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Menlo Logistics is the concept of the late '80s. At that time, see the company's marketing director, and then submit the idea of the creation of the company - an organization of the warehouse, inventory and transportation management, as well as through customized systems and software fully integrated supply chain - to the senior management. The initial business plan was to create, implement, and manage logistics projects for its customers.
Â Â Â Â Â Â On October 26, 1990, Menlo Logistics Inc. was formed. The name was a deliberate choice to prompt an association with California's Menlo Park, which was well known as the home of venture capitalists and high-tech industries. Logistics consultants and warehousing experts ran the dedicated, contract carriage operations. The start-up was "carrier neutral"Â and still does not give special treatment to its sister organizations or to any particular outside carriers.
Â Â Â Â Â Â Menlo Logistics established itself as a leading third-party logistics (3PL) provider in the 1990s, and rode the popularity of the outsourcing trend by notching double-digit growth every year during that era. One of Menlo's early success stories was its successful bid on a $100 million distribution contract with Sears. The department store wanted to close its internal distribution system, which cost Sears about twice as much as its competitors at 7 percent of its sales.
Â Â Â Â Â Â In December 2000, Menlo Logistics collaborated with General Motors to create Vector SCM, a new global supply chain management company serving the automotive industry. Vector SCM proved to be a role model for a successful lead logistics provider business model.
Â Â Â Â Â Â Effective January 1, 2002, Con-way formed Menlo Worldwide Logistics in its current form by combining Menlo Logistics (renamed Menlo Worldwide Logistics), Vector SCM and Emery Worldwide Forwarding (later renamed Menlo Worldwide Forwarding). Menlo Worldwide Logistics absorbed the operation s of Emery's logistics unit, Emery Global Logistics (EGL). The EGL operations gave Menlo Worldwide Logistics presence in Asia and South America, and expanded its European scope. The company began leveraging these operations to pursue organic growth outside of North America and grow its European footprint.
Â Â Â Â Â Â In December 2004, Con-way sold Menlo Worldwide Forwarding to United Parcel Service, and Con-way streamlined its operating units by merging Con-way Transportation Service's logistics unit, Con-way Logistics, into Menlo Worldwide Logistics. This completed the rationalization of three logistics entities into a single business unit. In 2006, GM exercised its right to purchase Menlo Logistics' interest in Vector SCM, and the sale was completed in December.
Â Â Â Â Â Â In seeking to grow its business in the Asian logistics market, Menlo purchased two Asian logistics companies, which were Cougar Holdings Pte, Ltd. and Chic Holdings, Ltd. in 2007. Singapore-based Cougar enlarged Menlo's operational scope in southeastern Asia, and Shanghai-based Chic significantly expanded Menlo's presence in China.Â
Â Menlo Worldwide Logistics is a global supply chain company operating in 20 countries worldwide. Its core business offerings include third-party logistics and supply chain management. Menlo Worldwide Logistics is a business unit of Con-way, and shares its corporate headquarters with its parent company in San Mateo, California. Sister companies include Con-way Freight, Con-way Truckload, and Con-way Multimodal.
Â Â Â Â Â Â Menlo Worldwide Logistics specializes in the integration of all functions across the supply chain, from sourcing of raw materials through product manufacturing to the distribution of finished goods. The company currently operates 210 locations worldwide and has 18 million square feet of warehouse capacity.
Â Â Â Â Â Â Menlo Worldwide Logistics offers custom solutions to maintain all supply chain project phases, including design, implementation, management and operation. As a leading 3PL, they help customers develop strategies using a process approach to fit the customer's unique partnership requirements.
3PL services include:
Dedicated contract logistics
Multi-client warehouses and distribution centers
Supply chain consulting
Supply chain network analysis and design
Software and technology solutions
Â Â Â Â Â Â The Transportation and Logistics industry sector comprises a wide range of service providers, covering all modes of transport - air, road, rail, sea - as well as related services such as warehousing, handling, stevedoring, and finally value added services like packaging, labeling, assembling etc. In addition to these 'physical' services, transportation and logistics industry includes all sorts of planning, organizational and management services in the area of transportation and logistics. In the past few years, we see the consolidation trend, in larger, integrated groups in more than one sub-industry, transportation and logistics industry operating result. Thus, among the restrictions on transportation and logistics industry, the industry has become increasingly blurred.
Â Â Â Â Â Â The business core of Menlo logistics is offerings third-party logistics. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer's needs based on market conditions and the demands and delivery service requirements for their products and materials.
