Who's Who in Logistics and Supply Chain Management - Armstrong ...
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<strong>Who</strong>’s <strong>Who</strong> <strong>in</strong> <strong>Logistics</strong> <strong>and</strong><br />
<strong>Supply</strong> Cha<strong>in</strong> <strong>Management</strong> - The Americas<br />
16th Edition<br />
<strong>Armstrong</strong> & Associates, Inc.<br />
Provid<strong>in</strong>g transportation <strong>and</strong> logistics expertise s<strong>in</strong>ce 1980.
<strong><strong>Who</strong>'s</strong> <strong>Who</strong> <strong>in</strong> <strong>Logistics</strong> <strong>and</strong> <strong>Supply</strong> Cha<strong>in</strong> <strong>Management</strong> - The Americas<br />
* Sixteenth Edition *<br />
© Copyright 2008<br />
<strong>Armstrong</strong> & Associates, Inc.<br />
100 Bus<strong>in</strong>ess Park Circle, Suite 202, Stoughton, WI 53589 USA<br />
Phone: +1-608-873-8929 Fax: +1-608-873-5509<br />
www.3P<strong>Logistics</strong>.com<br />
All Rights Reserved.<br />
No part of this publication may be reproduced, stored <strong>in</strong> a retrieval system or transmitted <strong>in</strong> any form by any means,<br />
electronic, mechanical, photocopy<strong>in</strong>g, record<strong>in</strong>g or otherwise, without the prior permission of the publisher, <strong>Armstrong</strong> &<br />
Associates, Inc.<br />
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that<br />
the f<strong>in</strong>d<strong>in</strong>gs, conclusions <strong>and</strong> recommendations that <strong>Armstrong</strong> & Associates delivers will be based on <strong>in</strong>formation<br />
gathered <strong>in</strong> good faith from both primary <strong>and</strong> secondary sources, whose accuracy we are not always <strong>in</strong> a position to<br />
guarantee. As such <strong>Armstrong</strong> & Associates can accept no liability whatever for actions taken based on any<br />
<strong>in</strong>formation that may subsequently prove to be <strong>in</strong>correct.<br />
16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
Page 2 of 833
16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
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Table of Contents<br />
Section 1 - Summaries of North American-Based 3PLs<br />
Page<br />
Major North American-Based 3PL Revenues<br />
Dedicated Contract Carriage Units<br />
Section 2 - 3PL Market Growth & <strong>Logistics</strong> Costs<br />
10<br />
11<br />
U.S. 3PL Market<br />
U.S. <strong>Logistics</strong> Costs<br />
Global <strong>Logistics</strong> Costs <strong>and</strong> 3PL Revenues<br />
Section 3 - North American & Lat<strong>in</strong> American-Based Providers<br />
14<br />
15<br />
16<br />
Def<strong>in</strong>itions <strong>and</strong> Explanations of Terms<br />
24/7 Express <strong>Logistics</strong>, Inc.<br />
3PD, Inc.<br />
A.N. Der<strong>in</strong>ger, Inc.<br />
ACCEL Logística<br />
Access <strong>Logistics</strong>, LLC<br />
Active Aero Group, Inc.<br />
ADI <strong>Logistics</strong><br />
ADS <strong>Logistics</strong>, LLC<br />
Aerospace Products International, Inc.<br />
Aimar S.A.<br />
Aimi Cargo S.A.<br />
AIT Worldwide <strong>Logistics</strong>, Inc.<br />
Aldia Logística<br />
Allen Lund Company<br />
Almacenadora, S.A.<br />
Almacenadora de Depósito Moderno, S.A. de C.V.<br />
Almacenadora Mercader S.A.<br />
Almacenar S.A.<br />
Almaviva S.A.<br />
Alpopular S.A.<br />
América Lat<strong>in</strong>a Logística S.A.<br />
AmeriCold <strong>Logistics</strong>, Inc.<br />
Aspen Distribution, Inc.<br />
ATC <strong>Logistics</strong> & Electronics<br />
Averitt Express <strong>Supply</strong> Cha<strong>in</strong> Solutions<br />
Barrett Distribution Centers, Inc.<br />
BDP International<br />
Bear Transportation Services, LP<br />
Beltmann Integrated <strong>Logistics</strong>, Inc.<br />
Bender Group<br />
B<strong>in</strong>otto S.A.<br />
BNSF <strong>Logistics</strong>, LLC<br />
Bomi de México, S.A. de C.V.<br />
Bonded <strong>Logistics</strong>, Inc.<br />
Brightpo<strong>in</strong>t, Inc.<br />
Burris <strong>Logistics</strong>, Inc.<br />
C.H. Rob<strong>in</strong>son Worldwide, Inc.<br />
California Cartage Company<br />
Capacity LLC<br />
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23<br />
26<br />
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16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
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Section 3 - North American & Lat<strong>in</strong> American-Based Providers<br />
Card<strong>in</strong>al <strong>Logistics</strong> <strong>Management</strong> Inc.<br />
Caterpillar <strong>Logistics</strong> Services, Inc.<br />
Celsur Logística, S.A. de C.V.<br />
Centro De Almacenes Congelados C.A.<br />
CEVA <strong>Logistics</strong> (The Americas)<br />
Champagne <strong>Logistics</strong><br />
Champion <strong>Logistics</strong> Group<br />
Coimex Logística Integrada S.A.<br />
Columbian <strong>Logistics</strong> Network<br />
Commercial Warehouse & Cartage<br />
Cornerstone Systems<br />
Crowley <strong>Logistics</strong>, Inc.<br />
CRST <strong>Logistics</strong>, Inc.<br />
Commercial Traffic Co. AKA CT <strong>Logistics</strong><br />
CTSI<br />
Companhia Vale do Rio Doce<br />
D.W. Morgan Company, LLC<br />
D+S Distribution, Inc.<br />
Derby Industries, LLC<br />
DHL & Exel <strong>Logistics</strong> (The Americas)<br />
Direct Fulfillment<br />
DSC <strong>Logistics</strong><br />
E*Fill America<br />
Engl<strong>and</strong> <strong>Logistics</strong>, Inc.<br />
Estes Air Forward<strong>in</strong>g, LLC<br />
Exologística S.A.<br />
Expeditors Int'l of Wash<strong>in</strong>gton, Inc.<br />
FedEx <strong>Supply</strong> Cha<strong>in</strong> Services/FedEx Trade Networks<br />
Freightquote.com<br />
GENCO <strong>Supply</strong> Cha<strong>in</strong> Solutions<br />
GIRAG<br />
Greatwide <strong>Logistics</strong> Services, Inc.<br />
Grupo TPC<br />
Hanover Term<strong>in</strong>al, Inc.<br />
Hub Group, Inc.<br />
Ingram Micro <strong>Logistics</strong><br />
Inl<strong>and</strong> Empire Distribution Systems, Inc.<br />
InSite <strong>Logistics</strong>, Inc.<br />
Interstate Distributor Co.<br />
J.B. Hunt Dedicated Contract Services<br />
Jacobson Companies<br />
Julio Simões Transportes e Serviços Ltda.<br />
Kane Is Able, Inc.<br />
Kelron <strong>Logistics</strong><br />
Kenco Logistic Services<br />
Keystone Dedicated <strong>Logistics</strong><br />
Kuehne + Nagel, Inc. (The Americas)<br />
LAN Courier S.A.<br />
L<strong>and</strong>air<br />
L<strong>and</strong>star Global <strong>Logistics</strong>, Inc.<br />
Laney & Duke Term<strong>in</strong>al Whse. Co.<br />
Leicht Transfer & Storage Co.<br />
LeSa<strong>in</strong>t <strong>Logistics</strong><br />
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195<br />
201<br />
204<br />
207<br />
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16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
Page 5 of 833
Section 3 - North American & Lat<strong>in</strong> American-Based Providers<br />
Levent<br />
Lily Dedicated <strong>Logistics</strong> Systems<br />
Liv<strong>in</strong>gston International, Inc.<br />
<strong>Logistics</strong> <strong>Management</strong> Solutions<br />
LOGISCO<br />
Logística Industrial S.A.<br />
<strong>Logistics</strong> Insight Corporation<br />
Logyx Almacenadora S.A. de C.V.<br />
LynnCo <strong>Supply</strong> Cha<strong>in</strong> Solutions, Inc.<br />
Mallory Alex<strong>and</strong>er International <strong>Logistics</strong><br />
Matson Integrated <strong>Logistics</strong><br />
MBX <strong>Logistics</strong>, LLC<br />
MD <strong>Logistics</strong><br />
Megatrux Inc.<br />
Menlo Worldwide <strong>Logistics</strong><br />
Midwest Express Group<br />
NAL Worldwide LLC<br />
National Traffic Service<br />
Network Global <strong>Logistics</strong> LLC<br />
New Breed <strong>Logistics</strong><br />
Nexus Distribution<br />
NFI Industries<br />
Nippon Express USA, Inc.<br />
ODW <strong>Logistics</strong>, Inc.<br />
Onest Mexico, S.A. de C.V.<br />
Ozburn-Hessey <strong>Logistics</strong><br />
Pacific American Services<br />
Pacer Global <strong>Logistics</strong> Services<br />
Patterson Warehouses, Inc.<br />
Penske <strong>Logistics</strong><br />
Performance Team<br />
PFSweb, Inc.<br />
Phoenix International Freight Services, Ltd.<br />
PLS <strong>Logistics</strong> Services<br />
Rapidão Cometa<br />
Redpack S.A. de C.V.<br />
Regal <strong>Logistics</strong><br />
RSI <strong>Logistics</strong>, Inc.<br />
Ruan Transport Corporation<br />
Ryder System, Inc.<br />
Saddle Creek Corporation<br />
Salem <strong>Logistics</strong>, Inc.<br />
Schenker Americas<br />
Schneider Dedicated Operations<br />
Schneider <strong>Logistics</strong>, Inc.<br />
SCI <strong>Logistics</strong> Inc.<br />
Scott <strong>Logistics</strong> Corporation<br />
ServiceCraft <strong>Logistics</strong><br />
Servicios Logísticos de Colombia S.A.<br />
Servientrega S.A.<br />
Sudamericana Agencias Aéreas y Marítimas S.A.<br />
Summit Global <strong>Logistics</strong>/FMI International<br />
Sunteck Transport Company, Inc.<br />
432<br />
435<br />
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443<br />
448<br />
453<br />
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16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
Page 6 of 833
Section 3 - North American & Lat<strong>in</strong> American-Based Providers<br />
Swift Transportation Co., Inc.<br />
syncreon<br />
TBB Global <strong>Logistics</strong><br />
The Term<strong>in</strong>al Corporation<br />
Tito Global Trade Services LLC<br />
Total Logistic Control<br />
TMSi <strong>Logistics</strong><br />
Total Quality <strong>Logistics</strong>, Inc.<br />
TransGroup Worldwide <strong>Logistics</strong><br />
Transplace<br />
Transportadora Americana Ltda.<br />
Transportadora Itapemirim S/A<br />
Transportation Insight LLC<br />
TranzAct Technologies Inc.<br />
Tr<strong>in</strong>ity Transport, Inc.<br />
United Facilities, Inc.<br />
Union Pacific Distribution Services<br />
UPS <strong>Supply</strong> Cha<strong>in</strong> Solutions<br />
UTi Worldwide Inc.<br />
VersaCold<br />
Verst Group <strong>Logistics</strong><br />
Wagner Industries, Inc.<br />
Warehouse Services, Inc.<br />
Warehouse Specialists, Inc.<br />
Weber Distribution Warehouses, Inc.<br />
Werner Enterprises Dedicated & <strong>Logistics</strong><br />
Wheels Group of Companies<br />
WOW <strong>Logistics</strong><br />
Yobel <strong>Supply</strong> Cha<strong>in</strong> <strong>Management</strong><br />
YRC <strong>Logistics</strong><br />
Zimag <strong>Logistics</strong><br />
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16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
Page 7 of 833
Company Name: Ryder System, Inc.<br />
Address: 11690 N.W. 105th St., Miami, FL 33178-1103 USA<br />
Phone Number: 888-887-9337<br />
Email Address: www.ryder.com/contactscs<br />
Fax Number: 305-500-4339<br />
Website Address www.ryder.com<br />
COMPANY BACKGROUND<br />
Parent Corporation: Ryder System, Inc.<br />
Year Started <strong>in</strong> <strong>Logistics</strong>: 1957<br />
Market Area:<br />
Int'l<br />
Found<strong>in</strong>g Bus<strong>in</strong>ess: Truck Leas<strong>in</strong>g<br />
Asset Focus: A, N<br />
(A = Asset Based, N = Non Asset Based)<br />
Subsidiaries or Related Companies<br />
OVERALL CAPABILITY<br />
Overall Capability of Provider: Tier 1 global supply cha<strong>in</strong> manager <strong>and</strong> presence <strong>in</strong> most major markets. Very good DCC.<br />
KEY PERSONNEL<br />
Gregory Swienton<br />
Chairman & CEO<br />
Rosario Rizzo<br />
SVP DCC<br />
Robert Sanchez<br />
EVP & CFO<br />
Tom Jones SVP U.S. SCS Dave Bouchard SVP International<br />
FINANCIAL INFORMATION (FY 2007)<br />
Total <strong>Logistics</strong> Revenue ($Millions): 2,818<br />
Total Net <strong>Logistics</strong> Revenue ($Millions): 1,867 *<br />
Total <strong>Logistics</strong> Employees (Includ<strong>in</strong>g Drivers): 17,482<br />
Total Long-Term Contracts Held: 850<br />
Average Length of <strong>Logistics</strong> Contract (Years): 3-5<br />
Ticker Symbol: R<br />
Exchange: NYSE<br />
* (Net <strong>Logistics</strong> Revenue is net of pass-through revenues for purchased transportation.)<br />
ASSETS<br />
Dedicated Contract Carriage Power Units/Trucks:<br />
Total Tractors: 3,489<br />
