Logistics is about the constant flow of products, not storage.

Transcription

1 RUBRIK Logistics is about the constant flow of products, not storage. Mike Wilson, Global Head of Logistics at Panalpina 8 CONNECT

2 LOGISTICS ADDS VALUE TO CUSTOMERS PRODUCTS By Eric Johnson Photos: Miquel Gonzalez Three years ago Panalpina s business broadened its logistics services, adding to its traditional expertise in freight forwarding. Global Head of Logistics Mike Wilson explains the advantages for Panalpina s clients: highly sought-after end-to-end services, greater flexibility in customers supply chains and outsourcing to a competent third party. Contrary to the predominantly transactional business of freight forwarding, logistical activities range from material handling, assembly, packaging and inventory management to distribution and aftermarket services, following and customizing a product from its point of origin to its point of consumption. In logistics, the relationship with the customer is one of cooperative partnership with the logistics provider playing an important role in adding value to the product. As such, logistics is more closely related to manufacturing than freight forwarding, believes Mike Wilson who joined Panalpina as Global Head of Logistics in January Over the last 20 years he has worked in manufacturing, supply chain and technology management including as one of the original founders of Celestica Ltd. as well as for Exel Logistics (now DHL), Deutsche Post DHL and most recently Timex Group. After two-and-a-half years in the job, shaping Panalpina s very own take on logistics, Mike Wilson takes stock. have come a long way, invested a lot in people and software and developed a whole new strategy to enlarge the Logistics offering into Value-Added Services. This way Panalpina can offer their customers true end-to-end solutions. In short, what is logistics about? Panalpina Logistics is mainly about adding value to a customer s product. The Value-Added Services we offer are inbound, warehousing, production, distribution and aftermarket activities. We don t want to just ship and store, we want to manage and customize products. An excellent example is our work for a world leader in telecommunications equipment in Brazil. We coordinate the supply of components and subassemblies from China to their manufacturing plant in São Paulo, where we release them for just-in-time assembly. Then we take the product When did Panalpina go into logistics, and why? Up until 2010 we handled logistics as more of an add-on to freight forwarding than an operation of its own. Then we realized that logistics is a product in its own right and, importantly, a complimentary product to freight forwarding, so a strategy and a management team were created to develop it. When I joined Panalpina I broadened my team with a number of people from recognized logistics providers and people who as I do have a background in manufacturing and supply chain management, usually from within the electronics sector. We Customizing and packaging is about adding value to a customer s product. CONNECT

3 RUBRIK RIK The key to a successful logistics facility is maintaining flow and keeping products moving. off that line and organize its delivery to the customer. We also undertake final assembly, configuration and testing. In the past this was done by the Electronics Manufacturing Services (EMS) providers, but as more customers are looking at refreshing and decoupling their supply chain we are being asked to do more and provide innovative solutions. How is logistics different to Panalpina s traditional business of freight forwarding? We don t like closed boxes; we like to open them up, to add value. We like to touch the product so our customers don t have to. Logistics is a more relational business, while freight forwarding is a more transactional one. We typically have three- to five-year contracts, and we usually work as longerterm partners with our customers. Logistics has more in common with manufacturing than with freight forwarding. Yet freight forwarding and logistics are very complimentary. Many of our customers want both; they want end-to-end service. Is logistics the same as supply chain management? Supply chain management is a holistic approach. When it comes to optimizing entire supply chains we work closely together with our colleagues in freight forwarding and at the Supply Chain Solutions Center in Frankfurt. Ultimately, the real meaning behind a supply chain is a product s life cycle from sourcing to disposal. The future therefore lies in managing the product life cycle, not just the supply chain. Our ambition is to become an indispensable partner for our customers by playing a more crucial role in their products life cycle. How do you become indispensable for your customers? We are involved in leading-edge research. Together with the Lean Enterprise Research Center [part of the University of Cardiff, where Mike studied and is now on the faculty] we are studying manufacturing, inventory and distribution patterns in industries as diverse as aircraft engines, electronics and highfashion products. This knowledge supports us to help our cus- 10 CONNECT

4 We like to touch the product. Mike Wilson, Global Head of Logistics of Panalpina tomers right-size their inventories which reduces their working capital and helps us understand how the inventory is transforming, say from component to manufactured finished product. This, in turn, shows us where to position our Logistics Value-Added Services, both geographically and in terms of timing in the customers supply chain. What is a typical logistics service? This is how an order is processed for a high-fashion clothier: We import the clothes, of course, then we steam iron them, put them in a see-through bag and attach a price tag and label from whichever retail shop or e-commerce channel they will be sold. Many fashion companies sell through multiple sales channels. We help by customizing the product in our facility, so the right packaging and labeling is provided to the right sales channel. Products are weighed and measured as part of the packaging process. A newly organized kitting area allows the team to quickly find the right labels. Radio frequency is used to ensure high levels of picking accuracy. CONNECT

