency improvement, risk management, and change management. Without going into specifics, it was enlightening (not just for me, but for everyone in the room) to hear directly from customers about their views, strategies, priorities, and objectives related to these topics — and to note the common threads between them, and where their views and experiences differed and why. Simply put, the 90-minute discussion, driven by questions from the moderator and audience, was a great example of peer-to-peer learning in action.

The forum concluded with a “fireside chat” between me and Chris O’Brien, Senior Vice President at C.H. Robinson, where we discussed several important factors necessary to calculate total landed cost and how companies can leverage TLC to derive supply chain benefits. Chris and I discussed this same topic in more detail in a recent episode of Talking Logistics (watch the short clip below where Chris talks about the importance of SKU-level data in determining total landed costs, and what insights companies can gain from having high-quality SKU-level data). We also discussed how near-shoring, omni-channel distribution, and natural gas vehicles are beginning to play an influential role in today’s supply chains, and what their impacts may be on future strategies.

The bottom line: as a survey I conducted a couple of years ago revealed, supply chain and logistics professionals view peer-to-peer learning and networking as the most valuable source of practical knowledge and advice.

Yet most 3PLs, despite having large and diverse sets of clients and employees, do a poor job of bringing these communities together to facilitate knowledge exchange and networking. The irony is that many 3PLs are working so hard these days to grow their social media communities (an effort I completely support and encourage), yet they continue to drop the ball when it comes to engaging their existing “real world” communities. As the attendees of C.H. Robinson’s forum would attest, spending an afternoon (or a day or two) with your peers and other industry professionals, sharing ideas, knowledge, and advice, is infinitely more valuable than picking up another follower on Twitter or Facebook, especially for the people who matter the most — your customers.

Guest Commentary: Moving Parts: Effectively Managing the Aftermarket Auto Parts Supply Chain

Automotive Industry | By Paul McDonald • 07/25/2013

When an automobile parts dealer or a business in the auto service parts retail network makes a request to its suppliers to fulfill an order, there is an expectation that the right component shows up at the right place, in the right time frame, at the right cost. After all, at the end of the line in this complex supply chain fulfillment cycle is a customer with a vehicle waiting for a repair part. That customer has the choice of going to a dealer’s service department, or an independent shop in the service parts retail network. The complexities of the aftermarket auto parts supply chain and the physical movement of millions of individual parts made by manufacturers around the world demands flawless execution at every link to satisfy that customer.

Accurate and timely visibility, process expertise and understanding the intricacies involved in managing the physical movement of goods and inventory are some of the acute challenges within the aftermarket auto parts industry. In order to win the business of a car owner, both dealers and the automotive service parts retail network must overcome these challenges and position themselves as the most attractive option. A third-party logistics provider (3PL) can address these issues and help implement solutions that allow a dealer or retailer to win in this continual competition for customers.

With parts crisscrossing the globe, one of the benefits of working with a 3PL is gaining the ability to offer assurance of a part’s status at any point in the supply chain. This is where visibility is critical. 3PLs provide an accurate view of the flow of inbound and outbound goods. Driven by continual technology investment, the accessibility of as-it-happens information is increasing by the day. By extension, the availability of supply chain information has altered the aftermarket auto parts landscape. The ripple effect of on-demand information continues as customer expectations surrounding status updates have also increased. The bar is constantly being raised regarding the importance of the reliability and efficacy of that information.

Dealers and other providers in the automobile service parts retail network that elect to navigate the aftermarket auto parts supply chain without the assistance of a 3PL run the risk of losing inventory control, negatively affecting customer service and increasing costs. A 3PL delivers the tools, information, and importantly, the people and process rigor to ensure accurate, timely execution. Most parts suppliers and their dealer or retail networks do not have the expertise to manage their own supply chains. By leveraging the experience and knowledge of a strong 3PL, stakeholders can focus on customer relationships, more efficient and accurate inventory management and increasing sales.

The movement of parts along each stage of the supply chain can also be a challenge. When a parts dealer or retailer needs 500 SKUs of windshield wipers and 50 pallets of mufflers, those parts do not arrive on separate trucks originating from each factory that produces them or distribution center that ships them. A 3PL can bring a robust transportation management solution integrated with technology to coordinate the collection of those parts from their points of origin and provide consolidation services to facilitate the receiving, sorting, repackaging and delivery of those auto parts to a dealer or retailer. Monitoring each stage along the way with timely data will quickly illuminate inefficiencies, identify possible corrective actions and allow for uninterrupted service.

