2014 GMC Summit May 14 -15, 2014 The Peabody Hotel, Memphis

2014 GMC Summit
May 14 -15, 2014
The Peabody Hotel, Memphis, TN
“Strategies for Creating Network Flexibility”
GMC held its 9th annual Leadership Summit on May 14-15, 2014 in Memphis, TN. The Summit
is the parcel industry’s premier event for high volume parcel shippers. The Summit provides an
opportunity for the attendees to learn about the latest parcel trends and strategies specifically
impacting mega-volume shippers. It also offers a forum to network with other industry
executives to understand common challenges and share best practices. The theme for the
2014 GMC Summit was “Strategies for Creating Parcel Network Flexibility”. GMC selected this
theme because a common goal for parcel shippers is developing a nimble network to meet the
high expectations of consumers while reducing cost and improving transit time. As the pressure
to stay ahead of the competition has increased, many parcel shippers are working to increase
flexibility in their networks. Transportation executives are striving to meet these goals by
exploring all available options. Whether it be leveraging store real estate to conduct direct to
customer fulfillment operations or implementing new carriers, shippers are aggressively
challenging old norms of shipping practices to implement network flexibility. Below is a recap of
the content from each of the presentations and highlights from the networking events.
2014 GMC Summit Recap / Day One
Parcel Trends: A Market View for 2014 and Beyond
Session Summary:
Mike Williams, GMC SVP of Operations, kicked off the program with an overview of current
economic, consumer, and carrier trends affecting the parcel market today. The session began
with a historical recap and timeline of how FedEx, UPS, and DHL have built out their service
models and network footprints over time. Understanding this history, it helps to know why the
current macro-consumer trends, such as ecommerce, are negatively affecting the parcel
carriers and are requiring more residential deliveries at lower rates. This translates into lower
margin packages which both FedEx and UPS are struggling with managing. FedEx has chosen
to embrace Postal Consolidation, which decreases revenue but increases margin. UPS has
chosen to keep packages within their own network which maintains revenue, but decreases
margin. As the trend towards smaller, more residential-focused deliveries continues, it will be
interesting how both FedEx and UPS continue to evolve and what additional changes are
required to support large parcel shippers.
Drivers of Network Flexibility
Session Overview: Consumer demands, competitive threats, and evolving technology are
driving the need for parcel network flexibility. Attendees learned the key factors that are
challenging shippers to reevaluate their parcel strategy and implement radical changes to their
network.
Session Summary:
Mike Lambert, GMC Strategic Solutions VP, presented information to get each attendee
grounded in the Summit theme of understanding the need for network flexibility. Shippers are
requiring more flexible parcel networks due to 5 key drivers:
1.
2.
3.
4.
5.
Consumer demands for reduced cost and transit
Aggressive growth
Competitive pressure
Cost pressure
Flawless peak period execution
Mike provided examples of how shippers are reacting to each driver of network flexibility and
some of the potential challenges that can arise. This presentation set the stage for case studies
that would be presented later in the program.
Purpose of Presentation: Network flexibility is a key topic for large parcel shippers because
each large shipper is being challenged by their customer to provide faster, cheaper, and more
convenient service options that can negatively impact the Supply Chain if not properly
managed. The GMC team is actively involved in helping our parcel spend management
customers achieve network flexibility in an efficient way that supports the customer’s long-term
objectives. This session was the key to establishing the structural foundation for the remaining
sessions of the Summit Program.
Reference Presentation: 2GMC Summit 2014 - Drivers of Network Flexibility.pptx
Case Study: Establishing a Carrier Neutral Network
Session Overview: Having a flexible parcel network requires the ability to be carrier neutral
and having the option to utilize alternative carriers. Attendees heard how Bon-Ton Stores, a
leading department store company, is addressing carrier neutrality constraints and establishing
its strategy to create parcel network flexibility.
Session Summary: Jerry Farhnam, VP of Transportation for Bon-Ton Stores, Inc. presented a
case study on their recent parcel contract negotiation. Having been a long-time UPS customer,
their contract did not contain enough flexibility to be able to take full advantage of evolving
carrier solutions in today’s market place. In addition, Bon-Ton was heavily tied to UPS and
systematically constrained from being able to easily integrate other carriers into their network.
This impacted their ability to negotiate effectively. With support from the GMC team, Bon-Ton
was able to successfully negotiate a new agreement, increase their overall flexibility, and
significantly reduce their transportation costs.