Â Â Â Â Â Â Globalization and outsourcing of logistics services created double digit revenue growth in the industry in the early part of the 21st century, however the economic downturn which made itself felt across the world in 2008 will result in a dramatic drop in the sector's growth in 2009. The industry was suddenly faced with some of the most difficult market conditions in history. Liberalization and privatization are one starting point that is driving change in this complex, rapidly changing sector. Regulatory requirements are to change significantly in recent years. In an interconnected world, companies operating across national borders, and with many local partners, accounting and governance issues are becoming increasingly complex because it is the customs and tax regulations. Companies looking to build a durable business need to continuously offer added value. As business models change in the industry, many companies are evolving from forwarding and warehouse managing companies to highly industrialized, information and technology driven supply chain providers.
Tools used to describe the industry
We have decided to use Porter's Five Forces to describe the logistics industry. Porter's Five Forces is a framework for the industry analysis and business strategy development. This five porter's five was developed by Michael E. Porter of Harvard Business School. It is useful tool for analyzing the structure of an industry and predicting the industry's future evolution.
Porter's Five ForcesÂ - describe with low, moderate or high.Â Industry competitiveness can be broken down into current and potential competitive forces.Â Â
Threat of entry
Intensity of rivalry
Bargaining power of buyers
Bargaining power of suppliers
Threat of new entrants-high
Threat of new entry can be characterized as high for a number of reasons, which are pressure from adjacent industries, economics of scale, capital requirements and experience
The first reason is pressure from adjacent industries. It means pressure by intense competition and inadequate profitability in own industries, carriers, freight forwarders, wholesale distributors as well as warehousing firms ,who try to broaden their service offerings in order to differentiation and offer more value-added service.
The second reason is economics of scale. Third-party logistics companies can provide large shipping discounts through economies of scale. Not only that,3PL's are also able to achieve much lower operating costs per load due to their ability to leverage their entire business for substantial discounts with trucking companies. These economies of scale can also be seen in the carrier qualification process, technology systems and consistent year-round freight prices. Most 3PL companies have difficult exploiting the economics of scale assumed by their business model.
The next reason is capital requirement. The potential entrants like carriers, freight forwarders and warehousing firms have required capability as well as invest in infrastructure that allow them to do the part of the 3PLs activities. For example, Most of the logistic industry needs to invest more in technology as well as other, but capital is not significant barrier as in other field like mineral extraction or integrated circuit production.
The threat of new entrants is high for the express transportation and logistics industry because of the high costs of developing the infrastructure required to compete effectively in the industry. There are companies, however, that have both the capital and the desire required to enter the industry. DHL is an example.
Experience is very important in logistic industry because they are serving is one of the main factors that might act as a barrier to entry but if high turnover of employees in 3PL industry will allows competitors ad new entry to overcome this barrier .
Intensity of rivalry-high
For most industries, the strength of competitive rivalry is the major determinant of the competitiveness of the industry used by a company which can increase competitive pressures on their rivals such as sustainableÂ competitive advantageÂ throughÂ innovation, powerfulÂ strategy and so on. Many large 3PLs strategically target industries like automotive. Competition is based on price and service 3PLs offer because customer see costs reduction as the main reason for logistic outsourcing and perceive fragmented 3PL service as commodities. 3PL firms need to differentiation its service offering so that it will be unique from the perspective of the customer.
Logistic companies need to differentiate itself from competitors. Examples, of this include the logistical support that the company now offers its customers and the web tracking technologies developed to enhance customer's ability to track packages.
There are many largest 3PLs companies that offer similar service like transportation management and so on to compete in order to survive as well as to ear more profit in this logistic industry. Table below shows several 3PLs companies that earn the higher revenue in year 2008.Melon Menlo Worldwide Logistics was number 40 in the 3PL .
Third-Party Logistics Provider (3PL)
1. DHL Supply Chain & Global Forwarding
2. DB Schenker Logistics
3. Kuehne + Nagel
4. Nippon Express Co. Ltd.
40. Menlo Worldwide Logistics.
The bargaining power of buyers-medium/high
The power of buyers is the impact that customer have on producing industry.
Buyers can suppress the profitability of the industry by demanding price concessions or increases in service like in 2009 did have a positive side; 3PL customers continued to increase their use of 3PLs as they focused on core competencies outside of logistics. This provided some underlying structural strength to the 3PL Customer continually influence on the prices and bargaining for higher quality as well as more service. Buyers have bargaining power over 3PLs for the following reason; customer feel they can find an alternative service provider and may make comparison between logistic company to see which logistic company can provide better service and offer lower price.