Issues surrounding effective inventory management are also commonly identified as roadblocks to efficiency. By taking advantage of the insight and expertise of a 3PL, dealers and the auto parts retail network benefit from increased transparency, visibility, clear communication and a fuller understanding of what happens at each stage of the supply chain. This information will position dealers and retailers to effectively manage the balance between over-ordering and warehousing unsold stock, and delayed fulfillment due to under-stocked items — both classic outcomes of a lack of timely visibility and rigorous process controls that lead to poor situational awareness and mismanaged inventories.

The aftermarket auto parts industry presents one of the most difficult and complex supply chains to manage. Whether a dealer or retailer needs one pallet consisting of 10 different products, or 100 pallets loaded with 1,000 parts, a 3PL provides the same seamless service. The right 3PL can implement systems that provide critical data integration and in-depth visibility to achieve results with greater efficiency and lower cost than a dealer or automobile service parts retailer can achieve otherwise.

Paul McDonald is Director of Business Development at Menlo Worldwide Logistics, a $1.6 billion global provider of logistics, transportation management and supply chain services. Named to his current position in 2008, McDonald is responsible for sales and marketing activities in Menlo’s Automotive and Heavy Industrial Group. He joined Menlo as a senior manager of operations in 1997.

Guest Commentary: Can You Blueprint a Logistics Services Operation?

Guest Commentary | By Kevin Schock • 05/02/2013

The time was the mid-nineties, and as many aspiring leaders do, I decided to earn an MBA. One class in particular, Service Marketing, left an impression on me. Back then, it was a new and revolutionary course, hot off the presses. It tackled the concept that service marketing is different from product marketing for many different reasons, including the variability of how a service is delivered. I think of that course often.

I am not sure why it stuck with me. Maybe it was because I had grown up with technology and followed my dad’s footsteps in a career focused on it. Or maybe it was because I worked in the transportation industry before grad school. Whatever the reason, I felt the course was on to something. To me, it pointed the way forward.

After earning my degree I joined a logistics company. To make a long story short, I discovered that the notion of what I had learned – creating consistency in a customer’s buying experience – could only be realized to a limited degree. Why? Thinking back, it was both timing and technology.

One of my first assignments at my new job was to lead a project with our IT group to “capture our best sales practices” in a single tool. We custom built what is now known as a sales force automation tool with a little CRM sprinkled in. However, the idea that we could blueprint the operation and deliver on what we promised all within an ‘90s-era technology system was overly optimistic.

Remember, this was almost 20 years ago, a different time in technology. So, the thinking was in the right direction, but the scope and scale were not there, both in our operating models nor in our tools to enable. When I look back at it, it was a concept ahead of its time.

As with any business, success starts and ends with the customer. But that’s easier said than done in the service-intensive transportation industry, where meeting customer demand requires timely, accurate information and precision in service delivery. Fast forward through the years and the “services marketing” ideas of service products, services catalogs, and so on continue to come up. So, this begs the question: Is now the right time? Do we have what it takes to realize this “revolutionary” idea of blueprinting a service company-wide?

To meet the demands of transportation and logistics operations, reduce costs, and improve overall asset management, services companies are taking a page from the manufacturing playbook. The first idea is a renewed focus on the customer. Siloed operations that manage contracts, customer orders, pricing, and bill collection in disconnected systems are out. To achieve 360-degree customer visibility, the new approach puts the customer in the middle – defining processes and services that work in an end-to-end fashion with and around the customer. The second approach emphasizes service products – with a goal to minimize disconnects between what the business designs and sells and how it is delivered. Here, the company specifies how it performs tasks based on what has been sold. This helps increase efficiency by minimizing the variance between what is sold and what actually happens operationally.

This is the direction we are going. When you consider a transportation management system with built-in event management, that works with other software solutions, and you couple it with the promise of in-memory and mobility technology, it’s clear that the technology is ready. Are we? Maybe now is the time where technology and revolutionary ideas meet. Something to think about.

