Menlo Worldwide Logistics’ Lean Approach Drives Additional European Growth
Schiphol and Eersel, Netherlands Site Visits
March 5, 2014
Tommy Barnes, President of Con-way Multimodal
Tony Gunn, Managing Director – Europe
Robert Bassett, Senior Vice President of Sales & Marketing
Marco van Walraven, Director of Operations – Europe
Arthur van Gerven, Senior Director Business Development & Key Account Management
Robert Schaap, General Manager
Tom Van Decraen, Site Manager
Tarkan Cakici, Operations Manager
Danny Keeris, Warehouse Manager
Roy Diederen, Senior Supervisor Operations
Menlo Worldwide Logistics Overview
In 2013, Menlo Worldwide Logistics generated gross revenue of $1.5 billion. Its global staff of approximately 9,000 manages operations in 20 countries on five continents. Menlo’s warehousing footprint includes 138 facilities with over 20 million square feet of space. Menlo was an early adaptor of “Lean” Management principles and has engineered tier-one supply chain management and finished goods distribution capabilities. Its IT capabilities, including its recent addition of Oracle-TM’s transportation management system, provide Menlo with solid transportation management and optimization capabilities.
Menlo Worldwide Logistics Europe
Netherlands headquartered Menlo Worldwide Logistics Europe (Menlo Europe) ended 2013 landing eight additional projects from both new and existing customers, increasing its warehouse capacity by 50,000 square meters, and expanding its employment by over 1,000 full-time staff at its facilities in Western and Eastern Europe. Year-over-year net revenue growth topped 16% and from its 2013 business wins, Menlo Europe is on track to grow 36% in 2014.
In total, Menlo Europe operates in eight countries. Its warehousing footprint is 1.5 million square feet, and Menlo has a European staff of over 2,000. Its supply chain management service offering mirrors that of its US operations and includes fourth- and third-party logistics management services (4PL/3PL), value-added warehousing & distribution, and domestic transportation management.
Menlo Europe has an operating network of 17 warehouses and five transportation management centers. Its warehousing footprint includes dedicated and multi-client warehouses in the Netherlands, Belgium, the Czech Republic, Germany and the United Kingdom. Its key European customers include Caterpillar, Diebold, Fox Head, Ingersoll-Rand, New Era, Nike, and Triumph. Menlo Europe has operations serving multiple vertical industries including Automotive, Healthcare, High-tech, Industrial, and Retail.
Menlo Logistics Europe Operations
Menlo Europe embraces Menlo’s global Lean Management principles and culture. In 2013, it performed 120 “Kaizen” events (process improvement events) across its customer base and 25 “Value Stream Mapping” (VSM) projects. VSM is a graphical analytical tool used to design optimal material flows through all or parts of a customer’s supply chain.
According to Menlo’s European Managing Director, Tony Gunn, “Our Lean philosophy helps us maintain our commitment to continuous improvement in managing supply chains, which has been, and will remain crucial to our success in an increasingly competitive environment,” noted Gunn. “These capabilities will continue to help differentiate Menlo in the pan-European market and provide the foundation to build on our momentum from a successful 2013.”
Con-way Multimodal Enters Europe as Menlo Freight Brokerage
In November 2013, the non-asset based transportation freight brokerage division of Menlo–Con-way Multimodal–expanded into Europe where it is doing business as Menlo Freight Brokerage. It has set up its headquarters in an office near Schiphol airport in Amsterdam and is collocated with other Menlo operations.
According to its President, Tommy Barnes, “Geographic diversification is a key part of our three-year strategic vision. By opening in Europe, we can tap a new market and support existing Menlo operations in securing transportation capacity for customers. Through our combined efforts, we should be able to further reduce costs and take additional waste out of customers’ supply chains. Our Europe opening supports Menlo’s overall business growth and Lean process improvement strategy.”
In 2013, Con-way Multimodal generated approximately $200 million in revenue. Leveraging its affiliate Con-way company relationships, Multimodal goes to market with an overall transportation spend in excess of $2 billion providing it with significant scale in securing carrier capacity for customers.