Threat of substitute-medium
In Porter's Model, the substitute product or service refer to products in other industries. Doing logistic and supply chain management in -house can be substitutes for 3PL.Other substitute are the broad range of a firm that specialize in service specific areas like motor carrier, warehousing and etc. Logistic company tend to have strong capability in one area like warehousing but may weak in others like transportation. It is seldom strong in all areas
The bargaining power of suppliers-medium
In a truly competitive market, there is no supplier that can set the prices. The fluctuating price of fuel is affecting the profitability of the transportation business. For example, if the price of the fuel in not stabile that its will effect the transportation. Carriers (motor, air and ocean), physical asset providers (public warehousing) and it vendors can be consider as suppliers for 3PL. Labor and government issues can show the power that suppliers can have in an industry. Labor has relatively little power in its relationship. For example; FedEx has chosen wisely to screen potential employees for union links thereby negating the ability of labor to exert itself on the company. On the other hand Government has a great deal of power in its relationship with the logistic companies. For example, Governments have the right to control the supply of landing rights at their airports. This is very serious problem for logistic company especially for transportation management because without these landing rights the company would be unable to service these markets.Â
Â Â Â Â Â The major competitor of Menlo Logistics is Federal Express.Â Federal Express (FedEx) is an international logistics service company.Â It is the world's largest express transportation company, with a presence in nearly 215 countries and covering 365 airports. It employs over 136000 employees and operates more than 645 aircraft. Their main activities are home delivery, air-delivery, shipping oversight, overnight delivery of packages, and so on. Â
Â Â Â Â Â Â Federal Express is built by a former U.S. Navy, Frederick Smith, Little Rock, Arkansas in 1971. For Smith, the idea of creating a transportation company, when he studied at Yale University in political science and economics; when he was about 91 million U.S. dollars venture capital investment. His goals and objectives, we started this business is the establishment of a transportation company can provide a nationwide delivery system that can be effectively provided by the package. The company was founded in June 1971 and officially began in April 17, 1973 action in the Memphis International Airport, 14 small aircraft launch. That evening, Federal Express delivered 186 packages to 25 U.S. dollars, from Rochester, New York City, city of Miami, Florida
Â Â Â Â Â Â The first entry of FedEx in the international market was in 1984 when FedEx acquired Gelco Express International and launched operations in Asia-Pacific. Seeking to build on their strengths, FedEx created a more diversified business through a series of acquisitions. FedEx has deployed over existing international companies to expand in its 1989 acquisition of Flying Tiger of its international business strategy. In 1995, FedEx became the only all based in the United States, China Cargo Airlines.
Â Â Â Â Â Â Besides that, C.H. Robinson Worldwide also is one competitor of Menlo Logistics. C.H. Robinson Worldwide, Inc. is one of the world's largest third party logistics (3PL) providers, with 2009 gross revenues of $7.6 billion. They provide freight transportation and logistics, outsource solutions, produce sourcing, and information services to over 35,000 customers through a network of more than 235 offices in North America, Europe, Asia, South America, Australia, and the Middle East. To meet the customers' freight needs, they provide access to over 47,000 transportation providers worldwide, including contract motor carriers, railroads, air freight carriers, and ocean carriers. Along with the service and about 7,300 employee's devotions, their performance leadership's culture, their successful record, they have established a profession leader's good prestige.
Â Â Â Â Â Â Although their traditional leadership and their production and truck service began, they have become the industry's leading procurement, transportation and comprehensive product portfolio of third party logistics, logistics services. The ongoing challenges of the transportation industry inspire them to innovate and search for new ideas that challenge limits and extend Beyond Brokerage. The customers and contract carriers are the beneficiaries of this forward-thinking approach, because they believe the customers deserve nothing but the best from their 3PL. Â
2.1 Competitors' profile
The current competitors for Menlo Logistics are C.H Robinson Worldwide, DHL, and FedEx. They all are the third party logistics and they do a good job in logistic industry.
For C.H Robinson worldwide profile, C.H Robinson Worldwide was founded in 1905, it is one of the world's larger third parties (3PL) providers, with 2009 gross revenues of $7.6 billion. They are a global provider of multimodal transportation services and logistics solutions, operating through a network of branch offices in North America, Europe, Asia, South America, and the Middle East.
