The Strategic Benefits Of Logistics Alliances

In early 1990, American President Companies startedassociated documentation for all motor carriers 3M
double-stack container rail service from Woodhaven,was using. 3M got the benefits of the latest
Michigan to Ford Motor Company's auto assemblyinformation technology, and Schneider gained and still
plant in Hermosillo, Mexico. APC coordinates all theenjoys the position of nationwide core carrier for 3M.
information, transportation, and inventory handlingThese examples illustrate logistics alliances that are
necessary to pick up parts and components frombecoming commonplace business arrangements.
vendors and sequence-load them into containers forVirtually unheard of a decade ago, such agreements
delivery on a just-in-time basis to Hermosillo.are now spreading as a way of lowering distribution
The movement includes coordination over fourand storage operating costs. For many manufacturers
railroads and with Mexican customs officials forand vendors, these ventures offer opportunities to
delay-free clearance. At the plant, Ford has built adramatically improve the quality of customer service.
state-of-the-art stack train terminal to smooth theThe principals in a typical agreement are a provider of
flow of sequenced parts into assembly operations.customized logistics services and a producer of
APC provides cranes and management to breakgoods that jointly engineer and launch a system to
down the containers. The partners collaborate tospeed goods to customers. But there are other
return containers to the United States carryingforms too, like arrangements between two service
components produced in the Maquiladora region andproviders and between two product marketers.
specialized part racks.Outsourcing of transportation or warehousing
A warehouse service venture of Lever Brothers andrequirements to a specialist is, of course, an
Distribution Centers, Inc. is bearing fruit. DCI has built,everyday matter. What is unusual about the
staffed, and operates a high-tech dedicatedrelationships described here is the innovative manner
distribution warehouse for the toiletries maker inin which the parties commingle their operations to
Columbus, Ohio. The companies share the benefitsobtain mutual benefits. A prime example is Drug
and risks: if warehouse utilization falls below a certainTransport, Inc., which has carved out a niche in
point, Lever helps cover the overhead; in return, DCIless-than-truckload distribution in the pharmaceutical
shares the productivity benefits when utilizationand office supply fields.
approaches full-capacity economies of scale. A similarTo permit wholesalers to offer daily delivery to retail
arrangement exists between Lever Brothers and Drycustomers at specified times, the Atlanta-based
Storage Corporation in Atlanta.carrier has established an array of services and
Schneider National furnished initial computerizedpricing. The rates are based on guaranteed delivery,
scheduling and electronic data interchange for 90at a fixed charge, to the retailer of whatever
Minnesota Mining & Manufacturing Companyproduct quantity is required. The charge is based on
shipping locations that were revamping theiraverage shipment weight at a rate negotiated in
transportation operations in the late 1980s. Theadvance of each 30-day planning period.
service included coordination of freight transit and