michigan state university supply chain management chain management and nlm enterprises cases studies...

Michigan State UniversityMichigan State UniversitySupply Chain ManagementSupply Chain Management

November 10, 2008November 10, 2008

Confidential & Proprietary Information of NLM - Strictly Confidential 2

Discussion PointsDiscussion PointsDiscussion Points

HistoryAccomplishmentsMarket ConditionsSupply Chain Management and NLM EnterprisesCases StudiesProcess ConfigurationExecution and Integration LeadershipCareer Path


Greg HumesGreg HumesGreg Humes

Education– Western Michigan University - Bachelor’s Degree in Marketing– Central Michigan University - MBA in Finance & Administration– Harvard Business School - Owner/President/CEO Management Degree

Work Experience– 1983 – Leaseway Transportation – 1995 – Penske Corporation acquired Leaseway, Humes was named Senior Vice President of Penske

Logistics – 1998 – Promoted to President of Global Automotive.

• Responsible for Logistics Service from order to delivery• Created the company’s first industry sector focusing on global supply chain service integration• Develop major logistics initiatives for Toyota, Ford, GM, Chrysler, Saturn, Whirlpool, Hewlett-Packard, Kraftmaid Cabinetry

and Carrefour.

– 2001 – President & CEO of Vector SCM• Responsible for GM’s $6 billion Global Supply Chain, executing capability development, engineering, and supply chain

technology solutions• Developed strong process management methodology• Created long-term cost savings efficiencies in a global supplier and logistics footprint for permanent change in a complex

GM network.

– 2006 – President of NLM, Interactive Capacity Gateway and Axelerate• Integrated NLM services into a unified enterprise while creating two new companies• Also guides the expansion and growth of the companies into new business markets • Drives the overall strategy to position the companies for future financial and global market growth


2 Year Accomplishments2 Year Accomplishments2 Year Accomplishments

Strategic Milestones– Established a single control point the drives quality assurance and streamlines the entire transportation

management process– Positioned the company to accelerate growth and capture a more dominant share of the transportation market– Created efficiencies within the organization– Launched Interactive Capacity Gateway LLC which is a SaaS (Software as a Service) logistics and

procurement management technology which will expand us into diverse markets– Implemented Balanced Scorecard method of performance measurement to increase accountability– Revamped Program Management Process to ensure quality of new customer/product launches– Launched Axelerate which is a Landstar logistics and carrier services agency

Customer Milestones– Won business with 13 new customers– Signed contract renewals with GM, Ford and Chrysler

Partnerships– Signed partnership agreements with A3i, FedEx, Landstar, Vascor, Penske and YRC.– Partnerships will help us grow into other markets

New Programs & Products– Developed 8 new products

Branding– Launched new NLM brand and website in November 2007– Launched Interactive Capacity Gateway LLC in January 2008.

Awards– NLM has won 11 awards from various customers and logistics organizations


Current Market ConditionsCurrent Market ConditionsCurrent Market Conditions

Hyper-dynamic business environment:– Globalization and collaboration – Longer supply chains – Shorter lead times– Industry consolidation– Short product lifecycles– Increased supplier resourcing– Dramatic volume swings– Consolidations & closures– Greater pressure to lower inventories– Aggressive logistics cost reduction demands (rising fuel costs and declining

carrier asset utilization)– Pressure to do more with fewer people


Top 5 Supply Chain LeadersTop 5 Supply Chain Leaders

Supply chain best practices turn ideas into profitable businesses

Nokia

Growing 70% in the PC business on $40B revenue baseDell

P&G’s customer-driven supply chain is the defining architecture for large consumer companies

Proctor & Gamble

Over-hauled its hardware supply chain and product development processes - 70% better, faster and cheaper

