New Breed - Targeted Growth in Action

Greensboro, NC Site Visit

February 1, 2006
By

Kurt Baumann and Evan Armstrong

Key Personnel:
Louis DeJoy, CEO

Ashfaque Chowdhury, CIO

Blair Clarke, Sr. VP, Operations

Joe Hauck, Director, Business Development

New Breed Value-Added Services Approach

New Breed’s supply chain capabilities and business focus far exceed the basic pallet in/ pallet out warehouse operation. For nearly 30 years, they have focused on building and executing comprehensive programs for customer order, inventory and distribution management. Their typical customer demands a high-level of value-added services, such as inventory management, inspection, product testing, assembly, refurbishment, packaging and labeling, and product life-cycle management. New Breed has developed capabilities to provide these services through substantial investment in information technology, developing their people and becoming highly integrated with their customers’ business processes.

For example, in late 2000, New Breed won a bid to distribute cell phones for Verizon Wireless on the basis of its plan to consolidate 8 existing distribution centers into one, merge customer orders from four legacy order management systems with a custom developed order and inventory management system, receive orders via the web, and expedite over 25,000 direct-to-consumer and direct-to-retail orders per day. In addition to the outbound challenge, New Breed took on the task of processing returns, which required extensive training to properly receive product from various suppliers and test units to determine their condition and disposition. Dispositions include return to vendor, replacement and repair. New Breed has been successful in executing these plans and continues to serve Verizon Wireless.

New Breed also continues to acquire similar customer accounts by this approach of integrating with customer processes and systems, by gaining product knowledge, by developing efficient supply chain networks and facilities, and managing orders, inventory and distribution. Some of their work includes maintenance and deployment of hazmat equipment for the U.S. military, replenishing manufacturing kits for Boeing, and distributing critical repair parts for Siemens Medical Solutions a medical imaging equipment manufacturer. Through its approach, New Breed develops long-term relationships with customers and is an indispensable link in customers’ supply chains.

USPS Mail Transport Equipment (MTS) Processing Center

The U.S. Postal Service is a cornerstone customer of New Breed. Over the term of its relationship, New Breed has generated estimated savings of $1 billion by extending the useful life of Mail Transport Equipment (MTE). A network of 22 processing centers across the country receives 3,500 truckloads of MTE daily from 2,500 customer facilities. MTE is received and inspected, repaired and shipped back into the USPS mail network. Specialized equipment was designed and built for processing MTEs and refuse. By outsourcing this work to New Breed, the USPS was able to balance the supply of MTEs across mail centers.

Emphasis on Technology

Information technology is a key element of New Breed’s customer value proposition and a source of competitive differentiation. New Breed continues to make significant investments in IT. It directs as much as 10% of net revenue into the development of proprietary systems and upgrading its best-of-breed systems, which include i2 for transportation management and network analysis, EXE for warehouse management and Logility for demand planning and inventory management.

New Breed is self-sufficient, having built internal capabilities for custom design and development, as well as facilities design and system integration. Their 25-member facilities implementation team is engaged in setting up new distribution centers and integrating customers, as well as rolling out systems and process enhancements to existing sites. Led by CIO, Ashfaque Chowdhury and supported by 100 technology services specialists, New Breed maintains their own extensive technology infrastructure and manages it on a daily basis with an alert system that continuously monitors all databases, applications, interfaces and hardware. If something as small as a scanner in Ontario goes off-line, a technician in Greensboro is notified to take corrective action.

Their proprietary order management system, Network Manager, is the centerpiece of their supply chain management toolset. It provides the capability to electronically enter and prioritize customer orders, as well as visibility to the status of orders, inventory and shipments. New Breed’s Connection Manage joins their applications and connects to customers and suppliers via XML, FTP, EDI, API, JDBC, SAP IDOC, Inovis and Attachmate. Technology is a major element of the make/buy decision for companies considering outsourcing. New Breed’s continuing investment in information systems provides a demonstrated advantage among its competitors in the 3PL market.

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