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Purpose of Presentation: Implementing multiple carriers to accomplish cost and service goals
is often a strategy to achieve network flexibility. However, shippers often have constraints to
implementing additional carriers, especially shippers who are single sourced with FedEx or
UPS. Common constraints are:
1) Carrier contracts that are inflexible due to revenue or volume commitments
2) Lack of IT capability to implement additional carriers
3) Operational infrastructure limitations (multiple shipping dock splits)
The purpose of the case study was to provide attendees a roadmap to overcoming these
specific constraints based on an actual example from a major retailer.
Reference Presentation: 3GMC Summit 2014 - BonTon - Carrier Neutral Network.pptx
Requirements for Executing a Complex Parcel Network
Session Overview: Establishing a flexible parcel network adds complexity to its execution and
management. In this session, attendees learned the operational and visibility requirements
necessary to optimize their network and alleviate the opportunity for unexpected cost and
service challenges.
Session Summary:
In this session, Mike Lambert and Katie Parker, GMC Strategic Solutions Manager, reviewed
the operational pitfalls to avoid with the added complexity associated with network flexibility.
Mike kicked off the session with a review for the following driving forces of network complexity:
1.
2.
3.
4.
5.
Quickly evolving market forces & technology
Moving from single origin to multiple origin network
Transition from centralized to decentralized operations
Use of new carrier options
Utilization of new service options
Katie explained that operational processes and capabilities can positively or negatively impact
the key drivers of cost in a complex parcel network. These cost drivers are carrier selection,
parcel weight, shipping distance, service selection, and accessorial usage. Each driver is a
function of optimizing a parcel network. After reviewing examples of common pitfalls related to
each cost driver, Katie provided an overview of the following potential solutions:
1.
2.
3.
4.
5.
6.
Improve WMS / TMS capabilities
Optimize inventory allocation
Standardize processes
Implement quality control
Manage with KPIs & Business Intelligence tools
Implement a Process Improvement Program
The session ended with a recap of how GMC engages in an on-going manner with shippers to
avoid operational pitfalls and implement the solutions to optimize a complex network.
Purpose of Presentation:
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Added network complexity aids shippers in meeting their customers’ cost and service
expectations. However, managers must diligently examine their operations to ensure they
execute as intended. Shippers should examine all components of their warehouse and
transportation management systems to understand the service selection process and ensure
accuracy of the inputs that influence it. They should also review the procedures of the packing
and shipping employees to ensure the likelihood of waste and process errors are eliminated.
Metrics should be established to analyze service selection performance and identify potential
issues / root causes on an on-going basis. Once a shipper has evaluated these areas and
implemented the proper business intelligence, they can be confident they are on the road to
managing their parcel spend optimally.
Reference Presentation: 4GMC Summit 2014 - Requirements for Executing a Complex Parcel
Network.pptx
Case Study: Creating Solutions for Speed and Convenience
Session Overview: With at least one mobile phone in everyone's pocket and an average of 25
consumer electronics in every home, technology is an integral part of our daily lives. When it
comes to these products repair and replacement, consumers demand speed and convenience.
In this session, attendees learned how Asurion, a leading technology protection company, is
establishing a parcel network that provides efficient and flexible solutions to keep their
customers’ home and lifestyle in harmony.
Session Summary:
A major component of Asurion’s business is to expediently replace their customers’ damaged
handheld devices. Asurion was interested in exploring the ability to provide same-day service
to its customers and in turn measure the effectiveness of same-day service on customer
satisfaction. Loring Katawalla, Logistics Director, and Rick Martin, Logistics Sr. Director, from
Asurion presented how they leveraged GMC analysis capabilities to determine the optimal
forward stocking locations based on specific criteria to minimize the use of hundreds of possible
locations. Asurion also presented their learnings from piloting the use of same-day delivery
and the outcome on customer satisfaction surveys.
Purpose of Presentation:
The presentation demonstrated the power of GMC analysis capabilities to assist shippers in
evaluating complex network alternatives. The presentation also provided shippers with insight
on implementing same-day delivery and the cost / benefit related to the service.