IBM

Everyday low prices defines the customer demand driving this supply chain

Walmart

ReasonCompany


NLM OverviewNLM OverviewNLM Overview

Founded: Founded: 19891989Headquarters: Headquarters: Detroit, MIDetroit, MIEmployees: Employees: 153153Managed Transportation SpendManaged Transportation Spend $578MM in Transportation Spend$578MM in Transportation SpendSuppliers & Plants:Suppliers & Plants: 32,00032,000Equipment Types:Equipment Types: 8585Shipments Managed: Shipments Managed: 4.7 MM4.7 MMIndustry Focus: Industry Focus: Automotive, Manufacturing, Logistics Automotive, Manufacturing, Logistics

Service Providers, CPG, Government, Service Providers, CPG, Government, ProduceProduce

Logistics Software Software


Automated Freight Pay & Audit

Automated Freight Pay & Audit

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ContainerOptimization

OrderConsolidation

Service provider Selection

Resource Allocation

Rating

Multi-LegPlanning

ShipmentConsolidation

SchedulingN

LM M

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NLM

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s Standardized ProcessCarrier ManagementComplianceVisibilityNetwork Capacity Shipment ManagementMode OptimizationProcurement M

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FedEx

International

Penske

A3iA3i NLMNLM

Ryder

Solution for CustomersSolution for CustomersSolution for CustomersC

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Landstar

ICGICG


NLM at-a-GlanceNLM atNLM at--aa--GlanceGlance

• Transaction Fee • Onsite staffing (per FTE)

• Software as a Solution (self-managed)• Tariff• Gain Share

Prod

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Prod

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Serv

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Serv

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Tech

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Ben

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• Increased visibility• 15-20% avg. cost reduction at start-up• Increased access to capacity via critical mass marketplace• Non-asset based provider

• Best-in-class processes• Improved network efficiencies• Time savings• Cost recovery through Process Compliance

• Web-based• Real-time, dynamic tracking and routing• Competitive marketplace for carriers

• Mode optimization• Real-time event management• Online Invoicing

• Truckload Brokerage• Deviation Freight

– Port– Rail– Primary Lane

• Specialized− Project Management

• Container

• Ground Expedited• Air Freight• Air Charter• Process Compliance

• Inventory Control & Compliance

• Sub-assembly & sequencing

OnPointOnPointDynamic

OnGuardOnGuardCritical

OnTrakOnTrakSolutions


NLM AdvantageNLM AdvantageNLM Advantage

NLM NLM ADVANTAGEADVANTAGE

Speed of ExecutionDynamic procurement and sourcing tools that drive competitive pricing reflective of the current marketplace within minutes

Critical Mass MarketplaceNLM manages over 1,500 carriers and more than 2,000 shipments daily resulting in an annual transportation spend of over one-half billion dollarsSheer volume of shipments through our network enables us to maintain competitive rates with greater access to capacity

Cost SavingsCollaborative ROI

• 15-30% cost savings at program initiation• 10-15% mode selection savings• 45 mins of worker productivity saved per shipment

Competitive carrier bidding marketplace for critical and specialized shipments encourages spot buys under tariff as well as back haul savings opportunities

• 6% spot buy savings on total transportation spendExpedited shipment cost recovery

• Existing customers have recouped an average of 50% of expense

Improved Carrier performance5% increase in on-time delivery


NLM AdvantageNLM AdvantageNLM Advantage

NLM NLM ADVANTAGEADVANTAGE

NLM Carrier Base Capacity Footprint

Program Number of Carriers Total AssetsAir 43 21,973Ground Expedited 486 31,590Truckload 202 24,038Container 266 18,620Specialized 326 8,150PPE 140 21,000Carrier Partner Base 51 459Total 1514 125,830


Software ProductsSoftware Products

Interactive Capacity Gateway ServicesInteractive Capacity Gateway ServicesInteractive Capacity Gateway Services

Capacity GatewayCapacity GatewayOn-demand shipment management solution for 3PLs, brokers and shippers

– Online order entry

– Online procurement

– Proactive event management

– Order visibility and tracking

– Automated tracking

– Reporting tools

ProcurementProcurementFlexible, real-time bidding environment

Competitive pricing reflective of current market conditions

Single truckload to lane sourcing

Scheduled shipment execution

Centralized marketplace


A3i A3i A3i

A3i is an independent supply chain systems integrator that specializes in application support for the Oracle Transportation Management System (OTM). A3i integrates manufacturers’ material orders to automated real-time transportation orders via a SaaS deployment model (Software-as-a-Service).