Kevin Schock is the Director of Solution Management in the SAP Transportation and Logistics Industry Business Unit, responsible for the global SAP solutions strategy and direction for the transportation and logistics cargo industries. He joined SAP in 2007 as Industry Principal for the transportation and logistics industry North America bringing over 20 years of experience in technology spanning roles in IT sales, logistics services marketing, and application development. Prior to SAP, Kevin worked for BNSF Railway in North America responsible for application development teams and strategic IT projects. Before BNSF, Kevin was head of Marketing for a crew and workforce management software company owned by Union Pacific Corporation. Kevin started his career with IBM and worked on the American Airlines account as well as led the market development department for GTE Supply (Verizon Logistics).

In Logistics, Somebody Has to Own the Assets

Logistics Service Providers | By Adrian Gonzalez • 04/03/2013

In most aspects of life, an asset is an asset, “a useful and desirable thing or quality,” as Dictionary.com defines it. But not in the logistics world, at least not to private equity investors and venture capitalists who view a 3PL with assets like an overweight runner, wearing a lead track suit and cement sneakers, in a field of sprinters.

Non-asset is non-fat, it’s sexy and desirable, it’s what every start-up 3PL tattoos on its forehead in case you missed it in its business plan, press release, and website.

But somebody has to own the trucks, warehouses, pallets, forklifts, IT, and other assets that make logistics — and the whole non-asset 3PL industry — possible.

It’s time for asset-owning 3PLs to take off that scarlet letter and embrace a better definition of an asset: “something useful in an effort to foil or defeat an enemy.”

In the retail industry, you can view Amazon.com as a non-asset retailer because it doesn’t own any stores, giving it a financial advantage over brick-and-mortar retailers that are “burdened” with real estate on their balance sheets. But if you look closely, Amazon’s real advantage comes from its logistics assets — the 89 distribution centers it has, including 20 opened last year, with more scheduled to open in the months ahead. And its technology assets too, like the Kiva robots Amazon purchased last year and the data centers that power its cloud computing services. What’s even more interesting, in my opinion, is that Amazon is leveraging these assets to provide fulfillment services for other companies.

Yes, Amazon.com is an asset-owning 3PL and proud of it.

And so is Sears, which is also positioning itself as an asset-owning 3PL. According to a recent article in Internet Retailer, Sears is rolling out a new service called Fulfilled by Sears that “enables other retailers to fulfill online and offline orders in the United States through Sears’ warehouses and stores.” The article provides some details about the service, including pricing. “We have the ability to ship orders much faster and more cost-effectively than other sellers do based on our national footprint of stores and warehouses,” says Imran Jooma, Sears’ corporate executive vice president and president of online, marketing, pricing and financial services. Check out the short video below from the Fulfilled by Sears website:

Fulfilled by Sears from Gisteo.com on Vimeo.

Simply put, the headlines you see in fashion magazines also apply to 3PLs: highlight and accentuate your assets — especially when retailers and other emerging competitors are encroaching on your turf by doing the same.

And investors also need to rethink their definition of what is an attractive investment in the logistics industry. Just like investors are becoming less enamored with consumer-centric websites and are falling in love again with business-to-business software, they also need to take a second look at the opportunities offered by asset-based logistics service providers.

Yes, somebody has to own the assets in logistics. But owning them is not enough — you also need the vision, talent, and will to leverage them creatively to foil and defeat the competition and provide differentiated value to customers.

4 Important Factors to Consider When Evaluating 3PL Partners

Logistics Service Providers | By Adrian Gonzalez • 02/13/2013

I often get emails from logistics executives looking for help and advice on selecting a 3PL partner. A couple of weeks ago, for example, I received an email from someone asking if I had updated a framework I had developed several years ago to help companies evaluate 3PLs. The answer was no, but this person’s email got the wheels in my head turning: What are the most important factors to consider when evaluating and selecting a 3PL partner?

I discussed this question last week on my talk show Talking Logistics, which you can watch by clicking below. I won’t repeat everything I talked about here, but I want to focus on the four evaluation factors I highlighted that go beyond the basics.

First let me tell you how I came up with these factors. I started by looking at the most common areas where 3PLs fall short of customer expectations. The number one complaint of customers — by a wide margin — is that their 3PLs are not proactive enough in identifying continuous improvement opportunities (see my October 2011 posting “I Wish My 3PL Was More Proactive”). Another top complaint is that 3PLs are slow to implement process changes and other requests.

