Agility Continues its Global Expansion
Atlanta, Georgia USA
March 10, 2009
Mokhtar Bazaraa, Senior Vice President
Gultekin Kuyzu, Senior Manager
In 1979 Agility began providing logistics services and with 2008 revenues of $7 billion and operations in over 100 countries, it has expanded rapidly to become a top-ten global supply chain manager. It has grown both organically and through acquisitions of U.S. based GeoLogistics and several smaller sized third-party logistics providers (3PLs). Agility focuses on offering customers supply chain solutions tailored to meet individual business needs through a global network of warehousing facilities and transportation management operations. As part of its growth strategy, Agility has adapted an “asset-right” business model, which means acquiring assets to meet specific customer and regional market logistics needs. Major Agility customers include: ABB, BP, Epson, General Electric, Halliburton, Nestle, Nike, Princess Cruise Lines, Shell Oil, Siemens, U.S. Department of Defense, and Wal-Mart.
Agility is a publicly traded company organized into three major business groups. Global Integrated Logistics (GIL) is the largest with revenues of $4.5 billion and more than 23,000 employees. Over $4 billion of its revenues are generated outside of the U.S. GIL has core competencies in freight forwarding, contract logistics/warehousing, project logistics, fairs & events, and supply chain management 3PL services. Agility’s annual freight forwarding volume tops 420,000 ocean trailer equivalent units (TEUs) and its airfreight volume is over 490,000 tons.
Defense & Government Services (DGS) generates $2.2 billion in revenues for Agility and has a workforce of over 10,000. It provides 3PL services tailored to governments, relief agencies and international institutions worldwide. These services include extensive warehousing and trucking operations in Kuwait to support U.S. Department of Defense distribution needs in the region.
The final business unit is Investments which draws on local insights from Agility’s global network to identify real estate and private equity opportunities in Asia, Africa and the Middle East. Investments has revenues of $200 million and employs more than 2,000 people.
Agility focuses on developing 3PL business and solutions for three major internally defined sectors: Technology & Electronics, Retail and Regional Sectors. These are detailed in the figure below.
Figure 1, Agility Sectors for Focused Growth
For the Technology & Electronics sector, Agility provides extensive airfreight forwarding services and manages many vendor managed inventory (VMI) hubs globally. It manages many retail distribution operations globally in the Middle East, Europe and Asia. To support regional operations, Agility is investing $130 million in India to develop increased warehousing and transportation capabilities. It has been one of the leading 3PLs in developing projects in higher-risk/higher-return regions of the world.
Supply Chain Solutions Group
Within the GIL business group is the Atlanta, GA U.S. based Supply Chain Solutions (SCS) group headed up by Senior Vice President Mokhtar “Mo” Bazaraa. Mo’s group supports Agility by providing process reengineering and supply chain modeling and optimization services to internal and external customers. Its services include developing solutions, designing efficient warehousing operations, and modeling, planning and implementing improved transportation management programs. Agility’s Supply Chain Solutions team has designed warehousing operations for customers such as P&G in Egypt and Morocco and Kraft in Bahrain. It has also redesigned Agility’s own European ground transportation network, which manages over $500 million in transportation annually.
Case Study: SCS Leverages i2’s Transportation Modeler in Developing an Optimal Nigerian Operation
Background: Agility was engaged to redesign and operate a warehousing and transportation management operation for a Fortune 100 consumer goods manufacturer1 in Nigeria, Africa.
Current Operation: The current logistics operation includes transportation management of raw and packaged materials (RPM) from Lagos, Nigeria’s TinCan and Apapa ocean ports and from local Nigerian suppliers to the manufacturer’s warehouse in Nigeria. RPM is then shuttled to the manufacturer’s plant and finished product (FP) is loaded and shipped to the warehouse for storage and distribution. The supply chain flows are shown in the figure below.
Figure 2, Supply Chain Flows
Traditionally all of the shipments were tendered as one-way truckloads from the port, warehouse, and to each distributor. The domestic over-the-road transportation process consists of three main components:
- Ocean containers full of RPM are moved from the port to the plant.
- 20’ trucks or 40’ trailers full of RPM are moved from domestic suppliers to the plant (currently, this segment is the responsibility of suppliers and the transportation cost is included in the product pricing).
- 20’ trucks move FP from the plant to distributors (the manufacturer contracts with local trucking companies for this service).
Each of the above components is presently handled independently on a lane-by-lane basis. To gain efficiencies, domestic transportation needed to be managed as a network and routing and carrier selection must be optimized.
Figure 3, Initial Transportation Planning was Lane-by-Lane
SCS Modeling: There is greater variability in equipment types, road infrastructure, and pickup and delivery facilities in Nigeria versus developed Western countries. Using i2 Technologies Transportation Modeler (TMod) software, Agility analyzed historical shipment data in light of these service and network constraints. From the i2 analysis, it identified network redesign and daily transportation optimization opportunities. The basic modeling process was as follows:
i2 TMod Analysis Inputs:
- Inbound/outbound shipments to/from the central warehouse.
- Business hours of warehouses, distributors, ports, suppliers.
- Vehicle/container types & their load capacities.
- Loading & unloading times at each location.
- Driving distances and transit times between locations.
i2 TMod Analysis Outputs:
- Optimized assignment of shipments to routes:
- Multi-stop, roundtrip.
- Optimized departure times.
- Selected appropriate vehicle types.
- Improved equipment utilization.
From the i2 analysis, Agility was able to identify over $1.6 million in annual transportation spend savings through daily transportation management and using a network-based transportation management approach versus the lane-by-lane approach. This represented a savings of over 20%. In addition, the overall carbon footprint of the customer will be dramatically reduced. The redesigned transportation management approach is shown graphically in the figure below.
Figure 4, Redesigned Transportation Management Strategy
The reengineered operation is being implemented by Agility over the next few months. Agility will be responsible for managing the dedicated central warehouse and all of the transportation from the plant, to and from the warehouse and local suppliers, and to distributors throughout Nigeria. It will be using TMod to optimize routes and select carriers on a daily basis. “This operation will be the first to use dynamic multi-stop truckload optimization in Nigeria, which will further improve the supply chain efficiencies,” says Mokhtar “Mo” Bazaraa.
The combination of using advanced tools such as TMod and field operations know-how is helping Agility to reduce costs, increase market share, enhance its speed to market, and replicate its operating model in emerging markets such as Nigeria.
Agility has made strong strides in growing and developing its global operations since starting its first warehousing operation in 1979. By leveraging tier-one systems such as i2’s TMod software and focusing on developing optimized integrated supply chain management solutions, we anticipate that it will play increasingly strategic roles within its customer base.
*At the time of this report the logistics services agreement with the manufacturer was being finalized and therefore its name was not disclosed.