Reprinted from THE MANUFACTURER, March, 2006

Third party trust
The distribution of a company's products from shipping dock to the end-user is fast becoming a high-tech science managed by third-party specialists. Scott Morgan, vice president of customer care at DSC Logistics, tells Gary Toushek about it.

The traditional transporting and warehousing of goods has been evolving into logistics and the back end of supply chain management, as more and more companies of all sizes outsource these aspects of their business to third-party logistics firms, who have become experts in moving products between A and Z.

One of the more successful firms in this field is Des Plaines, IL-based DSC Logistics, founded in 1960 as Dry Storage Corporation in a Chicago warehouse by Jim McIlrath and run today by his daughter, CEO Ann Drake. Since taking over the company in 1994, Drake has guided the firm through steady growth that has transformed DSC from a loose affiliation of 22 regionally oriented separate companies into a nationwide network of integrated logistics operations under one umbrella. DSC manages about 13 million square feet of warehouse space in 30 facilities in 13 states throughout the US, with major hubs in Allentown, PA; Atlanta, GA; Dallas, TX; Los Angeles, CA; and its home-base facility near Chicago. The company's customers include Kellogg, Kimberly-Clark, Unilever/Best Foods North America, Georgia-Pacific, and J.R. Simplot.

Scott Morgan, vice president of customer care, who has been with the company for 10 years, says that in today's marketplace changes can occur rapidly, and DSC helps its customers manage change and information in their supply chain, whether a merger or an acquisition, the introduction of a new product line, or simply the movement of goods to the end-user. "My customer care team and our customer relationship management program ensure that we have the structure in place to maintain a strong, healthy relationship with our customers to carry out their needs, and there's a sales component to help grow our relationship with these organizations."

The relationship with a new customer begins with business process integration, bringing together the processes that the customer employs, understanding the minute details, and integrating those into DSC's management of them. It requires a lot of time and collaboration initially, but it pays off handsomely on the back end. For example, it can refer to the deployment of product from the customer's manufacturing location to DSC's Logistics Centers and how that information flows, or it can refer to the flow of the customer's invoicing process and the information that requires; the result is an efficient, effective work flow. Morgan describes "sense-and-respond" as a process "that's part of our culture, providing leadership for our customers by being aware and sensing what's going on in the marketplace as it relates to their business, and providing ideas and solutions that help them."

DSC continually invests in new technology as well as upgrades of its own propriety software, and it's currently performing an RFID beta test for one of its customers that supplies Albertson's. To make sure that it's using its workforce of 2,500 employees efficiently across its network of facilities, DSC recently invested in a labor management system that provides detailed data on a real-time basis about the activities and productivity of the company's workforce. A few years ago it rolled out its Advanced Supply Chain Knowledge (ASK!) Web-based tool that allows its customers to log in and check on orders and inventory within the Logistics Centers.

DSC was chosen as one of a few logistics providers to participate in a remix program for Wal-Mart's vendors. The DSC program is entitled MOST (multi-vendor optimization strategy), which consolidates vendor shipments so that full truckloads of remixed pallets can be delivered to Wal-Mart distribution centers and stores. To get product to its store shelves more efficiently and to keep them well stocked, Wal-Mart now requires manufacturers to ship product more frequently, in smaller shipments. Wal-Mart's solution is this consolidation program, operated by a third party such as DSC Logistics, which temporarily stores participating customers' products at a logistics/remix center until the orders come in from Wal-Mart. Pallets are then stacked in product categories, such as laundry detergent, so the pallet will be a mix of brands that can be delivered right to the store shelf. These pallets of products are consolidated into truckloads for Wal-Mart's distribution center. For Wal-Mart it's a continuous flow of items that keeps its shelves consistently stocked; for the manufacturer, which has routinely shipped full truckloads to a Wal-Mart distribution center, it means shipping less than a truckload more frequently-and less efficiently. It may be a pain for manufacturers, but it's the cost of doing business with the giant retailer.

Two DSC East Coast facilities are ISO certified, the rest have an internal program for quality certification (its own Process 2000) that's similar to ISO in that all processes are documented, and strict guidelines ensure compliance to those processes. "It's important for our customers to know that we're employing best practices and operating with similar methods across our network," says Morgan.

Eighteen months ago DSC opened its Joliet Logistics Center south of Chicago, with more than a million square feet of warehouse space at CenterPoint Intermodal Center, to service a major consumer packaged goods customer, among other key customers. It features direct rail service with the adjacent new railyard of the Burlington Northern Santa Fe Railway, which travels to Northern California ports. DSC's facility was designed for distribution efficiency and contains five rail doors serviced by a double rail spur, 116 exterior truck doors, and 300 trailer parking spaces. An interesting feature is its Foreign Trade Zone status for customers importing goods from overseas; duties aren't paid until the goods move out of the facility and into US commerce, which comes in handy if the incoming goods need to be returned for some reason.

With security concerns being top of mind these days, it takes a considerable commitment for a customer to completely trust a third party to handle its supply chain and delivery of products. "In many cases we're the last interface the end-user has with the manufacturer," he says. "We take that responsibility seriously, and we make sure it's a positive experience."
© Copyright The Manufacturer. March 2006. Manufacturing in Action. All rights reserved.

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