Reference Presentation: 5GMC Summit 2014 - Asurion - Creating Solutions for Speed and
Convenience.pptx
Networking: Welcome Reception and Dinner
Attendees, Service Providers and GMC Staff enjoyed the Welcome Reception and Dinner held
in the Skyway Room on The Peabody Rooftop. The band “Free World” played Memphis jazz
and blues during cocktails and after a delicious Southern Buffet dinner they entertained in their
Memphis music scene style.
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2014 GMC Summit Recap / Day Two
Case Study: The Value of a Multiple Carrier Network
Session Overview: The cost versus service tradeoff is often a challenging consideration for
shippers when evaluating a single source or multi-source parcel model. Attendees heard how
Pfizer addressed this challenge and how they value multiple carriers in maintaining network
flexibility.
Session Summary:
Pfizer leverages both FedEx and UPS in their network. Sherry Owens, Sr. Manager of Global
Transport, presented the strategy that Pfizer employs to leverage the unique strengths of each
carrier to accomplish Pfizer’s service and cost goals. Sherry shared that a key to success to
managing multiple carriers is to be transparent with the carriers on procurement objectives and
maintain open communication on strategic objectives. Sherry also shared how GMC helped
Pfizer place a value on their multi-carrier network versus a single source network. This
information was utilized to assist in educating the Pfizer organization on the cost versus service
trade-off Pfizer makes utilizing a multi-carrier network.
Purpose of Presentation:
Many shippers that are single sourced are curious when multi-souring may make sense for their
company. This presentation was developed to help shippers understand the cost and service
trade-offs of multi-sourcing, and at what level of spend a multi-carrier solution may be feasible.
The session also helped shippers understand how they may segment or award their business
among multiple carriers.
Reference Presentation: 6GMC Summit 2014 - Pfizer - The Value of a Multiple Carrier Network
V3.pptx
Breakout Session: Flexible Network Strategy Challenge
Session Overview: Attendees divided up into teams to take on this challenge. Each team
was given a scenario for a company facing specific requirements and constraints to developing
network flexibility. Each team developed possible carrier, service, and network solutions for
creating network flexibility and identified the obstacles necessary to overcome in order to
implement their solution.
Session Summary:
Each team spent 30 minutes actively engaged in discussion of their scenario. A team
spokesperson then presented the results of their conversation based on the unique perspective
of the attendees from diverse industries and career experiences. Attendees left with several
ideas that they may consider in developing their own strategies for network flexibility.
Purpose of Presentation:
This session was intended as a capstone for the Summit to allow attendees to apply what they
learned and create opportunities for discussion around a specific real-life scenario. The session
Page | 5
provided a springboard for attendees to interact and build relationships that they could carry
forward into the networking events and develop further post-Summit.
Reference Presentation: 8GMC Summit 2014 - Breakout Session Case Studies.ppt.pptx
Morning Break
Attendees enjoyed the opportunity to view the famous Peabody Ducks as they marched from
their rooftop home, down the elevator to their day of entertaining all the visitors to the hotel
in the Grand Hotel Lobby.
Removing the Limitations of Flexibility in Carrier Contracts
Session Overview: Carriers traditionally develop contract conditions and incentives to
preserve their revenue and prevent shifts in volume to alternate carriers over the term of an
agreement. This session outlined the various methods that carriers structure agreements that
limit shipper’s flexibility and best practices for minimizing contract constraints.
Session Summary:
Mike Lambert focused on the need for flexible carrier contracts to maximize network
enhancements and enable efficient change. Mike reviewed the following specific areas of
parcel contracts to engineer in order to maintain flexibility & optimize their value over time. Best
practices to avoid common pitfalls in each of these areas were presented:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Revenue and Volume Commitments
Rebates
Penalties
Base rate discounts
Minimums
CWT Tiers
Accessorial surcharge discounts
Fuel surcharge discounts
Terms
In concluding the presentation, Mike provided the following best practices in creating a parcel
carrier contract.
Keep it simple
Secure discounts for all services
Keep an eye out for minimum impacts
Stay away from specific commitments
Gain discounts on high impact uncontrollable accessorials
Caution on rebates
Protection from market conditions
Protection from YOY increases
Carrier contracts on the same term / expiration cycle
Purpose of Presentation:
Page | 6
The session provided attendees insight into specific areas of parcel carrier contracts that are
often overlooked and as a result can limit flexibility to optimize a parcel network. If constraints
exist in a contract, then a shipper may have limitations to utilize alternative carriers and services
to meet their cost and service objectives. The intent of this session was to provide attendees
with helpful best practices to achieve flexible carrier contracts.
