Ground control

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Parcelhouse is an independent provider of information-based logistic solutions for the logistics, manufacture and transport industries. It provides customers, including manufacturers such as Nokia and Ericsson and logistics providers such as DHL and Solectron with a visibility tool that enables them to collaboratively share information with suppliers on a worldwide basis to increase efficiencies and improve performance throughout the supply chain.

Although the company was only founded in 1999, by 2003 Parcelhouse had already secured major multinational clients and it was critical that it had an IT infrastructure that allowed it to compete with other global logistics providers. As a result, it made a thorough evaluation of the Services market in EMEA and APAC in order to establish the best TCO model for its needs. According to Joakim Jansch, managing director, Parcelhouse EMEA, ‘IBM was the only company that met the criteria to work in cooperation with SMBs like Parcelhouse on a long-term basis. Outsourcing infrastructure management and hosting to IBM Global Services enabled Parcelhouse to focus on its core business and also allowed us to offer best-inclass SLAs.’

Particularly appealing to Parcelhouse was IBM’s On-Demand business model. As Jansch continues, ‘The usage-based pricing model was important as it allows us to avoid a large up-front investment and match costs to revenues – this ability to scale up and down also gave our customers tremendous flexibility. The relationship with IBM also gives us uptime of near 100 per cent on a consistent basis and allowed us to move from 200 to 3000 and then to 6000 users with no additional infrastructure costs.’

Together, Parcelhouse and IBM developed the Control Tower Solution (CTS) – an open, highly resilient platform with a flexible pricing model. The CTS is a fully integrated network management system – sold in partnership by both companies – providing total visibility, connectivity and improved control over the entire logistics process. It has an advance notification system that alerts personnel to any problems along the shipment route, enabling the supplier to plan appropriate alternatives.

Managing multiple providers
The CTS marked a sea change in the way that logistics solutions were provided to customers. Previously, the approach of pure-play logistics visibility software vendors to tracking packages via the Web had been centered on the relationship between the customer owning the package (either incoming or outgoing) and the provider shipping it. Parcelhouse’s innovation was the creation of a logistics information management system that enables customers to move from a fragmented logistics management approach – where each provider is managed separately – to a hub approach where a customer can manage multiple providers concurrently and efficiently.

For customers, the core value proposition of the CTS is flexibility, as they no longer have to rely on one logistics provider for access via a single point of contact and control. Further benefits include reduced logistics costs, improved customer service, increased efficiency and better supply chain visibility and control; all achieved with a simplified process.

Exel Logistics, now part of DHL’s parent company Deutsche Post World Net, is a global player in supply chain management. It needed faster, more cost effective supply chain systems – essentially, it required a platform that could help them to make strategic decisions about their business. After looking at a variety of different vendors – and an intensive due diligence process – Exel asked Parcelhouse and IBM to provide the Control Tower Solution (CTS) as the core framework for its Logistic Control Tower (LCT) to keep track of all facets of its supply chain.

Exel was particularly impressed with Parcelhouse’s track record and its cost effective approach to implementation. As Jansch explains, ‘We didn’t create a monolithic software application that then must be sold to customers at inflated prices in order to satisfy our shareholders. Instead, we like to grow with the client and we enabled Exel to start with something they could modify as they required. We work hard to identify where the value is being delivered – it is important to establish the costs in order to determine the reductions that can be achieved as this allowed Exel to develop a clear idea of the return it would make on its investment in Parcelhouse.’

Parcelhouse CTS integrates with the existing IT infrastructure of Exel and its partners to maximise investment and streamline management of the logistics flow across the entire network. The system renders information flow visible and accessible at both micro and macro levels, enabling total track and trace in real time. It offers billing and performance-based billing functionality, produces fulfilment documentation and tracks performance and costs with immediate notification of deviations.

Implementation of eight Parcelhouse modules – spanning everything from initial order to final settlement – began in 2003 and was completed in three and a half months. This was no mean feat considering that this involved integrating with Exel’s and the customers eleven different supply chain partners.

Exel Nordic & Baltic states IT Director, Claes-Håkan Johansson has identified a wide range of benefits resulting from the company’s implementation of the CTS, chief among which is the system’s real-time Business Activity Monitoring (BAM). Information on Exel’s entire supply chain processes is held on the system and all transactions are automatically checked. If all is as it should be – for example, if a particular purchase has the appropriate order authorised by the right person and is consistent with published rate card prices – then no human intervention is required. (Jansch estimates the percentage of Parcelhouse’s customers’ transactions that require no human intervention is in the ‘high-nineties’.) However, any deviation from standard practices is ‘red-flagged’ in real-time and the appropriate person is alerted.

Automating the total shipping processes has provided better supply chain visibility and control and drastically reduced the amount of manual processes required to process transactions. This has boosted productivity and saved costs – which can then be passed onto Exel’s customers. Johansson estimates  that Exel has been able to reduce logistics costs for end users by five to 35 per cent

Improved customer service
Per Gustafsson, Exel’s director of sales and marketing, Nordic and Baltic, highlighted the improved customer service. ‘Exel enables its customers to outsource their entire logistics function and the LCT allows us to provide a single source solution.’ His views are endorsed by Knud Midtgaard, vice-president of operations for Alfa Laval – the first Exel customer to benefit from their Parcelhouse-powered LCT: he said, ‘Our co-operation with Exel has given us greater control and visibility throughout our whole supply chain, with improved customer service.’

Alfa Laval is a manufacturer of heat exchange and fluid handling systems, operating in one hundred countries worldwide. The initial stage of Exel’s contract included managing all logistics processes originating from Alfa Laval’s distribution centre in Staffanstorp and the production site in Lund, Sweden, to customers in Europe and worldwide. Exel manages the incoming and outgoing distribution of Alfa Laval’s products and rollout to additional European cities.

The combination of Parcelhouse’s innovative approach to managing global supply chains and IBM’s robust, flexible on-demand infrastructure has allowed Exel to streamline its business, improve service and cut costs for both itself and its partners. Overall, the CTS provides Exel with full control of its operational and financial processes and creates a platform for truly world class processes to take flight.

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