While the new Menlo Freight Brokerage European operation is small, it has recruited a group of experienced transportation managers and is currently managing over 500 shipments per month on behalf of 19 customers. The transportation services it performs include arranging full truckload shipments, managing parcels, groupage (consolidated small ground shipments into a truckload), LTL (less than truckload), LCL (less than container load) and FCL (full container load) air freight shipments, and sea freight. Much of the shipment volume has been intra Europe; however, a small portion has been from Europe to Asia and the United States. Its modal mix by mode is shown in the chart below.
Menlo Freight Brokerage Europe Business Mix by Transportation Mode
For its transportation management system, the operation uses CargoWise, which has solid daily transportation management functionality for both domestic and international shipments.
Eersel Multi-client Value-Added Warehousing & Distribution Operations Review
After touring the Menlo Freight Brokerage operation, we made the trek to Eersel in the southeast part of the Netherlands to see Menlo’s largest European multi-client Value-Added Warehousing & Distribution (VAWD) operation.
Menlo’s Eersel warehouse started as an Emery operation in 1998 for Nike and in 2002 was migrated to Menlo. It is approximately 375,000 square feet and has four separate walled off subdivisions. The ceiling height is 10.6 meters, and Menlo added two 1,400 square meter mezzanine levels in 2007 in one of the warehouse sections to manage order fulfillment for Nike’s online Internet store. Menlo is a global lead logistics provider (LLP) for Nike Store and Nike Golf.
The Eersel operation manages approximately 85,000 SKUs (stock keeping units) of inventory for 11 different customers including ArjoHuntleigh, Fox Head, New Era, Nike, NYX, and Trimble. Warehouse utilization and activity is high. The operation processes over 28,000 inbound order receiving lines, 2.7 million received units, 238,000 shipped lines, and 1.3 million shipped units each month.
Significant value-added services are performed for customers including bonded storage, pick/pack operations, kitting, equipment configuration and testing, returns processing, apparel embroidery, and golf ball logo application.
Menlo’s “Lean” management principles have been fully deployed in Eersel. Inbound warehouse receiving and outbound shipping planning boards are utilized and numerous quality and productivity measures are tracked each day. In 2008, Eersel obtained Menlo’s Silver Lean certification level and it is also ISO 9001 and TAPA certified.
Each Menlo VAWD operation achieves it certification level based upon overall performance versus a set of KPIs (key performance indicators). For example, it uses guidelines such as those shown in the table below along with other criteria.
Menlo Logistics Warehouse Lean Certification Guidelines
Customer KPIs at Eersel include those in the table above plus on time receiving, labor cost metrics, multiple inventory variance measures, order fulfillment rates, shipping line/order accuracy, and safety incidents.
During our visit, we received an overview of the operation’s ongoing organizational, talent development, and warehousing redesign initiative dubbed “Brightest Star”. The Brightest Star Initiative started in 2012 and began by shifting to an industry specific supervisory approach with supervisors dedicated to a specific customer type (for example Healthcare, or Lifestyle products). Next, specific job levels were defined for a consistent warehouse career path and improved talent development. The career levels in progression are Shop Floor, Lead, Supervisor, Warehouse Manager, Operations Manager, and Site Manager.
In addition to defining a warehouse personnel career path, a partnership was developed with a local university to identify potential Lead and Supervisory staff. In 2013, six people were employed by Menlo via the partnership.
“Opal”–a new talent development program combining leadership, time management, and professional skills training was also deployed. It includes using a person’s psychological profile to assist in assigning them to a specific work team. For example, a person with an analytical personality type may perform better as part of a high-tech customer team. Thus far, two Supervisor groups and one Lead group have been trained using the Opal program.
The last step of the Brightest Star Initiative includes redesigning the warehouse operations and layout. According to Menlo’s Netherlands General Manager, Robert Schaap, the goal is to create a “Wow” effect for customers when entering the warehouse. Lifestyle customers such as Fox Head, New Era, and Nike are being relocated to their own warehouse area and Healthcare customers are also being combined. Customer posters of athletes and products line the ends of warehouse racking and the walls.
Menlo Logistics Europe Operations Summary
Even in the very competitive and slow-growth European 3PL market, Menlo has been able to attract substantial new business. Its Lean operations management approach is driving much of the growth by making it especially attractive to customers seeking high service performance levels. With the addition of European freight brokerage services to further its domestic transportation management operations, we anticipate Menlo will continue its upward growth trend.
Sources: A&A Primary Research, https://www.xpo.com