Technicolor Expands its 3PL Operations
July 16, 2012
Quentin Lilly, President
Frank Wolbert, SVP World-Wide Sales
Elaine Singleton, VP Supply Chain
Kevin Sullivan, VP Business Development
Mike Ziomek, SVP Distribution Operations, North America
Expanding from Media & Entertainment with Global Logistics Expertise
Technicolor Global Logistics (TGL) is a division of Technicolor SA (Euronext Paris: TCH), a worldwide technology leader in the media and entertainment sector. According to initial estimates for 2011, TGL’s third-party logistics (3PL) gross revenue reached approximately $500 million with Value-Added Warehousing and Distribution (VAWD) services contributing 75% of this total and Domestic and International Transportation Management (D/ITM) contributing the remaining 25%. While its parent company provides a broad range of services and products “from creation to audience” for the Media & Entertainment industry, TGL has worked behind the scenes to provide the supply chain links between movie studios and gaming software customers and their audience, from manufacture to store location. Within Media & Entertainment, TGL has captured an approximate 40% market share based upon its global small package logistics expertise and ability to track the status of new movie release campaigns from the program-level down to the piece.
By continually expanding the breadth of supply chain processes it manages for customers, TGL has grown revenue and developed a solid portfolio of 3PL capabilities and technologies. The services TGL provides to The Walt Disney Company is a good example of its 3PL capabilities. For Walt Disney and the majority of TGL’s other large customers, their supply chains typically originate off-shore and require imports of finished goods and components. TGL operates as a non-vessel operating common carrier (NVOCC) to arrange and track ocean and air imports. Components may divert to Mexico for contract manufacturing or deliver to TGL’s distribution centers for light assembly, specialized packaging, picking and distribution. Finished goods are distributed via one of TGL’s value-added warehousing and distribution campus locations in Ontario, CA; Memphis, TN; Livonia, MI; or Brampton, ON, Canada. Customer orders are routed through its RedPrairie transportation management system (TMS) for transportation mode and route optimization. Optimized shipments are released to the warehouse for picking. After picking, final shipments are distributed to customers mainly as direct-to-store parcel and less-than-truckload (LTL) shipments. Returned goods are processed in TGL’s facilities in Memphis.
Value-Added Warehousing & Distribution (VAWD) Capabilities
On a typical day, TGL picks, packs and ships 6 million units from 12 North American distribution centers (DCs) comprising 6.5 million square feet of distribution space. During peak season, TGL processes up to 60,000 unique customer orders per day. It employs 6,000 full-time employees which increase to nearly 12,000 before the peak holiday seasons. At peak capacity, TGL can ship 60,000 customer orders per day with 20% of the volume as same day delivery. Two-thirds of the shipping units are full case picks, while one-third are piece picks. TGL distribution operations also comprise high-volume kitting / custom packaging operations, including assembly and shipping of a variety of point-of-purchase displays for major big-box retailers. (TGL also manages a network of 8 DCs and ~1.0 million square feet of distribution space serving the UK and Western European markets, which were not evaluated by A&A).
TGL achieves this level of velocity using its proprietary Gold warehouse management system (WMS), which is RF-barcode capable and tightly integrated with its warehouse automation equipment. Several of the DCs are equipped with high throughput automation, including pick-to-light modules in multi-story mezzanines, in-line labeling equipment and sortation conveyers. Customer orders are run through TGL’s RedPrairie TMS for transportation optimization in advance of release to the warehouse. Shipments are consolidated based on the customer’s service level requirements and special instructions. TGL ships to 40,000 customer-assigned locations worldwide. Eighty percent (80%) of outbound shipments are direct-to-store, including major retailers, such as Wal-Mart, Costco and Target. Gain-sharing agreements allow TGL to share the cost savings benefits of operational efficiencies with the customer.
TGL also handles a large volume of returns, processing 1.4 million return units per day with fully-digitized claims processing. TGL quality inspects returned products, putting away pristine units, repacking units with cosmetic blemishes, and recycling or salvaging damaged and obsolete products.
Emphasis on Orchestrated and Secure Shipment
TGL’s primary customer commodity is packaged media, which is characterized by large volume, time-sensitive shipments that are scheduled around arrival “street dates” for major new releases of motion picture, television and game content. A major new release title will encompass up to 6m+ units, which need to be produced, packaged, staged and ultimately delivered to retail locations across North America in time for a specified launch date. Given the high value of the product and the ever-present threat of theft and piracy, any compromise of the product before the street date represents significant risk of financial loss to the content owner. As such, TGL has developed world class security protocols throughout its entire supply chain, encompassing extensive physical facility security, careful review and selection of carriers, and a host of other refined security processes and procedures.
DTM Services Grow Steadily with Solid TMS and Visibility Tools
TGL launched its transportation management services offering in 2006, which relies on RedPrairie TMS for planning and execution, and proprietary systems for shipment visibility and custom reporting. Its TMS determines the optimal mode, carrier, service and rate for each shipment across modes or within modes. Expanding from its core VAWD services, TGL has grown its D/ITM business by leveraging existing customer relationships and is actively acquiring new customers to diversify the customer base within the Technology, Retail, Consumer Electronics, Toys and Games, and Healthcare verticals. The primary mode utilized for customer shipments is parcel-ground with growing volumes in LTL and truckload. Like the best 3PLs in the segment, TGL has the ability to rapidly deploy TMS to new customers within 30 days using standardized templates and a mature implementation process. TGL recognizes the challenges facing shippers and believes that DTM is a key driver for future growth.
TGL has made a significant investment in shipment visibility and reporting. It has a solid understanding of the importance of these tools to its customers which demand the secure and precise distribution of new media releases where timing of the roll-out is critical. These same operational and reporting capabilities are clearly applicable to customer supply chain needs in TGL’s target verticals. Its capabilities include:
In-Transit Inventory Tracking
- Customized to each customer’s need for information
- Proactive notification of any delay or exception
Financial Audit and Controls
- Financial settlement for all shipments
- Sarbanes-Oxley level audit and controls
- Operational, financial and executive key performance indicators (KPIs)
- Consultative support for additional savings
Carrier Report Cards: Track trends – performance, cost, etc. Compare to other carriers and modes.
Modeling / Benchmarking: What-If analysis for facilities location, mode and carrier selection, etc.
Event Management: Time definite service that delivers to over 9,500 retail locations in the same day with committed hourly windows. The unique service is well suited for large retail date specific releases, consumer product market entries, and competitive go to market strategies for specialized packaged consumer products. These are specialized front end supply chain plans customized to exact requirements for high profile product launches.
TGL’s Framework for Customized Reporting
Reports can be generated for operational, tactical and strategic management levels. Reports include the tracking of scheduled tasks for delivery execution, multiple ad-hoc reports, and financial summaries. Digital dashboards and system access are provided via web-portals to provide customers with instant accessibility and control. TGL’s business intelligence is on par with the best solutions in the 3PL market.
TGL has developed Tier 1 capabilities to serve global customers which value end-to-end supply chain management and synchronized product roll-out capabilities for direct-to-store and direct-to-customer delivery.
Sources: A&A Primary Research, http://www.technicolorgloballogistics.com/