Damco picks up the baton
Published on 08 September 2016
With its new Supply Chain Orchestrator programme, Damco is making its first move into a new and growing area of the logistics industry, what is commonly known as fourth-party logistics or control tower services.
One challenge Damco expects early on, is how its new role with Orchestrator will be perceived. Since Damco will continue to provide 3PL services – sometimes to the same customer to which it is providing 4PL services – customers will want to know how Damco can ensure neutrality in its decision making.
As the lead logistics provider via Orchestrator, Damco will have a complete overview of, and responsibility for the customer’s entire supply chain. It will see where and what all 3PL providers are doing, and how they are doing it.
“Some structural requirements will have to be in place. Our reputation and credibility in providing this new service to our customers depends on us making all the necessary changes and that is what we are in the process of doing now,” says Daalhuisen, Global Control Tower Product Manager for Damco.
Daalhuisen says the 3PL and 4PL businesses will be completely separate, with independent staff and data centres and separate revenue statements. Damco will also offer ‘independency code of conduct’ agreements to all its 4PL customers that ensure Damco will treat its own 3PL business just the same as all the others being managed by Damco in a 4PL relationship.
“Combined with our supply chain management and design expertise, the IT platform we provide and the Damco people driving it all, we think we have one of the best 4PL offerings in the business with Orchestrator and we aim to prove it,” says Daalhuisen.
Many players, one maestro
One of the major challenges faced when using multiple logistics service providers, is how to gain end-to-end visibility and control over supply chain flows while optimising efficiency across all parties involved. That’s where Damco’s Supply Chain Orchestrator comes in. It orchestrates each individual partner in the customer’s supply chain to achieve an optimal supply-chain harmony.
If a global supply chain is like an orchestra – with its many players that must perform well, both individually and together – then Damco could be considered the string section. With its new Orchestrator program, it aims to be the maestro.
“We call it Supply Chain Orchestrator because it enables an organisation to orchestrate all the separate supply chain actions in real time from one platform, much like a conductor controls the flow and tempo of an orchestra to create perfect harmony,” explains Neil Wheeldon, who is responsible for Damco’s Global Product Development.
With the implementation of Orchestrator, Damco is moving into a new area of the logistics business, namely, that commonly known as fourth-party logistics (4PL) or control tower services. Instead of managing some of the logistic services requirements of sections of its customers’ supply chains (for example, Asia to Europe) through its third-party logistics (3PL) business, Orchestrator will enable Damco to become the lead logistics provider for a customer, managing its entire supply chain and all of the third-party logistics providers working within it.
Damco’s edge on competition
Damco is not the first 3PL provider to enter the fourth-party logistics market. With the rising importance of data and technology, it is a fast growing sector of the industry as companies seek more information and greater optimisation of complex global supply chains.
The competition includes other 3PL providers, IT companies and large consulting firms, all selling their version of 4PL services. However, Damco says it has a tangible advantage over this growing field of competitors.
“We offer something different than the competition,” says Agnes Bajger, Control Tower Program Manager for Damco. “Damco’s core competencies are in our people and our knowledge of supply chain management and design. And our customers continually remind us of that.“
“We have the platform and the expertise, and contrary to most of the competition, we see things more from an operational perspective. This is about the quality of our people and technology, which together give us the ability to detect issues and act on them, while continuously improving upon them. We don’t think anyone can deliver all of that in a 4PL solution better than Damco can.”
This is big
“The 4PL space is a very interesting new area for Damco, and one that has the potential to contribute significant new revenue streams for the company,” says Gerry Daalhuisen, Global Control Tower Product Manager for Damco.