Documente Academic
Documente Profesional
Documente Cultură
QuintessentialGlobalSupplyChainManagement
MarketSizeandMajorPlayers
April,2010
Phone:+18005253915
Website:www.3PLogistics.com
Email:Armstrong@3PLogistics.com
ABOUTARMSTRONG&ASSOCIATES,INC.
Armstrong&Associates,Inc.isasupplychainmarketresearchandconsulting
firmspecializingin3PLmarketresearch,providerbenchmarking,strategic
planning,mergersandacquisitions,logisticsoutsourcing,centralized
transportationmanagementprograms,andsupplychainsystemsevaluationand
selection.Armstrong&AssociatespublishesWhosWhoinLogisticsandSupply
ChainManagementTheAmericasandWhosWhoinLogisticsandSupplyChain
ManagementInternational.RecentresearchpapersincludeSwanDive:2008
U.S.andGlobalThirdPartyLogisticsMarketRevenues,2009Estimatesanda
ReviewofMergersandAcquisitions;WarehousinginNorthAmerica2009
MarketSize,Major3PLs,BenchmarkingCosts,PricesandPractices,andTrendsin
3PL/CustomerRelationships.
AllRightsReserved.
Nopartofthispublicationmaybereproduced,storedinaretrievalsystemor
transmittedinanyformbyanymeans,electronic,mechanical,photocopied,recordedor
otherwise,withoutthepriorpermissionofthepublisher,Armstrong&Associates,Inc.
Thefactsofthisreportarebelievedtobecorrectatthetimeofpublicationbutcannot
beguaranteed.Pleasenotethatthefindings,conclusionsandrecommendationsthat
Armstrong&Associatesdeliverswillbebasedoninformationgatheredingoodfaith
frombothprimaryandsecondarysources,whoseaccuracywearenotalwaysina
positiontoguarantee.Assuch,Armstrong&Associatescanacceptnoliability
whatsoeverforactionstakenbasedonanyinformationthatmaysubsequentlyproveto
beincorrect.
Copyright2010Armstrong&Associates,Inc.2|P a g e
Supportingthemachineryanddevicesofmodernglobalizationhasrequiredthe
developmentofsophisticatedworldwidespare/servicepartslogistics(SPL)networks.A
handfulofthirdpartylogisticsproviders(3PLs)haveansweredthemarketsdemand
andservicemostofearthsareaandpopulation.Asaresult,thesparepartslogistics
network,whichreliesoncompanieslikeCatLogistics,CEVA,DHL,Kuehne+Nagel,DB
SchenkerandUPS,hasgrownto$35billionayear.
ThemajorverticalindustriesinthesparepartslogisticsnetworkareAutomotive,
IndustrialandTechnology.Inshort,thesparepartslogisticsmarketisdrivenbyhigh
valuemanufacturedproductsandtheirmaintenance.
Toarriveatestimatesforthesparepartslogisticsmarket,webeginwithsomebasic
Armstrong&Associatesresearchresults.Eachyear,Armstrong&Associatesestimates
globalthirdpartylogisticsmarketrevenue.WethensplittotalrevenuesbyFortune500
industryverticalsandgeographicalareas.Thebaseyearusedinthisanalysiswas2008.
Ourinitialestimatesfor2009indicateanoveralldecreaseof7%.
Table1breaksdownglobal3PLrevenuebyselectverticalindustriesandthe
correspondingsparepartslogisticsrevenue.Theportionoftotal3PLrevenue
attributabletosparepartslogisticsishighestforAerospace&Defenseat18.8%.
AutomotiveandIndustrialarealsohighat15.8%and15%respectively.Technology
overallis9.4%.ExcludingAerospace&Defense,individualTechnologyindustrysub
segmentsvaryfrom7.6%to8.4%.
Ofthetotalsparepartslogisticsrevenueof$35billionasshowninTable1,$12.5billion
or35.7%isAutomotiveandTechnologyis$14.4billionor41.1%.
Copyright2010Armstrong&Associates,Inc.3|P a g e
Table1.Global3PLRevenuesbySelectIndustries&SubSegments(US$Billions)
Total3PL
3PLSpareParts
VerticalIndustries&SubSegments
Revenue LogisticsRevenue
Automotive
59.3
12.51
Industrial*
37.1
8.09
Technology:
Aerospace&Defense
10.2
2.60
Computers,OfficeEquipment
18.9
2.84
ComputerSoftware
2.4
0.33
Electronics:
ElectricalEquipment
22.4
3.42
MedicalEquipment
12.6
1.93
Network,CommunicationsEquipment
4.5
0.63
Semiconductors,ElectronicComponents
1.6
0.23
Telecommunications
16.1
2.33
Wholesalers:Electronics&OfficeEquipment
0.5
0.09
TechnologySubtotal
89.2
14.40
Totals
185.6
35.00
Source:Armstrong&Associates,Inc.CustomerAnalysis
*TheIndustrialverticalindustryincludes30companiesinvolvedinenergyrelatedactivities.The
largest,EnterpriseGPHoldingsandPlainsAllAmericanPipeline,areheavilyinvolvedinpetroleum.This
groupalsoincludesHalliburton,SonocoProducts,NationalOilwellVarco,etc.Thesecompaniesprovide
onethirdoftherevenuesfortheFortune1000DomesticverticalindustryIndustrial.Utilitiesare
includedintheFortuneverticalindustryElements.