Total Trucks: 546<br />
Total Other: 4<br />
Dedicated Contract Carriage Trailers:<br />
Total Dry Van: 4,939<br />
Total Reefers: 400<br />
Total Flatbeds: 447<br />
Total Tankers: 19<br />
Total Other: 61<br />
Total Transportation Assets:<br />
Total Tractors: 51,703<br />
Total Trucks: 57,646<br />
Total Trailers: 49,423<br />
Total Aircraft:<br />
Total Ocean:<br />
Total Other: 798<br />
Total Warehouses & Distribution Centers:<br />
Total Warehouses/DC's: 202<br />
Total Square Footage: 22.8 (Million)<br />
Total with Rail Doors:<br />
Avg Truck Doors per DC:<br />
Asset Ownership v.s. Leased:<br />
Transportation Equipment: Owned/Leased<br />
Warehouses/DC's: Owned/Leased<br />
FREIGHT FORWARDING/NVOCC VOLUMES<br />
Total Annual TEUs:<br />
Total Annual Airfreight Tonnes:<br />
MAJOR MARKETS<br />
INFORMATION SYSTEMS<br />
Total Licensed Customs Brokers:<br />
(For detailed <strong>in</strong>dustry <strong>in</strong>formation, see "Customers" section.)<br />
Automotive Consumer Goods Elements Food, Groceries Industrial<br />
Retail<strong>in</strong>g<br />
Technological<br />
Overall Information Systems Rat<strong>in</strong>g: G (E=Excellent, G=Good, C=Capable/Adequate, <strong>and</strong> I=Inadequate)<br />
Software Type:<br />
Software Vendor/Br<strong>and</strong>:<br />
Transportation <strong>Management</strong> System (TMS): i2 Technologies, Proprietary<br />
TMS Optimization Rout<strong>in</strong>es:<br />
Transportation Plann<strong>in</strong>g <strong>and</strong> Optimization: i2 Technologies<br />
End-to-end Match<strong>in</strong>g/Cont<strong>in</strong>uous Moves<br />
Warehouse <strong>Management</strong> System (WMS): V3 Systems, Manhattan--PkMS, Proprietary<br />
Mode Conversion/Optimization<br />
Network Model<strong>in</strong>g/Site Location:<br />
i2 Technologies<br />
Many to Many <strong>Supply</strong> Network Optimization<br />
Freight Bill Audit/Payment Software: Proprietary<br />
Order <strong>Management</strong> System:<br />
Other Systems Capabilities:<br />
Bar Cod<strong>in</strong>g<br />
EDI H<strong>and</strong>l<strong>in</strong>g Integrated TMS & WMS Internet Customer Access Real-time Track & Trace<br />
Dem<strong>and</strong> & <strong>Supply</strong> Forecast<strong>in</strong>g ERP Interfaces Internet Order Fulfillment Radio Frequency Devices XML Data H<strong>and</strong>l<strong>in</strong>g<br />
16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
Page 613 of 833
TRANSPORTATION MANAGEMENT SERVICES<br />
Transportation Plann<strong>in</strong>g Transportation Execution Transportation Services<br />
Carrier Mgmt <strong>and</strong> Contract<strong>in</strong>g<br />
Inbound Shipment Plann<strong>in</strong>g<br />
Outbound Shipment Plann<strong>in</strong>g<br />
End-to-end Load Match<strong>in</strong>g<br />
Mode Conversion/Optimization<br />
Contract File Ma<strong>in</strong>tenance<br />
Exception H<strong>and</strong>l<strong>in</strong>g<br />
Load Tender<strong>in</strong>g<br />
Loss/Damage Claims<br />
Track<strong>in</strong>g & Trac<strong>in</strong>g<br />
Freight Bill Payment:<br />
Pre-Audit<br />
Post-Audit<br />
Performed In-house<br />
Outsourced<br />
Air Freight Forward<strong>in</strong>g<br />
Consolidation/Deconsolidation<br />
Dedicated Contract Carriage<br />
Freight Brokerage<br />
Home Delivery<br />
Less than Truckload (LTL)<br />
Ocean Freight Forward<strong>in</strong>g<br />
Rail<br />
Rail TOFC/COFC<br />
Small Package<br />
Specialized<br />
Truckload (TL)<br />
WAREHOUSING & VALUE-ADDED SERVICES<br />
Warehouse/Distribution Center<br />
Facilities Mgmt Frozen Refrigerated Rail Sid<strong>in</strong>g<br />
Value-Added Services<br />
Call Centers<br />
Kitt<strong>in</strong>g<br />
Pick/Pack<br />
Cross Dock<strong>in</strong>g<br />
Label<strong>in</strong>g<br />
Pool Distribution<br />
Customization<br />
Lot Control<br />
Repair/Refurbish<br />
Inventory Control/Vendor Mgmt Merge <strong>in</strong> Transit<br />
Returnable Conta<strong>in</strong>er Mgmt<br />
KanBan<br />
Manufactur<strong>in</strong>g Support Reverse <strong>Logistics</strong><br />
Store Support/Direct Store Delivery<br />
Sequenc<strong>in</strong>g/Meter<strong>in</strong>g<br />
Specialty Packag<strong>in</strong>g<br />
Sub Assembly<br />
OTHER 3PL SERVICES, SKILLS & HANDLING<br />
Other 3PL Services<br />
Consult<strong>in</strong>g/Process Reeng<strong>in</strong>eer<strong>in</strong>g<br />
Factor<strong>in</strong>g/F<strong>in</strong>ancial Services<br />
Special Skills & Material H<strong>and</strong>l<strong>in</strong>g<br />
Bulk Commodities<br />
CUSTOMERS<br />
Hazardous Materials<br />
ISO Certified Certification Locations:<br />
Other Services:<br />
Installation/Removal<br />
Purchase Order Mgmt<br />
Quality Control<br />
Order Mgmt Project <strong>Logistics</strong> Union Services<br />
Food Grade/Sterile<br />
Numerous locations globally.<br />
INTERNATIONAL SERVICES & PRIMARY AREAS SERVED<br />
International Services<br />
AES/AMS/C-TPAT<br />
LCL Consolidation<br />
Customs Brokerage<br />
Export Crat<strong>in</strong>g<br />
A sample of 3PL clients.<br />
Customer<br />
Andersen W<strong>in</strong>dows<br />
Duty Drawback<br />
Foreign Trade Zone<br />
NVOCC<br />
Port Services<br />
Areas Served<br />
Africa/Middle East<br />
Asia/Pacific<br />
Australia/New Zeal<strong>and</strong><br />
Temperature Controlled<br />
Europe<br />
Lat<strong>in</strong>/South America<br />
North America<br />
TM-Transportation Mgmt WM-Whse/DC Mgmt VA-Value-Added DCC-Dedicated Contract Carriage<br />
Inte-Integrated TM&WM IM-Intermodal Intl-International SCM-<strong>Supply</strong> Cha<strong>in</strong> Network Mgmt. Lead-Lead 3PL<br />
Services Rendered by Ryder<br />
Industry Location TM WM VA DCC Inte IM Intl SCM Lead Other<br />
Build<strong>in</strong>g Materials, Glass<br />
Applied Materials Semiconductors, Electronic Components Europe, N. America<br />
Arv<strong>in</strong>Meritor Motor Vehicles & Parts Asia, Europe, L. America<br />
Aspects Beauty<br />
BellSouth<br />
Boe<strong>in</strong>g<br />
Boral Bricks<br />
Br<strong>and</strong>smart<br />
Household & Personal Products<br />
Telecommunications<br />
Aerospace & Defense<br />
Build<strong>in</strong>g Materials, Glass<br />
Specialty Retailers<br />
Carrefour Food & Drug Stores Argent<strong>in</strong>a, Brazil<br />
Carrier Corp. Aerospace & Defense N. America, L. America<br />
Coca-Cola Beverages N. America<br />
Comcast<br />
Telecommunications<br />
16th Edition<br />
©Copyright 2008 <strong>Armstrong</strong> & Associates, Inc., Stoughton, WI 53589 USA<br />
Page 614 of 833
COUNTRIES with OFFICES<br />
Countries served through owned offices or agents<br />
Africa/Middle East Asia/Pacific Australia/New Zeal<strong>and</strong> Europe North America Lat<strong>in</strong>/South America<br />
Ch<strong>in</strong>a<br />
S<strong>in</strong>gapore<br />
France<br />
Germany<br />
Irel<strong>and</strong><br />
Italy<br />
Romania<br />
United K<strong>in</strong>gdom<br />
Canada<br />
Mexico<br />
United States<br />
Argent<strong>in</strong>a<br />
Brazil<br />
Chile<br />
EDITOR'S COMMENTS<br />
Ryder, one of the most recognizable 3PL br<strong>and</strong> names, is a big-5 logistics 3PL. It has a state-of-the-art<br />
logistics optimization center near Lans<strong>in</strong>g, Michigan to serve General Motors’ new style plants. Ryder is a lead<br />
logistics provider for most GM plants, services DaimlerChrysler, Toyota <strong>and</strong> Honda plus a multitude of Tier 1<br />
suppliers. Ryder runs top notch <strong>in</strong>bound supply cha<strong>in</strong> management, sequenc<strong>in</strong>g centers, just-<strong>in</strong>-time <strong>and</strong> dedicated<br />
contract carriage operations.<br />
In recent years, Ryder has grown substantially <strong>in</strong>to the High-Tech <strong>and</strong> Consumer Goods verticals, <strong>in</strong> large part<br />
due to its advanced outbound capabilities managed through the Dallas-Ft. Worth TMC. Tom Jones, president of<br />
U.S. SCS will push this expansion <strong>and</strong> marg<strong>in</strong> improvement. These operations grew significantly <strong>in</strong> 2006 <strong>and</strong><br />
2007, contribut<strong>in</strong>g to Ryder SCS’ 16% <strong>and</strong> 11% net revenue growth (respectively).<br />
Throughout 2007, Ryder added two key top managers – Todd Carter to drive profitability <strong>in</strong> the rapidly grow<strong>in</strong>g<br />
Transportation <strong>Management</strong> arena <strong>and</strong> Rosario Rizzo to run <strong>and</strong> <strong>in</strong>vigorate its DCC operations.<br />
Provider's Strengths<br />
Ryder has LLP supply cha<strong>in</strong> management. Dedicated contract carriage <strong>and</strong> transportation management are<br />
strong. Distribution center operations are capable.<br />
Provider's Weaknesses<br />
Increas<strong>in</strong>g flexibility <strong>and</strong> central control.<br />
CASES & NEWS<br />
Ryder's Lat<strong>in</strong> American Operations [To view <strong>in</strong> full html format, follow this l<strong>in</strong>k:<br />
http://www.3plogistics.com/Ryder_Lat<strong>in</strong>America_2007.htm]<br />
Among its Best<br />
Monterrey, Mexico & Santiago, Chile – Site Visits<br />
October 17-20, 2007<br />
Key Personnel:<br />
Eugenio Sevilla-Sacasa, VP & Manag<strong>in</strong>g Director<br />
David Contreras Munguia, Director of Operations<br />
Ernesto Donnadieu, Director of Operations<br />
Ruben Elias, Manag<strong>in</strong>g Director<br />
Matias Bernasconi, Manager of Operations<br />
Carlos Bellavigna, Manager of Operations<br />
Jose Gonzalez, Transportation Manager<br />
Ryder<br />
Ryder made an important decision 10 years ago when its Lat<strong>in</strong> American operations were less than $10 million. It put Gene Sevilla <strong>in</strong><br />
charge of the operation. He surrounded himself with good people <strong>and</strong> built the Lat<strong>in</strong> America operation <strong>in</strong>to one of Ryder’s best. The ball<br />
really got roll<strong>in</strong>g after the meltdown of Argent<strong>in</strong>a’s economy <strong>in</strong> 2002. Revenues for that year were $92 million. We estimate that 2007 year<br />
end revenues will be $310 million. Revenues have <strong>in</strong>creased 327%. The compound annual growth rate is 27.5%. Mexico <strong>and</strong> Brazil are<br />
paramount. Each has over $100 million <strong>in</strong> revenue.<br />
As a result of Sevilla <strong>and</strong> his team’s efforts, Ryder is now one of the three largest third-party logistics providers (3PLs) <strong>in</strong> Lat<strong>in</strong> America<br />
<strong>and</strong> is the fastest grow<strong>in</strong>g. Services offered are value-added warehous<strong>in</strong>g <strong>and</strong> distribution (VAWD) <strong>in</strong>clud<strong>in</strong>g manufactur<strong>in</strong>g support, nifty<br />
variations of dedicated contract carriage (DCC), transportation management, <strong>and</strong> some returns management.<br />
A Sevilla trademark is design<strong>in</strong>g operations to match up with customer requirements. As seasoned observers know when third-party<br />
logistics is done right, profitability <strong>in</strong>creases. Not surpris<strong>in</strong>gly, Ryder’s Lat<strong>in</strong> American operations are among its most profitable. The home<br />
office for Lat<strong>in</strong> America is <strong>in</strong> Miami.<br />
Ryder's Lat<strong>in</strong> American Operations - Basic Facts:<br />
• Employees = 3,825<br />
• Dedicated Contract Carriage Units = 1,110<br />
• Other Trucks Under Contract = 2,350<br />
• Locations = 75<br />
• Warehous<strong>in</strong>g = 5 Million Square Feet<br />
Mexico<br />
Ryder has been especially successful <strong>in</strong> Mexico. When Sevilla took over, revenues were about $10 million. This year we estimate revenue to<br />
be $150 million. Major customers <strong>in</strong>clude: Carrier, Hewlett-Packard (HP), Philips, General Motors (GM) <strong>and</strong> Toyota. Most operations are <strong>in</strong><br />
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Monterrey, Guadalajara <strong>and</strong> the Mexico City area. Revenues are evenly split between VAWD <strong>and</strong> transportation activities.<br />
Dedicated contract carriage <strong>in</strong> Mexico takes a slightly different form because of Mexican laws prohibit<strong>in</strong>g ownership of truck<strong>in</strong>g<br />
