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A Penton Media Publication

outsourced-logistics.com

September 2008

Get the RFP right before you outsource

Action?Also in this issue:Legislators Dene 3PLs Government Matters - At The Border and Beyond Questioning Six Sigma Effectiveness Vulnerable Infrastructure Adds Risk Top 3PLs Recognized

Ready For

MORE SPEED

MORE TECHNOLOGY

MORE SMARTS

MORE CONNECTIVITY

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Editorial

Freight Doesn't Vote

S

ummer films arent usually meant to inspire much more than pure escapism. Swing Vote may be prophetic for the logistics community. Recent events paraphrase the films premise that a single vote will decide the presidential race. In the real-world example, a single letter swayed a politician who mobilized to support a position held by the logistics community that resulted in the first-ever definition of a third party logistics provider in US legislation. (See pg. 11.) This isnt the first time logistics has become a political issue, though it is probably one of the issues that will escape public notice. Often progress comes slowly and quietly. Much louder are the arguments over the DHL decision to outsource its North American air lift to UPS. That decision isnt so much the subject of the debate as the resulting loss of business for ABX and the Wilmington, OH hub which had supported the DHL operations. The fact that DHL did not withdraw from the US market and that air freight volumes it handles will move through the UPS WorldPort two hours south of Wilmington seems to have been missed as the small Ohio community reels under significant job losses--or job displacement. DHLs expansion in North America may have been more carefully planned than

its contraction. As it proceeded with its bid to buy Airborne Express, the German-owned company ensured the air operations were shifted to an American-owned and American-controlled group to avoid US restrictions on foreign ownership or control of a US airline. That group, ABX, became DHLs prime contractor for airlift. DHL had learned from the experience of DP World, the Dubai group that acquired UK-based P&O Ports and with it, terminal operations in the US. It had also noted at least three separate failed attempts by British Airways to merge with US airlines. Ohio is important to the presidential candidates, so the DHL issue and Wilmingtons plight wont go away. The term foreign owned has been used in an accusatory rather than factual tone when referring to DHL. Logistics, by its nature, is global and the companies providing logistics services have complex pedigrees. US-based firms hold assets and pay salaries to workers around the world just as non-US logistics companies operate terminals, warehouses and provide jobs for Americans. The larger global issues affecting logistics (oil, trade, etc.) make big, sweeping turns. Closer in, at the DP World and DHL level, the turns are tighter and faster. The issues driving them are much more localized and often more difficult to see developing. Whether real or imagined concerns such as security at New Yorks ports (DP World), mortgaging key infrastructure to non-US owners (Indianas toll road), and job losses in Ohio can lead to restrictive legislation and regulation that ultimately constrains logistics and damages trade. As difficult as these issues are to uncover and address as they develop, they are even more difficult to reverse once they have gained momentum. The definition and role of a third party logistics provider were buried deep inside consumer product safety legislation that was responding to recent cases of tainted foods and lead paint in toys. One diligent logistics professional noticed the language and started the process that averted future restrictions. US companies alone spend over $1 trillion per year on logistics. Freight may not vote, but the logistics community does. Its time to become a more vocal constituency.

Perry A. Trunick, chief editor, [email protected]

Outsourced Logistics

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20September 2008 Vo l u m e 1 , N u m b e r 4

Global MarketsVulnerable Infrastructure Equals Economic Risk Community Voice Congress Defines Role of 3PLs

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Operations Ready for Action? The request for proposal is a critical step in the process of outsourcing. Don't short circuit results with an incomplete process.

Operations Governmental Matters Community Voice Six Paradigms for Determining Whether to Outsource Supply Chain Management Services Logistics Services Air CargoWhere Does It Go From Here? Community Voice The Anatomy of Supply Chain Technology

12

30

Field Report Is There Such a Thing as Six Sigma Lite? Questioning Six Sigma Effectiveness, Scale and Alternatives.

34

40

3PL File Expeditors International of Washington, Inc.

Departments

FeaturesLogistics Services 3PLs Recognized for Excellence The second annual third-party logistics service awards presentation by eyefortransport recognized companies in seven categories.