A3i’s SaaS solution is configured, deployed, and running 24/7 at Oracle’s On Demand Center.


A3i’s software is the best in the industry - ForresterA3iA3i’’s software is the best in the industry s software is the best in the industry -- ForresterForrester

Leader: Oracle Leads With A Wide Breadth Of Offerings And Impressive Market Momentum Oracle leads in ground planning, freight payment, and implementation services. Oracle scored the highest relative to its competitors across ground transportation planning, freight payment, multimodal transportation, implementation services, and product strategy and vision. References were extremely positive and noted the depth of the implementation team’s expertise as a key asset. Areas of weakness include limited support for managing asset-based fleets, global trade management, and the lack of a SaaSdeployment option. Notably, these are all areas of significant R&D investment for Oracle — a testament to its strategy and vision. Oracle Transportation Management (OTM) 5.5 is a good option for large, global enterprises looking for a solution that can be implemented by a systems integrator (not all can) with support for multiple modes and long-term viability. OTM is also a good tool for 3PLs — a significant percentage of the customer base — with its KPI dashboard features, contract management, and scalable configuration.

January 29, 2008 The Forrester Wave™: Transportation Management Solutions, Q1 2008


Typical Sources of SavingsTypical Sources of SavingsTypical Sources of Savings

Typical Savings Range From 10% - 20% of Total Freight Spend


Partnership CollaborationPartnership CollaborationPartnership CollaborationCa

rrie

rsCa

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ultiM

ulti -- IndustryIndustry

FedEx StatisticsFY07 Revenue - $35.2bAverage Daily Volume - More than 7.6 million

shipments for express, ground, freight and expedited delivery services

Service Area- More than 220 countries and territories, including every address in the United States

Air Operations - 677 aircraft; more than 375 airports served worldwide

Ground Fleet - More than 80,000 motorized vehicles for express, ground, freight and expedited delivery service


Partnership CollaborationPartnership CollaborationPartnership CollaborationCa

rrie

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overnment

Governm

entCustom

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YRC Worldwide Statistics FY07 Revenue - $9.6bEmployees – More than 63,000 worldwide Service Area- 80 Countries (Asia, Europe, North America &

South America)Operating Facilities – 170 LocationsServices:• Contract Logistics (LTL, dry van, flatbed, reefer, intermodal,

air, expedite, etc) , • Brokerage (dry van, flatbed, reefer) • Forwarding (air cargo, cartage, air charter, commercial air,

exclusive-use vehicles, linehaul, etc.) • Global (Ocean/Air)


GM Global OTD Strategic PlanGM Global OTD Strategic PlanGM Global OTD Strategic Plan

• Revenue Enhancement

• Cost Reduction• Lead-time Red

2002 Operational FocusOrder Fulfillment Logistics Supply Operations

GM Vision:World Leader in

Transportation Products& Related Services

• Global Locator• Demand Sensing• Order Mix Forecasting• Pipeline inventory

Pooling and Dealer Trading

• Vector Implementation• Inbound/Outbound Visibility• Network Optimization• Dynamic Re-routing for

For Dealer Trades

• Logistics Portal• Premium Transportation Mgmt• Alliance Management• Logistics as a Revenue

Source

Finance• Cost Reduction• Revenue Enhancement• Vector Bus. Model Mgmt.• Non-core Ops Divestiture