Geographically,Table13PLsparepartslogisticsrevenuesfollowthedistributionof
majormarketsandindustrialproduction.Europeaccountsfor$11.6billion(33.1%),
NorthAmerica$9.4billion(26.9%)andAsiaPacific$8.4billion(24.0%).Therestofthe
worldaccountsfor$5.6billion(16.0%).
Copyright2010Armstrong&Associates,Inc.4|P a g e
Table2.3PLSparePartsLogisticsRevenuebyRegion2008(US$Billions)
3PLSpareParts
Region
Country
LogisticsRevenue
NorthAmerica
Canada
0.8
Mexico
0.7
UnitedStates
7.9
Region
9.4
Europe
France
1.8
Germany
1.9
Italy
1.7
Netherlands
0.6
Spain
1.3
UnitedKingdom
1.7
Others
2.6
Region
11.6
AsiaPacific
China
3.5
HongKong
0.1
India
0.6
Japan
2.4
Singapore
0.1
SouthKorea
0.6
Taiwan
0.3
Others
0.8
Region
8.4
SouthAmerica
Brazil
0.9
Venezuela
0.1
Argentina
0.1
Others
0.5
Region
1.6
CentralAmerica
0.1
Australia
0.7
UnitedArabEmirates(Dubai)
0.2
RemainingCountries/Regions
3.0
Total
35.0
Belize,CostaRica,ElSalvador,Guatemala,Honduras,Nicaragua,Panama
Inanalyzingthedistributionoftransportationandwarehousingrelatedcosts,we
estimatethattransportationaccountsfor70%to75%andwarehousingaccountsfor
25%to30%.ThetransportationcomponentishigherinNorthAmericaandAsiathanin
Europe.
Copyright2010Armstrong&Associates,Inc.5|P a g e
MajorPlayers
CEVA
CEVA(anditspreviousincarnations,TNTLogisticsandCTI)hasbeenheavilyinvolvedin
automotivelogisticsforover20years.Ithasdevelopedandexecutedverywellaseries
ofautomotivelogisticsbusinessmodels.Theprincipalcomponentsareinbound
logistics,materialsmanagement,sequencingcentersandkanbanmanufacturing
support.Developmentofitssparepartslogisticscapabilitywasalogicalextension.
Consequently,SPLhasgrownto15%+ofrevenuesforCEVA.
CEVAmaintainsaseriesofkeycentrallocationsformanagingitsglobalSPLnetwork.
Theyare:
NorthAmerica(Detroit,MichiganandJacksonville,Florida)
SouthAmerica(SaoPaulo,Brazil)
Europe(Antwerp,BelgiumandBarcelona,Spain)
Asia(Singapore)
Australia(Sydney)
CEVAscoreinternalmodelforsparepartslogisticsmanagement(SmartSpares)isa
steppedapproachbeginningwithacentralwarehouse.Partschannelsareprovided
directtocustomers,servicepartners,endusersandfieldserviceengineers.Thecentral
warehouseanditscentralcenterareresponsibleforcontrollinginventoriesthroughout
theflowprocess.Regionalwarehousesarethemainpartssuppliersforcardealerships
andretaillocations.Replenishmentforservicepartnerstendstobepredictable,
scheduledandinvolvingmultipleline,stockorders.Forwardstockinglocations(FSLs)
carrysmallinventoriesofcriticalparts.Servicefromtheselocationscanbescheduled
ormissioncritical.Fieldserviceengineers(FSEs)normallypickuppartsfromFSLsor
pickupanddeliverylockboxlocations.ReturnsbyFSEsarenormallytoFSLs.
Copyright2010Armstrong&Associates,Inc.6|P a g e
Diagram1.CEVAsSPLExecutionServices
SeaFreight
Suppliers
RoadFreight
Central
Warehouse
Customer
Locations
Road/AirFreight(4872hrs)
AirExpress(2448hrs)
AirFreight
Regional
Warehouse
Road/AirFreight
(Replenishment)
Service
Partners
RoadFreight(Nextday)
RoadParcel/Express(Nextday)
ForwardStock
Location
InNightDistribution
Courier/Taxi(28hrs)
PUDO
EndUsers
Field
Engineers
TheconfigurationoftheLogisticsNetworkdependsondeliverylocations,
requiredservicelevelsandvolumesofsparesperdestination
Transportationfromsupplierstothecentralwarehouseisoptimizedusingtheleastcost
modethatcanmeetstockingrequirements.Serviceismeasuredintermsofdays.
