Logistics Center of Excellence: Delivering Value to Organizations

Perhaps the most overworked word in the supply chain management lexicon is “visibility.” Yet it’s difficult to overstate the importance of a view into what’s going on in the supply chain. After all, you can’t source, make, move, store, deliver, measure or improve what you can’t see. At the same time, the value of supply chain visibility is lessened if it isn’t comprehensive – encompassing the supply chain from one end to the other, from upstream to downstream.

But where do you gain that visibility? Very often it comes from a logistics services provider, one equipped with end-to-end solutions designed to meet your needs while you concentrate your time, energy and investment in your core business.

Choosing that provider is critical because you will rely on their information gathering and data collection that is vital to managing your business, allowing you the ability to make foundational decisions.

It’s also important to have the capability to track shipments anywhere along the supply chain, and receive alerts on potential delays. A key service provider should also be able to identify the root cause or reason for slowdowns or stoppages in shipment. Moreover, it can lead to corrective action for recovery.

Additionally, good data feeds accurate forecasting. The right data enables better scheduling and use of supply chain assets.

“A Center of Excellence (CoE) centralizes technology, processes and people needed to collect supply chain data that provides the visibility that’s required to match objectives and goals of the enterprise with managers’ decisions,” says my colleague Matt Lewis, vice president for business development at GEODIS.

Properly implemented, a Center of Excellence provides insight to needed data on global and domestic transportation, warehouse management, distribution, and more. It’s also vertical-agnostic: flow management greatly benefits such sectors as high-tech, industrial, automotive, retail, fast-moving consumer goods, and healthcare where a unified, optimized supply chain is imperative to sell across multiple channels or serve volatile markets. Yet, a CoE is so much more than a real-time reporter on shipment status.

The Broader Value Proposition of a Logistics Center of Excellence

It extends well beyond visibility to give users integrated global logistics and trade compliance services. “Based on a company’s supply chain segmentation goals and business objectives, a CoE can be designed to support any portion of a company and the fulfillment needs of its product portfolio,” Lewis says. “It aggregates data from all partners in a supply chain network – noting real-time status of orders, shipments and inventory, all of which enable supply chain execution decisions. Moreover a Center of Excellence enables better consolidation, routing optimization, logistics network optimization, inventory optimization and Request for Quotation (RFQ) handling.”

Logistics Center of Excellence
Source: GEODIS

Consolidation simplifies the customer relationship by having fewer partners (sometimes only one) but having the right partners, who may do everything from procurement and operations to IT and invoicing and payment.

Within a Center of Excellence, an end-user has the aerial view that only a 4PL can offer: supplier performance management, risk mitigation, customs clearance, visibility control and alert management. Beyond that, it allows for complete operational, tactical and strategic control throughout the supply chain. That means clients benefit from one-stop shopping and global pricing with a simple rate structure.

Additionally, a Center of Excellence solution enables “what-if ” analysis of sourcing and distribution initiatives that can be invaluable because it can identify plan deviation or breakdown.

Uses of data collected by a lead logistics services provider run from the simple to the highly complex. For instance, the downstream implications of delayed production can be hugely expensive – but they’re easy to understand: machines coming off an assembly line late, for example, can greatly impact promised delivery dates. In such an event, fixed delivery dates of those products, as opposed to “manageable” dates, may require expedited delivery.

The decision about how to proceed is a bit more complex. How to move forward is ultimately up to the manufacturer, but a logistics provider needs to be ready with the cost estimates for alternate delivery options. After all, the provider is working with an assigned carrier. Its staff is well aware if a fixed date can be met, and if not, how much more it will cost the client.

It’s fair to ask if a customer can achieve comprehensive management of information, alerts and performance, not to mention shipment consolidation, invoice processing and supply chain coordination with a transportation management system, either its own or one provided by a 3PL.

There is a major difference between a TMS and a true 4PL Center of Excellence solution, however. The latter gleans and stores status data from trading partners – and a lead logistics service provider’s 3PL contractors – in a more structured way than a TMS can provide. “Data collected this way provides greater insight into the real-time status of orders, products in stock and shipments,” says Lewis. “Such data enables decision-makers not only in planning but in assessing and monitoring the supply chain. It’s really about much more than transportation and distribution.”

In fact, it’s about financial visibility, operational visibility and informational visibility. The interplay and collaboration of all three of those components is what provides the customer with true visibility, enhanced supply chain management and the ability to focus on building their products.

It’s one thing to know where a shipment is in its journey from point A to point B, and when it arrives. It’s another to be able to sift the data and know the exact cost implications of that movement. “Customers might ask for data dumps,” says Lewis, “because every time a shipment goes from A to B, they might want to know the true, landed cost of that shipment.” Cascading from the initial cost of a product is the expense incurred in shipping it – whether across the ocean or the country – plus handling and payment fees. On top of that, customs duties, taxes and insurance have to be factored in. Moreover, currency conversion can affect the final tab. A true Center of Excellence implementation enables that kind of analysis.

Customer service has two components: material, product, or shipment status comprise one part; the second has to do with utilizing data around movements to make strategic, long-range decisions. That capability is not inconsequential. “Customer demands are changing so quickly because of the Amazon effect,” says Lewis. “It has completely changed the customer landscape. Accurate data collection, assessment and provision helps detect and monitor the flow of business. That visibility includes all of your stakeholders and how they interact with the supply chain.”

Scalability is integral to customer success. As an enterprise’s business expands, its supply chain experiences increased complexity, often accompanied by a sudden spurt in data acquisition. That requires aligning with a 4PL that has the most up-to-date technologies, optimized processes, teams trained in flow management and which is well-versed in best practices.

Yet it all begins with working with “the voice of the customer” in the first place in an effort to understand where the client wants to be, and to build a customized solution based on its business goals. Matching those goals and needs with the right solutions is paramount to success.

“A 4PL must have an overarching view into a client’s physical, informational, and financial flows,” says Lewis. “The task is to create a single entity controlling and coordinating those three flows.”

It goes without saying that some customers are less mature than others, so an in-depth business case assessment is required if the proper solution is to be designed. Doing that lifts the logistics management burden from the client, allowing them to focus solely on their business.

As customers’ supply chains extend further and further around the world, the need for a Center of Excellence becomes ever greater. As customers source raw materials from one place or another, or as they set up manufacturing plants around the globe, the 4PL and its CoE staff can become the operational brains of clients, which allows them to focus on what they excel at, making products – and building revenue.

Danielle PecoraroDanielle Pecoraro is Communications Manager for GEODIS, a global company with expertise across all supply chain functions offering customized Advisory, Sourcing and Procurement and Strategic Outsourcing solutions to include 4PL and LLP.  Danielle has a focus on supply chain and logistics industry market news and manages strategic communications and project implementations.