operations by non-Mexicans. Ryder leases tractors <strong>and</strong> trucks to small Mexican truck<strong>in</strong>g companies who then contract with Ryder to<br />
provide services. About 300 tractors, 50 trucks <strong>and</strong> 500 trailers are <strong>in</strong>volved <strong>in</strong> DCC-like carriage operations. Ryder Mexico equipment is<br />
leased to Mexican customers, <strong>in</strong>clud<strong>in</strong>g Mexican carriers. Some of these carriers dedicate equipment to Ryder <strong>and</strong> Ryder utilizes it<br />
<strong>in</strong>terchangeably for its customers.<br />
Ryder’s 25 locations <strong>in</strong> Mexico <strong>in</strong>clude n<strong>in</strong>e warehouses it operates <strong>and</strong> 16 customer plants. The warehouses are all pretty new. They are<br />
large boxes with modern layouts, clean <strong>and</strong> well kept. Most <strong>in</strong>volve pallet <strong>and</strong> carton pick<strong>in</strong>g. A few are radio-frequency (RF) facilities. A<br />
couple have piece pick<strong>in</strong>g, kitt<strong>in</strong>g, etc. Ryder manages about 1,000 truck border cross<strong>in</strong>gs a day. Transportation management plann<strong>in</strong>g is <strong>in</strong> a<br />
280,000 square foot warehouse near Mexico City.<br />
Carrier Corporation – Mexico<br />
Ryder supports three Carrier air conditioner related operations <strong>in</strong> the Maquiladora rich area <strong>in</strong> <strong>and</strong> around Monterrey. It also runs an<br />
<strong>in</strong>bound warehouse, a vendor managed <strong>in</strong>ventory (VMI) space <strong>in</strong> another warehouse, an outbound distribution facility, <strong>and</strong> ma<strong>in</strong>ta<strong>in</strong>s a large<br />
yard for load<strong>in</strong>g oversized units for commercial build<strong>in</strong>gs.<br />
At the Carrier residential air conditioner factory <strong>in</strong> Monterrey, Ryder has 110 employees <strong>in</strong>tegrated with 1,100 Carrier employees. Ryder’s<br />
personnel h<strong>and</strong>le receiv<strong>in</strong>g, manufactur<strong>in</strong>g (JIT/Kanban) support <strong>and</strong> shipp<strong>in</strong>g. They wear dist<strong>in</strong>guish<strong>in</strong>g red shirts. I saw 10 of them<br />
participat<strong>in</strong>g <strong>in</strong> a quality/performance meet<strong>in</strong>g with 25 or so Carrier employees. Ryder’s six-sigma quality program (ACE – Analyze, Chart<br />
the course, Execute flawlessly) matches well with Carrier’s quality program which by co<strong>in</strong>cidence also is referred to as ACE (Achieve<br />
Competitive Excellence).<br />
Carrier uses eight l<strong>in</strong>es to produce 2,500-3,500 units per day. Operations cover six days with two shifts on the five air conditioner l<strong>in</strong>es<br />
<strong>and</strong> one shift on the three coil l<strong>in</strong>es.<br />
Ryder h<strong>and</strong>les a significant portion of <strong>in</strong>bound with dedicated <strong>and</strong> managed transportation. About 80% of materials are local. Ryder also<br />
does outbound transportation execution <strong>in</strong> this location. Transportation plann<strong>in</strong>g is done <strong>in</strong> Mexico City.<br />
While this factory is 15 years old, it is clean, well ma<strong>in</strong>ta<strong>in</strong>ed <strong>and</strong> modern <strong>in</strong> appearance.<br />
At Carrier’s commercial unit manufactur<strong>in</strong>g plant, 20% of the employees are Ryder’s. This new, modern facility is used to turn out<br />
customized air condition<strong>in</strong>g units for large build<strong>in</strong>gs like Target stores. Consequently, there are thous<strong>and</strong>s of part changes each month <strong>and</strong><br />
about 400,000 parts overall. The facility is 220,000 square feet.<br />
Ryder does all phases of the materials management for Carrier. It provides sequenc<strong>in</strong>g, kitt<strong>in</strong>g, pick<strong>in</strong>g <strong>and</strong> pack<strong>in</strong>g, <strong>and</strong> h<strong>and</strong>les VMI.<br />
Ryder uses ProAct as its warehouse management system (WMS) for these operations. RF will be implemented as Carrier gets SAP<br />
implemented. For the commercial unit, Ryder h<strong>and</strong>les <strong>in</strong>bound <strong>and</strong> outbound transportation us<strong>in</strong>g DCC as necessary.<br />
The third Carrier facility we visited was the Stiva parts warehouse. This 180,000 square foot operation h<strong>and</strong>les parts <strong>and</strong> materials for all<br />
three Carrier factories. Inventory is managed on a consigned basis <strong>and</strong> moved to the plants on an as needed, JIT basis. Parts for similar<br />
products are ma<strong>in</strong>ta<strong>in</strong>ed <strong>in</strong> blocks for efficiency.<br />
From what we saw <strong>in</strong> Monterrey, Ryder <strong>and</strong> Carrier have a true partnership where their quality driven jo<strong>in</strong>t efforts turn out top-notch<br />
products.<br />
General Motors<br />
Ryder has three operations for GM <strong>in</strong> Mexico. (Overall, Ryder has support operations for GM at 17 of its 28 locations). The Mexican<br />
operations are:<br />
• Yard <strong>Management</strong> – Ramos Arizpe<br />
• Yard <strong>Management</strong> – Silao<br />
• Yard <strong>Management</strong> – Toluca<br />
• Inbound Support Warehouse – Ramos Arizpe<br />
• Inbound Support Warehouse – Silao<br />
A major surprise <strong>in</strong> these GM locations is Ryder’s railroad switch<strong>in</strong>g operations. Ryder has five eng<strong>in</strong>es <strong>in</strong> Mexico used to move cars <strong>in</strong><br />
the load<strong>in</strong>g process.<br />
Ryder’s ASL (alternative storage location) <strong>in</strong>bound plant at Saltillo (Ramos Arizpe) is 180,000 square feet. It’s a conta<strong>in</strong>er break facility for<br />
supply<strong>in</strong>g the GM assembly plant at Ramos Arizpe by updat<strong>in</strong>g customer systems electronically with the <strong>in</strong>formation created by Ryder’s<br />
ProAct, RF capable WMS. The plant turns out 1,100 vehicles a day. The vehicles are Saturn’s SUV (VUE) <strong>and</strong> a small Chevy (CMA) sedan<br />
for the Mexican domestic market.<br />
Ryder’s yard management services are: 1) to drive the cars from the assembly plant to a large yard; 2) to h<strong>and</strong>le car load<strong>in</strong>g <strong>and</strong> shipment;<br />
3) to make sure the f<strong>in</strong>ished <strong>in</strong>ventory is taken care of <strong>and</strong> customer ready. At any given time, there are about 10,000 cars <strong>in</strong> <strong>in</strong>ventory <strong>in</strong> the<br />
yard. Load<strong>in</strong>g is an efficient, careful <strong>and</strong> orderly process. Cars are driven <strong>in</strong>to place <strong>and</strong> secured for movement. These operations are<br />
controlled by a state-of-the-art <strong>in</strong>formation system with RF capability spann<strong>in</strong>g a 45-plus acre yard. Ryder’s yard management service<br />
operates <strong>in</strong> all GM Mexico plants.<br />
British American Tobacco<br />
Ryder’s operations for British American Tobacco (BAT) are a textbook example of supply cha<strong>in</strong> management.<br />
The tobacco is raised <strong>in</strong> Virg<strong>in</strong>ia. It is shipped to the Maquiladora plant <strong>in</strong> Monterrey where it is made <strong>in</strong>to cigarettes. The cigarettes are<br />
shipped via truck to seven distribution po<strong>in</strong>ts <strong>in</strong> Canada. In Canada, Ryder provides DCC delivery <strong>and</strong> transportation management to stores<br />
<strong>and</strong> distributors. The BAT Canadian operation operates under the br<strong>and</strong> name Imperial Tobacco.<br />
Ryder’s BAT warehouse is a new, food grade facility with 210,000 square feet. There is a protective cooler area of 60,000 square feet.<br />
Product is controlled <strong>and</strong> shipped on a first <strong>in</strong> first out (FIFO) basis to Canada. In addition, Ryder manages the packag<strong>in</strong>g material<br />
(cardboard) for the plant. Cardboard is shuttled to the plant as needed <strong>and</strong> seven loads a day are brought back.<br />
This RF facility uses WebSphere for its WMS. Manhattan’s PkMS is used for Canadian distribution. RF read<strong>in</strong>g devices are Symbol guns<br />
<strong>and</strong> pallets have license plates.<br />
Ryder uses five tractors <strong>and</strong> 10 trailers for the dedicated shuttles. Celadon is the primary outbound carrier.<br />
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To summarize, Ryder manages packag<strong>in</strong>g material to the plant utiliz<strong>in</strong>g its DCC for transportation. Ryder moves f<strong>in</strong>ished product to the<br />
protective RF environment. It controls the f<strong>in</strong>ished product <strong>in</strong>ventory until requested to release it on a FIFO basis. It provides<br />
transportation management for outbound l<strong>in</strong>ehaul to Canada <strong>and</strong> distribution to Mexico. In Canada, it provides cross-dock<strong>in</strong>g, dedicated<br />
store delivery <strong>and</strong> transportation management to get the product to customers.<br />
Incidentally, BAT pays the cigarette taxes when the product is cleared <strong>in</strong>to Canada.<br />
Others<br />
The HP operations <strong>in</strong> Guadalajara are a good example of multifunction supply cha<strong>in</strong> management. Inbound is managed to the plant.<br />
Transportation plann<strong>in</strong>g <strong>and</strong> execution is done for U.S. distribution. DCC is provided for activities close to Guadalajara. Ryder provides<br />
extensive piece pick<strong>in</strong>g <strong>and</strong> pack<strong>in</strong>g <strong>and</strong> returns management for HP <strong>in</strong> Guadalajara.<br />
Ryder has over 1,700 employees throughout Mexico.<br />
A Note About Brazil <strong>and</strong> Argent<strong>in</strong>a<br />
Brazil is Ryder’s second largest Lat<strong>in</strong> American operation. There is a huge tomato process<strong>in</strong>g operation for Unilever with warehous<strong>in</strong>g <strong>in</strong><br />
Goiânia which is <strong>in</strong> the middle of Brazil. Most other Brazilian operations are transportation based. Ryder has a specialized ability to h<strong>and</strong>le<br />
truck<strong>in</strong>g between Brazil <strong>and</strong> Argent<strong>in</strong>a. There isn't any st<strong>and</strong>ardized documentation for this activity. Each load is unique.<br />
Aside from Unilever, Ryder’s largest customers <strong>in</strong> Brazil are: GM, Volkswagen <strong>and</strong> Toyota. Ryder has over 1,000 employees <strong>in</strong> Brazil.<br />
In Argent<strong>in</strong>a <strong>and</strong> Brazil, Ryder is <strong>in</strong>volved with retail <strong>and</strong> automotive distribution. HP, Carrier <strong>and</strong> Philips distribution is h<strong>and</strong>led.<br />
Carrefour, Coke, Nestlé, Norte, <strong>and</strong> Peñaflor are also customers. There are 12 locations, 900,000 square feet of warehouse space, <strong>and</strong> 400<br />
employees. Growth <strong>in</strong> Argent<strong>in</strong>a has been steady follow<strong>in</strong>g the 2001-02 economic melt down there.<br />
Chile<br />
To manage the Southern Cone (Argent<strong>in</strong>a <strong>and</strong> Chile), Sevilla chose Ruben Elias a seasoned <strong>in</strong>dustry veteran. Both Elias <strong>and</strong> Sevilla have<br />
low-key, personal management styles. They work very well together <strong>and</strong> with their teams.<br />
Elias opened up the Ryder Chilean operations <strong>in</strong> 2005. The emphasis has been on retail accounts. Distribution services are preformed for<br />
Nestlé, LTS Logística (Lider stores) <strong>and</strong> Ekono stores. Lider has over 120 stores. Ekono convenience stores total 22 <strong>and</strong> the cha<strong>in</strong> is<br />
grow<strong>in</strong>g quickly.<br />
For LTS Logística, Ryder runs transportation plann<strong>in</strong>g <strong>and</strong> execution. LTS Logística has an 800,000 square foot warehouse which<br />
