Date post: | 17-Jan-2016 |
Category: |
Documents |
Upload: | rudolf-banks |
View: | 215 times |
Download: | 0 times |
Internet Enabled 4PL A Case Study
Padraic Allen
Two Trends Facing Supply Chain Managers Today
eCommerce – – the internet can offer the internet can offer true integration – the Cornerstone of true integration – the Cornerstone of Supply Chain ManagementSupply Chain Management
Outsourcing – organisations – organisations are are outsourcoutsourcinging non-core competencies non-core competencies
Manufacturer
Supplier Distributor Merchant
Partners with small IS staffs
Legacy systems
Incompatible information formatsNeed for real tim
e information
Security concerns
Cumbersome communicationsHigh costs
Too much stock
Outdated pricing
Long turn around time
Largesupport
staff
CustomerserviceIssues
The Supply Chain Challenge
eBusiness & Supply Chain Management
One area where the payback from e-Business can be substantial is in the integration of the supply chain
“The B2B Frenzy is all about the Supply Chain” AMR Research
Outsourcing
Listed by Harvard Business Review as one of the most important management concepts of the past 75 Years
Means of increasing performance of non-core supply chain activities
Fourth Party Logistics is the evolution of supply chain outsourcing
The key benefit of 4PL is that of increasing shareholder value
-Benefits of 4PL–
• 4PL provider maintains primary accountability and quality within the arrangement
• 4PL has the overarching responsibility for supply chain performance
• 4PL should be able to impact the entire supply chain – increasing revenue, lowering costs, reducing working capital and fixed capital
4PL Operating Models
The 4PL environment has three primary operating models:
The Synergy Plus Model The Solution Integrator Model The Industry Integrator Model
Note: 4PL is a trademark of Accenture
4PL Operating Models
The Synergy Plus Model - relies on a working relationship between the 4PL Organisation and a 3PL Company. Both the 4PL and the 3PL partner to market supply chain solutions which capitalise on the capabilities and market reach of both. The 4PL offers a broad range of services to the Third Party Logistics Provider including; technology, supply chain strategy skills and program management.
4PL Operating Models
The Solution Integrator Model - focuses on the strength of the 4PL as an individual organisation which manages a comprehensive supply chain solution for a single client. This arrangement encompasses the resources of the 4PL with a selection of complementary service providers, chosen by the 4PL, to establish a “best fit” integrated solution for the client company.
4PL Operating Models
The Industry Innovator Model - is the most complex operating model within the 4PL environment but also the most rewarding. Within this model,a 4PL organisation develops and runs a supply chain solution for multiple industry players with a focus on synchronization and collaboration.
What is the Industry Innovator Model?
The Industry Innovator is an integrated eCommerce based range of outsourced supply chain functions that act as a highly efficient path for enabling the transfer of product from suppliers to buyers.
An individual company in each industry will have slightly different supply chain needs, but there should be similarities within an individual industry.
Although the model looks similar to a marketplace, it could in fact be a series of one-to-many relationships pushed through one Market site on the web.
Typical Supply Chains
Inefficient and Clogged with inventory!
Supply Chain Re-engineering for a Single Company
Supply Chain Re-engineering for an Entire Industry
Internet Enabled 4PL – A Case Study
iTooling.com
iTooling.com was conceptualised as an ‘Industry Innovator’ 4PL. It was developed for the industrial tooling sector with an initial focus on cutting tools.
Brief Profile of the Industry
Customers – Aerospace, Automotive, Job Shops, etc.
$19Bn Worldwide Market (Roughly 1/3 in each region US, Europe & Asia)
Small form factor Relatively high value Consumable – Frequent repeat buying Many suppliers – Very fragmented
Background The industrial tools market is one of the most fragmented
and agency locked markets in the world today. The route from manufacturer to customer is characterised
by the involvement of many intermediaries, several hand-offs and multiple inventory holding points.
The belief was that there is minimal value added by these intermediaries and the consequence of their involvement is additional touches, increased customer cost and an erosion of manufacturer’s margin.
It was felt that there was an outstanding opportunity to totally simplify the supply chain and in doing so reduce the cost and significantly improve the buying experience for the customer.
Supply Chain
Global Manufacturers
Typical Supply Chain
RegionalDistributor
CountryWholesaler
Local AgentCustomer
+ +
Supply Chain Future
Global Manufacturers
Global Manufacturers
RegionalDistributorRegional
DistributorCountry
WholesalerCountry
Wholesaler
Local AgentLocal AgentCustomerCustomer
iTO
OL
ING
.com
Strategy
Partner with quality brand manufacturers of selected industrial tools.
Create a multi brand carrying internet site to allow customers a full catalog view of the selected products and pricing.
Manage the customer relationship and the fulfillment process and this would become a core competence of the company.
Partner with strategically positioned logistics providers capable of meeting or exceeding customer’s response expectations.
