The Right Path to Add Value Using a Lead Logistics Partner (LLP)

Working with a Lead Logistics Partner (LLP) – a strategic business partner who will manage a significant part of your supply chain - can seem daunting.

Businesses might assume that it is all or nothing: you hand over control of your supply chain and cross your fingers that your provider knows what they are doing. Not so, as Ingo Brauckmann, Managing Director LLP Europe at DHL Supply Chain explains.

“It’s a myth that working with an LLP means a ‘big bang’ approach. The message we’re trying to get out is that you can start small and grow the service provision over time if you want to. LLP can be a vehicle for change that brings real benefits to the customer.”

Beginning with smaller, more manageable projects means you can build a strong relationship with your provider, and see quantifiable results at each stage, allowing you to assess progress, make adjustments and, potentially, develop the relationship further.

When Muntons, one of the world’s largest producers of malt, wanted to expand their business globally, they turned to an LLP arrangement to help reduce operating costs and streamline operations. The task for DHL was to manage Muntons’ end-to-end supply chain holistically, simplifying operations and trimming costs along the way. By turning to an LLP, Muntons was able to make immediate savings.

Total freight costs reduced by nine percent per annum; optimization of manual handling equipment reduced capital assets by up to 50 percent and a redesigned ocean freight procurement model saved Muntons 15 percent, compared to the market rate for such services. These savings across the supply network have supported the company’s global expansion into North America and South-East Asia.

Increasing visibility
Some firms might be concerned about losing visibility of their supply chain, but in fact visibility is usually greatly improved with an LLP.

A good example of this is global tobacco giant British American Tobacco (BAT), which began its LLP relationship with DHL Supply Chain in 2011. It wanted to reduce cost and volatility, and improve visibility across its Western Europe network.

BAT’s freight management processes were very manual, with minimal integration across Europe. There was a lack of visibility and control of the supply chain and decisions were often reactive. “We have put systems and processes in place that allowed BAT to make informed decisions about parts of their business they didn’t previously have clear and accurate information on,” says Brauckmann.

The results have been impressive: 30 percent more capacity within their Western European supply chain and load-fill in vehicles up 20 percent. The partnership is also on track to reduce BAT’s logistics costs in Western Europe by 18 percent over five years.

“To win with our customers, we need to be reliable and responsive to their needs and deliver on our promises,” says Simon Elliott, Head of Logistics, Western Europe Supply Chain Service Center, BAT. “Our partnership with DHL LLP ensures we have the capability to launch new products with speed and scale into Western European markets.”

Flex with your business
Neither is an LLP arrangement an inflexible one. “An LLP partnership is a progressive and intuitive journey. Resources can be reallocated and scope can change as the partnership evolves,” says Paul Parry, Senior Director, Global LLP at DHL Supply Chain. Working so closely together, and having a sound understanding of a customer’s business, means supply chains are under constant review by the LLP.

It’s an arrangement that has worked well for the Ford Motor Company for many years. In 2000, Ford transitioned from using three separate providers in different European regions to using DHL as a single European LLP provider. It wanted to support lean manufacturing and understand – then reduce – costs.

DHL cooperated closely with Ford to create a specialist team that manages their supply chain logistics, which deployed staff and implemented new processes in all European Ford manufacturing locations. Using lean logistics principles, a bespoke engineering transport network and just-in-time deliveries, the partnership has delivered real results: emergency freight was reduced by 20 percent, vehicle utilization improved by more than 15 percent and CO2 emissions were reduced by an estimated 20,000 tons. These results were achieved while Ford experienced an in-time arrival performance of 95 percent for deliveries within 30 minutes of the engineered time windows.

“Commercial flexibility and scalability is what our customers are demanding now,” adds Parry. “Continual review and development is key to what we do, we’re always looking to reduce supply chain costs and improve its performance, and an LLP relationship allows us to do that very effectively.”

The message, then, is clear. Starting on a journey with an LLP might feel like a step into uncharted territory but it needn’t be. Working closely with your provider you can start small, review and evaluate results on an ongoing basis, and scale to suit your needs. The benefits – cost-savings, greater visibility and scalable growth – make for a compelling case. Isn’t it time you started your journey?