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Sun 1 Apr 2007 12:00 AM

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Calling for help

Motorola is the latest international heavyweight to outsource its logistics operations to a third party company. Under a recent contract, DHL will manage the supply chain of Motorola Returns Management Centre in Europe, Middle East and Africa (EMEA). Logistics Middle East takes a look at the new partnership between the two companies.

The number of international companies outsourcing their logistics operations is constantly increasing throughout the world. Indeed, even the biggest international brands are now recognising the benefits of hiring a logistics company to manage functions such as warehousing and transportation. One such example is Motorola, which recently formed a partnership with DHL Express Logistics to manage the company's supply chain in Europe, Middle East and Africa (EMEA).

Motorola, which has developed an enviable reputation in the global telecommunications market, arranged meetings with various different companies during its search for a logistics partner. The challenge was finding a company focused on time definite deliveries, which could assist the Motorola Returns Management Centre to respond more effectively to customers and reduce operating costs.

"We wished to develop a close relationship with a single partner to create a unique solution tailored to Motorola's needs," says Alex Lloyd, senior logistics lead for Motorola Returns Management Centre.

"Above all, we wanted to boost the quality of service that our customers receive in terms of timeliness and flow traceability, reduce costs and inventory, and streamline our supply chain by eliminating the need for multiple suppliers across the EMEA region," he adds.

At the time, the Motorola Returns Management Centre was facing a number of business hurdles, which limited the opportunities to provide efficient customer service. In particular, transportation costs in the EMEA region were higher than necessary, with a number of transportation providers delivering the finished goods, leading to limited control and visibility.

"We were looking for a large-scale partner with the ability to takeover management of the EMEA market. The company would be totally free to subcontract work to their own network of service providers, based on proven efficiency," says Lloyd.

"In the end, DHL was chosen because it offered a unique solution and could successfully meet our criteria," he adds.

DHL's track record in the telecommunications and hi-tech industries proved a winning asset for the Motorola contract. After beating the competition, the logistics heavyweight was awarded an agreement as sole contact point between customers and suppliers, acting as the exclusive logistics provider with responsibility to manage strategic, tactical and operational duties.

The value of the contract amounted to US$550,000, which is split into $275,000 on logistics activities and $275,000 on transportation activities, covering Saudi Arabia, Kuwait, Qatar, Iraq, Egypt, Yemen, Pakistan and Maldives.

DHL is responsible for coordinating the activities of Motorola's EMEA returns management centre, supplying spare parts, packaging equipment and managing inbound and outbound transportation.

Most of the spare parts for networks are shipped from the UK and areas in Asia to the United Arab Emirates, where DHL stores them. Annually, the company will handle approximately 1000 shipments for the returns centre, which will be stored within a 2000 square feet distribution centre, located in Dubai Airport Free Zone (DAFZ).

"The strategically located warehouse allows DHL to respond quickly to the demands of the telecoms operators that place orders through the Motorola network," says Dirk Van Doorn, commercial manager of express freight and logistics, DHL Middle East.

"As per the agreement, DHL is offering Motorola an express logistics repair and return service. We basically recover faulty units from the telecom operators and ship them back to the Dubai Express Logistics Centre (ELC), which consolidates the broken or damaged units and ships them onto the Original Equipment Manufacturer (OEM)," adds Van Doorn.

In addition, DHL ships out the components that eventually replace the defective parts that have been recovered from the operator. By adopting this process, DHL manages to build-up a pool of spare parts called a rotational pool, which is accessible to all telecom operators in the region.

DHL and Motorola have also developed an IT infrastructure to exchange information on issues such as stock availability and parts that need to be returned to the OEMs, ensuring a high level of satisfaction for both customers and suppliers.

"DHL's e-tracking system offers Motorola a full tracking service as DHL can focus on the logistics activity," says Van Doorn.

"The tool allows Motorola and its end customers to track shipments and get an up to the minute shipment updates. DHL also handles the minimum and maximum inventory levels on behalf of Motorola and process the last bill of material update in the Motorola system, once goods have been ordered for dispatch," he adds.

By having this agreement in place, the Motorola Returns Management Centre is able to focus on its core activity, which is to market, sell and install network units. "DHL is responsible for managing the supply chain and transportation, a core competency that allows Motorola to be more successful in the market place and gain a higher market share. The success of Motorola is also the success of DHL," concludes Van Doorn.

The Motorola / DHL partnership

Offering DHL's tailored supply chain service to Motorola introduces the following benefits:

• Consolidation of Motorola's supply chain operations across the EMEA region

• Providing a dedicated team working on the programme

• Flexibility of pushing DHL's staff pool up or down depending on the requirements and demands

• Reduction of transit times for Motorola's imported products

• Lower logistics service cost per unit network

• Managing the OEM in terms of getting returns back into the rotational pool

• Ease of distribution and sharing of spare parts across the region

• Customs clearance expertise

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