3 pl selection demystified, ulery 29apr13
TRANSCRIPT
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WERC 36th Annual Conference 3PL Selec)on – Demys)fied!
Robert Ulery, Vice President, Johnson Stephens Consul@ng, Inc.
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Hello!
• Who is this guy?
• What’s his background?
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Should I Listen to Him?
1. I’ve worked on several sides of 3PL
2. It might be awkward to leave now
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Today’s Goals 1. Learn: – How to engage a 3PL.
– What to share with them.
– How to ask for (and get) accurate proposals and pricing.
2. Understand how 3PL works: – When does it make sense?
– When does it not?
3. Illustrate a proven selec@on process.
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Why Outsource?
Good Reasons:
• Capacity • Flexibility • Access to technologies
• Capital avoidance
Bad Reasons:
• Save money
• Transfer risk
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The Matrix Strategic V
alue
Non-Core
Competency
Outsource
Retain
Offer to Others
Improve or Outsource
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The Tradi@onal Approach
• Approach a 3PL to test the waters. • Ask for “direc@onal pricing.” • Decide to get two or three more quotes.
• Receive quotes in different formats.
• Put together an RFP and try again. • 3PLs begin to lose faith. • Make a selec@on based on price.
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Lessons Learned
• RFIs can be a waste of @me.
• “Direc@onal pricing” doesn’t exist. • 3PLs need several weeks to respond. • You need to specify the commercial structure.
• You have homework.
• Don’t use that old RFP everybody passes around.
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Project Objec@ves
• The objec@ve is to find a business solu)on, not benchmarking.
• This is more of a solu)on design process than a typical procurement process.
• Your approach should provide the 3PLs maximum flexibility versus a predefined technical solu@on.
• You need to determine what each 3PL will do versus what the candidate can do.
• Understand the sensi@vity of cost versus improved service levels and capabili@es.
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Beaer Approach
STEP 1 Admit you have a problem.
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Beaer Approach
STEP 2 Assess the market.
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Beaer Approach
STEP 3 Establish project @meline.
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Beaer Approach
STEP 4 Understand your opera@on’s work content.
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Beaer Approach
STEP 5 Gather lots of data. • Details, not averages
• Weekly volumes, not annual
• Inventory history, not average turns
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Beaer Approach
STEP 6 Create a custom Request For Proposal.
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Beaer Approach
STEP 7 Give the market @me to respond.
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Beaer Approach
STEP 8 Tour bidders through your opera@ons.
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Beaer Approach
STEP 9 Create scoring criteria, including objec@ve
and subjec@ve factors.
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Beaer Approach Objective
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Beaer Approach Subjective
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Beaer Approach Composite
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Beaer Approach
STEP 10 Select finalists.
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Beaer Approach
STEP 11 Meet the key people.
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Beaer Approach
STEP 12 Pick the provider you like best.
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Aber The Selec@on
1. Nego@ate a fair opera@ng agreement.
2. Expect the best, prepare for the worst.
3. Invest in the rela@onship.
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Call Me if You Get Stuck!
Robert Ulery Vice President Johnson Stephens Consul@ng, Inc. [email protected] 678-‐778-‐7630 www.johnsonstephens.com