Strategy (Continued)
Hub inventory at the logistics sites calculated to achieve a defined customer fill rate
Take ownership of the product only when it is being picked for a customer order and aggressively manage the cash conversion cycle
Primarily trade on-line and actively encourage customers to do so but this will be supplemented by call center support
Work on an agreed service fee calculated to cover iTOOLING.com’s costs and achieve target profit
itoolexp4.exe
Hubbing Animation…
•Real Time Demand Information
•Online without being in direct competition with existing channels
•Forecasting Data Available
•Distribution Coverage
•Product Feedback
•Improved Manufacturers Margin
•Product Choice & Comparison
•Best Price Available
•Improved Purchasing Experience
•Simple / Transactional Cost Savings
•Improved Customer Service
•Technical Support available 24/7
•One Stop Shop for Industry
Benefits- Win, Win
Manufacturer Customer
iTOOLING.com ProfitiTOOLING.com Profit
Existing Distribution Existing Distribution Network ModelNetwork Model
Price
Manufacturer Selling PriceManufacturer Selling Price
Geographic Agent MarginGeographic Agent Margin
National Distributor MarginNational Distributor Margin
Local Distributor MarginLocal Distributor Margin
End User PriceEnd User Price
Sheffield Recommended Sheffield Recommended Retail Price ModelRetail Price Model
iTOOLING.com ModeliTOOLING.com Model
iTOOLING.com iTOOLING.com Service ChargeService Charge
Discountvs R.R.P.
Saving
““Sheffield” MarginSheffield” Margin
But…. Industry was not ready for radical change Manufacturers feared increased
competition and even less opportunity for differentiation
Intermediaries proved to be more valuable than anticipated and in fact held a lot of power in the chain
These lessons were not unique to the Tooling industry!
Where to next?
How Could We ? Continue to engage the Intermediaries Overcome the Manufacturers fears And Still Achieve Supply Chain
Efficiencies
Conclusion: By moving From Revolution to Evolution
A.S.P. Charge
Dist A :Business as usual with reduced inventory
Dist B : On-line presence & reduced inventory
Dist C : Added value sales agent. On line presence, sources product & provides technical support
No Dist : Manufacturer Website or Large Customer
Exchange, MRO or other marketplace (Covisint?)
Mfg A Mfg B Mfg B Mfg C Mfg D Mfg E
Supply & Inventory ManagementSupply & Inventory Management
On-line Web PresenceOn-line Web Presence
Order FulfilmentOrder Fulfilment
Invoicing & BillingInvoicing & Billing
Sell DirectSell Direct
eMarketseMarkets
Manufacturer(s)Manufacturer(s) IndustryIndustryMasterMaster
Channel Channel Partner Partner CatalogCatalog
Touch Touch PointsPoints
End-User End-User Custom Custom CatalogsCatalogs
4PL Management4PL Management
Integrated M3 Cataloging Technology & 4PL Mgmt.
The Information Conduit
ManufacturerManufacturerManufacturerManufacturer
ManufacturerManufacturerManufacturerManufacturer
ManufacturerManufacturerManufacturerManufacturer
ManufacturerManufacturerManufacturerManufacturer
iTooling.comiTooling.comiTooling.comiTooling.comChannel Type BChannel Type BChannel Type BChannel Type B
Channel Type CChannel Type CChannel Type CChannel Type C
Channel Type DChannel Type DChannel Type DChannel Type D
Channel Type AChannel Type AChannel Type AChannel Type A
iTooling.com Value PropositioniTooling.com Value Proposition
Design & Manage Design & Manage ProcessesProcesses
Design & Manage Design & Manage ProcessesProcesses
3PL Partners: Tracking, Delivery, Inbound3PL Partners: Tracking, Delivery, Inbound Manage Hubs, Reports, Manage Hubs, Reports,
3PL Partners: Tracking, Delivery, Inbound3PL Partners: Tracking, Delivery, Inbound Manage Hubs, Reports, Manage Hubs, Reports,
Software Partner: Catalogs, ASP, Back Office, Software Partner: Catalogs, ASP, Back Office, eCommerce PlatformeCommerce Platform
Software Partner: Catalogs, ASP, Back Office, Software Partner: Catalogs, ASP, Back Office, eCommerce PlatformeCommerce Platform
Technical & Technical & Business Business
ImplementationImplementation
Technical & Technical & Business Business
ImplementationImplementation
Partner Partner Relationship Relationship ManagementManagement
Partner Partner Relationship Relationship ManagementManagement
ASP £ Model
Variable £ Model
Communicate & Communicate & ConsultConsult
Communicate & Communicate & ConsultConsult
Cost + Mgmt. Fee
Fee % Based
Standard Software Interface to 3PL PartnersStandard Software Interface to 3PL Partners Standard Software Interface to 3PL PartnersStandard Software Interface to 3PL Partners
Conclusions The story continues… There are still tremendous
efficiencies to be achieved in Supply Chains
Despite the bad press, eBusiness is happening now and is a major force in achieving these savings
The path will be more an evolution than a revolution as first expected