Supporting Cast - Global Trade Magazine
  December 10th, 2015 | Written by

Supporting Cast

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  • How #3PLs Are Helping Advanced #Manufacturers

If you are thinking of offering your products online but have not figured out how to set up the website to that end, you would not ask your physician or your local baker, but what about your logistics provider?

“We help people develop their own e-commerce storefronts,” says Brian Bourke, vice president of Marketing at SEKO Logistics, a company that has focused heavily on e-commerce logistics. “We have the ability to develop websites for customers, complete with shopping cart.”

Increasingly, SEKO has shouldered functions that go beyond the traditional forwarding and warehousing activities. Other logistics providers are also broadening their scope of services. “We find we must get much more involved with customers, with manufacturing and also with order fulfillment,” reports Bob Imbriani, executive vice president, International at Team Worldwide.

Hakan Bicil, chief commercial officer of CEVA Logistics, notes that his clients increasingly look for more holistic solutions for their supply chain management rather than procure individual elements. He adds that this is more pronounced in some industries than others. The automotive industry often blazes a trail, whereas the industrial sector tends to lag about five to seven years behind.

The call for additional activities extends in both directions, both up and down the supply chain. The former reaches to a manufacturer’s suppliers. “We use our global network,” says Bicil. “We ensure the vendor will have the products ready for shipment on time.”

It’s often not merely a matter of ensuring that parts flow to the factory at the right time, but also in the right order. Sequencing is an element that CEVA, SEKO and Team have taken on for some customers.

“We bring a part in at the time the customer wants it at the point of use,” says Bicil.

Logistics providers are not averse to getting involved in the manufacturing itself, notably assembly or sub-assembly work. “We do not do any manufacturing, but we do assembly for customers,” says Imbriani, adding that this activity has been on the rise for Team.

SEKO has been expanding on this side as well, particularly with medical devices. “We are doing some assembly in our facility in Pittsburgh. It is a natural extension of how far up the food chain companies like us may go,” says Bourke.

With the automotive and high-tech sectors, sub-assembly by logistics providers is so widespread that it has become virtually a commodity, remarks Bicil.

Packing and kitting are routine functions for many logistics firms. Bicil notes that this gives CEVA flexibility to shift products around its network. He gives an example of an item that is out of stock in Italy but not selling very well in Britain. Rather than produce a fresh batch in China and ship it to Italy, this can be resolved by the logistics firm shifting inventory from Britain, a step that involves the replacement of the power cable to match different electrical sockets.

SEKO’s MedTec Solutions division, which provides specialized services to the medical and technology sectors, opened a European control center in 2014. The scope of activities offered range from network management, inventory control, quality and process engineering, IT support and development to program management, packaging design and engineering, sales and market development. It also incorporates clean room manufacturing and kitting.

Thanks to the rise of e-commerce, on the delivery side, logistics providers increasingly have to offer a bundle of solutions that cover multiple delivery channels. Bourke notes that five or 10 years ago logistics staff did not have to ask into which channel a shipment had to be slotted. Today they need to establish the nature of the shipment, which raises a host of questions, he points out.

“Where is the order coming from? What kind of label must go on the box? How do you pack the items? Do you need to include a return label?”

More and more, the delivery means more than simply handing over the shipment, especially when it comes to white glove services for products like appliances. Team often performs installation, but within limits.

“We don’t hang a TV on the wall, we don’t do fancy installations,” says Imbriani.

Returns management has assumed more prominence in the wake of growing B2C e-commerce logistics.

To begin with, the logistics provider’s frontline staff may have to determine if a product is worth shipping back to be recycled or if it should be demolished, possibly because it is seriously damaged. In some countries Team’s obligations include taking steps to recycle a product, says Imbriani.

In some cases, decontamination has to be provided or software changed. “If we have to take a medical unit back, all data has to be wiped clean to protect patient data,” says Bourke.

Sometimes the return process involves taking products apart, such as separating reusable metals from scrap metal, notes Imbriani.

A logistics employee who is capable of assessing the state of a device due for return is likely also able to perform some basic repairs on it. Logistics providers include an element of repairs in their portfolio.

CEVA has built up a lot of expertise in certain sectors, such as automotive, high-tech and consumer retail, says Bicil. “We understand the critical issues of our customer and their internal processes. We look at the customer’s customers.”

For more advanced technical activities, be they in conjunction with installing a product or for repairs, many logistics firms have teamed up partners that have the necessary expertise. “We do some repairs, sometimes we hook up with partners who are specialists,” says Bicil. CEVA has even taken over staff from customers to perform these functions, or invested in training for its own staff so they can carry out repair jobs, he adds.

One area where partnerships are more or less the norm is trade finance. In the early days of 3PLs, some large players decided to shoulder this themselves to the point of actually taking ownership of products from their clients, but this is usually not an option today.

“With global rules that have emerged over the years, the initial idea of shortening the balance sheet is limited,” comments Bicil. “We don’t want to have customers’ products on our balance sheet. We have an exclusive partnership with a company that is specialized in that.”

SEKO takes a similar stance. “Trade finance is a crucial element. It is not our forte, but we help facilitate it. We have a network of vendors and partners,” says Bourke.

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