Similarly,mostcentralandregionalwarehousescanmodallyoptimizedistributionto
customers.PUDO(pickupanddeliverylocations)transportationisnormallyscheduled
andovernight.Themostinteresting(challenging)transportationinvolvesFSLswhere
networksofongoingcourierservicesareused,oroutboundandairfreight
replenishmentisoftenrequired.Occasionally,nextflightout(NFO)emergencyservice
isrequiredwhenmistakesorunexpectedfailuresoccur.Avariantofinnight
distributionisthedeliveryofpartstoautodealersduringthenightusingdriverswith
keyaccess.
Table3liststheservicesofferedbyCEVAforautomotiveSPL.
Copyright2010Armstrong&Associates,Inc.7|P a g e
Table3.AutomotiveSPLServicesofferedbyCEVA
ServiceOffering
CEVAActivities
Managementofallwarehouseoperationsfrom
Warehousing
receivingtoshipping.CEVAalsoofferswarehouse
designandconstructionmanagementservices.
Customer
Managementandfollowupoforderstosuppliers
Relationship
andfromdealers,includingHelpDeskfunctionsand
Management
ExceptionManagement.
Core
Distribution
Optimizationofnetworklocations,includingcenter
Planning
ofgravityanalysesanddetailedrouteplanning.
Executionandmonitoringofalltransport
requirementsincludingregularrouteoptimizations
Transportation
togetherwithcertifiedpickupanddelivery
measures.
Managementofalltypesofreverseflowsfromthe
Reverse
customerBuyBacks,Returns,Remanufacturing
Logistics
Cores,andReturnableContainers.
ExtendedCore
Managementofstocklevelstogeneratemaximum
Inventory
availabilityfromminimumstockinvestment.
Management
Controlofstockintegritytoensureassets
protection.
Supplychainreengineering,fromdesignto
Complimentary
managementofthetransformation.Management
SpecialServices
Services
ofadditionalservicessuchaspackaging,packaging
design,Customs.
CEVAssolutionsaresupportedbyahostofITsolutionswithmultipleWMS(warehouse
managementsystems),TMS(transportationmanagementsystems)andinterconnecting
capabilities.
CEVAsautomotivecustomerlistislongandincludesmostcarcompaniesandseveral
major(Tier1)suppliers.TheonlymajorbrandmissingisToyota.CEVAincludesJohn
Deere,CaseNewHollandandKomatsuamongitsautomotivecustomers.
Copyright2010Armstrong&Associates,Inc.8|P a g e
Diagram2.CEVAsSparePartsLogisticsWorldwideNetwork
UK
UK
Fiat,
Fiat,
MAN,
MAN, VW
VW
Renault,
Renault,
Nissan
Nissan
Suzuki
Suzuki
USA
USA
BMW,
BMW, Chrysler,
Chrysler,
Eaton,
Eaton, Honda,
Honda, John
John
Deere,
Deere, Nissan
Nissan
Spain
Spain
Fiat
Fiat
Brazil
Brazil
Fiat,
Fiat, Ford,
Ford, Case
Case
New
New Holland,
Holland, BMW,
BMW,
Iveco,
Iveco, John
John Deere,
Deere,
Magna
Magna Marelli
Marelli
Key
Argentina
Spare Parts
Logistics Service
Other
Logistics Service
Italy
Italy
Bosch,
Bosch, Fiat,
Fiat,
GM
GM
(Chevrolet),
(Chevrolet),
MAN,
MAN,
Piaggio,
Piaggio,
Renault,
Renault,
Scania
Scania
Honda
Honda
Argentina
Argentina
Fiat
Fiat
Poland
Poland
BMW,
BMW,
Fiat,
Fiat,
IVECO,
IVECO,
Magneti
Magneti
Marelli
Marelli
France
France
Fiat,
Fiat,
Filtrauto,
Filtrauto,
Piaggio
Piaggio
Germany
Germany
Airbus,
Airbus, MAN,
MAN, Man
Man
and
and Hummel,
Hummel,
Piaggio
Piaggio
China
China
S-GM,
S-GM, S-VW
S-VW
Turkey
Turkey
Ford,
Ford, GM
GM
Greece
Greece
Fiat,
Fiat,
Piaggio
Piaggio
Australia
Australia
BMW
BMW GM,
GM, Isuzu,
Isuzu,
Komatsu,
Komatsu,
Mitsubishi
Mitsubishi
AmajorCEVAinitiativeformanyyearshasbeentoexpanditsverticalindustry
penetrationbeyondautomotive.CEVAseffortshavebeensuccessfulinthehightech
vertical.
