SUPPLY CHAIN OVERVIEW
Scott Grady
Sr. Vice President
Landstar Supply Chain Solutions
North American Supply Chain Trends
Early 2000’s
 Globalized Focus
– One Product fits all
 Auto Industry
 Clothing
 Agricultural
 Consumer Electronics
– Inventory Floats could be as much as 60 days
– Industry carried “Back up inventory”
 Velocity was Slow
 NAFTA
– North American Focus
 Limited Global Impact
 Premature for Infrastructure
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North American Supply Chain Trends
Today
 Globalization Comes Home
– Consumer trends are changing more dynamically
 Auto Industry
 Clothing
 Agricultural
– Supplier Trends
 Near Shoring
 Campus Environment
 Tier 1’s are more sub-assemblers than Manufacturing based
– Auto
– Electronics
– Industry carried “Back up inventory”
 Velocity Extremely Fast and agile
 Supply base has “right Sized” no excess Capacity
 NAFTA
– Today NAFTA is bringing Manufacturing to the Consumer
– Mexico Has Advantage
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MEXICO Today
Mexico
 Seaports
– Intermodal
– Strong Infrastructure focus in past 10 years
 Highway
– Infrastructure Upgrades and Rapid improvement
– Can Source Regionally Today




Growing Consumer Demand
Supplier Capacity
Workforce
Downside
– Security Issues
– Political Strife
– Limited Logistics Expertise (Growing)
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Changes in Strategy
Manufactures
 Campus Environment (Near Sourcing)
– Tier 1’s (sub Assembly) on Campus




Parts are sequenced
Inventory owned by Tier
More capacity at Manufacturing sites
Forced Suppliers to Tier 1
– Consumer Electronics
 Consumer Driven Velocity
– Trends drive sourcing choices
– Time to Market
 Consumers tastes change and they want more for their $
 Retail-no longer seasonal, but stores are updated every 45-60 days
 Automobiles, used to be 36 to 48 months concept to dealer floor
– Dodge Dart 18 Months
 Green Environment
 Risk Mitigation
 Sustainability
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Changes in Strategy
THEN
SupplierSupplier
NOW
Customer
Supplier
Supplier
Collaborative
Suppliers:
Supplier
Increased LTL Frequency
Decreased Lead Time
Decreased Inventory
Reduced Transportation
Spend
Supplier
Supplier
Supplier
Customer
Supplier
Supplier
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Current Supply Chain Issues Cross Border
 Visibility
 Security
– High valued cargo
– Merchandise easy to sell
– Merchandise that is not traceable
 Expedite
– Mexico
– US
 Vendor set-up
 Very little exchange still of capacity
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Supply Chain
Brief Discussion
Design
Why Outsource
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Total Enterprise Solution
Reducing Supply Chain Costs and Increasing Visibility
Performance
Reporting
Truck
Financial
Settlement
Master Data,
Customer
Order
Transportation
Management
System
Supply Chain
Event Mgmt
Global In-Transit
Inventory Visibility
Rail
Level 1
SKU Level
Planning
Air
Level 2
Shipment
Planning &
Optimization
Shipment
Execution
Ocean
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The Supply Chain Network
The Design
 Complexity drives the solution
– Size and volume does not drive complexity
 Forecasting integrity
– A changing forecast drives
 Mode change
 Deviation and route fall off
 Expedite
 Visibility is the key
– Multiple touch points need to have event marks
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Network Design Types of Optimization
Basic
Operational
Network
Tactical
Dynamic
Strategic
Simple Optimization
Evaluation of Cost &
Service Options
Full Network
Optimization
Shipment Level
Shipment Level
Daily / On Going
Excel / Access
Transportation
Modeler
Enterprise
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Shipment Planning and Optimization
Support a wide range of optimization needs
Optimized
Decisions
• Consolidation
• Service Provider
• Timing
• Equipment
• Route
• Mode
1. Loading
2. Warehouse receiving.
Storage as required
 Multi-Leg Multi-Mode





Consolidation
Common Leg
Consolidation
Multi Stop Consolidation
Multi-Tier Networks
LTL Consolidation
Continuous Moves
3. Container stuffing
6. International transport
(Land, Sea and/or Air)
4. Customs - origin
7. Customs destination
5. Port services - origin
9. Container de-stuffing and
warehouse receiving. Storage as
required
8. Port services destination
10. Truck loading
11. Final delivery
 Service Time Calculation
 3-Dimensional Container




Optimization
Itineraries & Profiles
Carrier Capacity
Throughput
Rating
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Load Configuration

Shipment View
–
–
–
–

Change View Perspective
–
–
–
–

Increase effective cube utilization
 Provides detailed loading instructions
 Reduces failed loads – loads that can not be loaded as planned
 Inputs to drive utilization include SKU level detail
–
Stack ability, dimensions (LWH), dunnage
Nose
Tail
Top
Side
Manipulate, at the ship unit level
–

