Outsourcing Project Management

Manufacturer of Heating & Air Conditioning Systems
Issue: Client wanted to consolidate warehousing and distribution into a single site and further to determine the feasibility of outsourcing the operation to a 3PL.
Solution: A cost model was built that reflected the capital investment expense required to establish a new DC location together with a forecast of operational costs to serve as a baseline for comparing costs to 3PL proposals.  A warehouse sizing exercise was conducted and based upon data analysis from several plants along with forecasted production including new product requirements it was determined that 1M sq. ft. was required. An RFP was created that contained historical data, systems requirements, planned inventory levels, customer service requirements and all other pertinent information needed for the 3PLs to submit a detailed bid.  A selection process was developed and certain criteria were selected to compare 3PLs qualitatively and quantitatively.
Results: As expected six proposals were received in response to the RFP. The selection process and criteria helped the client to narrow the field and after significant due diligence a 3PL was selected.  TSC assisted with final negotiations and drafted the 3PL contract in collaboration with its client and the 3PL.  Today, after many years this outsourcing is still considered to be a successful undertaking from a cost and service viewpoint.

Manufacturer of Medical Devices
Issue:  A US based client wanted to consolidate EMEA distribution into a single European location and be sure that it could ship complete orders on short notice and deliver on time. A significant amount of product was sourced from the US.
Solution:  Client determined that outsourcing with a European 3PL would best meet their requirements but wanted help in managing an RFP process including negotiations through to contracting.  This project also involved determining the best single location in Europe for land and air transportation from a service and cost perspective.
Results:  TSC managed the outsourcing project through to a successful conclusion.  The process involved identifying which 3PLs best fit the needs of the client based upon certain criteria, creating an RFP that clearly set out requirements and provided the necessary data and information required for the 3PLs to prepare their proposals, bid proposal reviews and managing the final selection exercise.  Cost of operations after steady state met budget expectations.

Global Plumbing Products Manufacturer
Issue:  In Canada client operated from three separate distribution sites, one was outsourced; another managed by the client and the third was associated with a manufacturing plant.  Client wanted to reduce cost and improve customer service (order to delivery cycle) by consolidating operations into a single site 425,000 sq. ft. building situated in the best geographical location to serve its customers.
Solution: TSC worked with client to assemble all of the historical and forecast data and information required to create a detailed RFP.  After extensive review of qualifications and successes a bid list of 3PLs was put together. The consulting and client teams also undertook the task of developing the new facility sizing including internal and external facility specifications.
Results:  TSC managed the entire outsourcing project from beginning to final pricing and contract negotiations.  This project was concluded satisfactorily, implementation was accomplished meeting expectations under difficulty of transfers of product from three sites along with receiving of new inbound shipments.  Bottom line client expects to save $2.0M annually.

Major Battery Manufacturer
Issue: Transportation costs were draining margins and each retail channel had unique requirements around service and order quantities.  The company also operated a sizeable private fleet along with heavy utilization of LTL and FTL carriers.
Solution: TSC analyzed 2 years of data and from that developed specifications for each channel. Company made a decision to consider outsourcing to a 3PL who would act as a lead logistics provider managing all modes of transportation in North America. TSC managed the selection process (RFI, RFP), pricing and service negotiations to contract negotiations of terms and conditions.
Results:  After conducting a rigorous selection process a lead logistics provider was selected from 6 RFP participants and a contract finalized.   A dedicated control tower was established to manage all modes of transportation and the private fleet was converted to dedicated contract carriage making big box DC and store door deliveries on a scheduled basis. Transportation costs were reduced by 16%.

West Coast US DC for Imported Plumbing Commodities
Issue: Growth in imports from China and the western US market dictated the establishment of a DC in the western part of the US.
Solution: The exact site location options was determined after analysis of data both historical and forecasts; a location analysis was completed to determine the preferred sites on the west coast and the Long Beach – Ontario CA area was considered to be the best option.  An RFP setting forth requirements and goals was created and together with a data package was issued to 6 warehouse 3PLs for bidding.  TSC managed the entire process.
Results: TSC and client visited 3PL warehouse sites in the preferred areas to assess people, operations and metrics. RFP responses were analyzed, additional 3PL meetings were conducted until the field was narrowed down to two 3PLs.  A final selection process was conducted covering pricing, service commitments and contract terms and conditions culminating with the selection of the client’s 3PL partner.

3PL Distribution Center Assessment
Issue: Manufacturer was not satisfied with 3PL performance and engaged TSC to make an objective assessment of warehouse operations.
Solution: TSC assigned a team of experts to assess systems functionality and performance, labor productivity, master plan for the building and to conduct interviews of both 3PL and client people at the site.
Results: TSC produced a report covering findings and recommendations.  Key areas addressed were the need for layout changes, slotting improvements, dock space management, labor improvements around goals training – handling – interleaving – just about all activities plus restructuring methodology for overtime and temp hiring for surges and holidays.  In addition certain metrics required refinement and the client use of the metrics for managing the 3PL needed adjustment.  Last TSC produced a list of systems functionality improvements that would result in the 3PL being more efficient and this was implemented.

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