From SCDigest's On-Target E-Magazine
- May 29, 2013 -
Logistics News: Sony DADC Decribes Its Path to Building Successful Third-Party Services Business
Organizational, IT and Cultural Change are All Keys, Executives Said; Good Advice for Other Considering 3PL Services Offering
SCDigest Editorial Staff
A growing number of regular shippers s are providing 3PL services to other companies - including increasingly often their own competitors. A supply chain executive from 7-11 convenience stores, for example, recently noted at the Warehouse Education and Research Council (WERC) that the company was providing third-party delivery services for other c-store chains.
Usually, the goals of such programs by non-traditional 3PLs is to leverage some excess capacity they have by taking on third party-business that has the effective of reducing their own logistics costs per , since the third party clients absorb some of the overhead.
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For Sony DADC, however, the move to providing third party-services was a bit more urgent than that. The business unit has traditionally provided production, packaging and distribution services for DVDs, CDs, games and other disk-based products for various Sony businesses, such as major Hollywood studio Sony Pictures, the Playstation group, Sony Music, etc.
However, it's no secret that the volumes of that traditional entertainment media have been falling in the face of on-line delivery, and to executives at Sony DADC a few years ago, the future looked bleak. That's when the president of the business decided that its best path for success was to become a third party manufacturing and distribution provider for others in the industry, many of whom were competitors in the entertainment business to Sony itself.
In a case study presentation last week at the Gartner Supply Chain Executive conference in Phoenix, two Sony executives told the story of the company's supply chain transformation from being an internal-only arm of Sony to successful third-party services provider. It is a story that just may hold some lessons for other companies thinking about jumping into the third-party business.
Among the most important keys to the transformation, according to Sony: organizing for success, changing the hearts and minds of the Sony DADC team to eventually embrace the new strategy, and changing out its existing IT platform to provide Sony and its third-party clients dramatically improved levels of speed, capabilities and flexibility.
According to Patric Van Blaricom the first thing Sony DADC did upon embarking on the strategy was to add a new executive - Van Blaricom himself - to head up the effort. That led to the creating of a program management office that was to guide the strategy and lead the execution of bringing on new clients.
But that central team really only takes on about 20% of the total effort for each new client - the rest of the 80% of the work that needs to be done for each client is done by functional experts after the parameters of the program have been defined by the core team.
But that 20% of the program is crucial, Van Blaricom said, as that is what really defines what services are to be provided and gets the overall work requirements documented. That central group also provides a consistency of effort that is essential for success.
"If you dont have dedicated resources, then every new client is like an ad-hoc project," Van Blaricom said. "The dedicated team can set timelines and drive what the rest of the teams need to do.
The existing IT platform Sony had was old, inflexible, functionally deficient, and hard to integrate. John Postik, global CIO for Sony DADC, led the charge to substantially revamped the entire Sony DADC platform, which he developed in a very modular way so that new or existing clients could easily access the specific IT services they needed.
The core of the platform came from supply chain software vendor Softeon, which provided warehouse management, transportation management, 3PL billing, distributed order management, and other modules that form the core of the new Sony DADC platform.
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The distributed order management (DOM) software is also key, because it allows Sony connect to a number of different ERP and manufacturing platforms it has across the globe in a very seamless fashion, so that the change in order management systems didnt impact different facilities at all, riding over top of all these systems. The DOM solution also gives Sony DADC the ability to optimally select a sourcing point, factoring in transportation costs, parcel cutoff times, and other factors, and have complete visibility to the order throughout its lifecycle. 
