selection decisions made by providers of logistics and transportation
services. One of the latest examples is TNT Logistics’
new facility in Brownstown, Mich., which exclusively serves Ford Motor
Co.’s new Dearborn
Truck Plant.
TNT’s 340,000-sq.-ft. (31,586-sq.-m.) facility
is a US$7.7-million investment and employs about 120. TNT’s operation
is located just 14 miles (23 km.) from the Ford plant.
Kerry Zielinski, TNT’s manager of business development
in Brownstown, says the company looked at four possible sites. Proximity
was a key to the final decision, as was the ability to move into a new
facility.
“A new build allowed us to pick particular dock
locations,” Zielinski says. “We can reduce our labor if we can site
docks in a new building.”
TNT runs two shifts, mirroring the Ford operation.
It delivers a parts gamut ranging from engines to trim. More than 80
Ford suppliers send products to TNT, whose personnel transport materials
to the plant in a scheduled, synchronized daily pattern, with each load
designed to maximize space and minimize travel time within the plant.
“Some products come in by the truckload and others
arrive in small quantities,” Zielinski says. “We do our own inventory
independent of Ford so we know everything we have in the building. We
are providing a service that sequences and meters material into the
plant, and that allows Ford to keep a minimum amount of inventory line-side.”
TNT handles more than 1,700 part numbers through
its center, with two dozen of the commodities sequenced into specially
designed racks for line-side delivery to the truck manufacturing facility
in correct build order.
In New Challenges
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| Target?s new regional distribution center in Topeka is an example of facilities drawn by the logistics infrastructure of the Kansas City region. |
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The U.S. business logistics system experienced
a demanding year in 2003, according to the Council of Logistics Management’s
15th Annual State of Logistics Report. Rosalyn Wilson, a transportation
consultant who compiled the report, says shifts in global manufacturing,
as the U.S. loses manufacturing facilities to low-wage countries, are
“redrawing the landscape for transportation strategies.”
Charles McSwain, vice president, real estate, CSX,
says global trade is highlighting the importance of multimodalism.
“The logistics platform is under change because
companies have optimized the use of current resources, which are largely
truck-oriented, and in order to gain the next level of savings for customers,
they are seeking to incorporate multimodalism,” says McSwain, who serves
as vice chairman of the Industrial Asset Management Council, an Atlanta-based
association of corporate real estate executives, economic developers
and service providers. “They are looking for better proximity to multimodals
in order to afford the savings of rail or barge or other modes as part
of their mix. That requires a shift in location in order to drive those
efficiencies.”
McSwain says the ultimate destinations of consumer-oriented
freight are already in place. The challenge is to align supply chains
more tightly around multimodal infrastructure in given areas. He cites
Atlanta as an example.
“In Atlanta, there is transportation infrastructure
spread all around the city, but in order to maximize multimodalism,
there needs to be a more concentrated destination of traffic so the
connection between modes doesn’t cause the freight to be handled and
drayed, only to be handled and drayed again. Atlanta and a lot of other
cities are working on this.”
TNT’s executive vice president, Mark Morrison,
says global sourcing brings with it its sh are of potential pitfalls.
Security and control issues are huge.
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“Companies have to know who is sourcing their materials
and keep track of their movement electronically,” Morrison says. “If
you make a couple of mistakes in the supply chain, it can more than
offset the value of your sourcing. Companies need to balance the risks
that come with global sourcing. If you have a failure, it can really
get magnified.
“Global sourcing is in its adolescence,” he adds,
“but it’s picking up enormous momentum in relation to its importance
to the whole discipline of supply chain management. The challenge is
creating command and control activities necessary for global commerce.”
Morrison says the market is calling for shared
networks where large facilities get divided into smaller chunks. Customers
and users take control of that smaller activity to be a distribution
point in a local area.
“That’s becoming more of a phenomenon as we roll
out new logistics thinking,” Morrison says. “A number of our customers
have invited us to look at their existing distribution environment.
A lot of our energy goes into the design of new networks that rationalize
assets and consolidate into larger distribution centers. We often find
that yields a value for our customers in terms of better control and
better turns in their materials by having it in the right place.”
But Morrison says a lot of logistics remains the
“blocking and tackling” fundamentals of warehousing and trucking. He
says most of TNT’s facility requirements involve dedicated facilities
for the company’s larger accounts and involve a variety of long-term
leases. And he says one of TNT’s core competencies is its relationships
with some of the best developers in North America.
“We clearly like to deal with facility providers
that give us and our customers flexibility,” Morrison says. “We have
some excellent relationships with facility providers in the warehouse
industry.”
Peter Crosby is a founder of CGR Management Consultants,
a Los Angeles firm that advises clients on supply chain management strategies.
He says more of his clients are becoming interested in consolidating
their assets as a result of the rise of third party logistics firms(3PLs).
“More than 10 percent of U.S. companies use third
party logistics,” he says. “Ten years ago, it was under 2 percent. More
and more companies are outsourcing.” Crosby says certain industries,
such as frozen food manufacturers, seem to favor 3PLs.
“It doesn’t make sense for them to have an owned
or leased distribution center. Frozen food manufacturers want to be
able to consolidate into truckload shipments.”
K.C. Region for DCs
Kansas City’s central location gives it some natural
advantages in the sector. It’s the second largest rail center in the
U.S. behind Chicago. Interstate 35 links the region to Canada and Mexico
and is an important facilitator of NAFTA trade. And, Kansas City International
Airport boasts the largest air cargo facility in the region. K.C. is
also home to the corporate headquarters of two large motor carriers,
Yellow Roadway and SCS Transportation.
“Kansas City has historically been known as a transportation
hub, and we continue to emphasize and focus on this strength, improving
the city’s ranking among Midwest cities in regards to logistics and
transportation services,” says Chris Gutierrez, president of Kansas
City SmartPort, Inc. 
Big box retailers and “pure” manufacturers are
the typical prospects considering the region for a new distribution
center, Gutierrez says. One prime example is Target’s 1.3 million-sq.-ft.
(120,770-sq.-m.) distribution center in nearby Topeka, which will eventually
employ 650 and serve Target stores in five states. The $80-million facility
opened in mid-July 2004.
The area also attracted Ameri-sourceBergen, the
world’s largest pharmaceutical services company, which is consolidating
its Midwest distribution operations into a $40 million, 280,000-sq.-ft.
(26,000-sq.-m.) facility in the city’s Congress Corporate Center development.
It will be one of the company’s seven regional distribution centers
and will employ about 180 when it opens in early 2005.
TNT Logistics opened a new center in Brownstown,
Mich., earlier this year. The facility is dedicated to serving Ford’s
new plant in Dearborn. 