All Ship Units
By Item
By Commodity
By Stop
–
Sequence of loading
Orientation
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TOP 10 REASONS TO OURSOURCE
 Global Reach
– Leverage critical functions
– Global resources
 People, Process and Systems
 Operating Expenditures (OpEx) Rules
– No capital expenditures
– Fees are operating costs
– No need to show return on equity
 Innovation and Interoperability
– Outsources spend billions a year integrating new technology
– Companies can tap into these resources
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TOP 10 REASONS TO OURSOURCE
 Service Transparency
– As outsourcing has matured however, metrics have become a key indicator
of the success
– Organizations can benefit from best practices
 Savings in Labor Cost
– The cost of labor in developed countries for high level activities is
extremely high
– Shifting the location where this work takes place is definitely advantageous
depending on the skill set.
 Centralized Management of Resources and Functions
– The ability for outsourcers to consolidate these functions is a core
competency that many companies look to leverage.
– Commonality across divisions and regions in process
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TOP 10 REASONS TO OURSOURCE
 Improving Regulatory Controls
– Achieving, measuring and maintaining compliance is a complex and capitalintensive endeavor. Companies with limited compliance resources look to
outsourcing for the design, execution and auditing of controls, while allowing
companies to retain requisite internal oversight
 Accelerating Process Maturity
– Outsourcing can often become the catalyst to drive business maturity
– Outsourcing can drive a set of best practices and recommendations that can be
applied across the organization
– Process integration is a key enabler to the improved delivery of services, and
provides a comprehensive framework for aligning resources to deliver business
value and repeatable processes across the Supply Chain
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TOP 10 REASONS TO OURSOURCE
 Increased Resources
– Companies that need access to new skill sets for project work, mergers and
acquisitions and/or to support expansion into a new region, outsourcing can
offer a solution.
– Leading outsourcing companies can support Strategic direction and develop
new capacity as well as having a global reach to a broad talent pool
 Improving Company Strategic Focus
– Letting an outsourcer focus on managing operational functions allows
companies to focus more strategically on their core business, saving time and
improving efficiencies
– Outsourcers today are in the business of driving innovation, managing data
centers and applying non-disruptive technologies to help businesses succeed
in an ever changing market
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Solutions Environment
Operational
Tactical
Strategic
Focus
Shipment / Load
Management
Evaluation of Cost &
Service Options
Full Network Analysis
& Design
Horizon
Daily / Weekly
6 Months to 1 Year
1 to 3 Years
Tools
Transportation Mgmt.
Systems
Transportation
Modeler
Supply Chain
Strategist
3 to 6 Weeks
3 to 6 Months
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Cost Reduction and Value Creation
Order
Optimization
Reduce Shipments
Mode
Optimization
Carrier
Optimization
Least-cost Mode
Least-cost Carrier
Order
Visibility
Inventory Reduction
Business
Intelligence
Savings Validation
5 -15%
Savings
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The issues cause a …….
Ripple Effect…….
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North America Capacity Market Issues
 Capacity shortage predicted by mid 2013
– Capacity down 7% from 2008 (Source Credit Suisse)
– ATA predicts a loss of capacity with CSA as cash strapped companies
cannot afford in cab technology TT
 Asset utilization poor
 Empty miles are still high
 Customer leverage deteriorates as rates increase with shortfall
– Platform already strained in 1st and 2nd quarter 2012
 Natural Disasters
– 2011 The year was telling
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Transportation Industry Today
3.5
3.0
2.5
Shipments
(Numbers)
2.0
1.5
Expenditures
(Dollars)
1.0
Cass Freight Index
0.5
0
Jan 2011
Jan 2012
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Planned for the Un-Planned
 How far down the Supply Chain does your provider manage
 Can you use the process to let you know
– Event Management
 Business Intelligence
 Manage the exceptions
 Utilization
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Value Proposition
Benefit Category
Explanation
Improved Shipment Visibility
Many companies report a reduction in high cost shipments due to
better transportation planning and shipment visibility
Optimize Carrier & Mode
Selection
Reduced costs due to automating the selection of the lowest rate
carrier
Identify Transportation Invoice
Discrepancies
Discrepancies are found at the individual shipment level prior to
invoicing
Improved Carrier Performance
Using carrier performance information will help in the negotiation of
better rates and the reduction in service related failures which impacts
shipper’s bottom line
Lower Administrative Costs
By automating the tendering, shipment creation, and consolidation
process, firms can redeploy staff to more value added functions
Contract Savings
By standardizing carrier tariffs and leveraging the buying power of
Landstar, companies have received significant reductions in carrier rates
Utilize Carrier Assets More
Efficiently
By leveraging technology of the carrier marketplace, customers are able
to take advantage of backhaul pricing on many lanes
North American Supply Chain Trends
Thank You
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