supplies products to the Wal-Mart like Lider stores scattered throughout Chile’s 2,500 mile length. The warehouse is unionized with 1,200<br />
employees. Ryder’s 27 transportation management employees are not.<br />
Ryder manages 400 trucks on a daily basis. 70 tractors <strong>and</strong> 173 trailers belong to LTS Logística <strong>and</strong> are operated with<strong>in</strong> 100 miles of<br />
Santiago. This equipment moves about 70% of shipments. This fleet often delivers more than one load to a store <strong>in</strong> a day. Overall, the<br />
average equipment utilization is 220 miles a day.<br />
Throughout the system, deliveries are live unload. Delivery w<strong>in</strong>dows are 20 m<strong>in</strong>utes. Shipments are palletized. Non-LTS Logística<br />
equipment is used for longer length hauls.<br />
Ryder uses proprietary software to speed deliveries for rout<strong>in</strong>g purposes. A global position<strong>in</strong>g system (GPS) is used to locate <strong>and</strong> track<br />
<strong>in</strong>dividual tractor-trailer units. Information on <strong>in</strong>dividual trips is displayed with color codes (red for vehicles not on time) <strong>and</strong> can even be<br />
displayed <strong>in</strong> Google Earth at the touch of a button. The LTS Logística operation manger is Matias Bernasconi <strong>and</strong> he runs a good operation.<br />
Ryder ma<strong>in</strong>ta<strong>in</strong>s a separate 100,000 square foot warehouse for Ekono stores. Transportation management is done at that warehouse.<br />
Ryder’s major warehous<strong>in</strong>g operation <strong>in</strong> Chile, however, is <strong>in</strong> the Santiago suburb of Quilicura. This lean logistics, modern, 300,000 square<br />
foot warehouse for Nestlé has 850 stock keep<strong>in</strong>g units (SKUs).<br />
Most <strong>in</strong>bound is received from four Nestlé production plants <strong>in</strong> Chile. Soup <strong>and</strong> food products come from San Fern<strong>and</strong>o; liquid milk<br />
products come from Los Angeles <strong>and</strong> Osorno; powdered milk comes from Llanquihue. Baby formula is imported.<br />
The WMS Ryder uses <strong>in</strong> South America is GCL <strong>and</strong> Nestlé orders for it come electronically from Nestlé’s SAP. Roadshow is used by<br />
Ryder to optimize routes.<br />
Orders average 60% pallets <strong>and</strong> 40% cases. There are about 15 l<strong>in</strong>es per order. There are 100 shipments per day. Each shipment normally<br />
has multiple orders for the same location.<br />
There are 93 pickers <strong>and</strong> receivers <strong>in</strong> this RF warehouse work<strong>in</strong>g three shifts. Rack<strong>in</strong>g is extensive <strong>and</strong> five rows high. Ryder license plates<br />
are applied to pallets of product as part of putaway which regularly occurs with<strong>in</strong> four hours.<br />
The warehouse has 50 doors <strong>and</strong> 25 numbered bays are used for stag<strong>in</strong>g. Each bay has separate fenc<strong>in</strong>g to preserve order <strong>in</strong>tegrity.<br />
Orders are loaded by the truckers or their lumpers.<br />
Products <strong>in</strong> the warehouse are grouped us<strong>in</strong>g an A, B, C, D format.<br />
This warehouse measures up to Nestlé’s high st<strong>and</strong>ards. Ryder does a good job of runn<strong>in</strong>g it <strong>and</strong> controll<strong>in</strong>g the store deliveries<br />
throughout the country.<br />
The overall quality of the Ryder warehouses that we saw was very good. Most are new, modern build<strong>in</strong>gs. More importantly, the<br />
employees are productive <strong>and</strong> hard work<strong>in</strong>g. Managers are <strong>in</strong>volved <strong>and</strong> process improvement oriented. Gene Sevilla has built a strong team<br />
<strong>and</strong> he coaches very well.<br />
Ryder System Ga<strong>in</strong>s Traction <strong>in</strong> Ch<strong>in</strong>a<br />
Shanghai, Ch<strong>in</strong>a Site Visit<br />
October, 2007<br />
[To view <strong>in</strong> full html format, follow this l<strong>in</strong>k: http://www.3plogistics.com/Ryder_Ch<strong>in</strong>a_2007.htm]<br />
Key Personnel:<br />
Christopher Woodward - Vice President & Manag<strong>in</strong>g Director, Ch<strong>in</strong>a<br />
Alice Yu - Director of Bus<strong>in</strong>ess Development, Greater Ch<strong>in</strong>a<br />
Gary Maida - Senior <strong>Logistics</strong> Manager<br />
Chris Gee - Senior <strong>Logistics</strong> Project Manager, Ch<strong>in</strong>a<br />
Ryder has been work<strong>in</strong>g <strong>in</strong> Ch<strong>in</strong>a s<strong>in</strong>ce 2000 when it began assist<strong>in</strong>g Shanghai General Motors (SGM) <strong>in</strong> launch<strong>in</strong>g an <strong>in</strong>bound logistics<br />
management process for its production facility <strong>in</strong> Shanghai. In 2001 Ryder formally entered the market by form<strong>in</strong>g a <strong>Who</strong>lly Owned<br />
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Consult<strong>in</strong>g Company <strong>in</strong> the Shanghai Free Trade Zone. In 2006 Ryder received a logistics license to perform <strong>in</strong>tegrated logistics services <strong>in</strong><br />
Ch<strong>in</strong>a. Its ma<strong>in</strong> third-party logistics (3PL) service offer<strong>in</strong>g <strong>in</strong>cludes: transportation management, value-added warehous<strong>in</strong>g <strong>and</strong> distribution,<br />
<strong>and</strong> supply cha<strong>in</strong> eng<strong>in</strong>eer<strong>in</strong>g <strong>and</strong> design services. Major customers <strong>in</strong> Ch<strong>in</strong>a <strong>in</strong>clude: Beij<strong>in</strong>g Benz, Lucent, <strong>and</strong> Italian household systems<br />
manufacturer Merloni TermoSanitari (Merloni). Ryder Ch<strong>in</strong>a's basic operational service offer<strong>in</strong>g is detailed <strong>in</strong> the figure below.<br />
At the time of our visit <strong>in</strong> mid-October, Ryder had a team of 95 people <strong>in</strong> Ch<strong>in</strong>a, eight of which were logistics eng<strong>in</strong>eers. It managed<br />
226,000 square feet of warehouse space <strong>in</strong> six cities: Shanghai, Beij<strong>in</strong>g, Wuxi, Changchun, Nanj<strong>in</strong>g <strong>and</strong> Kunm<strong>in</strong>g. Ryder was also manag<strong>in</strong>g<br />
domestic transportation <strong>in</strong> approximately 200 dist<strong>in</strong>ct lanes. This December, Ryder is start<strong>in</strong>g up a new operation for a consumer<br />
electronics/white goods customer <strong>in</strong> Shanghai that will br<strong>in</strong>g its total square footage to approximately 500,000 square feet, its transportation<br />
management network to about 250 lanes, <strong>and</strong> its total number of employees to 160. This operation is set to go live the second week of<br />
December. In addition, Ryder is contracted to open up warehous<strong>in</strong>g operations <strong>in</strong> Guangzhou, Harb<strong>in</strong>, Fuzhou, Changsha, Wuhan, <strong>and</strong><br />
Zhengzhou <strong>in</strong> the first quarter of the new year.<br />
In addition to Ryder's traditional transportation management <strong>and</strong> value-added warehous<strong>in</strong>g <strong>and</strong> distribution operations, Ryder Ch<strong>in</strong>a is<br />
currently provid<strong>in</strong>g some <strong>in</strong>terest<strong>in</strong>g global transportation management services that are capable due to the time difference of 12 hours<br />
between the eastern U.S. <strong>and</strong> Shanghai. Accord<strong>in</strong>g to Chris Woodward--Ryder's manag<strong>in</strong>g director for Ch<strong>in</strong>a--by us<strong>in</strong>g teams composed of<br />
Ryder staff <strong>in</strong> both the U.S. <strong>and</strong> Ch<strong>in</strong>a, Ryder provides a virtual 24 hour work day mak<strong>in</strong>g it easier to staff <strong>and</strong> support central<br />
transportation management operations required to run 24 hours, seven days a week.<br />
Case Study: Merloni's, Ryder Domestic Ch<strong>in</strong>a, Network Redesign <strong>and</strong> 3PL/4PL Services<br />
With the help of i2's <strong>Supply</strong> Cha<strong>in</strong> Strategist, supply cha<strong>in</strong> network optimization software, forecasted dem<strong>and</strong> volumes <strong>and</strong> service level<br />
requirements, Ryder's eng<strong>in</strong>eers designed an optimal domestic Ch<strong>in</strong>a distribution network for Merloni's Ariston water heater product l<strong>in</strong>e. In<br />
addition, Ryder worked with Merloni <strong>in</strong> develop<strong>in</strong>g key <strong>in</strong>dicators for monitor<strong>in</strong>g supply cha<strong>in</strong> performance.<br />
By utiliz<strong>in</strong>g Ryder's optimal network design solution <strong>and</strong> its 3PL <strong>and</strong> 4PL services, Merloni has reduced its Ch<strong>in</strong>ese distribution center<br />
(DC) network from 18 to 12 Ryder managed locations. The redesign has dramatically reduced Merloni's on-h<strong>and</strong> <strong>in</strong>ventory levels while<br />
improv<strong>in</strong>g its transportation service <strong>and</strong> direct service area coverage to customers.<br />
While Ryder's ma<strong>in</strong> Merloni central distribution center operation is <strong>in</strong> Wuxi, we had a chance to visit its 4PL Shanghai regional<br />
distribution center (RDC) operation <strong>in</strong> the northwestern Jiad<strong>in</strong>g district of Shanghai.<br />
Ryder utilizes a local 3PL (Kanto) for warehous<strong>in</strong>g, <strong>in</strong>clud<strong>in</strong>g non-management labor, <strong>and</strong> Merloni's Shanghai local transportation<br />
services. The RDC is 22,600 square feet <strong>and</strong> product is stored on pallets on the warehouse floor. Most of the water heaters are dest<strong>in</strong>ed to<br />
Ch<strong>in</strong>ese big-box retail stores such as Gome <strong>and</strong> Yolo.<br />
To support its Ch<strong>in</strong>ese warehous<strong>in</strong>g <strong>and</strong> distribution operations <strong>in</strong>clud<strong>in</strong>g Merloni, Ryder uses a popular local warehouse management<br />
system--"Flux" WMS. Flux is <strong>in</strong>tegrated with Merloni's order management system <strong>in</strong> Wuxi. As orders are generated they drop <strong>in</strong>to Flux. Flux<br />
is used to pr<strong>in</strong>t paper pick lists for pick<strong>in</strong>g <strong>in</strong> the warehouse <strong>and</strong> for putaway of product as it is received. Once product is picked <strong>and</strong> loaded<br />
<strong>in</strong>to trucks for outbound distribution, Flux is updated with the <strong>in</strong>formation which also automatically updates Merloni's order management<br />
system. Through this tight <strong>in</strong>tegration, <strong>in</strong>ventory accuracy <strong>and</strong> visibility has been dramatically improved.<br />
Summary<br />
Ryder has learned many lessons s<strong>in</strong>ce enter<strong>in</strong>g the Ch<strong>in</strong>ese 3PL market with SGM. It is us<strong>in</strong>g its logistics eng<strong>in</strong>eer<strong>in</strong>g expertise,<br />
<strong>in</strong>formation systems, <strong>and</strong> operational process design expertise to develop tier-one Ch<strong>in</strong>ese supply cha<strong>in</strong> operations <strong>and</strong> differentiate itself<br />
from domestic 3PL competitors. Ryder has had to be creative <strong>in</strong> its bus<strong>in</strong>ess development approach <strong>and</strong> is beg<strong>in</strong>n<strong>in</strong>g to see significant<br />
success. With this approach, Ryder has become established <strong>in</strong> one of the fastest grow<strong>in</strong>g global 3PL markets <strong>and</strong> is on track to become a<br />
lead<strong>in</strong>g domestic Ch<strong>in</strong>ese 3PL provider.<br />
Ryder’s World Class Automotive <strong>Logistics</strong><br />
Lans<strong>in</strong>g & Farm<strong>in</strong>gton Hills, MI - Site Visits<br />
March 15, 2006<br />
[To view <strong>in</strong> full html format, follow this l<strong>in</strong>k: http://www.3plogistics.com/Ryder_3-2006.htm]<br />
