Wal-Mart’s motto may be size, price or one-stop service availability. “Always Low Prices. Always,” “We expect a lot of attention and a lot but Bob Duron, the world’s of care and feeding. We’re also expecting largest retailer’s vice presi- really good results,” said Bisczat. P&G dent for direct imports and expects talent, dedication and focus that e-commerce, said that might are repeatable, continual and reliable. not always apply to its relationships with “Bring me the varsity every time,” Bisczat third-party logistics providers. said. “When I don’t get the varsity it costs
“Price is not everything,” Duron told a us money collectively and service will suf-packed audience at the Council of Supply fer and the relationship tends to hinder.”
Chain Management Professionals’ annual The biggest and most comprehensive conference in San Antonio Oct. 16. offerings aren’t necessarily Wal-Mart’s pref-
“We are in business for every day low erence, Duron said. For its e-commerce price, every day low cost. That’s what we service providers, the merchandiser wants
stand for. But I would say there is a broader vision of that,” Duron said. “I can drive 3PLs to a price that works, and if there is a service failure, if the organization implodes and can’t make it on (what Wal-Mart pays), what have we done? We’ve added cost into the process. There’s no way that should be the defining way that we do business.”
Duron was joined by Raymond Bisczat, Procter & Gamble’s purchase group manager, national physical distribution, and Elijah Ray, UTi Integrated Logistics’ senior vice president of customer solutions, to offer shippers, suppliers and logistics providers a glimpse of what two of America’s largest shippers look for in a 3PL relationship. The executives said collaboration, flexibility and a willingness to communicate honestly were more important to a successful relationship with them than
transparent and sophisticated systems and integration, and will look to providers with proven experience.
But for a warehouse or transportation provider, where more systems are manually operated, the ability to download files and process freight bills will be matched by on-time delivery and visibility into inventory. The service provider is matched to the customer’s needs.
“Rarely are all things ‘equal,’” Bisczat said.
Duron said Wal-Mart looks to 3PLs for services it knows others can do as well or better, or for those Wal-Mart doesn’t have.
“We can ship boxes,” he said. “ Wal-Mart can ship boxes. We use third parties basically because we’re trying to leverage some kind of expertise. If you
can’t leverage that expertise in a strategic way it doesn’t seem to make sense.”
Bisczat said P&G expects 3PLs to engage them regularly at a decision-making level on a substantive basis. The 3PL also needs to be vertically integrated so decisions at the top are informed and if necessary modified by decisions made on the warehouse and shop floor.
“Boxes get shipped on the warehouse floor,” he said, “and decisions get made about business at site level.”
P&G is one of Wal-Mart’s largest suppliers and has maintained executive level relationships for more than 20 years. The consumer products goods manufacturer uses the Bentonville, Ark.-based chain’s RetailLink information service to design and launch programs throughout its stores. New 3PLs would be expected to use the many information technologies Wal-Mart makes available to streamline and expedite mutual operations, though Bisczat acknowledged Wal-Mart’s radio frequency identification program “has not been the panacea many people thought it was.”
Both shippers maintain multiple 3PL relationships –– Wal-Mart more than 30, P&G more than 20 –– though they said the current trend of adopting a fourth-party logistics provider model to rationalize and reduce the number of 3PLs probably doesn’t suit their needs.
“To me, the 4PL model doesn’t fit our (3PL relationship) model very well,” Duron said. Wal-Mart likes to have relationships with niche providers who can step in as needed for special or new projects.
Bisczat said P&G might try to consolidate the scope of some national 3PL relationships.
“I don’t think we’ll ever get to the point where you’ll hand your whole supply chain keys to a given supplier and say ‘you manage the soup to nuts’ because, one, the complexity of our business, the scale, the volume, as well as its changing needs I don’t think would lend itself to getting the best value –– which is the balance of service and cost –– by just stepping away from it,” he said.
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