Logistics Changes Are Customer Driven

Oct. 1, 2008
With the formation of the global supply chain solutions group, Ryder has built two business units that will work together and be managed as global business units

With the formation of the global supply chain solutions group, Ryder has built two business units that will work together and be managed as global business units instead of two US business units, says John Williford. In a conversation with Outsourced Logistics, Williford describes how change has been customer driven and how Ryder's experience in a number of industry groups has evolved to help create the services, technologies and reach the geographies that are important to a broader range of users.

“What I really have always liked doing is taking capabilities and focusing them on the needs of customers,” says Williford, and today, those needs include much more flexibility in supply chains than in the past. Users of logistics services need help planning, mapping, and operating their global supply chains.

Logistics engineering is increasingly important as these new more flexible supply chains are initially designed and then reevaluated, and realigned as conditions change. For instance, more manufacturing firms are interested in moving from Asia back to Mexico, and that involves a lot of total landed cost studies and network studies as those companies try to determine how much and what sourcing to shift, where to locate, and whether warehousing should be in the interior of Mexico or nearer to the US border.

Even five or 10 years ago, companies set up fixed supply chains with most or all of their manufacturing in Asia. Now, because of the changes in fuel prices, currencies, ocean rates, port congestion and other factors, they are looking for more balanced supply chains where some manufacturing may be in the US or Latin America and some in Asia. And even in Asia, the sourcing is more spread out than it had been.

Most 3PLs do “event management,” says Williford. He describes Ryder's approach as more of a “Control Tower” approach that creates a plan at a detailed level and tracks progress against the plan. Execution is at a very high level.

Williford describes the logistics engineering function as operations design, network layout, even sourcing studies. It includes lean processes and continuous improvement.

One of the weaknesses of 3PLs in general, has been the lack of an ability to proactively bring new solutions to existing users. That's where the engineering approach and use of lean processes and continuous improvement come in to make sure 3PLs continuously bringing new value to existing users.

One challenge 3PLs continue to face is the need to represent continuous improvements in financial terms. Whether they're customer service improvements or direct cost improvements, all of the continuous improvement work needs to be expressed in dollar terms because that's what users expect.

In the end, it's the job of the 3PL to put a variety of options in front of the users and to work with them to find the best solutions. In the years that the use of outsourced logistics has been growing, the user companies have gotten better at looking across the departments and business units and considering total cost to the company to provide a certain service level, but there is still work to be done to bring that same thinking to the total supply chain. It's rare, says Williford, to see a company making a decision based on the cost impact for the total supply chain. But as Ryder and other 3PLs are finding themselves providing logistics services to more members of the same supply chain, that attitude and capability may evolve. Like the current advances in outsourced logistics, the providers may be ready with services and capabilities, but users will have to drive the change.

Latest from Transportation & Distribution

176927300 © Welcomia | Dreamstime.com
96378710 © Nattapong Boonchuenchom | Dreamstime.com