1 39

Editorial Freight Doesn't Vote Classifieds Advertiser Index

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2 | September 2008 | Outsourced Logistics

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1300 E. 9th Street Cleveland, OH 44114-1503 216.696.7000 216.696.2737 fax www.outsourced-logistics.com

EditorialChief Editor Perry A. Trunick Senior Editor Roger Morton Professional Contributors James A. Calderwood

DesignArt Director Bill Szilagyi

SalesEASTERN REGION Jim Oot, Phone: 973-335-8902, Fax: 973-335-8903, [email protected] WESTERN REGION Keith Taunton, Phone: 334-514-8107, Fax: 334-514-9377, [email protected] FLORIDA Bob Eck, Phone: 352-391-5577, [email protected] ENGLAND Paul Barrett, Mark Whiteacre, David Moore Phone: 44-1268-711-560, Fax: 44-1268-711-567 FRANCE Fabio Lancellotti, Phone: 331-4294-0244, Fax: 331-4387-2729 ITALY Cesare Casiraghi, Phone: 39-31-261407, Fax: 39-31-261380 BELGIUM, HOLLAND Peter Sanders, Phone: 31-299-671303, Fax: 31-299-671500 TOKYO Yoshinori Ikeda, Phone: 813-3661-6138, Fax: 813-3661-6139 SEOUL, KOREA Young Sang Jo, Phone: 822-739-7840-2, Fax: 822-732-3662 TAIWAN Charles Liu, Phone: 886-2-707-5829, Fax: 886-2-707-5825 CHINA Ballycastle Trading, Inc. Ltd., Phone: 852-524-7256, Fax: 852-524-7027 INDIA Shivaji Bhattacharjee Phone: 91-11-268-7005, Fax: 91-11-2652-6055 SINGAPORE Mike Seah, Phone: 65-299-0413, Fax: 65-758-7850 or 65-296-6629

Have you heard?Outsourced-Logistics.com is more than just a companion site to the magazine. It is the online logistics daily, providing news, decision-making tools and information resources for logistics professionals.

BusinessPublishing Director David H. Colby eMedia Market Development Manager Jason Washburn Circulation Manager Tyler Motsinger Production Coordinator Rachel Klika Custom Media Group Terrence GroganBob MacArthur Senior VP Industrial Group

249 W. 17th St., New York, N.Y., 10011 212-204-4200

Chief Executive Officer John French [email protected] Chief Financial Officer Jean B. Clifton [email protected] Chief Revenue Officer Darrell Denny [email protected] Logistics (ISSN 1547-1438) is published monthly by Penton Media, Inc., 9800 Metcalf Ave., Overland Park, KS 66212-2216. The magazine is sent to qualified management in the field of logistics. Periodicals postage paid at Shawnee Mission, KS and at additional mailing offices. Can. GST #R126431964. Publications Mail Agreement # 40026880. POSTMASTER: Send address changes to Outsourced Logistics, P.O. Box 2113, Skokie, IL 60076-7813. Printed in U.S.A. Copyright 2008 by Penton Media Inc. Send editorial correspondence to: Editor, Outsourced Logistics, 1300 E. 9th Street, Cleveland, OH 44114-1503, or [email protected] For information on obtaining reprints:Contact Penton Reprints at 888.858.8851 [email protected] List Rentals: Walter Karl Inc., Rosalie Garcia, (845) 732-7027, [email protected] Copying: Permission is granted to users registered with the Copyright Clearance Center Inc. (CCC) to photocopy any article, with the exception of those for which separate ownership is indicated on the first page of the article, provided that a base fee of $1.25 per copy of the article plus 60 per page is paid directly to the CCC, 222 Rosewood Dr., Danvers, MA 01923. (Code No. 0895-8548/08 $1.25 + $.60)Out-of-print copies are available as positive microfilm and can be ordered from National Archive Publishing Co. (NAPC) 300 N. Zeeb Road, P.O. Box 998, Ann Arbor MI 48106-0998.

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