General Motors is <strong>in</strong> the fight of its life to remake itself. It needs to radically redesign its cost structure <strong>and</strong> how it makes cars. As part of<br />
its redesign, GM is complet<strong>in</strong>g two new automotive assembly plants near Lans<strong>in</strong>g, MI. The first plant, Lans<strong>in</strong>g Gr<strong>and</strong> River, is <strong>in</strong><br />
production build<strong>in</strong>g the Cadillac CTS, SRX <strong>and</strong> STS. The second plant, Lans<strong>in</strong>g Delta Township, will be produc<strong>in</strong>g later this year. Its<br />
production will be the Saturn Crossover, GMC Crossover <strong>and</strong> Buick Crossover.<br />
As GM Plant Manger, Ken Knight expla<strong>in</strong>ed it “We planned the process first <strong>and</strong> planned the build<strong>in</strong>g later.” The new just-<strong>in</strong>-time<br />
facilities use no tow motors. “What really drives us is material movement,” Knight said. “We br<strong>in</strong>g the whole semi truck next to where the<br />
parts are used so we use materials right off the truck.” As a sign of the seachange at GM, the new Lans<strong>in</strong>g River plant has been rated as<br />
one of the best <strong>in</strong> the world by JD Powers.<br />
Critical to General Motors’s success is the need for a supply cha<strong>in</strong> control partner operat<strong>in</strong>g flow through parts sequenc<strong>in</strong>g centers close<br />
to its two new plants. GM chose its longtime logistics service provider, Ryder SCS, to design <strong>and</strong> run these critical support functions.<br />
Ryder responded by tak<strong>in</strong>g over a build<strong>in</strong>g seven miles from the Lans<strong>in</strong>g Gr<strong>and</strong> River plant <strong>and</strong> one mile from the new Lans<strong>in</strong>g Delta<br />
Township location. Ryder renovated the facility us<strong>in</strong>g a REIT plan set up by Ashley Capital Development. It is <strong>in</strong> the process of build<strong>in</strong>g<br />
<strong>and</strong> design<strong>in</strong>g an adjacent facility. The two connected build<strong>in</strong>gs will have over 1.6 million square feet <strong>and</strong> 160+ dock doors. Inbound loads<br />
of parts, most <strong>in</strong> returnable plastic conta<strong>in</strong>ers, will exceed 300 a day. Outbound shuttles to the GM plants will be more than 1000 per day.<br />
Ryder’s new location (<strong>Logistics</strong> Optimization Center) is divided <strong>in</strong>to two pr<strong>in</strong>cipal operations. The southern half of the build<strong>in</strong>g is laid<br />
out for sequenc<strong>in</strong>g parts. The northern half is for h<strong>and</strong>l<strong>in</strong>g conta<strong>in</strong>ers of bulk parts (nuts, bolts, screws, etc.).<br />
There are over 30 cells operat<strong>in</strong>g <strong>in</strong> the sequenc<strong>in</strong>g area. In these cells, mirror assemblies, trunk kits, spr<strong>in</strong>gs, fuel tanks <strong>and</strong> other parts<br />
are setup to be delivered <strong>in</strong> production sequence order exactly as needed on the GM assembly l<strong>in</strong>es. Parts are tracked cont<strong>in</strong>uously to <strong>in</strong>sure<br />
that assembly time w<strong>in</strong>dows at the GM plant are met.<br />
Throughout Ryder, LOC scann<strong>in</strong>g technology is employed with workers utiliz<strong>in</strong>g h<strong>and</strong> held guns. All work processes are designed to be<br />
lean <strong>and</strong> st<strong>and</strong>ardized. Performance is tracked <strong>and</strong> measured.<br />
Ryder’s employees at the LOC receive about 40 hours of tra<strong>in</strong><strong>in</strong>g before they are certified to work <strong>in</strong> the sub assembly <strong>and</strong> sequenc<strong>in</strong>g<br />
processes. Control is tight – error rates <strong>and</strong> rework are m<strong>in</strong>imal. Inventory scanned <strong>in</strong> us<strong>in</strong>g two dimensional RF scanners as delivered <strong>and</strong><br />
put a way as directed. Most locations mirror locations for GM’s assembly l<strong>in</strong>es. Inventory received is reconciled to advanced ship notices<br />
(ASN’s) sent to suppliers <strong>and</strong> carriers.<br />
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Ryder built its own <strong>in</strong>formation technology for the LOC. <strong>Logistics</strong> <strong>Management</strong> Suite (LMS) is the overarch<strong>in</strong>g technology platform for<br />
transportation coord<strong>in</strong>ation. The WMS is LCMS.<br />
Ryder’s supply cha<strong>in</strong> plann<strong>in</strong>g activities us<strong>in</strong>g the contract management, logistics plann<strong>in</strong>g <strong>and</strong> data management systems are primarily<br />
carried out at Farm<strong>in</strong>gton Hills, MI. Farm<strong>in</strong>gton Hills is the headquarters for Tom Jones, long-time Automotive VP for Ryder, Jim Moore,<br />
VP of Bus<strong>in</strong>ess Development, Tom Kroswek, Senior Director-<strong>Logistics</strong> Solutions <strong>and</strong> 200 logistics eng<strong>in</strong>eers. This operation does the<br />
plann<strong>in</strong>g for 60% of Ryder SCS bus<strong>in</strong>ess.<br />
From this location, Ryder does transportation <strong>and</strong> material plann<strong>in</strong>g for 48 automotive assembly plants. Sixteen of the plants are for<br />
General Motors. Ryder also operates as an automotive LLP for Toyota (4 plants) <strong>and</strong> DaimlerChrysler (all NA locations). It also provides<br />
automotive logistics for Honda, Nissan, Mazda <strong>and</strong> Ford. (Richard Jenn<strong>in</strong>gs, VP, is key to DaimlerChrysler <strong>and</strong> many other customer<br />
relationships.)<br />
Ryder coord<strong>in</strong>ates parts flow plann<strong>in</strong>g with over 300 tier one plants h<strong>and</strong>l<strong>in</strong>g over four million shipments a year. An example is Ryder’s<br />
plann<strong>in</strong>g activity for Mopar, DaimlerChrysler’s aftermarket parts supplier.<br />
Mopar has 41 North American facilities, <strong>in</strong>clud<strong>in</strong>g national DCs, field distribution centers <strong>and</strong> third party packagers. Ryder manages the<br />
flow of parts to <strong>and</strong> from these facilities.<br />
In addition, Ryder provides JIT service as an element of its “Plan for Every Part” control at LOCs for all DaimlerChrysler’s North<br />
American car <strong>and</strong> truck assembly plants.<br />
Ryder h<strong>and</strong>les all <strong>in</strong>bound plann<strong>in</strong>g for DaimlerChrysler’s Integrated <strong>Logistics</strong> Centers. This activity coord<strong>in</strong>ates with three of the other<br />
ma<strong>in</strong> automotive logistics 3PLs. TNT <strong>Logistics</strong> runs the ILCs at Nashville, TN <strong>and</strong> Green SC. Exel does Portage, IN <strong>and</strong> Toledo, OH.<br />
LINC h<strong>and</strong>les Detroit. Penske, Ford’s primary LLP, <strong>and</strong> Menlo/Vector round out the core group of major automotive 3PLs. These large<br />
sophisticated operations cooperate <strong>and</strong> compete regularly <strong>in</strong> <strong>in</strong>sur<strong>in</strong>g high quality supply cha<strong>in</strong> management for North America based<br />
automotive assembly operations. The level of operation ma<strong>in</strong>ta<strong>in</strong>ed by Ryder, the largest U. S. automotive 3PL <strong>and</strong> its primary competitors,<br />
has reached a po<strong>in</strong>t where it bars entry. Scale makes it a daunt<strong>in</strong>g task for any new 3PL to become a major player <strong>in</strong> this market.<br />
Ryder’s transportation procurement operations are located <strong>in</strong> Ann Arbor, MI. Ryder has built this location after the purchase of<br />
LogiCorp twelve years ago. This facility is ran by Tim Podv<strong>in</strong>, General Manager. It ma<strong>in</strong>ta<strong>in</strong>s <strong>and</strong> negotiates carrier contracts. It manages<br />
the rate database, audits <strong>and</strong> pays freight bills. The Ann Arbor operation h<strong>and</strong>les 3.7 million freight bills a year with over 100 employees.<br />
Over 90% of transactions are now h<strong>and</strong>led by EDI. 80% of audits are automated.<br />
Ryder uses around 1400 contracted carriers. About 200 carriers h<strong>and</strong>le 80% of Ryder’s freight spend. Ryder has a web-based freight bill<br />
system (LEAPS) for 350 smaller non-EDI carriers.<br />
The Ann Arbor facility h<strong>and</strong>les $1 billion <strong>in</strong> freight payments <strong>and</strong> manages more than $2.9 billion <strong>in</strong> freight spend for its customers each<br />
year. Included <strong>in</strong> this activity is back office functionality for Ryder’s Transportation <strong>Management</strong> Center <strong>in</strong> Dallas/Ft. Worth. The TMC<br />
h<strong>and</strong>les most of Ryder’s non-automotive bus<strong>in</strong>ess. It specializes <strong>in</strong> outbound transportation management <strong>and</strong> freight brokerage. The TMC<br />
is a key part of Ryder’s expansion <strong>in</strong>to the Hi-Tech vertical.<br />
Pilot Pen Notes the Write Way to Outsource [Inbound <strong>Logistics</strong>, June 2008,]<br />
To distribute its quality writ<strong>in</strong>g <strong>in</strong>struments <strong>in</strong> Mexico, Pilot Corporation of America relies on its 3PL not just for storage <strong>and</strong> transportation,<br />
but also a competitive edge.<br />
Trumbull, Conn.-based Pilot Corporation of America, the U.S. subsidiary of Tokyo, Japan-based Pilot Pen, has ma<strong>in</strong>ta<strong>in</strong>ed a U.S.<br />
operation s<strong>in</strong>ce 1970. The company is authorized by its parent company to sell <strong>in</strong> the United States <strong>and</strong> <strong>in</strong> Mexico. S<strong>in</strong>ce 2000, Pilot Pen<br />
Mexico, a Guadalajara-based bus<strong>in</strong>ess unit of Pilot Corporation of America, has been purchas<strong>in</strong>g products made at the U.S. company's<br />
manufactur<strong>in</strong>g <strong>and</strong> distribution facility <strong>in</strong> Jacksonville, Fla., <strong>and</strong> arrang<strong>in</strong>g for their distribution <strong>in</strong> Mexico.<br />
"We sell pens to Pilot Pen Mexico, which then sells the pens <strong>and</strong> makes its own profit," says Juan Estrella, director of supply cha<strong>in</strong> for<br />
Pilot Corporation of America.<br />
Pilot Pen does bus<strong>in</strong>ess <strong>in</strong> Mexico without dedicat<strong>in</strong>g major corporate assets to the market by rely<strong>in</strong>g on Miami-based 3PL Ryder to<br />
distribute its Florida-made goods south of the border.<br />
The full l<strong>in</strong>e of Pilot Pen writ<strong>in</strong>g <strong>in</strong>struments spans 12 different categories, <strong>in</strong>clud<strong>in</strong>g a variety of pens <strong>and</strong> pencils, creative markers,<br />
highlighters, <strong>and</strong> a mixed bag of supplies <strong>in</strong>clud<strong>in</strong>g refills, lead, <strong>and</strong> erasers.<br />
Only a limited portion of the Pilot Pen l<strong>in</strong>e is distributed <strong>in</strong> Mexico. For example, "we don't carry No. 2 pencils. We sell ma<strong>in</strong>ly refillable<br />
pens <strong>and</strong> markers," Estrella expla<strong>in</strong>s.<br />
Equally focused is Pilot Pen's geographic concentration <strong>in</strong> Mexico. While it directs distribution operations throughout Mexico, the<br />
company's primary market is the capital, Mexico City. Other major markets for Pilot Pen products <strong>in</strong>clude Guadalajara <strong>and</strong> Monterrey.<br />
The pen manufacturer contracts with Ryder to select Mexican ground transportation carriers <strong>and</strong> to provide additional operational<br />
support. Ryder is particularly careful about screen<strong>in</strong>g, select<strong>in</strong>g, <strong>and</strong> monitor<strong>in</strong>g Mexican motor freight carriers serv<strong>in</strong>g Mexico City. Pilot Pen<br />