HRM• Common LDP Process • Headcount• PMPs/IDPs/LDP

IS&S• e-Enablement• IT Development Portfolio • IT Operations

Organization Transformation• Organization Redesign, OTD College• GoFAST, EEAS • Common Communication Process

Planning• Business Process & Administrative

Support• Metrics Tracking, OTD Portal

OTD MissionMaximize GM profitability by:

• Integrating and Optimizing the GM Supply Chain• Implementing Enterprise-wide, Real-time Sense and Respond Capabilities• Focusing on Revenue Growth & Total Cost Reduction Opportunities• Building Cross-Functional Operational Excellence & Decision-Making Capabilities...To Create the Best Possible Order & Delivery Experience for GM Customers

and Dealers

OTD Global Priorities

• Human Resource Mgmt• Organizational

Transformation• Quality Improvement

• eBusiness Readiness• End-to-End OTD Pilot

Implementation

• Delivery Date Reliability• Vehicle of Choice• VDP Deliverables

• Plant OTD Enablers• Material Scheduling• Container Mgmt• Supplier Collaboration• Supply Chain Part Planning• Supply Chain Design

• GVDP Deliverables• Capacity Planning & Mgmt• Supply Chain Info. Vis.• Engineering Change Mgmt.• Supplier Performance Reporting• GM Owned Inventory Management

• Decision Support• Inventory Analysis• Enhanced

Scheduling & Order ManagementCapabilities

Common: Order Prioritization, Collaborative Planning, Constraint Elimination, Process Measurement, & Cross-Functional Decision Making

The Foundation: GM’s Core Values & Cultural PrioritiesCustomer Enthusiasm, Continuous Improvement, Integrity,

Teamwork, Innovation, Individual Respect and ResponsibilityAct As One Company, Embrace Stretch Targets, Move With

A Sense of Urgency, Enhance Our Product & Customer Focus

OTD Vision:Right Product - Right TimeRight Place - Right Price


GM’s Big Outsourcing PushGMGM’’s Big Outsourcing Pushs Big Outsourcing Push

December 2000, General Motors formed a joint venture with Menlo Logistics called Vector SCM.

– Vector SCM would handle all of GM’s outsourced logistics, serving as primary point of contact for 3PL’s that once worked for GM directly.

– The joint venture cost more than 600 times the average logistics-outsourcing contract of $10,000 and represented 10% of the $65B outsourced logistics industry

– The two companies shared board seats and equity shares.Why joint venture?

– Slash dealer car-purchase and order cycle from 60 days to 15.– Seek a clearer view of its global logistics operations


GM’s Vector VisionGMGM’’s Vector Visions Vector Vision

Before Vector VisionOrder Cycle

60 Days

Fragmented view of their global logistics operations

Untimely inventory information

Long delivery times to dealers

With Vector VisionOrder Cycle

• Accurate and reliable deliver• Single system to capture all EDI (electronic data

interchange) links• Better management of all material and finished

vehicles in the GM pipeline

15 Days


Global Supply Chain & Logistics Global Supply Chain & Logistics Global Supply Chain & Logistics

Logistics services play an important role in integrating organizations and the extended physical supply chain

Order FulfillmentOrder FulfillmentManufacturing

Suppliers

RailInterchanges

PlantsConsolidation

Centers and PortsVehicle and Parts

Distribution Centers

Dealers CustomersConsolidation

Centers and Ports

Production Sales

Vector SCM

LogisticsLogistics

OOEEMM

TTIIEERR

NNSuppliers

InterchangesPlants Consolidation Centers and Ports

Parts Distribution Centers

ManufacturingPlants

Consolidation Centers and Ports

Rail

Production Sales

JJVV

AAlllliiaanncceess


Process Configuration Framework Process Configuration Framework Process Configuration Framework

6.0 6.0 Develop and Manage Human CapitalDevelop and Manage Human Capital

Management & Support ServicesManagement & Support Services

7.0 7.0 Manage Information TechnologyManage Information Technology

8.0 8.0 Manage Financial ResourcesManage Financial Resources

9.0 9.0 Acquire, Construct, and Manage PropertyAcquire, Construct, and Manage Property