5 The Japanese 5S methodology approach makes sure there is a place for everything, and everything is in its place. Picking orders can range from multiple full pallet orders (shown here) to smaller case pick or even piece pick orders. Ultimately we distribute the clothes to the retailer, which can be quite a challenge. During the 2012 Summer Olympics, for instance, deliveries in London had to be made in the middle of the night, because daytime traffic in the city was impossible. Reverse logistics is another prime offering. In the UK, for instance, we collect obsolete telecommunications equipment from a network of 40,000 sites, either directly or through subcontractors. We then decommission the machines and manage their dismantling, recycling and final disposal. It is important to note that logistics is never one size fits all. How does Panalpina s approach differ from its competitors? Some of them are just about storage; we re not. We re interested in fast-moving, short-cycled, complex products such as electronics, healthcare and high fashion where we can add the most value. Competitors might be happy to store some product for years just to fill up their warehouse space; the more they can fill their sheds, the more economic it becomes; that is not the sort of business we want. Logistics is about the constant flow of products. Things need to be moving, fast. The faster goods move, the less cost is incurred. Our focus is on asset velocity. A pallet wrapping machine is used to reduce the risk of damaging products during transportation. Black wrap is used for extra security. Who are your customers and what s their advantage? We have a mix of customers in terms of size and industry. We work for a lot of household names and for a lot of lesserknown companies. We help our customers to increase their asset velocity by matching inventory to seasonal demand. We turn our customers fixed costs into variable costs by allowing them to outsource more supply chain activity into multiuser facilities where we optimize the use of space and workforce. Our customers appreciate our open mind for new concepts and they value the technology and fully integrated tools we deploy. We never stand still. There is always room for improvement! 12 CONNECT

6 A BETTER WAY TO GET BETTER: LOGEX LogEx short for Logistics Excellence is a continuous improvement method that has been introduced throughout Panalpina Logistics over the past year. It applies a bottom-up team approach to generating, and then implementing ideas from front line employees. LOGEX BUSINESS FRAMEWORK 1. Strategy and objective setting It was one of those changes that seem only too obvious but only in hindsight. Often products are stored based on size or the frequency they are required, with fast-moving and large products at the front of the warehouse and slower-moving, smaller products at the back. This is fine if each customer only orders one product in most of Panalpina s facilities, customers order multiple products at the same time. 5. Building supply chain partnerships 2. MANAGING THE KEY PROCESSES 4. Tools and techniques For example, when a chain of pet shops received an order for a dog bowl, it was almost always accompanied by orders for a leash, a collar, a fur brush and other canine accessories. Somebody was buying a dog, observes Mike Wilson, so they were also buying the kit that comes with that, all in one purchase. To fill the order, a Panalpina logistics worker had to trawl all over the warehouse. Fetching the bowl from the front, where larger items are kept in bins; retrieving the collar from the back, where smaller items sit on racks. First up one isle, then down another: standard warehouse procedure. Except when LogEx gets involved. The key to the concept is to harness the insights of the people actually doing the logistics, the ones on the shop floor. In this case, they recommended that all the dog paraphernalia be kept in one area. Unconventional, yet simple and by doing so, fulfillment times and mistakes were cut down significantly. With LogEx, we start by asking the workers: What can we do to make your working life easier? Wilson explains. And we get answers that really work. The success is driven by the people on the floor; they win and lose the battle for us. This bottom-up approach is completely opposed to the topdown technique, applied by many of Panalpina s competitors and in other industries. There is too much of a teacher-pupil paradigm to those; the boss telling you what to do, Wilson contends. Here, the boss is asking the workers how to do things better. Standing behind the boss s question is specialist expertise. Wilson has hired logistics professionals with years of experience who advise on LogEx projects. And LogEx supplies software packages that model warehouse operations so they can be laid 3. People-enabled process out optimally; schedule operations to suit order and demand profiles; and automate much of the day-to-day administration. Over the past year, LogEx has been rolling out to encompass all of Panalpina s logistics operations. They are working their way up a 19-step pyramid of excellence, moving from bronze to silver to gold status. The initiative might be called a program, but Wilson doesn t like that word, because it implies a completion date, and we see continuous improvement as just that a never ending journey. We are not saying we are perfect no person or organization is that. What we are looking for is a constant striving for doing things better. Everybody and every operation have faults and we will all make mistakes; we have to live with that. The good organizations learn from their mistakes and make the corrective actions to ensure it never happens again it is the Critical Incident Technique applied to our operations. LogEx changed the culture of Panalpina s Logistics. Now it is moving on beyond that, Wilson says. It is about doing things better by using the resources on hand, which includes our people, and it is about doing the sometimes very simple things that make people s lives that little bit easier. ABOUT THE AUTHOR: Eric Johnson, based in Zurich, Switzerland, writes about technology, science and business. Developed based on the lean business model SA Partners CONNECT