Diagram3.CEVAsHighTechandTelecomCustomers
ForApple,CEVAhandlesiPodandiPhoneboardreplacementsinAustralia.Returnsare
forwardedtoarecoverycenter.ForIBMinThailand,CEVAhandlesamixofservers,
Copyright2010Armstrong&Associates,Inc.9|P a g e
ATMsandotherproductsthrougha25,000squarefootwarehouse.InItaly,CEVAdoes
cellphonelogisticsforTelis/TIM.1
ForGetronics,CEVAprovidesadvancedreplacementservices.Thisoperationisagood
exampleofCEVAshightechsparepartsability.Getronicsisaleadinginformationand
communicationtechnology(ICT)serviceproviderandthelargestintheBenelux.CEVAs
servicesforGetronicsarenextdayandsameday.Overnightserviceordersaresentto
thepickupanddropofflocation.Samedayordersarecourieredtotheservice
requiredlocation.Returnsaresenttotherecoverycenterandrefurbishedwhen
possible.
Diagram4.Getronics:AdvancedReplacement
GetronicsCase:
AdvancedReplacement
Suppliers
ProcessSteps
Factories
1. Nextdayservice:Itemsaredelivered
InnighttothePUDO.
Regional
Warehouse
2. Nextdayservice:Engineercollects
itemsfromPUDO.
3. Samedayservice:Itemsareshipped
fromtheFSLbycouriertotheservice
event
a
ForwardStock
Location
B
Recovery
Center
PickUpDropOff
Point
3
2
4. Periodically,theEngineerdeliversthe
unused/defectivereturnitemstothe
PUDO
5. Theitemsarecollected,thenreceived
andstoredatthewarehouseas
defectiveorunused
a. Areplenishmentitemisshippedfrom
thewarehousetotheFSL
4
ServiceEvent
A. Defectiveitemsareshippedtothe
RecoveryCenter
B. Refurbisheditemsareshippedtothe
warehousefororderfulfillment
DHL
DHLGlobalServiceLogisticsstartedin1996.Today,ithas200customersandserves
100countries.DHLssupportinginfrastructureis50large,regionalwarehousesand850
ormorelocalstoragelocations.Controllingtheglobalinformationandeventfloware
threemultiplelanguagecallcenters/controltowers.ThecontroltowersareinSterling,
Virginia;Brussels,Belgium,andSingapore.Ninelanguagesareused.Thecommonly
used,globalITsystemisSeLECT.
Forpurposesofthispaper.Wegenerallytreatcellphonelogisticsasaseparatebusiness.
Copyright2010Armstrong&Associates,Inc.10|P a g e
DHLsSPLindustryemphasisisontechnologyrelatedcompanies.TheoverallSPL
servicemodelissimilartoCEVAswithminorchanges.
Diagram5.DHLsSPLCustomers
DHLsSPLinfrastructureisshowninDiagram6.DHLsinfrastructureandoverallSPL
processaresimilartoCEVAs(Diagram1).Thisparallelismindicateshowglobalspare
partsoperationsneedtoworkforthemajorplayers.
Diagram6.DHLsGloballyIntegratedInfrastructure
Suppliers
Local Execution
Land
Air
Regional Replenishment
Global /
Regional
Warehouse
Tier 1
Sea
Area /
Country
Warehouse
Customer
Facilities
Tier 2
Field
Storage
Warehouse
Replenishment
Same Day
(1-4 Hours
Mission
Critical)
3 Regional Logistics
Customer Service Centers
End Users
Dedicated Program
Management
Tier 3
PUDO
Dealers
Distributors
Field
Engineers
Consignment
Stocks
* A centralized billing and invoicing solution with local tax re-claim is available throughout Europe
Recently,wehadagroundlevellookatDHLsTechnologyCenternearJohannesburg,
SouthAfrica(Randjiesfontein).Oursitevisitgaveusacloseuplookathowthemodel
showninDiagram6getsfleshedoutinpractice.AndreBresler,thegeneralmanager,
has60,000ormoresquarefeetofthecentralwarehouse.Heusessixfieldstocking
Copyright2010Armstrong&Associates,Inc.11|P a g e
warehousesatkeylocations(Durban,CapeTown,PortElizabethetc.)inSouthAfrica.
TheFSLsareabout5,000squarefeeteach.
NinetyfivepercentofthedeliveriesfromRandjiesfonteingotofieldserviceengineers.
FSLsarestockedovernightandservicedbyairbecauseofthedistancesinvolved.HPisa
majorcustomer.Mostmissioncriticalsitesarebanks,thestockexchangeandotherkey
economiclocations.
Breslerusescouriersextensivelytoprovidesamedayservice.Dispatchesareusually
madewithin20minutes.About10to20criticalshipmentsaremadeeachday.Total
shipmentsrun150to250perday.Courierchargesrun$50to$60ashipment.