DHL was founded in San Francisco almost 40 years ago by three budding entrepreneurs - Adrian Dalsey, Larry Hillblom and Robert Lynn. DHL has continued to expand at an extraordinary rate. Nowadays, DHL has become top of the international express and logistic industry. It becomes the global market leader for logistic industry. DHL operated in Malaysia since 1973. Today, DHL's international networks link more than 220 countries and territories worldwide and employ 300,000 employees.
Federal Express (FedEx) is an international logistics service company. FedEx is founded by a former U.S. Marine, Frederick W. Smith, on 1971 in Little Rock, Arkansas. Today's FedEx is headed by FedEx Corporation, which provides strategic direction and consolidated financial reporting for the operating companies that compete collectively under the FedEx name worldwide, it includes FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks and FedEx Services and the others. Nowadays, FedEx has more than 1900 FedEx office.
2.2 Competitors' competitive offering
C.H Robinson Worldwide provide freight transportation and logistics, outsource solutions, produce sourcing, and information services to over 35,000 customers through a network of more than 235 offices in North America, Europe, Asia, South America, Australia and the Middle East. As a third party transportation and logistics provider, they help their customers and industry increase efficiencies.
DHL provide worldwide package express, international documentation express, and import express service. They also have Jumbo Box and Jumbo Junior. They logistics customers include over 75% of the world's largest quoted non-financial enterprise.
FedEx Corporation provides transportation, e-commerce, and business services in the United States and internationally. It operates in four segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. The FedEx Express segment offers various shipping services for the delivery of packages and freight. The FedEx Ground segment provides business and residential ground package delivery services. The FedEx Freight segment offers less-than-truckload freight services, as well as shipment carrier services. The FedEx Services segment provides sales, marketing, information technology support, and customer service support
2.3 Competitors' strategies
CH Robinson worldwide's main strategy is to invest in the long-term success of the customers, contract carriers, growers, employees, and communities. By keeping track to the few factors, internal or external workforce or customer will be more confident to the company and a long term and stronger relationship will be built indirectly. Next CH Robinson worldwide also using a more flexible and customizable solutions to serve their customer. For example, customer can choose the date of shipment of their goods.
DHL's strategy is to continuously update to customer service through superior information by controlling transportation management and supply chain event management. By keeping the latest information of customers, DHL can understand more about what the customer's wants and needs.
FedEx's strategy is to purchase air routes and acquired other company. Next they also provide 'One-stop solution' for every customer which means the items they send will depart on time without any delay such as
2.4 Competitors' future strategies and goals
CH Robinson worldwide Helping Carriers Save Fuel and Reduce Emissions. Their future goal is to achieve the long-term target of 15 percent growth for net revenues, income from operations, and earnings per share. To achieve their targeted goal, CH Robinson worldwide put a lot effort in improving their customer service such as decreases their lead time and always be punctual for their shipment and logistical process.
DHL's future strategies embrace social responsibilities by using more eco-friendly way in their service because peoples nowadays are more concern about cooperation social strategy (CSR).Besides that, their goal is to build stronger, longer term of partnership with customer by providing world class service, across all their operation. To achieve the targeted goal, DHL do a lot of research and investment in searching a substitute resource for petro which is less harm to the environment or more eco-friendly.
FedEx's future strategies are to become technological superiority where using higher technology for their transportation process to meet the needs and wants of customer. For example, they wish to improve their current variety of transports which cover form land to air.
CH Robinson worldwide
Founded in 1905.
One of the world's Larger third parties (3PL) providers.
Operated in Malaysia since 1973.
International network links more than 220 countries and territories worldwide.
Founded in 1971.
Over 1900 FedEx offices.
Provide freight transportation and logistics, outsource solutions, produce sourcing, and information services.
Worldwide package services.
International documentation express
Import express services
Jumbo Box and Jumbo Junior
Delivery duty paid
Express logistics solution
Selection of package materials.
CH Robinson Ltd
Invest in the long-term success of the customers, contract carriers, growers, employees, and communities.
Flexible, customizable solutions
Customer service through superior information by controlling transportation management and supply chain event management.
Purchase air routes and acquired other company.
'One-stop solution for every customer.
Helping Carriers Save Fuel and Reduce Emissions
Achieve the long-term target of 15 percent growth for net revenues, income from operations, and earnings per share.
Embracing social responsibilities by using most eco-friendly way to service.
Firm's current Supply Chain & Logistics Situations
Menlo Worldwide Logistics' Strength
Menlo Worldwide Logistics specializes in the integration of all functions across the supply chain, from sourcing of raw materials, through product manufacturing, to the distribution of finished goods.Â
Top-tier companies around the world look to Menlo Worldwide Logistics for innovative solutions that help drive business strategies, improve customer service, accelerate order-cycle times, and tighten control of the supply chain - all while reducing costs in transportation, inventory and order fulfilment.