I then asked myself, are there things you can look for when evaluating prospective 3PL partners that would minimize or eliminate the risk of experiencing these issues? And that’s how I came up with these four evaluation factors:

1. Alignment of Continuous Improvement Cultures. I’ve had the opportunity to research many successful 3PL-customer relationships and the common thread across them all is that both parties have strong continuous improvement cultures, usually grounded in Lean/Six Sigma principles — a common language that immediately creates a bonding point. It’s like meeting someone for the first time and realizing that you both grew up in the same neighborhood or went to the same university. Sharing the same experience and level of commitment to continuous improvement creates a strong foundation to build a lasting relationship.

And you can gauge that level of commitment by, among other things, the number of continuous improvement projects the 3PL initiates and completes each year; the investments it makes in formalized training programs; the number of Six Sigma Black Belts the 3PL has across the organization; and the number of awards it receives from customers related to successful continuous improvement projects. Simply put, if continuous improvement is not part of a 3PL’s DNA, then you are setting yourself up for disappointment down the road.

2. Modern IT Platform with a Focus on Innovation. Why does it take a 3PL so long to make a process change or enable a new process in response to a customer request? The answer, in most cases, is that they are burdened with an inflexible and outdated IT infrastructure. If the majority of a 3PL’s systems were developed in the 90s (or earlier), or they are written in outdated and proprietary languages, then you are putting yourself at risk of experiencing integration issues, and more importantly, the 3PL will not be able to keep pace with your rapidly changing supply chain and logistics requirements. In short, make sure that a 3PL’s commitment to continuous improvement also applies to its IT systems, that the company is keeping pace with the rapid and ongoing changes occurring in technology, and that its IT strategy and roadmap align with yours.

It’s also important to look at the number of IT resources a 3PL has and how much the company invests in technology annually, as a percent of net revenues. But don’t be fooled by the overall dollar investment. Many 3PLs spend a lot of money on IT annually, but the vast majority goes to maintaining existing systems. And the older and more outdated the systems are, the more money they cost to maintain. Therefore, what you really want to know is how much of a 3PL’s annual IT budget goes toward innovation-related projects — i.e., toward developing or implementing new applications or functionality, especially customer-facing solutions.

3. Invest in Talent Development and Retention. There is a shortage of supply chain and logistics talent in the industry, and it’s arguably the biggest issue facing both 3PLs and their customers. At the end of the day, it’s people that make or break any relationship, including a business one. In fact, one of the things that often creates friction in a 3PL-customer relationship is when the primary person in charge of managing the customer relationship is moved to a different account or leaves the 3PL. How deep is the 3PL’s talent pool? Will the replacement be as competent and have the same communication and relationship management skills as the other person? Does the 3PL have a defined succession planning process that involves the customer to ensure a smooth transition? These are all important questions to consider. Ideally, the 3PL will have people across all levels of the organization that are knowledgeable about your vertical industry, and even better, have worked in it. Also, take a close look at the training and development programs the 3PL invests in, and the content of those programs. This will shed some light on what skills and knowledge the 3PL deems important, and if they align with your expectations.

4. Provide Business Intelligence and Insights. This point goes beyond IT. Sure, having access to BI dashboards is very important, but I view that as a basic requirement these days. What I’m talking about here relates to something many customers say they want from their 3PLs: “Tell me something I don’t already know.” As I wrote about last September in “Operational Excellence is Not Enough – Why 3PLs Must Leverage Their Most Valuable Asset,” customers want their 3PL partners to provide them with insights about leading industry practices and trends, as well as to facilitate networking and knowledge-exchange opportunities with other shippers in the 3PL’s community. Does the 3PL conduct market research and share its findings with customers? Does the 3PL organize peer-to-peer learning and networking events for customers and industry experts to attend? Does the 3PL make it easy for you to contact and collaborate with their extended team of experts? If all a 3PL has to offer is a dashboard, then don’t expect to gain much insight beyond what you already know.

Obviously, there are many important factors to consider when evaluating and selecting a 3PL partner. But in my opinion, the four factors above are the most critical in paving a smoother path to a long and successful relationship.

What do you think? Post a comment and share your perspective.

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