Bresleremploys50peopleinRandjiesfontein.Securityisalwaysamajorissueasitis
throughoutSouthAfrica.Ithasbeenanareaofquickandconstantimprovementsince
partsofthebusinessincludelaptopsandcellphones.
Inventorylevelsandreplenishmentforthecentralwarehousearecontrolledbythe
Brusselscallcenter/controltower.Theyhaveinformationforthestocklevelsofall
parts.Nextflightoutshipmentsareusedwhenrequired.MainpartsflowforHPisfrom
itsPraguedistributioncenter.
Returneddevicesandpartsareaccumulatedinoceancontainers.Onecontaineris
normallyshippednortheachweek.
Customersareable,throughtheircustomizeddashboards,totrackeachspareparts
event.
AmajorproblemforBreslerhasbeenthewildfluctuationinfuelprices.Thefuel
serviceschargesheisresponsibleforcreatecostandpricingdifficulties.
Breslersoperationprovides25valueaddedservicestoitscustomers.Themulticlient
operationsconductedinSouthAfricaarerequiredtobeclosedbook.
ForoperationstocountriessurroundingSouthAfrica,SPLshipmentsaresentbyDHL
Express.
Copyright2010Armstrong&Associates,Inc.12|P a g e
UPS
UPSreferstoitsSPLbusinessasPostSalesServices.Itoperatesfourglobalcentral
stockinglocations(CSLs)torunitsnetwork.
Theyare:
Louisville,KentuckySCLogisticsCenterandUPSAirHub
Roermond,NetherlandsCologneAirHub
SingaporeAPAC
Miami,FloridaCentral/SouthAmerica
Regionalstockinglocationsinclude:Shanghai,Philippines,HongKong,SaoPaulo,
ChicagoandBurlington,Ontario.
UPShasaverylargeglobalcapacitywithover975FSLs.Ninetypercentofthevolumeit
handlesisthroughUPSownedfacilities.InEurope,99%ofbusinessesarelocated
withinfourhoursofaUPSFSL.IntheU.S.,88%ofbusinessesarewithintwohoursofa
UPSFSL.Thereare22globallocationswithtechnicalservicescapabilities.Extensiveuse
ismadeofcourierservicesforsamedaydeliveriesandNFOsasneeded.UPSalsooffers
aproprietaryServicePartsReturnsSolutionthatcandynamicallyroutepartsfroma
servicetechnicianbacktotheiroptimalfinaldestination(returntostock,repairvendor,
recycler,etc.)savingdaysintransitandtransportationlegsandreducingtruckstock.
Diagram7.ComprehensiveGlobalInfrastructureFSLNetwork
Extensive Field Stocking Location network to provide high service levels
across the globe and access to any market
FSL's
US
Canada
Mexico
Latin
America
EMEA
APAC
Total FSL
Network
211
46
22
65
281
363
988
UPSSPLUSsystemisdeployedglobally.Likeitsmajorcompetitors,itprovides
extensiveonlinerealtimeinformationandresearchdesign.Customerordersand
Copyright2010Armstrong&Associates,Inc.13|P a g e
advancedshipnoticesfeedtheinventorymanagementmodulewhichissupportedby
ordermanagement,warehousemanagement,partsreturn,shippingandreporting
includingreceiptconfirmation.
UPSservicepartslogisticscustomersincludethefollowing:
Customer
Product/Service
SiliconGraphics,Inc.(SGI) DesktopWorkstations,Servers,Software
DecisionOne
MultivendorITService
TokyoElectronLimited
SemiconductorProductionEquipment
HewlettPackard(HP)
HighTechEquipment
Sprint
WirelessTelecom
Embraer
Aircraft
PhilipsHealthcare
HealthcareTechnology
HitachiGST
HardDrives/StorageTechnology
ForPhilipsHealthcare,UPSputtogetheraglobalpackagein2006.Threecontinental
stockinglocationsweresetupinLouisville,TheNetherlands,andSingapore.Thereare
50FSLsusedgloballyandservicetechniciansuse1,000pickup/dropoffpoints.Overall
inventorydropped30%andtotalcostshavebeenreducedmorethan15%.Service
deliveryreliabilityincreased95%.
ForHP,UPSprovides:
HPScopeofServices2
Courier/NFO(nextflightout)
FieldStockingLocations(FSL)UnitedStatesandCanada
InformationTechnology(IT)forscopedservices
RequestFulfillmentcallcenters/helpdesks
ReverseLogisticsServicePartsReturnsSolution,defectivewarehousing,
freetradezone
TechnicalServicesandRepairsLatinAmerica
PackageTransportationdomesticandinternational,holdforpickup
CustomsBrokerage
AirFreight
UPSinitiatedthenewscopeofservicesforHPin2004.
