Christie Digital Systems is just one customer, but the Kitchener, Ontario-based company’s 3PL needs seem to exemplify the changes taking place in the industry.
Christie makes movie projectors for cinemas and digital displays found in museums and on tradeshow floors. The company’s main manufacturing facility is in Kitchener, but it recently opened up a second plant in China. It also has a large service centre in California. Christie has sales offices in over 25 countries and sells its products into over 100 different nations.
This year, Christie is making some changes to the way it handles its 3PL needs.
“The days when 3PLs were responsible for just storing our products in the warehouse and shipping them in trucks is gone,” says Christie’s vice-president global operations, Ihor Stech.
Because of the company’s increasingly global manufacturing and supply chain, there has been a change in shipping times.
“Our lead times are longer. Now they’re four to five to six weeks. And the good 3PL companies are able to make small changes to our inventory themselves. They are able to open the boxes, drop in pallet codes and close the boxes, and do it all neatly, cleanly and professionally. We expect the 3PL to truly be a partner with the us, the manufacturer.”
Stech said Christie needs this type of service if it decides, for example, to change an instruction manual after the product has already been shipped out of the manufacturing facility.
With more countries opening up to trade, Stech says Christie expects its 3PL partners to have optimal locations worldwide and to open up distribution centres in whatever countries offer the most legal, regulatory, or geographical advantages.
Over the next twelve to eighteen months, he said that even though Christie is happy with its 3PL partners, it will be re-evaluating its current 3PL arrangements.
“For us it’s time to streamline some of the movement of materials. Rather than having a historical reason for doing business with a company, now we have to have a true business reason.”
To that end, he said Christie seems to be drawn toward two types of carriers: larger companies with a truly global reach for the majority of the work and smaller organizations that offer specialized services reaching into Europe and Asia when needed.
Part of that streamlining involves deciding how products will be moved. While the company tries to maximize surface transportation options as much as possible, it doesn’t want to eliminate air freight entirely, and any 3PL partners need to be able to accommodate all modes of transportation.
“We often want to be more responsive to our customers than what is expected of us.”
Technology will play a key role in determining the business value of 3PL relationships. He said Christie wants to partner with companies that have computer systems it can integrate with its own. Ideally, the 3PL would run on the identical management software. He said Christie will even work with the 3PL to build a bridge connecting the two companies’ systems.
“It’s imperative we have immediate access to our inventory.”
Currently Christie’s main concern is with inbound inventory, not outbound, partly because the company has a strong inbound logistics team in-house, but mainly because it needs to ensure it has the necessary parts on hand to accommodate tight manufacturing schedules.
“We have thousands of SKUs coming in that become dozens of saleable products.”
Overall, Stech says that having a good relationship with 3PLs is important.
“We treat those companies are partners, and while we demand service, we gladly accept advice from them. We are building very satisfactory and beneficial relations with them.”