Viewpoint: Bringing logistics and transportation back in house

It would be tough to add up the actual pages that the business-to-business press has written, printed, and posted on the advantages that a successful outsourcing relationship can bring to a logistics operation.

By ·

It would be tough to add up the actual pages that the business-to-business press has written, printed, and posted on the advantages that a successful outsourcing relationship can bring to a logistics operation. When a shipper fully understands his needs and a third-party logistics provider (3PL) is attentive and responsive to those needs, that partnership has the potential to result in service levels and cost savings that could make even the stingiest CFO crack a smile. In fact, the LM staff has, time and time again, revealed case study examples of just that scenario. It often starts with transportation costs spiraling out of control and ends with a 3PL stepping in to redesign the distribution network, bringing order to the kingdom.

The story we’ve yet to tell involves a shipper that’s wise enough, and confident enough, to admit when he’s made a bad outsourcing decision—and, in turn, bring logistics and transportation back in house. Enter Marcus Smith, manager of transportation procurement of Armstrong World Industries, a 150-year-old manufacturer of flooring, ceilings, and cabinets—and this year’s NASSTRAC Shipper of the Year. Armstrong’s bold success story begins on page 20. Smith will be the first to tell you that he still believes in the power of a properly outsourced arrangement, and his story certainly isn’t designed to bash 3PLs. Instead, what I liked most about Smith’s tale is that it represents a tight-knit logistics operation that fully understands its customer’s needs—and its diverse modal mix—and was ready to respond quickly when it realized that those needs weren’t being met.

In fact, it took Smith and company just under a year after they outsourced their transportation (January 2007) to realize that things weren’t going to pan out. “New carriers were just sprung on us,” Smith tells Contributing Editor John Schulz. “And as we got into the summer of 2007, it got very busy and the problems started magnifying.”
Complaints, late deliveries, and missed pick-ups mounted, and Armstrong customers told Smith that they wanted the familiar faces back in the cabs. According to Smith, it all boiled down to a failure by the 3PL to understand their customer requirements—and he’s willing to shoulder some of the blame.

“Perhaps we just didn’t properly communicate on the front end, or our 3PL failed to understand how critical the service was,” says Smith. But any way he sliced it, he and the logistics and transportation team knew the poor performance couldn’t continue. What unfolds in the cover story by Schulz is a step-by-step process that brings transportation and logistics, now one of Armstrong’s core competencies, back in house. Smith and company created a seven-person in-house transportation department that consists of three new hires along with four Armstrong employees who are familiar with the company’s processes and culture. And the results have been stunning.

“A good 3PL definitely serves a great purpose, and I still recommend them,” Smith adds. “We just have a business with a lot of specialized needs…and we’re better served being on the team internally.”

About the Author

Michael Levans, Group Editorial Director
Michael Levans is Group Editorial Director of Peerless Media’s Supply Chain Group of publications and websites including Logistics Management, Supply Chain Management Review, Modern Materials Handling, and Material Handling Product News. He’s a 23-year publishing veteran who started out at the Pittsburgh Press as a business reporter and has spent the last 17 years in the business-to-business press. He’s been covering the logistics and supply chain markets for the past seven years. You can reach him at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

3PL · Logistics · Transportation · Viewpoint · All Topics
Latest Whitepaper
Case Study: LEAN Yields Big Results
Every day, companies across a wide range of industries use LEAN in their supply chains, warehouses and distribution centers, finance departments, and customer service centers, among other areas. LEAN practices improve safety, quality, and productivity by extracting cost and waste from all facets of an operation – from the procurement of raw materials to the shipment of finished goods.
Download Today!
From the October 2016 Issue
Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.
European Logistics Update: Post-Brexit U.K. moving ahead, but in which direction?
Badcock Home Furniture &more: Out with paper, in with Cloud TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
How API Technology Connects the Transportation Economy
Dynamic decision making is made possible through accurate, actionable data. When combined with progress in data science and the Internet of Things, technology companies that add value to direct-to-carrier APIs and combine them with high-power data analytics will create new concepts for the information economy.
Register Today!
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...

2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...