Value-Added Services Drive ModusLink Europe

Value-Added Services Drive ModusLink Europe
Apeldoorn, NL and Brno, CZ Site Visits
March 21, 2013
By
Evan Armstrong

Key Personnel:
John Boucher, President and Chief Executive Officer
Scott Crawley, President, Global Operations, Sales and Marketing
John Heffernan, Regional General Manager
Petr Jurecka, Regional Director of Operations – ModusLink Czech Republic

ModusLink Global & Europe Overview

ModusLink Global Solutions (NASDAQ: MLNK) has approximately 3,700 employees deployed across more than 30 facilities in 15 countries within North America, Europe and Asia. Its operations process and ship 470 million units annually for more than 200 customers. With $740 million in total revenue for 2012, ModusLink ranks among the top quartile of global third-party logistics providers (3PLs). ModusLink’s total revenue is split approximately even across its Asia, North America and Europe operations. Due to extensive manufacturing support services, its cost of purchased materials and transportation comprise 60% of total revenue resulting in value-added 3PL revenue of approximately $300 million. Key ModusLink global accounts include: AMD, Cisco, HP, IBM, Lenovo, Microsoft, and Sony.

ModusLink operates in a Lean continuous improvement environment long on process control. Its global operations are ISO 9001:2008 certified, and the majority of operations are also ISO 14001 (Environmental Management Standard) certified. It has two facilities—one in Europe and one in the U.S.—that are ISO 13485 (Medical Devices Standard) certified. Through March 2012, ModusLink completed 987 continuous improvement projects over the past five years.

In Europe, ModusLink has five solution centers (value-added warehousing and distribution operations) located in: Brno, Czech Republic; Orléans, France; Jászfényszaru, Hungary; Kildare, Ireland, and Apeldoorn, The Netherlands. It serves 28 major customers from its European operations including: AMD, Cisco, GoPro, IBM, Lenovo, Nokia, Sony, TomTom, and Toshiba.

ModusLink Europe Solution Centers (Value-Added Warehousing Operations)

To support its operations, ModusLink runs SAP’s ERP (enterprise resource planning) and integrated WMS (warehouse management system). Demand planning, procurement and materials management, materials and finished goods inventory management, warehousing, and distribution are functions performed in each of ModusLink’s operational sites. Transportation management is executed using Precision Software’s transportation management system.

Brno, Czech Republic Value-Added Supply Chain Management Operation

ModusLink started up its Brno operations in 2005 leasing a single 36,000 square foot warehousing facility. Today, Brno has grown to be one of ModusLink’s largest global operations with a bonded warehousing footprint of 268,533 square feet split between three warehouses. The ISO 9001, ISO 14001, ISO 13485, TAPA (Technology Asset Protection Association) certified operation has a full-time staff of approximately 550 employees and also utilizes a third-party staffing company for temporary labor during demand peaks. Services performed in Brno include: value-added warehousing and distribution, advanced kitting and packaging, configuration and postponement, materials management, and transportation management. Key Brno accounts include: Corel, Cisco, HP, Lenovo, Logitech, Microsoft, Samsung, Sony, and Toshiba. The operation is modern and very secure with CCTV (closed-circuit television) cameras throughout the facilities and strong security measures in place.

Brno is organized like a manufacturing plant with specific operations, kitting, and packing runs being performed in different warehouse zones. The level of activity is very high compared to other 3PL operations. Overall, the operation maintains over 22,000 active part numbers in inventory and ships over 72 million units per year. Its combined on-time shipping performance is 99.8% and inventory cycle count accuracy is 99.98%. Some of the distinct customer operations are highlighted in the paragraphs below.

In one of the largest operations, 60 people staff two long consumer electronic OEM (original equipment manufacturer) shaver kitting and packaging lines and three smaller u-shaped lines for kitting and packaging the same company’s line of electronic toothbrushes. The lines are highly automated and all products receive a quality check prior to final shrink wrapping. Approximately 20 components make up each shaver and toothbrush kit. The lines run in two shifts and can process up to 200,000 units per week. The finished kits are shipped to the client’s distribution centers throughout Europe.

ModusLink Operations Summary

ModusLink is providing global high-tech customers with significant value-added supply chain management services across 15 countries. With a focus on complex logistics services, process reengineering, and high volume kitting and packaging operations, ModusLink has been able to develop a top-notch customer base. Given its core capabilities, ModusLink’s customer relationships tend to be strategic and run for multiple years across many projects and supply chain functions. It will be interesting to see how it grows as it moves from a traditional manufacturing-centric market outlook to embracing an overall 3PL marketing strategy.