Menlo Worldwide Logistics helps firms attain operational excellence across their global supply chains. Through practical and incremental solutions that leverage leading technologies and the best in logistics services, Menlo Worldwide Logistics enables clients to address complex global supply chain management issues.
Corporate capabilities include:
Supply chain management, order management, logistics management, optimization and visibility
Creative, global 3PL solutions that address needs ranging from single transactions to some of the largest and most complex supply chain challenges
Open and scalable technology that is readily integrated into existing operations, and extended as needs evolve
Lean logistics focusing on reducing waste and inventory, standardized work and mistake proofing
Menlo Worldwide Logistics has operations throughout North America and strategic points in Europe, Asia/Pacific and Latin America, and manages 17 million square feet/1.6 million square meters of warehouse space and over three million shipments per year
Menlo Worldwide Logistics helps customers achieve noteworthy results every day. With their expertise, lean processes and global reach, Menlo helps their clients compete. When Menlo discuss best practices, they call upon their subject matter experts from various disciplines around the world to develop industry-specific solutions. Experienced in many vertical markets, we specialize in creating customized solutions.
With personnel, offices, distribution agreements and partnerships on five continents, Menlo Worldwide Logistics has the global infrastructure to quickly expand our operations. Specializing in supply chain management, our operations managers share their hands-on experience by developing tailored operating procedures to meet stringent objectives.
Menlo Worldwide Logistics is a leader in the creation and application of practical, advanced technology and design techniques that add value to customers' supply chains. The group is responsible for product strategy and expertise for contract and enterprise logistics applications, including visibility, data management, enterprise application integration, order and transportation management, warehouse management, and RFID technology. In developing industry integration standards, Menlo Worldwide Logistics has participated in RosettaNET, OAG, CIDX and TransXML.
Menlo Worldwide Logistics, the global logistics subsidiary of Con-way Inc. (NYSE: CNW), today announced that it has received its first Environmental Excellence Award from the U.S. Environmental Protection Agency (EPA) SmartWay(SM) Transport Partnership.
Menlo was honored by the EPA at an award presentation held today in conjunction with American Trucking Associations' Annual Management Conference & Exhibit in Las Vegas. Menlo was one of 37 companies and organizations from among the more than 2,100 SmartWay partners to receive this distinction.
Menlo has a partnership with SmartWay, including its sister companies Con-way Freight and Con-way Truckload, will eliminate six million tons of carbon dioxide and save more than 540 million gallons of diesel fuel -- a savings to the broader economy of at least $2 billion a year.
Menlo Worldwide Logistics has been named a Top 10 3PL by readers of Inbound Logistics as part of its annual Readers' Choice 3PL Excellence Awards in September 2009. More than 6,000 supply chain professionals cast votes in this year's competition. The publication announced the readers' Top 10 along with its list of the nation's Top 100 3PL Providers, which also included Menlo. Inbound Logistics is the leading trade magazine targeted toward business logistics and supply chain managers.
For the Top 10 3PL Readers' Choice Awards, the majority surveyed cited service and ability to cut transport costs as the most important criteria for evaluating 3PL performance. Overall, they ranked Menlo eighth of the more than 400 providers nominated.
With the globalisation of world business, the border-crossing activities between organisations have substantially increased. Organisations not only need to handle supply functions, but also play a tremendous role in demand simulation through integration both inside the firm and outside with business partners and customers. Logistics has become more and more mature and sophisticated by taking on an external focus, incorporating suppliers and customers in the business processes, with all the supply chain functions integrated into a whole. By minimising the costs in the value chain or providing customised services, logistics acts as a major source of competitive advantages and profitability. To meet this goal, it would require the integration of activities to focus on customer-oriented measures. Customer service and logistics activities are a chain of interdependent activities that supplement each other to facilitate the flow of information, goods and cash within the value chain. The absence of one activity may imply some specific channels need to supplement another unit.
Menlo Worldwide Logistics' Weaknesses
Menlo lacks advertisements, and only has little advertisement via Google. In contrast is DHL, they have a strong worldwide presence and known to everyone. Very few people would have heard of Menlo worldwide logistics unless they are in the industry or have previous dealings with the company. The fact that Menlo is reputable cannot be denied, but companies like DHL, FedEx, GedEx, Skynet would be more familiar to the general community.