Reference Presentation: 9GMC Summit 2014 - Removing the Limitations of Flexibility in Carrier
Contracts .pptx
Networking: Mississippi Riverboat Cruise & Memphis in May World
Championship BBQ
After the conclusion of the sessions and lunch, we gathered in The Peabody Lobby and took a
short walk to Beale Street Landing and boarded the Memphis Queen III for a relaxing riverboat
cruise on the Mississippi River. Riding up and down the river we enjoyed picturesque views of
the Memphis skyline and riverfront. The Riverboat historian told interesting history and folklore
of the Mighty Mississippi along the way. Upon returning to the dock and disembarking, we
entered the BBQ Festival and enjoyed the hospitality of the “All Star Ten Pin Porkers” as they
hosted us in their award winning tent and served their mouth-watering Bar-B-Q. A good time
was had by all!
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2014 GMC Summit Attendee List - Shippers
First Name
Loring
Rick
Megan
Brandon
Angel
Joe
Christine
Catherine
Solomon
John
Mike
Warren
Jeff
Justin
Michael
Makita
Erik
Carlota
Adita
Sherry
Mike
Surge
Doug
Sophie
Ellinda
Jerry
Jim
Ray
Nik
Sheila
Page | 8
Last Name
Katawalla
Martin
Dempsey
Graham
Manriquez
Mason
Basile
Gammill
Woldeslassie
Jansen
McCabe
Bishop
Brady
Schweikert
Dumas
Surgeon
Milici
Asturias
Shah
Owens
Appleby
Ghosh
King
St.-onge
Moss
Farnham
Rawlins
Shearer
Bafana
Mong
Title
Director, Logistics
Sr. Director, Logistics
Senior Transportation Manager
Lead Logistics Analyst
Sr. Manager of Logistics
Transportation Analyst
Supply Chain Losistics Manager
Director Supply Chain Logistics
Vice President, Transportation & Logistics
Director of Global Logistics
VP of Operations
Director of Transportation Logistics
Sr. Manager of Logistics
Transportation Analyst
Transportation Manager
Sr. Director, Transportation
Director, SCL & Global Sourcing
Director of Supply Chain
Senior Manager, Global Transport
Senior VP
Director, Reporting & Analysis
Sr. Manager
Team Leader, Transportation & Customs
Transportation Manager
VP, Logistics
SVP of Distribution and Logistics
Senior Manager, Domestic Transportation
Sr. Director, Transportation
Sr. Project Manager
Company
Asurion
Asurion
AT&T
AT&T
AT&T
AT&T
Auto Zone
Auto Zone
Auto Zone
Bodybuilding.com
Bodybuilding.com
Former Macy's Executive
Harry & David
Kohl's
Nike
Nike
Office Depot
One Kings Lane
One Kings Lane
Pfizer
QVC
QVC
QVC
Sanofi-Aventis Canada, Inc.
Sterling
The Bon-Ton Stores Inc.
The Bon-Ton Stores Inc.
Thirty-One Gifts
W. W. Grainger
W. W. Grainger
2014 GMC Summit Attendees – Service Providers (Networking Events Only)
First Name
Patrick
Jim
Doug
Mark
Chris
Cary
Mark
Phil
Bonnie
Dennis
John
Dan
Daniel
Jason
Major
Brandon
Terese
Page | 9
Last Name
Allard
Brown
Easley
Hensley
Janus
Lin
Magill
Marlowe
McElvey
Nicoski
O'Brien
Reiss
Sayne
Smith
Smith
Staton
Tubbs
Title
Sr. Director Business Development
Sr. Customer Sales Manager
Director of Supply Chain Solutions
Business Development
Business Development
GM Sales - West and Mid-West
VP of Business Development
Chief Logistician
Worldwide Account Mgr - Healthcare
Manager, Field Strategy and Contracts
General Sales Manager
Sr. Business Development Manager
Business Development Manager
Director, Major Accounts
Executive Vice President
Program Manager, Retail Solutions
Company
Newgistics, Inc.
AFN
Pathmark Transportation
Lasership
Endicia
MOL Consolidation Service
OnTrac
Acuitive Solutions
FedEx Services
United States Postal Service
MOL Consolidation Service
Terrapin
Lasership
Eastern Connection
Pathmark Transportation
Transportation Impact
Lasership

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