Panalpina successfully adds logistics manufacturing services to telecoms industry

Panalpina, one of the world’s largest third-party logistics providers (3PL) has added Logistics Manufacturing Services (LMS) to its operations for a large telecoms company in Brazil. The company now manages the assembly of semi-knocked down units for base stations. Panalpina not only executes the final assembly, but takes full ownership of the whole process – from planning to quality control. It is one of the first times that a telecoms company has successfully outsourced manufacturing to a 3PL.

Logistics is changing – rather than simply transporting goods from A to B, there is a growing trend for partners to take more ownership and responsibility for their customer’s supply chains.Some logistics companies now provide value-added services that take on more of a manufacturing role in the supply chain. Panalpina is one of those companies.

At a facility near São Paulo, Panalpina now handles assembly, warehousing and outbound delivery of telecoms equipment for an important global customer. The 32,000 m² facility replaces five separate warehouses that the customer used to operate, one for each section of its supply chain.

The partnership between the two companies has been a success. The customer took a risk in changing its supply chain model by giving manufacturing responsibility to a 3PL. This was only possible because Panalpina offers more than simple manpower. Panalpina takes care of all the planning that goes along with high quality manufacturing. Giving the 3PL a leadership role means that some order cycle processes can be run in parallel instead of in a sequence, which has greatly reduced order fulfilment times.

Final assembly and testing

The five sections of the customer’s supply chain are terminals (cell phones, tablets, modems), spare parts for terminals, semi-knocked down (SKD) assembly, finished goods and spare parts for finished goods. “SKD is where the real action is; out of the 220 people that work at the facility, 140 work on SKD,” says Mike Wilson, Global Head of Logistics at Panalpina.

SKD alone consists of five different assembly lines. In the final assembly and testing line, Panalpina staff assemble base station boards and cabinets, and run software updates and tests. Finished products are then packaged, labelled and passed to the warehouse next door for outbound delivery.

“Adding Logistics Manufacturing Services to our offering is a major part of our strategy, and is the future of our industry. It allows us to deliver faster time-to-market while cutting costs,” explains Wilson.

Expertise

In a first for the industry, Panalpina often hires people with a background in Electronic Manufacturing Services to fill its logistics positions. These people come with knowledge and experience of managing complex manufacturing and supply chains in an outsourced environment. This gives Panalpina a distinct advantage as it has the expertise to look at a customer’s business from their perspective and understand the critical touch points in their supply chain. Panalpina understands the planning and operations involved in both logistics and manufacturing and this was a key reason why the company could take on more of the customer’s operations.

“We speak our customer’s language and that gives them confidence. We’re all on the same team with the same ideas about what needs to be done and how to make it work,” says Krasimir Banchev, Panalpina’s expert for value-added logistics services.

Technology

Technology is another key component in ensuring the customer’s chain runs smoothly. With trucks coming and going every day, managing the inbound and outbound flow of goods is crucial. Panalpina uses RedPrairie, an advanced IT tool for warehouse management. On the assembly line, Panalpina is fully integrated into the customer’s internal system.

This state-of-the-art system gives Panalpina complete visibility of inventory to maintain optimum levels while reducing cost wherever possible. It allows the company to monitor its performance and gives the customer transparency to ensure its expectations are met.

“We want to set the benchmark for fully integrated, value-added logistics and raise expectations of what a logistics service provider can do,” concludes Wilson. “The operation in Brazil is a great example of how we can make improvements across more of the supply chain. And we are busy building our next value-added success already”.