depends on motor freight carriers "that can consistently deliver to Mexico City with<strong>in</strong> a certa<strong>in</strong> time w<strong>in</strong>dow," Estrella says.<br />
Pilot Pen began its relationship with Ryder <strong>in</strong> Mexico four years ago. The company had relied on another logistics company to h<strong>and</strong>le<br />
product distribution <strong>in</strong> Mexico until it filed for Chapter 11. Ryder took over the lease on an <strong>in</strong>ventory-h<strong>and</strong>l<strong>in</strong>g facility <strong>in</strong> Guadalajara, sign<strong>in</strong>g<br />
new contracts with most of the former customers who moved merch<strong>and</strong>ise through the facility, <strong>in</strong>clud<strong>in</strong>g Pilot Pen Mexico.<br />
The transition to Ryder went smoothly. "We didn't want to dim<strong>in</strong>ish customer service," Estrella notes. "That's always the scary part of a<br />
transition, wonder<strong>in</strong>g how long you are go<strong>in</strong>g to be down. We weren't down at all."<br />
In mak<strong>in</strong>g the transition to Ryder, Pilot Pen protected the short-term stability of its operations <strong>and</strong> the long-term viability of its<br />
distribution cost structure <strong>in</strong> Mexico. Ryder ma<strong>in</strong>ta<strong>in</strong>ed smooth shipp<strong>in</strong>g to key markets <strong>and</strong> <strong>in</strong>tegrated its management <strong>in</strong>formation system<br />
with Pilot Pen's at m<strong>in</strong>imal bus<strong>in</strong>ess disruption.<br />
Ryder h<strong>and</strong>les order process<strong>in</strong>g, customer service functions, <strong>in</strong>ventory storage <strong>and</strong> management, <strong>and</strong> shipment track<strong>in</strong>g for Pilot Pen <strong>in</strong><br />
Mexico. In addition, Ryder provides services related to import<strong>in</strong>g U.S.-made Pilot Pen goods <strong>in</strong> Mexico. "We have our own import broker,"<br />
Estrella expla<strong>in</strong>s, "but Ryder does the follow-up." This <strong>in</strong>cludes ensur<strong>in</strong>g that extra import documents are provided, if necessary, <strong>and</strong> that<br />
import duties are paid promptly so products quickly clear Mexican customs process<strong>in</strong>g.<br />
All Pilot Pen products sold <strong>in</strong> Mexico pass through Ryder's warehous<strong>in</strong>g <strong>and</strong> distribution facility <strong>in</strong> Guadalajara, where security is a top<br />
priority. "There's no pilfer<strong>in</strong>g <strong>in</strong> Ryder's facility; it does a good job secur<strong>in</strong>g the <strong>in</strong>ventory," Estrella notes.<br />
WORKING AS ONE<br />
Ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g open l<strong>in</strong>es of communication helps the partners keep th<strong>in</strong>gs runn<strong>in</strong>g smoothly. Pilot Pen <strong>and</strong> Ryder employees hold weekly<br />
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meet<strong>in</strong>gs to f<strong>in</strong>e-tune the distribution of Pilot Pen products <strong>in</strong> Mexico. Ryder works so closely with Pilot Pen <strong>in</strong> Mexico that customers tend<br />
to see them as one company. The Ryder manager who supervises its facility <strong>in</strong> Guadalajara, for example, responds to calls from Pilot Pen<br />
customers as if he were a Pilot Pen employee. "He answers the phone, 'Pilot Pen,'" Estrella says.<br />
Ensur<strong>in</strong>g order execution is critical to keep<strong>in</strong>g major customers <strong>and</strong> attract<strong>in</strong>g new ones <strong>in</strong> Mexico. "When Pilot went <strong>in</strong>to Mexico, we<br />
guaranteed our service, as we always do," Estrella notes. "Our culture is: we're go<strong>in</strong>g to get the merch<strong>and</strong>ise there, wherever the customer<br />
wants it." This dependability has been crucial <strong>in</strong> deal<strong>in</strong>g with larger retailers. Office Depot, one of Pilot Pen's largest customers <strong>in</strong> Mexico,<br />
<strong>in</strong>sists on timely order execution, which Ryder has delivered.<br />
With Ryder at its side, Pilot Pen hopes to capture the bus<strong>in</strong>ess of another U.S.-based retailer <strong>in</strong> Mexico: Wal-Mart. "We've been<br />
approach<strong>in</strong>g Wal-Mart for a few years, <strong>and</strong> recently got some positive feedback," Estrella says.<br />
Pilot Pen may have nowhere to go but up <strong>in</strong> Mexico, given its short five-year presence <strong>in</strong> the market. "We're still <strong>in</strong> the <strong>in</strong>fancy stage<br />
there," Estrella notes.<br />
Hold<strong>in</strong>g down distribution costs <strong>in</strong> Mexico is critical to accelerat<strong>in</strong>g its growth, so Pilot Pen works closely with Ryder to develop efficient<br />
ways to do bus<strong>in</strong>ess.<br />
One potentially money-sav<strong>in</strong>g idea under consideration would let Ryder h<strong>and</strong>le Pilot Pen order-tak<strong>in</strong>g <strong>in</strong> Mexico. Currently, Pilot Pen<br />
Mexico <strong>in</strong>puts customer orders <strong>in</strong>to its own IBM server, an AS400 system, <strong>and</strong> the orders are then transmitted <strong>in</strong> a transfer protocol<br />
designed specifically for Ryder's management <strong>in</strong>formation system. The partners may comb<strong>in</strong>e their systems to boost efficiency.<br />
As Pilot Pen has become more comfortable work<strong>in</strong>g with Ryder, the pen manufacturer has begun to consider funnel<strong>in</strong>g customer orders<br />
<strong>in</strong> Mexico directly to Ryder. That step would free Pilot Pen to devote more <strong>in</strong>ternal attention to other operations. And that's exactly the<br />
k<strong>in</strong>d of freedom a good partner provides.<br />
Brazil Stakes Its Claim [Inbound <strong>Logistics</strong>, June 2008]<br />
Shift<strong>in</strong>g trade w<strong>in</strong>ds, strong domestic <strong>in</strong>dustries, <strong>and</strong> the presence of lead<strong>in</strong>g 3PLs have positioned Brazil <strong>in</strong> the middle of a global trade rush.<br />
With so much attention directed toward the Asia-Pacific theater, <strong>and</strong> U.S. bus<strong>in</strong>esses bent on digg<strong>in</strong>g deeper <strong>in</strong>to countries such as<br />
Ch<strong>in</strong>a <strong>in</strong> search of less-expensive labor, Lat<strong>in</strong> American markets have largely rema<strong>in</strong>ed untapped.<br />
Mexico notwithst<strong>and</strong><strong>in</strong>g, countries such as Brazil have been discreetly, albeit progressively, develop<strong>in</strong>g transportation <strong>in</strong>frastructure,<br />
absorb<strong>in</strong>g <strong>in</strong>tellectual capital <strong>and</strong> best practices, <strong>and</strong> creat<strong>in</strong>g a bus<strong>in</strong>ess climate that is rapidly attract<strong>in</strong>g foreign <strong>in</strong>terest from bus<strong>in</strong>esses <strong>and</strong><br />
logistics providers alike.<br />
Lat<strong>in</strong> America is far from a new venture for U.S. <strong>in</strong>dustry. Henry Ford's foray <strong>in</strong>to Brazil's rubber-rich Amazonian market <strong>and</strong> the ill-fated<br />
development of "Fordl<strong>and</strong>ia" <strong>in</strong> the 1920s foreshadowed the automobile's <strong>in</strong>evitable importance to the region's economic prospects.<br />
Today, the automotive sector is among Brazil's top export <strong>in</strong>dustries <strong>and</strong> the country's emerg<strong>in</strong>g role as one of the world's lead<strong>in</strong>g<br />
ethanol <strong>and</strong> flexible-fuel vehicle producers bodes well for cont<strong>in</strong>ued growth.<br />
In less overt ways, the development of the automotive <strong>in</strong>dustry, corollary dem<strong>and</strong> for logistics <strong>and</strong> supply cha<strong>in</strong> execution capabilities,<br />
<strong>and</strong> the swift migration of U.S. 3PLs to the region have helped re<strong>in</strong>force a nascent transportation <strong>and</strong> logistics network that is beg<strong>in</strong>n<strong>in</strong>g to<br />
pay major dividends for regional economic growth.<br />
Ryder System first made <strong>in</strong>roads <strong>in</strong>to Mexico, Brazil, <strong>and</strong> Argent<strong>in</strong>a <strong>in</strong> 1995, notes Gene Sevilla, vice president <strong>and</strong> manag<strong>in</strong>g director of<br />
Ryder, Lat<strong>in</strong> America.<br />
The Miami-based 3PL started sell<strong>in</strong>g <strong>in</strong>to the Mexico market <strong>and</strong> its cross-border bus<strong>in</strong>ess organically evolved. Its expansion <strong>in</strong>to Brazil<br />
<strong>and</strong> Argent<strong>in</strong>a has largely been through strategic acquisitions, <strong>and</strong> Ryder entered Chile two years ago with an exist<strong>in</strong>g customer.<br />
"Mexico was a greenfield effort, beg<strong>in</strong>n<strong>in</strong>g with automotive <strong>and</strong> consumer products," Sevilla says.<br />
Its economy has been greatly helped by the North American Free Trade Agreement (NAFTA), evidenced by an upsw<strong>in</strong>g <strong>in</strong><br />
manufactur<strong>in</strong>g <strong>in</strong>tegration, <strong>in</strong>ternational traffic, <strong>in</strong>ternal consumption, <strong>and</strong> general bus<strong>in</strong>ess growth.<br />
"NAFTA has been the w<strong>in</strong>d under Mexico's w<strong>in</strong>gs," he observes.<br />
South America, by contrast, has not enjoyed the benefit of a contiguous border or liberalized free trade <strong>and</strong>, consequently, is still <strong>in</strong>ternally<br />
market driven <strong>and</strong> focused.<br />
Brazil, however, is beg<strong>in</strong>n<strong>in</strong>g to reap the benefits of social <strong>and</strong> economic reform <strong>and</strong> <strong>in</strong>creas<strong>in</strong>g domestic consumption, <strong>and</strong> this growth<br />
is spill<strong>in</strong>g out beyond the cont<strong>in</strong>ent.<br />
South America's slower growth has been a w<strong>in</strong>dfall <strong>in</strong> terms of susta<strong>in</strong>able development. Political <strong>and</strong> economic protectionism over the<br />
past few years have helped stabilize fiscal management <strong>and</strong> strengthen domestic <strong>in</strong>dustries.<br />
In the face of a weaken<strong>in</strong>g U.S. market <strong>and</strong> an otherwise thriv<strong>in</strong>g global economy, Lat<strong>in</strong> America at large <strong>and</strong> Brazil <strong>in</strong> particular are<br />
positioned to capitalize on a potential economic development bonanza.<br />
"More people are buy<strong>in</strong>g consumer product goods <strong>in</strong> Brazil, <strong>in</strong>clud<strong>in</strong>g three million vehicles a year, many of which are manufactured <strong>in</strong>country,"<br />
says Sevilla. "Automobile producers are also export<strong>in</strong>g product to other South American countries as well as Mexico <strong>and</strong> Ch<strong>in</strong>a."<br />
Strong government leadership has curbed once-rampant graft <strong>and</strong> is encourag<strong>in</strong>g private <strong>in</strong>vestment. A more secure f<strong>in</strong>ancial foot<strong>in</strong>g,<br />
controlled <strong>in</strong>flation, <strong>and</strong> greater public/private collaboration are further <strong>in</strong>dications that Brazil's traditionally domestic-driven economy can<br />
susta<strong>in</strong> <strong>and</strong> grow commodity <strong>and</strong> specialized export trade.<br />
"For exports, Brazil rema<strong>in</strong>s a low-cost producer of commodities. It has resources <strong>and</strong> can produce <strong>in</strong>expensively," says Sevilla. "Despite<br />
<strong>in</strong>frastructure concerns, Brazil can export cheaply <strong>and</strong> is becom<strong>in</strong>g more efficient at achiev<strong>in</strong>g scale with manufactured goods."<br />
But the <strong>in</strong>frastructure gaps are glar<strong>in</strong>g, <strong>and</strong> <strong>in</strong>l<strong>and</strong> transportation needs improvement to support warehous<strong>in</strong>g networks as <strong>in</strong> Mexico <strong>and</strong><br />