UPSbegancentralizingSGIsinventoryintheLouisvilleCSLin1996.FromtheCSLand
FSLnetwork,SGIdispatches2,000ormorepartsamonth.Mostoftheseordershave
TheservicesforHPincludefunctioningasanairfreightforwarderoutofUPSPudongAirportfacilityin
Shanghai.Areportonthatoperationisat:http://www.3plogistics.com/Site_Visits.htm.
Copyright2010Armstrong&Associates,Inc.14|P a g e
twotofourhourservicerequirements.UPSmaintainsaninventoryof31,000parts.An
acceleratedreverselogisticsprocessisutilized.
ForDecisionOne,UPSoperateswithsevendirectrepairreturnvendorsandhasacentral
stockinglocation(Louisville).Partsavailabilityis24/7withover100FSLswithinfour
hoursoftheDecisionOnecustomerbase.UPSutilizesitsstoresandotherlocationsto
provide1,100holdforpickuppoints.Inaddition,realtimeorderstatusisavailablefor
fieldengineers.
Kuehne+NagelLeadLogisticsSolutions
ServicepartsandreverselogisticsaftermarketmanagementforKuehne+NagelLead
LogisticsSolutions(KNLLS)involvesmaintaining450partsdistributionlocations
worldwide.Theseservicesincludelastmilehandlingandhandoffstoservice
technicians.Returnsarehandledasrequestedincludingcartridgecollectionandwaste
management.Typicalcustomersforthissegmentaremedicalmachinery,device
manufacturersandhightech/computercompanies.
Diagram8.Kuehne+NagelLLSSelectedCustomers
Supplier & Inventory
Management
Distribution &
Network Management
Aftermarket
Management
TheTomoTherapySolution
In2006,TomoTherapyselectedKNLLStodesignandmanageaglobalspareparts
networkwithrequirementsthatincludedcriticalsparepartsdeliveredgloballywithin10
hours.KNLLSmaintainsa24/7callcenter,18regionalstockinglocationsandmanages
aglobaltransportationnetwork,includingnextflightoutservices.AdedicatedKNLLS
teammanagesmorethan12,000annualserviceorders.Thecallcentershandleorders
includingcriticalneedsandturns,trackingandtracing.Thesolutionallowedastartup
Copyright2010Armstrong&Associates,Inc.15|P a g e
companytohaveimmediateaccesstoaglobalinfrastructureabletosupportafast
growinginstalledequipmentbaseworldwide.
DBSchenker/SchenkerLogistics
DBSchenkerLogisticshasextensiveSPLapplicationsinAutomotive,Industrialand
Electronicsverticalindustries.TheautomotiveSPLisanaturaladdontoSchenkers
extensiveoperationssupportingcarassemblyinGermany,theAmericas,China,France
andMalaysia.Customersinclude:BMW,Porsche,Nissan,Mercedes,VWandBosch.
DBSchenkersautomotiveSPLoperationsareattheCEVA/CatLogisticslevel.
DBSchenkersindustrialactivitiesincludeaglobalnetworkforaerospace/airline
customers.CurrentmajorlocationsforrunningthenetworkareLondon,Paris,
Singapore,DubaiandSeoul.CustomersincludeGE,SIA,Airbus,MessierBugatti,
Embraer,RevimaAPUandRockwellCollins.(DBSchenkercomment:Pleasetakeinto
accountthreethingshere.AeroHubiscurrentlyinrampup.TheAOG(transportation
productbasedondirectdelivery)alreadyexistsinmorethan20locationsworldwide.
ThetargetforAeroHubistogettothesamelevelasAOG.Additionally,wehaveRMS
(ReturnManagementServices)asanoptionwithintheAOGnetwork.Asthisisnetwork
driven,wereabletoopeneachnewairporttothenetworkextremelyquicklyaswere
therealready.)
Diagram9.AeroHubModelOverview
ContentfromDBSchenkersAeroHubsolutionpresentation
Copyright2010Armstrong&Associates,Inc.16|P a g e
BetweenDBSchenkeranditscustomers,informationflowsareprimarilybyEDIandan
internetbasedintegratedenvironmentwhichisrefreshedrealtime.Extensiveuseis
madeofhandheldscannersandZebraprinters.Asinglecontrolcenterisusedforeach
customer.Multiclientwarehousingisstandard.Reportinginventoryvisibilityand
eventactivityareverygood.
OneofDBSchenkersAerocustomersisMessierBugatti,aleaderinaircraftbrakes.For
MessierBugatti,DBSchenkermaintainspartsatfivegloballocations.Threehundred
eightyAirbuspartsaremaintainedinSingapore,SydneyandDubai.Stockingand
aircraftonground(AOG)servicearefeaturedinSingaporeandSydneyandrun
24/7/365.Deliverystatusesareconfirmedin15minutes.
