DECK: Unigistix president and CEO Michel Dunlop discusses the evolving nature of 3PL partnerships in an exclusive interview
CT&L: It’s a particularly noteworthy achievement for a 3PL, which must not only manage its own operations well but which is directly tied to the demands and fortunes of its clients’ supply chains, to be named to the prestigious list of Canada’s 50 Best Managed Companies.
Dunlop: I think it speaks to our entire industry. The 3PL industry includes some of Canada’s best companies and I think our industry is coming to the fore as a critical part of the economy’s success. We weren’t named as one of Canada’s best managed 3PLs; as a 3PL we were named as one of Canada’s best managed companies. We believe intrinsically that we are an extension of our client partners’ brands and that we need to operate as internal departments of their organizations. We integrate into not only their supply chains but also their value chains. We also provide a high degree of consulting as they are preparing campaigns introducing new products or looking at new distribution channels. We think it’s critical that we become one with our partners’ competitive differentiators in their market place.
CT&L: What would you consider to be the most significant challenges facing your customers in 2004?
Dunlop: All of our partners are operating in what I consider to still be a fragile economy. Their bottom lines are being squeezed and therefore cost matters to them. Simultaneously, they are attempting to differentiate themselves and be competitive in their market places. Many of them are distributing their products through national and North American retailers and the role of the retailer in bringing product to market is growing stronger and so they have to live up to the growing requirements from their own channels and clients.
CT&L: Our own survey of outsourcing practices indicates a considerable penetration of outsourcing in the Canadian market place. In your view are the relationships deep enough, however?
Dunlop: No I don’t think the relationships are deep enough yet but I believe they are moving in the right direction. The 3PL market is starting to mature. The onus is upon us to deepen the relationship each day. I don’t expect that our partners wake up every morning thinking what can Unigistix do for me today. I believe it’s our responsibility to communicate with our partners on our capabilities today and our plans for tomorrow, hoping that they are pleased enough with the service we’ve already provided that they will consider us to do more and more for them As an industry we need to be prepared to act as an internal and integrated part of our client’s organization. You can’t limit yourself to only your contract. When a partner is dealing with a professional logistics organization they should expect the triple benefit of cost reductions, improved service levels and technological advances made by the 3PL across a multi-client base.
CT&L: Industry experience suggests that many 3PL outsourcing relationships encounter difficulties because the scope of the project may be ill defined at the outset or effective controls are lacking to prevent "scope creep" during the course of the relationship, which adds to costs. What would you advise to prevent this from happening?
Dunlop: You need a well thought-out contract that sets out the services and expectations that are predictable at the beginning of the relationship. But once the logistics partner has proven it can deliver on those services, then I believe it appropriate in a relationship to begin exploring together what other activities the logistics provider can do to benefit the client. Some people may call that scope creep but I believe that’s only because they view themselves as limited in their capabilities. You need to anticipate that your client partner’s needs will change and be flexible enough to address those needs.
CT&L: Traditional supply chain management focuses on delivering value to end customers; reverse logistics is often seen only as a necessary evil and the concentration is simply on cost minimization. Unigistix is experienced in reverse logistics. What role should reverse logistics play in the overall logistics strategy and what benefits have you experienced with companies that are making the effort?
Dunlop: There are very few industries that don’t have product returns. Reverse logistics is a real part of doing business. If it is poorly handled it leads to or underscores a deterioration of the brand of our partner in their client’s mind. But if you do reverse logistics professionally if you take product back properly and quickly, issue proper credit to the end user or retailer professionally and quickly, highlight product deficiencies to the manufacturer early in the cycle, and dispose of the product properly or better yet refurbish or repair it so that it can go back into inventory and keep costs down it leads to a better bottom line for your partner and hopefully brand enhancement in the market place.
CT&L: You operate a facility in Brampton that provides integrated, customized, e-based logistics management support to clients in the telecommunications, software and health and safety industries in North America and abroad. Can you further elaborate on your service offerings?
Dunlop: We call our building a logistics centre and we are very proud of the fact that we provide both physical and information services to our partners. We concentrate on people, process and technology. Our team members are the core of our success. The processes we use with our partners ensure that we do the right work at the right time in the right way and our proprietary technologies ensure that we create and maintain what we call an electronic DNA of every product that enters and leaves our facility.
CT&L: Technology is becoming a differentiator in many sectors yet market studies show that the use of 3PLs as technology providers remains low. Why do you think that is and what needs to happen for that to change?
Dunlop: Too often companies that call themselves 3PLs but basically do pick, pack and ship limit their relationships to the people in supply chain. If you truly are a next generation logistics provider, including technology solutions, including people solutions, then you better ensure that you have relationships in your partner’s organization across all disciplines, including IT. We ensure we know the IT people and that they are aware of the capabilities we offer and that they view us the way the supply chain people do: an extension of their own capabilities.
CT&L: Studies on outsourcing, including our own, indicate that users of 3PL services are challenged when it comes to accurately measuring the improvements offered by the relationship. In your view must 3PLs themselves do a better job of measurement and communicating the data to their clients?
Dunlop: I absolutely think it is our industry’s responsibility to communicate information to our clients better. When a 3PL is doing a good job we become invisible to our partners and we all need to do a better job of communicating not only how we are meeting today’s expectations but also how we go beyond those expectations. Too often when clients are evaluating their 3PL, the yard stick is problems encountered, not problems avoided or problems solved.
CT&L: Looking five years into the future, how do you see the 3PL- customer relationship evolving and how would you like to position Unigistix to keep up with this evolution?
Dunlop: I do not see Unigistix keeping up with this evolution; I see us leading it. It’s up to us to anticipate our partners’ needs, keep abreast of technologies, processes and any other innovations and present recommendations to our partners. Our partners don’t trust us as being a critical part of their success because we are stagnant; they expect us to lead and to tell them what the opportunities are. We as an industry need to ensure that we are truly integrated with our c
lients and that we consider ourselves to be an extension of our partners’ brand.