Grow Your Business & Improve Customer Satisfaction through a Distributed Supply Chain of Drop-Ship & Third Party Logistics Learning Objectives - Understand the key components of a distributed supply chain utilizing a blend of drop-ship and third-party logistics, and what it means to your building your business - Learn how a distributed supply chain can reduce costs and improve customer service ratings through improved order fulfillment times and shorter deliveries. - Examine the strategies to select a drop-ship or third-party logistics program to meet your specific business needs - See firsthand how these strategies have transformed some of the largest retailers product offerings through virtual inventory and customer service ratings - Leave with the confidence to examine your business needs and with the knowledge of resources available to build your business through drop-shipping and third-party logistics strategies

1. ®
Supply Chain Management Summit 2013 | 8.22.2013

2. Distributed Supply Chain Management
Presented by
Paul Brisson
Senior Product Manager
pbrisson@commercehub.com
518.810.0700 x3912
Grow Your Business & Improve Customer Satisfaction through a
Distributed Supply Chain of Drop-Ship & Third Party Logistics

3. Who are we?
Strategy
/
Planning
Informa2on
Technology
Buying/Selling
Logis2cs
Materials
/
Produc2on
Customer
Experience

4. Why are we here today?
SCMS
2013
Learn
Connect
Grow

5. Learn…
§ Key principles of utilizing a distributed supply chain
management program with drop-ship & third-party
logistics (3PL)
How do we accomplish it?

6. Connect…
§ Get First Hand Knowledge on the Subject
ü Share real life experiences
ü Discuss what has / has not worked well in the past
ü Swap contact information & continue the
conversation
How do we accomplish it?

7. Grow….
§ Leave with the Confidence to Evaluate a Distributed
Supply Chain Management Program Which Works
Best for You
How do we accomplish it?

8. • The
Apple
Farmer…
Tradi/onal
Supply
Chain

9. The Local Apple Farm Stand
Grow
the
Apples
at
the
Farm
Sell
the
Apples
at
the
Farm
Harvest
the
Apples
at
the
Farm

10. Apple Farmer at Farmers Market
Grow
the
Apples
at
the
Farm
Sell
Apples
at
Local
Farmers
Market
Harvest
the
Apples
at
the
Farm

11. Apples at Grocery Store Chain
1.
Farmer
Grows
the
Apples
5.
Grocery
Store
Markets
Apples
in
their
Stores
2.
Harvest
&
Package
Apples
at
the
Farm
3.
Farmer
Sells
Apples
to
Grocery
Chain
4.
Grocery
Chain
Distributes
to
Stores
6.
Customer
Purchases
Apples

12. Local Apple Farm
– Farmer Owns Entire Product Life-Cycle
– No Outside Involvement
– Most Profitable Marketing Outlet for Farmer
– Limited Exposure to Customers
Apple Farmer at Farmers Market
– Farmer Owns Product Management & Distribution
– Market & Farmer Responsible for Marketing
– Additional Overhead for Market Fees & Distribution Costs
– Limited Outside Involvement & Exposure to Customers
Apples at Grocery Store Chain
– Farmer Owns Product Management & Wholesale Distribution
– Grocery Store Responsible for Retail Distribution & Marketing
– Decreased Profit Margin for all parties involved / Increased Customer Costs
– Extensive Outside Involvement & Exposure to Customers
Supply Chain & Control

13. What if...Grocery Store Chain could
– Connect with Local Farmers Across the region/country
– Sells Apples on their Website
– Routes Order to Farm Closest to Customer
– Farmer Ships to Customer
– Apples Arrive Fresh, Cost Effective, and Quickly
A New Approach…

14. Drop-Ship Model
– Farmer
Owns
Product
Management
&
Distribu/on
– Grocery
Store
Chain
Responsible
for
Marke/ng
– Well-­‐Defined
Outside
Involvement
– NEW…Most
Profitable
Marke/ng
Outlet
for
Farmer
&
Store
– Most
Exposure
to
Customers
Apples Drop-Shipped to Customer

15. Merchant
– Markets & Sells Products to Customers
Customer
– Orders Products From Merchant
Supplier [drop-shipper]
– Owns & Manages Inventory
– Fulfills Orders on Behalf of Merchant
– Invoices Merchant for Sale
Shipper
– Ships Orders on Behalf of Merchant/Supplier
What is Drop-Shipping Exactly?