ForBombardier,DBSchenkermanagesa4,500squarefootwarehousespaceatthe
NaritaAirporthub.About3,000SKUs(stockkeepingunits)aremaintained.Aonehour
windowisusedtoaddressaircraftonground(AOG)situations.
HerearesomeotherexamplesofDBSchenkerssolutionsforSPLcustomers:
InShanghai,fortheautomotivereplacementpartsoftheSchaefflerGroup,DBSchenker
maintainsadistributionhubserving250endcustomerandOEM(originalequipment
manufacturer)locations.DBSchenkersWMSandTMScapabilitieshaveledtohighKPI
(keyperformanceindicator)results.
HeidelbergerDruckmaschinenutilizesDBSchenkerforitsSPLfacilityinIndianapolis,
Indiana.DBSchenkersetupanoperationwithFTZ(freetradezone)accreditationin
IndianapolistohandleHeidelbergsprintingpressspareparts.DBSchenkersWMSis
integratedtoHeidelbergsSAPsystemand24/7coverageisprovided.Thirtysix
thousandSKUsarehandled.Thiswarehouse,likeallDBSchenkeroperations,uses
qualitymethodstocontinuouslyimproveprocesses.TheseincludeaPermanent
OptimizationProgram(POP)whichisKAIZENbasedandSixSigma/Leanlogistics
focused.
ForOcinColumbus,Ohio,DBSchenkerrunsaMegaCenter.Thisoperationsupplies
servicepartstofieldtechnicians,aswellasconsumablesformachinestocustomers.
Copymachinesaresuppliedregionallywithdeliveriestocustomersviawhiteglove
carriers.TheMegaCenterishousedwithina217,000squarefootfacility.Inaddition,
thecenterisautomatedwithpicktolighttechnologythatsupportshighvelocity
pickingfromhorizontalcarouselscontaining26,000locations.Ocfieldtechnicians
performbothemergencyandregularservicecalls.DBSchenkerprocesses
approximately800sparepartsordersaday,includingemergency,replenishmentand
nextflightoutforcriticalrepairs.Inaddition,itshipsmachinesuppliestoOc
customers,customizedcopiersandthreetofoursizabledealerordersdaily.TheWMS
usedinColumbusisExceed(Infor).Itisusedasthecontrolcentertocommunicatewith
multipleapplicationsinternalandexternaltotheoperation.
Copyright2010Armstrong&Associates,Inc.17|P a g e
Diagram10.AftermarketLogisticsServices
CaterpillarLogisticsServices
CatLogisticsisatieroneglobalsupplychainmanager.CatLogisticshascorecapabilities
invalueaddedwarehousinganddistribution.Themajorityofitscustomerrelationships
areintheAutomotiveandIndustrialmanufacturingverticals.However,CatLogistics
hasalsobeendiversifyingintoMining,Oil&Gas,Aerospace&Defense,Technological,
andConsumerDurablesindustries.
ContentfromDBSchenkersAutomotiveAftermarketLogisticssolutionpresentation
Copyright2010Armstrong&Associates,Inc.18|P a g e
Diagram11.CatLogisticsGrowth&LongTermRelationships
CatLogisticsservices1,933dealerbranchesand1,407rentaloutletsforitsparent
companyCaterpillar.Caterpillarsinventoryincludesapproximately650,000unique
parts.CatLogisticsoperationsarebasedin23countrieson6continents.Inall,191
countriesareserved.Thereare108facilitieswith20languagesspoken.Inthe
Americas,thereare61locationswith6,200employees,EAMEhas33locationsand
4,450employeesandAsiahas12locationsand1,250employees.
ToillustrateCatLogisticscapabilities,wewilllookatitsJapaneseoperations.TheCat
LogisticsstoryinJapanstartedin1994whenitsetupoperationsinTokyotosupport
SunMicrosystemscomputerpartsdistribution.In1996,italsobeganpartsdistribution
andfinishedvehiclepreparationoperationsforChrysler.Today,CatLogisticsprovides
servicestoitsparentCaterpillarandtoitsmajorJapan3PLcustomers:MitsubishiHeavy
Industries,FordAutomotive,andMGLandRover.Approximately380CatLogistics
employeesareinJapan;300ofwhicharebasedatthenewSagamiharadistribution
center.CatLogisticsprovidesoperationsgatewayservices,partssourcingandcontract
packagingservices,domesticJapaneseandinternationalservicepartsdistribution,and
inboundmanufacturingsupportservices.
