In-House? Outsource? Blended? Many choices now exist in logistics October, 2006 - Wood Digest By: Lisa Harbatkin

Are you getting into LTL? Using 3PL?
Less-than-truckload and third-party logistics have become facts of business life in wood sectors. That's clearly true for companies making all or most of their products overseas. But it's just as true for companies still manufacturing domestically. Company systems and capabilities are under increased competitive pressures. That's where service providers can step in, along with trade association shipping and logistics support programs.

"It's all about core competencies," says Tom Giovingo, executive vice president of supply chain and logistics company Fidelitone Logistics. Fidelitone Logistics' competencies include logistics, import/export, distribution, inventory management, packaging and electronic order processing. Its clients range from small companies to major national manufacturers.

Companies have their own individual approaches to their logistics needs, says Brent Burton, vice president for transportation and logistics at the American Home Furnishings Alliance. AHFA's logistics supports include a container discount program, FedEx ground discounts and a fuel card program.

"We're doing all we can to leverage our buying power to enable members to take advantage of the cost savings," Burton says.

"U.S. distribution has been put under more pressure," Giovingo says, as domestic manufacturing of finished products, components and repair parts has moved to Pacific Rim factories. "The challenge is that what might have been a 30-day lead time turns into 60 days or even 120 days.”

Higher raw materials prices and fuel costs are among supply chains concerns now, Burton says, "and with increased lead times, you have to improve your forecasting and inventory management. The distances we're encountering now with overseas manufacturing have increased the complexities of the supply chain."

At the same time of course, customers really don't care, says Giovingo, "whether it came from 30 miles away or thousands of miles away. The expectation is that you will have the item available for immediate shipment." Fidelitone Logistics' job centers on providing the services that make that delivery happen.

Manufacturers can outsource all or part of their supply chain and logistics functions. LTL and 3PL can benefit any manufacturer or vendor.

"If I'm just shipping one order, it costs a lot," Giovingo says, "but spread over thousands of shipments, there's a real savings." There can be market-expanding potential for smaller or regional manufacturers. National manufacturers can benefit from greater cost-efficiencies and other savings.

"Our smaller clients can benefit from the cost savings of a large-scale logistics operation," Giovingo says. "We can apply 3PL disciplines to regionally based clients as well as to national ones.”

Companies are adding supply chain and transport logistics managers, says Burton. "You're looking to establish partnerships with all elements in your supply chain. It's about having full visibility in your orders and your products for all parties from the plant to the consumer," he says. "You're optimizing your supply chain to increase your productivity." *

*Excerpts from the October, 2006 article.