Menlo is vulnerable to fluctuations in oil price and government regulations. As a logistic company, the petrol and diesel price would greatly affect the revenues of the company. Without oil, they would not be able to operate Lorries, forklifts and certain machines that are needed to run the operation smoothly. Once there is an increase in oil price, the costs goes up and the earnings of Menlo is bound to drop. Apart from that, government regulations heavily restrict how Menlo conduct its business in the country, for example NAFTA, which is also known as the North American free trade agreement created a trilateral trade bloc in North America and is a restriction that Menlo is obligated to abide in.
The logistic industries' strength
Logistics companies are gaining popularity among many industries, many firms prefer to outsource their logistic work to a 3PL. for the very reason that it might be more cost efficient and some firms are unable to acquire the sufficient capital to handle all the logistical work on their own. 3PL's work efficiently through integrating various transport models, and because of their wide range of knowledge and experience, they are able to plan and select the most efficient mode to transport the goods to the customers.
Logistic companies have paid close attention to the quality of their customer service, for logistic companies are service providers and every company's main purpose is to serve their customers well, all these can be summed up into a point : Customers come first. Many different schools of thoughts are emerging, but nonetheless the importance of customer service cannot be neglected.
Logistic companies are getting more and more innovative, they invest heavily on information systems, because information is crucial to the existence of a logistic company. Their efficient cost savings was done through information sharing.
The logistic industries' weakness
As competitive pressures increase and supply chains become increasingly global and complex, efficient and proactive supply chain management has evolved from solely an operations concern to a critical business success factor.
3PL emerged in the 1980s and have been providing valuable service for companies willing to outsource logistics. Since then the industry has been growing substantially both in terms revenues and number of players. Nowadays 3PL market has a decent share in total transportation costs and established position in the transportation sector. Furthermore, analyst forecast a significant growth of the industry and an increase of its role in the supply chain management of companies. However, the industry is not enjoying adequate profits and margins are small. 3PL companies have difficulty differentiating themselves among each other and have difficulties demonstrating value proposition to potential customers. At the first glance, it signifies commoditization-a competitive environment where differentiation is difficult, customer loyalty is low and competing offerings are virtually indistinguishable from customer perspective.
Third party logistics have been approaching commodity status, and transforming the logistics outsourcing value equation from higher margins and vendor control into a classic buyers' market with competition driving down margins; adding features and services, and increasing buyer choice.
The current/potential logistics problem Menlo Worldwide Logistics is facing
Menlo faces pressure from neighbouring industries. It means pressure by intense competition and inadequate profitability, for example, DHL and C.H Robinson Worldwide. Apart from that, other 3PL uses economics of scale, 3PL's are able to achieve much lower operating costs per load, however many have difficult exploiting the economics of scale assumed by their business model. The threat of new entrants is high for Menlo because of the high costs of developing the infrastructure required to compete effectively in the industry. There are companies, however, that have both the capital and the desire required to enter the industry. DHL is an example.
Menlo worldwide logistics also face intense rivalry among its competitors, all of them fighting for customers in the same field, because their service offerings are similar, for example transportation management. As mentioned above, the environment signifies commoditization-a competitive environment where differentiation is difficult, customer loyalty is low and competing offerings are virtually indistinguishable from customer perspective. It is therefore difficult to compete.
There are many more problems that Menlo worldwide logistics face and there many more problems to come.
First to start strategy planning, a company should have a clear direction whether is to meet financial, growth, market share, and other objective should be well understood. There are four components for good strategy, which are customer, supplier, competitors and company. Each component is assessed about their needs, strengths, weaknesses, orientation and perspective.
An aggressive strategy of acquisitions and strategic expansions in key Asia Pacific markets is establishing Menlo Worldwide, LLC, the global logistics subsidiary of Con-way Inc. (NYSE: CNW), as one of the best-positioned third-party logistics providers in the region as Asia continues to grow as the manufacturing workshop to the world.
To beat the competitors and fulfill customer needs, Menlo Worldwide Logistic has practice lean logistic to deliver superior supply chain performance and give its customers a competitive advantage. Lean logistics emphasizes minimization of all resources used in supply chain management. The lean logistics methodology uses proven lean practices and principles to reduce waste, complexity and errors.