CatLogisticsSagamiharaDistributionCenter
Thenew50,000squaremeterSagamiharadistributioncenterwasopenedinNovember
2007.Priortoitsopening,itsclients,MitsubishiHeavyIndustries(MHI)andCaterpillar
Japan,performedtheirowndistributionfromtwosmallerfacilities:a9,480square
meterpartscenterwarehouseforMHIanda33,000squaremeterpartscenter
warehouseforCaterpillarJapan.Migratingtothenewfacilitywasanextensiveproject
whichstartedin2004whenafeasibilitystudywasperformed.InAugust2005,Cat
Copyright2010Armstrong&Associates,Inc.19|P a g e
LogisticsmadeaproposaltoMHIandCaterpillartocombineoperationsintoanew,
moreefficientdistributionoperation.OnJune9,2006logisticsagreementsweresigned
byCaterpillarandMHIandinDecember2006,theoldCaterpillarcenteronthecurrent
sitewasdemolishedandnewbuildingconstructionbegan.
CatLogisticsSagamiharaDistributionCenter
TheSagamiharadistributioncenter(SDC)isatwoflooroperationwithroomtoexpand
toathirdfloor.TheSDCcomprises35,000squaremetersforCaterpillarsupplychain
managementoperationsandapproximately16,000squaremetersforMHIoperations,
ofwhichthetotalfacilityhasapproximately21,000squaremetersreservedforparts
andproductstorage.Approximately380,000SKUsofpartsandproductsarekeptinon
handinventory.
Onanaverageday3,800linesofpartsandproductsarereceived,110,000piecesare
packagedforshipping,and10,300linesofservicepartsandproductsareshipped.In
termsofastandardorderprofile,approximately80%ofCaterpillarJapandomestic
ordersareforemergency/JustInTime(JIT)fulfillment.CatLogisticshasjustonehour
fromorderreleasetopickandpackemergency/JITshipmentsandhavethemavailable
forloadingonanoutboundtruck.Similarly,approximately75%ofMHIordersarealso
emergencyorders.Exportordersmustbeprocessedthenextdayforemergency
shipments,orwithinfivedaysforitemsinstock.Torunoperations,CatLogisticsis
usingitsSAPwarehousemanagementsystemintegratedwithradiofrequency(RF)
scanners.
Copyright2010Armstrong&Associates,Inc.20|P a g e
LoadingaTruckforLocalDelivery
Storagelocationsinthedistributioncenteraredictatedbytheindividualdemand
forecastsforeachpartorproduct.Veryslowmovingitemsarestoredoutsidewhen
possible,oronthesecondflooroftheSDC.Approximately20%ofthetotalpickvolume
comesfromtheseareas.Theremaining80%ofthetotalpickscomefromthefirstfloor
andaremostoftenmadefromacentralthreelevelmezzaninewhichaccountsfor64%
ofallpicks.
ThreeLevelCentralMezzanine
Onthefirstfloor,CatLogisticsisalsorunningapackagingoperationforitsclients.It
occupiesapproximately10%oftheSDCandemploysapproximately100people.
CatLogisticsmanagespartssourcingservicesfortheCaterpillarnetworkfromJapan.
Oftentheservicepartsandproductswillneedtobepackagedinstandardquantities
priortoshipping.CatLogisticsperformsthepackagingservicesutilizingtwomain
Copyright2010Armstrong&Associates,Inc.21|P a g e
packaginglines.Thirtypercentofthevolumeisautobaggedintoplasticbagsandthe
restismanuallyprocessed.Thepartsarethenconsolidatedintolarge,opentop
containersfordomesticdistribution,putintostorageorpackagedforexport.Value
addedservicesinclude:woodcratingforlargerparts,specialtylabelingforlocal
marketsandcustomers,andproductrustproofing.
PackagingLineAutobaggingofParts
Tosupportthepackagingoperation,CatLogisticsutilizesaproprietarypackagingsystem
(GPPS)whichisintegratedwiththeSAPWMS.
Keyoperationalvolumesandmetricsareasfollows:
Inboundtrucktraffic:Approximately90inboundsuppliertrucksareunloaded
eachday.
Outboundtrucktraffic:Approximately50outbounddeliverytrucksare
dispatchedeachdaytoMitsubishiandCaterpillarJapandealerlocations.
Containershipments:Approximatelysevenfortyfootoceancontainersare
shippedeachdaytoglobalCatLogisticsnetworklocationsincluding:Morton,
Illinois;Grimbergen,Belgium;Melbourne,Australia,andSingapore.
Outboundshippingperformance:CatLogisticshasperformedwithmorethan
99%efficiencyinontimeshippingacrossitsclients.
Notablepoint:TheSagamiharadistributioncenterisprocessingapproximately
thesameamountofemergency/JITshipmentseachdayasthelargestCaterpillar
partsfacilityinMorton,Illinois.Theemergency/JITshipmentprocessingtimeis
onehourfromorderreleasetohavingtheshipmentavailableforloadingonan
outboundtruck.
Copyright2010Armstrong&Associates,Inc.22|P a g e