the United States.<br />
The cargo transportation network <strong>in</strong> Brazil depends heavily on truck<strong>in</strong>g, with 62 percent of freight mov<strong>in</strong>g on roads, followed by rail (20<br />
percent) <strong>and</strong> <strong>in</strong>l<strong>and</strong> waterways (13 percent), says Adolfo Pimentel Filho, director of bus<strong>in</strong>ess development, Ryder Brazil.<br />
"There are some efforts toward privatiz<strong>in</strong>g roads. Brazilian authorities are aware that they need to make strong <strong>in</strong>vestments <strong>in</strong> local<br />
<strong>in</strong>frastructure - especially transportation - to support short- <strong>and</strong> long-term growth plans," he says.<br />
Mauricelio Gomes Faria, general manager of logistics, Lat<strong>in</strong> America for Fiat Auto <strong>in</strong> Brazil, perceives road transportation as the foremost<br />
challenge <strong>and</strong> opportunity for bus<strong>in</strong>ess growth <strong>in</strong> the region. The South American arm of the Italian automobile company manufactures<br />
components <strong>and</strong> assembles vehicles <strong>in</strong> Brazil <strong>and</strong> Argent<strong>in</strong>a.<br />
Fiat Auto <strong>in</strong> Brazil has partnered with Ryder to h<strong>and</strong>le <strong>in</strong>ternational transportation management for Iveco-Fiat Group's truck <strong>and</strong><br />
commercial vehicle division <strong>in</strong> Argent<strong>in</strong>a <strong>and</strong> Brazil, <strong>and</strong> the Fiat Group's automobile bus<strong>in</strong>ess <strong>in</strong> Brazil <strong>and</strong> Mexico.<br />
Grow<strong>in</strong>g consumerism, market competitiveness, <strong>and</strong> progressive technology <strong>in</strong>vestment have made Brazil attractive to Fiat despite<br />
bureaucracy <strong>and</strong> <strong>in</strong>frastructure issues. The value of work<strong>in</strong>g with Ryder is evident <strong>in</strong> its "ability to react to new transportation dem<strong>and</strong>s," says<br />
Gomes Faria.<br />
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While the broader difficulties of manag<strong>in</strong>g local transportation <strong>and</strong> warehous<strong>in</strong>g, <strong>and</strong> l<strong>in</strong>k<strong>in</strong>g these domestic components to global supply<br />
<strong>and</strong> dem<strong>and</strong> cha<strong>in</strong>s are readily apparent, they have yet to dam the tide of foreign speculation.<br />
In fact, these obstacles have created dem<strong>and</strong> for the type of responsiveness that third-party logistics companies can provide, hasten<strong>in</strong>g<br />
the pace of manufactur<strong>in</strong>g <strong>and</strong> logistics outsourc<strong>in</strong>g growth <strong>in</strong> the region.<br />
As 3PLs cont<strong>in</strong>ue to exp<strong>and</strong> their presence throughout Lat<strong>in</strong> America, they are also leverag<strong>in</strong>g experience <strong>and</strong> service capabilities to<br />
attract U.S. <strong>and</strong> foreign bus<strong>in</strong>esses outside of the already entrenched automobile sector.<br />
Ryder, which began work<strong>in</strong>g with automotive titans, has also developed local partnerships with lead<strong>in</strong>g consumer goods companies.<br />
Much of what it has acquired <strong>and</strong> developed <strong>in</strong> terms of cultural knowledge <strong>and</strong> value-added logistics services for the auto <strong>in</strong>dustry are<br />
transferable to other verticals.<br />
On the transportation side, automotive companies' sophistication <strong>and</strong> focus on <strong>in</strong>bound <strong>and</strong> just-<strong>in</strong>-time require optimal routes for<br />
delivery to manufactur<strong>in</strong>g plants. It's easy to predict dem<strong>and</strong>, but any disruptions, such as transport delays, can greatly impact operations.<br />
These challenges necessarily impact local distribution.<br />
"The automotive supply cha<strong>in</strong> is cont<strong>in</strong>gent on network design <strong>and</strong> efficiencies ga<strong>in</strong>ed or lost through warehous<strong>in</strong>g <strong>and</strong> distribution<br />
strategies such as crossdock<strong>in</strong>g. This level of sophistication is not available work<strong>in</strong>g solely with local partners," Sevilla shares.<br />
In the consumer products sector, the network between local manufactur<strong>in</strong>g plant <strong>and</strong> f<strong>in</strong>al consumer is considerably more arbitrary -<br />
bus<strong>in</strong>esses are less attuned to shifts <strong>in</strong> dem<strong>and</strong>, <strong>and</strong> don't know what will be sold where. These companies require greater flexibility <strong>and</strong><br />
scalability.<br />
As <strong>in</strong>terest <strong>in</strong> Lat<strong>in</strong> American grows, the task of <strong>in</strong>tegrat<strong>in</strong>g local transportation <strong>and</strong> distribution l<strong>in</strong>ks with global supply cha<strong>in</strong>s will def<strong>in</strong>e<br />
the evolv<strong>in</strong>g role of the 3PL - <strong>and</strong> give current outsourc<strong>in</strong>g prospects a strike of certitude as foreign bus<strong>in</strong>esses explore new avenues for<br />
growth.<br />
Ryder <strong>in</strong> Lat<strong>in</strong> America:<br />
Argent<strong>in</strong>a: 724 employees, 600 vehicles (17% owned, 83% dedicated) 200 carriers under contract, 11 locations*<br />
Brazil: 1,100 employees, 1,000 vehicles (60% owned, 40% dedicated), 600 carriers under contract, 12 locations*<br />
Chile: 5 locations*<br />
Mexico: 1,800 employees, 1,000 vehicles (60% owned, 40% dedicated), 145 carriers under contract, 26 locations*<br />
*<strong>in</strong>clud<strong>in</strong>g crossdock, warehouse, ma<strong>in</strong>tenance facilities<br />
<strong>Logistics</strong> exec Williford to lead Ryder unit [American Shipper+, June 6, 2008]<br />
Ryder System Inc. last week named John Williford to the newly created position of president, global supply cha<strong>in</strong> solutions.<br />
The move is part of the company's effort to comb<strong>in</strong>e its U.S. <strong>and</strong> <strong>in</strong>ternational supply cha<strong>in</strong> bus<strong>in</strong>ess units to form a s<strong>in</strong>gle, <strong>in</strong>tegrated<br />
organization that will provide global service to shippers.<br />
Williford jo<strong>in</strong>s the company from Golden Gate <strong>Logistics</strong>, a Palo Alto, Calif.-based logistics portfolio company he helped create <strong>in</strong><br />
February 2006. Williford was chief executive officer of Golden Gate, which is backed by private equity firm GTCR Golder Rauner LLC,<br />
Chicago. The company has made one acquisition, Atlanta-based ocean freight forwarder Global L<strong>in</strong>k <strong>Logistics</strong>, so far.<br />
Williford is perhaps best known as the former CEO of Menlo Worldwide <strong>Logistics</strong>, a large contract logistics company that is part of the<br />
Con-way Inc. freight group. Menlo <strong>Logistics</strong> was formed <strong>in</strong> 1990 by then-parent company Consolidated Freightways at the suggestion of<br />
Williford, who as director of market<strong>in</strong>g for the transportation conglomerate saw an opportunity to capitalize on the grow<strong>in</strong>g trend of<br />
bundled logistics services. Williford was <strong>in</strong>strumental <strong>in</strong> build<strong>in</strong>g Menlo <strong>in</strong>to a major <strong>in</strong>ternational third-party logistics provider.<br />
He left Menlo <strong>in</strong> 2005 after be<strong>in</strong>g passed over to head Con-way, then known as CNF Inc.<br />
Williford will beg<strong>in</strong> his new role on June 23.<br />
Manufacturer of the Year for <strong>Supply</strong> Cha<strong>in</strong> Excellence: Stonyfield Farm [By Neil Shister, World Trade Magaz<strong>in</strong>e, May 1, 2008]<br />
…<br />
Forty-odd trailers will pull up to the load<strong>in</strong>g dock here today with each haul<strong>in</strong>g away some 5,000 cases of product, a selection of the<br />
company’s nearly one hundred SKUs of yogurt <strong>and</strong> dr<strong>in</strong>ks. The shell of this factory was the <strong>in</strong>dustrial strip mall that was Stonyfield’s early<br />
home; they operated out of two bays, <strong>and</strong> Steven Inamorati remembers shuttl<strong>in</strong>g raw materials through the park<strong>in</strong>g lot. Construction<br />
workers are at work, <strong>in</strong>stall<strong>in</strong>g more capacity.<br />
This new capacity, along with plans to manufacture this year <strong>in</strong> Utah, is a measure of how Stonyfield has been able to exp<strong>and</strong> scale s<strong>in</strong>ce<br />
the deal with Danone while still reta<strong>in</strong><strong>in</strong>g most of its <strong>in</strong>dependence. “There are only two vetoes on us,” Hirshberg expla<strong>in</strong>s as we sit <strong>in</strong> his<br />
office. “The only one that comes up on a rout<strong>in</strong>e basis is Capital Expenditures (the other is acquisitions).” Does the oversight slow down his<br />
agility? “When we were negotiat<strong>in</strong>g our deal, this came up. They said, ‘okay, we have to veto all Cap Exs.’ I said, ‘no, no, no you can’t veto all<br />
Cap Exs because that will take me forever.’ (We were a $94 million dollar company at the time, somebody would come <strong>in</strong> with a purchase<br />
order, make a case <strong>and</strong> we’d get it done). We agreed on a number, anyth<strong>in</strong>g over a million dollars. I said, ‘okay, a million dollars, no sweat!’<br />
We rarely had anyth<strong>in</strong>g that cost that much. S<strong>in</strong>ce then, I don’t th<strong>in</strong>k we’ve ever had anyth<strong>in</strong>g under a million dollars.”<br />
The challenges to devise <strong>in</strong>novative ways to keep the supply cha<strong>in</strong> true to the company’s environmental mission have grown with the<br />
growth <strong>in</strong> volume.<br />
“One of the th<strong>in</strong>gs we said when we started out,” recalls Hirshberg, when asked to discuss this question of size, “was that ‘we’re only<br />
go<strong>in</strong>g to sell with<strong>in</strong> a little area. We’ll assume that somebody else will be the New York area yogurt maker <strong>and</strong> somebody else will be Ohio’s.’<br />
That was our vision. But we ran <strong>in</strong>to this very complex concept that is like a brick wall that is called ‘scale.’ If you don’t have scale you can’t<br />
be economical. And with scale comes efficiency.”<br />
“We had this classic moment when it became clear. We were sell<strong>in</strong>g to 7 stores <strong>in</strong> the local area. And, we got a call from the buyer at<br />
another cha<strong>in</strong> that had 35 stores. He said to my partner ‘why are you sell<strong>in</strong>g your yogurt to my competitor <strong>and</strong> not to me?’ And Samuel said ‘<br />
well, I don’t have enough cows.’ And he said ‘well get some more damn cows!’ <strong>and</strong> slammed the phone down. We took that as very good<br />
bus<strong>in</strong>ess advice, so we scaled up.”<br />
As scale grows, so has the complexity of optimiz<strong>in</strong>g production <strong>and</strong> distribution. Which would be the case for any company but, given<br />
the need to <strong>in</strong>clude carbon footpr<strong>in</strong>ts <strong>in</strong> the optimization functions, logistics becomes doubly significant at Stonyfield.<br />
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“I’ve been do<strong>in</strong>g this for 25 years,” says Hirshberg, “<strong>and</strong> I would venture that for the first 20 years the supply cha<strong>in</strong> was certa<strong>in</strong>ly a m<strong>in</strong>or<br />
consideration <strong>in</strong> terms of our plann<strong>in</strong>g because I’m quite sure it was a s<strong>in</strong>gle-digit part of the P&L. I don’t th<strong>in</strong>k it ever got <strong>in</strong>to double-digits<br />
even with our geographic spread. But as we hit $100 barrel oil, it’s a whole other world. The relevance of the supply cha<strong>in</strong> is entirely different<br />