10.0 10.0 Manage Environmental Health & SafetyManage Environmental Health & Safety

11.011.0 Manage External RelationshipsManage External Relationships

12.0 12.0 Manage Knowledge, Improvement, and ChangeManage Knowledge, Improvement, and Change

Operating ProcessesOperating Processes

1.01.0Develop Develop Vision & Vision & StrategyStrategy

2.02.0Design & Design & Develop Develop Products Products & Services& Services

3.03.0Market &Market &

SellSellProducts & Products &

ServicesServices

4.04.0DeliverDeliver

Products Products & Services& Services

5.05.0Manage Manage

Customer Customer ServiceService


Why Execution Broke DownWhy Execution Broke DownWhy Execution Broke Down

Managers and work teams don’t know the goal.– 15% of employees actually knows their organization's most important goals

Managers and teams don’t know what to do to achieve the goal– Many people do not know what critical activities provide the greatest leverage to

achieve team goals– People will replace leveraged activates with frantic busyness

Companies do not keep score– Most employees do not know what the key measures of success are– They don’t measure and track the specific behaviors that lead to goal

accomplishment

No one is held accountable– Less than 10% of people meet with their manager at least monthly to discuss

their progress on work goals


Performance

Move the Core

Num

ber o

f Peo

ple

Low Medium High

One of the most significant barrier to superior results is inconsistency with performance between division, departments and people.

Every organization will have “top 20%” of high performance and 60% of average performance. The challenge is to move the middle 60% toward the higher level of performance.

Improvement does not produce incremental results; it creates breakthrough results.

How to Create an Execution Culture? Start by Moving the Middle

SolutionSolutionSolution


4 Disciplines Executed 4 Disciplines Executed 4 Disciplines Executed

Discipline 1 Discipline 2 Discipline 4

Discipline 3

Focus on the Wildly Important

Act on the lead

Measures

Create a cadence of

accountability

Keep a Compelling Scorecard

3. Keep a Compelling Scorecard

• People & teams play differently when they are keeping score

• The right kind of scorecard motivate the players to win

2. Act on the Lead Measures• 20% of activities

produce 80% of the results

• The highest predictors of goal achievement are the 80/20 activities that are identified and codified into individual actions and tracked

1. Focus on the Wildly Important• Exceptional execution start

with narrowing the focus• Clearly identifying what must

be done• If the above are not

accomplished then nothing else you do will matter

4. Create a Cadence of Accountability

• Great performers thrive in a culture of accountability that is frequent, positive and self-directed.

• Engage in simple weekly process that highlights successes, analyzes failure, and correct course as needed


ResultsResultsResults

Business case approachImproved order cycle time Greater visibility of material and productGlobal procurement leverageConsolidation of suppliers Shipment activity based costingCost savings achievedImproved technology to operate supply chainConsolidation and centralization of operationsAcquired the company for the people, process and technologyGM is driving further internal success today


LeadershipLeadershipLeadership

Leaders relentlessly upgrade their team, using every encounter as an opportunity to evaluate, coach and build self-confidence

Leaders make sure people not only understand the vision, they live and breath it

Leaders drive positive energy and optimism

Leaders have the courage to make unpopular decisions and gut calls

Leaders probe and push with curiosity

Leaders inspire risk-taking and learning by setting the example

Leaders celebrate


PRESERVECore Values

Core Purpose

CHANGECultural & Operating Practices

Specific Goals & Strategies

Leadership Leadership Leadership


Career PathCareer PathCareer Path

NLM Enterprises are always looking for talented people

We are connected to major global logistics companies

Keep your options open

Have a vision and plan for it

Build Relationships and have Mentors

Benchmark

michigan state university supply chain management chain management and nlm enterprises cases studies...

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