The elements of Menlo Worldwide Logistics' lean logistics culture focus on:
Mistake-proofing and standardizing work
Menlo Worldwide Logistics' pipeline visibility and event management applications enable customers to reduce required safety stocks. Their strategic supply chain analyses can uncover ways to reduce inventory and touches by replacing a warehouse with a cross-dock. The strategic modal optimization analyses include inventory value for decision support on modes and routes. Menlo Worldwide Logistics operate plant warehouses that deliver parts continually to manufacturing line-sides, eliminating a need for plant inventory. Other inventory-reducing services Menlo Worldwide Logistics offers are postponement and customization, which push the product completion to the last practical point in the chain.
Elimination of waste is a key attribute of lean supply chain management. Waste reduction is not the same as cost reduction, although waste reduction often results in lower supply chain costs. With a goal of reducing waste, Menlo Worldwide Logistics works with its customers to modify policies and procedures that produce or encourage waste.
Menlo Worldwide Logistics examines several areas for supply chain waste reduction opportunities:
Mapping material flows.
Keeping drivers and tractors moving.
Using milk runs.
Electronic data interchange (EDI).
Optimize transportation routes.
At Menlo Worldwide Logistics, quality is instituted at the source to prevent errors from entering the supply chain. Standard processes are the heart of this lean logistics model. Process standardization enables the uninterrupted movement of a product through a supply chain. Continual flow is enabled with a value-stream perspective, which means viewing processes in terms of how they add value to a customer.
Elements of Menlo's mistake-proofing tools and techniques include:
Making it easy to do things right and making it hard to do things wrong
Easy-to-read visual controls
Radio-frequency devices coupled with bar-code technology
System-directed cycle counting at our warehouses
Utilization of Six Sigma and SPC
Electronic data interchange
Implement repeatable, standardized processes
Establish one best way to perform each task
Visual documentation of processes
Correct any activity that causes rework, unnecessary adjustments or returns
Organized workplace (5S)
Menlo Worldwide Logistics advanced Warehouse Management Systems (WMS) allow them a great degree of flexibility in our operations to accommodate their clients' various requirements. The system, enabled by radio frequency (RF) data collection and distribution, provides state-of-the-art picking and inventory tracking with unparalleled accuracy.
Menlo Worldwide Logistics offers dedicated and shared warehouse facilities all over the globe. This strategy employs a shared technology base to afford customers scalable solutions. Menlo Worldwide Logistics warehouses offer state-of-the-art security to match individual client needs, vital to maintaining high levels of inventory control. Menlo Worldwide Logistics has experience in designing warehouse space for optimal efficiency, using simulation and schematics to derive the ideal operating techniques.
Warehouse Operations and Metrics
Menlo Worldwide Logistics operates warehouses using repeatable, documented processes with technology that optimizes labour scheduling. For example, Menlo Worldwide Logistics automated workflow management will batch orders for identical items and assign an order picker to select them together in a technique called cluster picking. Cluster-picked items are brought to the shipping area, where they are distributed among various orders.
Menlo Worldwide Logistics' cross-dock centres keep their clients' products moving continuously, even in the most demanding situations. A successful cross-dock program requires precision timing of carriers and complete visibility - tracking every truck or container and every item - at every point of the shipment. Cross-docking can be used as an inventory postponement strategy. Imported goods are sorted and directed to regional distribution centres based upon current requirements. This enables inventory deployment decisions made weeks earlier to be adjusted based on sales that occurred during the ocean voyage.
Inventory Management Programs
Once the materials are in the warehouse, Menlo Worldwide Logistics optimizes the time spent handling inventory through careful assignment of storage locations. Techniques such as dynamic slotting, in which their warehouse system automatically optimizes the location of products in the warehouse based on their activity level, can dramatically reduce order-picking time and associated labour costs. Menlo Worldwide Logistics inventory management programs can dramatically improve inventory accuracy, up to 99.99 percent in most cases. Complex rules for lot-tracking compliance are handled consistently. Whether it is a food industry client that must ensure a supplier never receives a shipment with a date code that is earlier than a prior shipment, or an automotive client that must track lots for quality purposes, Menlo Worldwide Logistics has tools and processes to guarantee compliance.
The Lean warehousing philosophy ensures continual operational improvements, waste elimination and high ongoing operating efficiencies. There is a sharp focus on labour productivity, enabled by optimized layout, system-directed put away and task interleaving. In addition to operating efficiencies, Lean warehouse operations mean fewer errors, faster turnaround times and process standardization across facilities. Menlo Worldwide Logistics' Lean facilities utilize Six Sigma, statistical process control and ISO processes to create a mistake-proof operating environment.