than it was even seven years ago, when oil was $30 a barrel. So, now the supply cha<strong>in</strong> is central. It’s gone from a relatively m<strong>in</strong>or functional<br />
consequence to be<strong>in</strong>g a central consideration.”<br />
…<br />
Today, the company measures the carbon footpr<strong>in</strong>t of the entire supply cha<strong>in</strong> <strong>and</strong> it does so with a passion <strong>and</strong> precision unlike many<br />
others. The overall goal is for the company—<strong>in</strong> all its operations <strong>and</strong> sourc<strong>in</strong>g—is to be 100 percent susta<strong>in</strong>able by the year 2015.<br />
In terms of the transportation component, Stonyfield is do<strong>in</strong>g this <strong>in</strong> conjunction with its logistics solution provider, Ryder System.<br />
Work<strong>in</strong>g <strong>in</strong> t<strong>and</strong>em, the two are stak<strong>in</strong>g out what will likely prove to be significant benchmarks <strong>in</strong> the evolution of susta<strong>in</strong>able supply cha<strong>in</strong>s<br />
—like measur<strong>in</strong>g greenhouse emissions through the entire manufactur<strong>in</strong>g-distribution cycle from the raw milk pick-up at the farm all way<br />
down-stream to the f<strong>in</strong>al customer distribution center.<br />
The relationship began two years ago, when Stonyfield decided to get rid of paper <strong>in</strong>voices <strong>in</strong> the wake of its growth. “Lots of<br />
companies do their freight bill audit <strong>and</strong> payment off an electronic feed,” observes Ryan Boccelli, Stonyfield Director of <strong>Logistics</strong>. “What we<br />
were look<strong>in</strong>g for was a partner who could do more than that; we wanted to use freight audit <strong>and</strong> payment as the foundation for driv<strong>in</strong>g<br />
changes <strong>in</strong> our supply cha<strong>in</strong>.” They chose Ryder, <strong>in</strong> part because of the power of its system resources <strong>and</strong> eng<strong>in</strong>eers. And, <strong>in</strong> part to partner<br />
with a non-asset based carrier <strong>in</strong> order to be assured of non-biased advice if the relationship exp<strong>and</strong>ed <strong>in</strong>to transportation, which it did.<br />
“Once we started data gather<strong>in</strong>g we could identify all our exist<strong>in</strong>g lanes <strong>and</strong> shipments,” says Boccelli.<br />
Lots of factors impacted the logarithms: the need for temperature-controlled transport, a sell<strong>in</strong>g season that peaks <strong>in</strong> January <strong>and</strong><br />
February, customer constra<strong>in</strong>ts (like delivery times, which could not be changed), <strong>and</strong> volume imbalances (heaviest <strong>in</strong> New Engl<strong>and</strong>). “At<br />
Stonyfield,” expla<strong>in</strong>s Mark Swenson, the Ryder Vice President who h<strong>and</strong>les the account, “we took our Six Sigma tools <strong>and</strong> concentrated on<br />
the supply cha<strong>in</strong>. That allowed us to ask ‘who are the suppliers <strong>in</strong> this process, what are their <strong>in</strong>puts, what is the process (i.e. where are the<br />
h<strong>and</strong>-offs), where do each of the silos impact the next h<strong>and</strong>-off?” What was unique about Stonyfield was that outputs were be<strong>in</strong>g measured<br />
not only <strong>in</strong> terms of productivity but also greenhouse gases.<br />
The result<strong>in</strong>g rout<strong>in</strong>g guide comb<strong>in</strong>es efficiency <strong>and</strong> reduced emissions (like all other systems at Stonyfield, transportation rema<strong>in</strong>s a work<br />
<strong>in</strong> progress with such th<strong>in</strong>gs under consideration as collaborative book<strong>in</strong>gs with other refrigerated users <strong>and</strong> pull<strong>in</strong>g t<strong>and</strong>em trailers with one<br />
tractor to reduce carbon footpr<strong>in</strong>ts). Part of the solution entails a fleet contracted through Ryder, which <strong>in</strong> addition to purely bus<strong>in</strong>ess<br />
advantages (it carries 25 percent of Stonyfield’s volume), enables the company to exercise control over factors like the use of biofuel <strong>and</strong><br />
state-of-the-art environmentally friendly tractors. The size of this contract fleet is expected to grow <strong>in</strong> the future (“as we reduce carbon<br />
emissions”). Meanwhile the selection of outside carriers isn’t always awarded on the basis of lowest cost, when feasible allowances are made<br />
for environmental impact (“with a good EPA SmartWay provider, we might pay more”).<br />
“The most significant change <strong>in</strong> our supply cha<strong>in</strong>,” expla<strong>in</strong>s Ryan Boccelli, “is that we’ve added systems we never had before to let us<br />
measure th<strong>in</strong>gs we weren’t able to before.” Ryder <strong>in</strong>vested considerable effort <strong>in</strong> ‘tweak<strong>in</strong>g’ the EPA SmartWay fleet performance model,<br />
customiz<strong>in</strong>g it to validate Stonyfield particulars <strong>and</strong> enabl<strong>in</strong>g precise read<strong>in</strong>gs of carbon emission per channel, vehicle <strong>and</strong> product. “You can’<br />
t improve what you’re not measur<strong>in</strong>g. Now we’ve got clear report<strong>in</strong>g, employees are look<strong>in</strong>g at the data, measur<strong>in</strong>g carbon, work<strong>in</strong>g with<br />
customers, report<strong>in</strong>g that back <strong>in</strong>to the bus<strong>in</strong>ess <strong>and</strong> report<strong>in</strong>g it out to the public.”<br />
“Rather than just look at the P&L to each customer,” notes Steve Inamorati, “we also look at the <strong>in</strong>put to greenhouse gases <strong>and</strong> the<br />
carbon footpr<strong>in</strong>t.”<br />
One of the features of Stonyfield management s<strong>in</strong>ce 2006 have been Mission Action Teams, cross-functional teams charged with<br />
develop<strong>in</strong>g specific goals <strong>and</strong> agendas to drive down company greenhouse gas emissions (“to make environmental efforts part of the<br />
company DNA,” says Hirshberg). “Our biggest w<strong>in</strong>s,” says Transportation Team member Boccelli, “have been track<strong>in</strong>g greenhouse gases to<br />
the customer level <strong>and</strong> the elim<strong>in</strong>ation of LTL deliveries.”<br />
As one listens to the Stonyfield story, the Big Question is ‘environmentalism at what cost?’ Conventional wisdom is that ‘manag<strong>in</strong>g for<br />
susta<strong>in</strong>ability’ is contrary to the best fiscal <strong>in</strong>terests of the enterprise, that it may be a noble sentiment but bad bus<strong>in</strong>ess. Gary Hirshberg,<br />
however, couldn’t disagree more. He describes different company <strong>in</strong>itiatives undertaken for the sake of the environmental mission—a<br />
porous park<strong>in</strong>g lot to allow ra<strong>in</strong>water to drip <strong>in</strong>to the ground rather than spill off <strong>in</strong>to sewers, solar energy collectors, <strong>and</strong> factory carbon<br />
offsets of 100 percent. “The mission has never cost us,” he <strong>in</strong>sists. Granted, there’s an <strong>in</strong>itial capital cost, but amortization typically occurs<br />
faster than predicted, followed by positive cash flows. “Take the waste water plant. Seventeen percent more capital costs; it’s go<strong>in</strong>g to<br />
generate $3.5 million of sav<strong>in</strong>gs over ten years. That’s net.”<br />
And the supply cha<strong>in</strong>?<br />
“Of most of the th<strong>in</strong>gs we’ve looked at, th<strong>in</strong>gs that are good for the environment are good for bus<strong>in</strong>ess,” says Steve Inamorati. “So<br />
when you start talk<strong>in</strong>g about be<strong>in</strong>g more profitable <strong>and</strong> mak<strong>in</strong>g more money, most of those th<strong>in</strong>gs we talk about for greenhouse gas<br />
footpr<strong>in</strong>t <strong>and</strong> carbon impact footpr<strong>in</strong>t are go<strong>in</strong>g to do exactly that—be good for bus<strong>in</strong>ess. Some are go<strong>in</strong>g to entail <strong>in</strong>vestment to do it, but<br />
there’s always pay-back.”<br />
So how are decisions made at Stonyfield?<br />
Stonyfield is add<strong>in</strong>g western U.S. production capability this year. Figur<strong>in</strong>g out where to site the facility is a live question when I visit: how<br />
to h<strong>and</strong>le distribution out of a new production facility. The problem is that the equipment is suitable only for large batches, “too big for<br />
some our products <strong>in</strong> the West” Boccelli expla<strong>in</strong>s.<br />
The orig<strong>in</strong>al <strong>in</strong>tention to make all of the West Coast Stonyfield product there is thus not viable. Boccelli sketches out the options that<br />
have been developed with their Ryder partners over a multi-month <strong>in</strong>tensive analysis: “Do you br<strong>in</strong>g back all the product to New Hampshire<br />
<strong>and</strong> then ship it <strong>in</strong> s<strong>in</strong>gle customer deliveries go<strong>in</strong>g West? That makes no sense from a cost <strong>and</strong> carbon footpr<strong>in</strong>t perspective or as a<br />
bus<strong>in</strong>ess strategy. Do we put an <strong>in</strong>ventory distribution center out there that <strong>in</strong>ventories everyth<strong>in</strong>g we’ll need for the West? You’re pay<strong>in</strong>g<br />
that additional storage <strong>and</strong> h<strong>and</strong>l<strong>in</strong>g costs of all of the product that you’re still mak<strong>in</strong>g <strong>in</strong> the East. Then there’s the option to cross-dock.”<br />
At this po<strong>in</strong>t he pauses for effect: “Or do you go to the historical faux pas of two purchase orders so you’re shipp<strong>in</strong>g some product to<br />
each customer from the West <strong>and</strong> some from the East? Customers aren’t always open to this, it requires two deliveries <strong>and</strong> more<br />
management.” But from a greenhouse footpr<strong>in</strong>t perspective, this is the best alternative.<br />
“The decisive factor is whether you can persuade your customers to go aga<strong>in</strong>st what would be their natural <strong>in</strong>cl<strong>in</strong>ation. If you went to<br />
your sales people <strong>and</strong> said ‘this is what we want to do’ (two purchase orders), their emphatic answer would be ‘absolutely not.’ But, this<br />
particular time I said, ‘I’m not go<strong>in</strong>g to take ‘no’ between the four walls, we really have to talk to the customer about it <strong>and</strong> let them know<br />
what we’re try<strong>in</strong>g to do.’”<br />
The result? “It’s been well received. Customers <strong>in</strong> the West are very well aware of what Stonyfield <strong>and</strong> our mission is. They’re open to it.”<br />
To sweeten the deal as a k<strong>in</strong>d of quid pro quo, these West Coast customers could be rewarded with more frequent shipments with reduced<br />
lead-time. While perhaps not of historic magnitude, this distribution approach illustrates at the granular level just how environmentally driven<br />
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decision-mak<strong>in</strong>g translates <strong>in</strong>to w<strong>in</strong>-w<strong>in</strong> bus<strong>in</strong>ess practice that’s good for Stonyfield, good for its customers, <strong>and</strong> good for Planet Earth.<br />
And, if social responsibility isn’t a sufficient motivator for change, Hirshberg is quick to po<strong>in</strong>t out that the petro-economy that has been<br />
fuel<strong>in</strong>g <strong>in</strong>dustry is itself becom<strong>in</strong>g unsusta<strong>in</strong>able. “Oil is at $100 a barrel, where is it go<strong>in</strong>g to be <strong>in</strong> five years? That’s easy. Somewhere<br />
between $150 <strong>and</strong> $200. And then 100 percent of our lives will be changed.”<br />
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