16. Merchant
– Owns Inventory
– Markets & Sells Products to Customers
Customer
– Orders Products From Merchant
3PL Provider [drop-shipper]
– Manages Inventory
– Fulfills Orders on Behalf of Merchant
– Invoices Merchant for Services
Shipper
– Ships Orders on Behalf of Merchant/3PL
Third-Party Logistics Model (3PL)

17. • Merchant
• Supplier
• Customer
The Three Perspectives

18. The
Merchant
Perspec/ve
Drop-­‐Ship
Pros
– No Cost Product Expansion
– Focus on Customer Experience
– Limited Logistics Mgt.
– New Opportunities to Grow
Cons
– Partner Compliance Mgt.
– More Suppliers to Manage
3PL
Pros
– Fewer Suppliers to Manage
– Focus on Customer Experience
– Limited Logistics Mgt.
– Less Expensive than
warehouses
Cons
– Upfront Inventory Costs
– Partner Compliance Mgt.
– New Challenges to Manage

19. The
Supplier
Perspec/ve
Drop-­‐Ship
Pros
– Increased Exposure to
Marketplace
– Increased Product Line Depth &
Buying Power
– Limited Marketing Management
– Many New Opportunities to Grow
Cons
– Potentially Increased Inventory
Management Costs
– Partner Compliance Programs
– Diverse Operations to Manage
– New Challenges to Manage
3PL
(Not
Applicable)

20. • When Managed Well…
The Experience is Better, Faster, and Cheaper
• When Managed Poorly…
Poor Customer Experience = Bad Customer Reviews
– Cancellations Due to Out of Stock
– Returns for Poor Product Presentation
– Customer Service Complaints for Late Shipments
– Administrative Overhead for Program Outweighs Savings
The
Customer
Perspec/ve

21. Drop-Ship Programs are of two varieties
– Merchant Managed
• Merchant Connects Directly with Supplier
• Merchant Manages Entire Order Life-Cycle
– Provider Managed
• Merchant Connects with Supplier via Provider
• Provider Manages Information Delivery
• Provider, Merchant, & Supplier Manage Order Life-Cycle
Two Flavors of Drop-Ship Programs…

22. Types of Services Available
– Rela/onship
Management
– Product
Catalog
Building
– Inventory
Management
– Order
Processing
– Shipping
Rules
Management
– Packing
Slip
Management
– Invoicing
Management
– Service
Level
Management
Traditional Drop-Ship Services…

23. CommerceHub
www.commercehub.com
– Full Service Drop-Ship Provider
Dropship Commerce
www.dropship.com
– Product, Inventory, & Order Management Provider
VendorNet
www.vendornet.com
– Drop-Ship Management & eCommerce Solution Provider
Leading Drop-Ship Providers

24. Banneker Industries
http://www.banneker.com/
– Sponsors of Today’s Summit
– Footprint in 6 States & MSBE
Exel America
www.exel.com
– Global Coverage
– 74,000 employees / 300 warehouses
Schenker USA
www.schenkerusa.com
– Coverage: Europe, Asia, South America, Africa, North America
– 36,000 employees / 405 warehouses
Kuehne & Nagel Logistics, Inc.
www.kuehne-nagel.com
– Global Coverage
– 19,000 employees / 50 warehouses
Leading 3PL Providers

25. Understand Your Business Goals
– Remember the Apple Farmer
Research Marketing Opportunities
– Self-Managed Retail/Wholesale
– Distributor Managed Wholesale
– Drop-Ship & 3PL
Grow
– Utilize a Distributed Supply Chain of Drop-Ship & 3PL
Key Next Steps…

26. Thank you for Attending
Please feel free to send any questions.
pbrisson@commercehub.com
518.810.0700 x3912