Menlo Worldwide Logistics has developed good strategies which bring a lot of benefit to themselves and also their customer. However, the most suitable strategy in our group's opinion is lean logistics. It can be said as a competitive advantage over the competitor. Moreover, what they provided has also become the competitive advantages for their client, this has become a very attractive point against the competitor. Hence it is a strategy that fulfils the objective and vision which to provide best service and create competitive advantage for their clients. The benefits of lean logistics to Menlo Worldwide Logistics customers include:
Lower supply chain costs
Faster turnaround times
Ongoing cost reduction and service improvement culture
Process standardization across geographies
Besides, the aggressive strategy is a good strategy to expand their market share. However, Menlo Worldwide Logistics has a lots of branch around the world, further expansion will increate the burden of management and controlling, their company has reach a stable stage and they should take this as a strength. Hence, Menlo Worldwide Logistics should not take aggressive strategy to further expand their business in worldwide but should maintain their competitive advantages to fulfil customer need to generate higher profit.
We will only focus on
Lower supply chain costs
Ongoing cost reduction
As supply chains are constantly changing and evolving, Menlo Worldwide logistics has to develop a number of logistics strategies for specific product lines, to specific countries as well as to specific customers. In order to cope with constantly changes of supply chain as well as to adapt to the flexibility of the supply chain. Menlo Worldwide Logistic should develop and implement a formal logistics strategy.
Menlo Worldwide logistic needs to lower it supply chain costs because there are unnecessary overhead costs to generate forecasts, as Menlo is using it own warehouse, group into kits for scheduled production, and distribute within the plant and so on. These costly and time-consuming steps can be avoided with an unplanned supply chainÂ which is able to pullÂ in materials and parts on-demand.
Menlo Worldwide logistic needs reduce its cost by focusing on renegotiating freight and shipping rates, reduction in overall freight costs and streamlining operations. There are three best practices that can be followed by most businesses to reduce costs which are freight costs, improve shipping and receiving and technology
Freight costs: There are several options to optimize freight costs. Renegotiation of minimum billing to a minimum for a zone needs to be explored. Product delivery coordination is also a useful tool to streamline freight costs. Arrangements with a number of smaller local carrier sometime s provide the best rate/best service combination.
Improve shipping and receiving: Streamlining shipping and receiving practices will offer substantial savings. This can happen through reduction of window time for receiving. A flow chart needs to be made of all the operations to determine the wasteful processes and combining existing processes.
Technology: In case of cross border trade, documents needs to reach at least twenty four hours in advance to avoid delays at the border. Technology also allows coordination of all shipments to optimize loading.
Menlo Worldwide logistics started to develop a logistics strategy by looking at four distinct levels of their logistics organization.
By examining Menlo Worldwide logistics' objectives and strategic supply chain decisions, the logistics strategy should review on how the logistics organization contributes to those high-level of objectives. Menlo Worldwide logistics' objectives and strategic supply chain is to lowering supply chain costs, faster turnaround time, fewer errors, ongoing cost reduction and service improvement culture as well as process standardization across geographies
The logistics strategy should examine the structural issues of the Menlo Worldwide Logistic such as the optimum number of warehouses and distribution centers.
Any strategy should review how each separate function in the logistics organization is to achieve functional excellence.
The key to developing a successful logistics strategy is how it is to be implemented across the organization. The plan for implementation will include development or configuration of an information system, introduction of new policies and procedures and the development of a change management plan.
A successfully implemented logistics strategy is important for Menlo Worldwide logistic, who are dedicated to keeping service levels at the highest levels possible despite changes that occur in the supply chain.
Menlo need to tackle four major problem areas which are upgrade it distribution Center or warehousing, inventory decision and green Logistics or Eco-friendly Logistics
Menlo Worldwide logistics needs to have green Logistics or Eco-friendly Logistics. Nowadays, customer is more concern about the environment like DHL's future strategy and goals is to embracing social responsibilities by using most eco-friendly way to service. Menlo Worldwide logistics needs to measure reduce of greenhouse gas emissions .There are some sustainable shipping methods like reusable containers or eco-friendly packaging.
The second improvement that Menlo Worldwide logistics needs to make is to upgrade its distribution Center / warehousing. Although Menlo has done a lot of improvement of its service and efficiency improvement but we still think Melon still can make improve further .In order to compete with big 3PL or logistic companies like DHL Supply Chain & Global Forwarding, FedEx and CH Robinson worldwide. As Menlo has operating in 20 countries worldwide and already able to manage it logistic in the 20 countries so Melon needed to set up a new location so that Menlo Worldwide logistics can be expand.