Another area to consider is information systems. Here, Natali asks a similar set of questions. “Do I have the systems I need?” Diebold’s enterprise resource planning (ERP) system couldn’t give them the detail needed to manage logistics and material flow effectively, providing another reason to partner, he explains.

A third consideration is speed of improvement. Even if there is sufficient need and critical mass to make it worthwhile to develop logistics capabilities internally, is there time to do it? “Am I going to get better enough fast enough to execute what I need to do?” asks Natali. If the answer is “no” then the solution is outsourcing.

Also in terms of scope and critical mass, Natali raises the question of purchasing leverage. Even with Diebold’s multi-million-dollar budget for transport and warehousing, does a thirdparty logistics company have more procurement leverage?

The bottom-line question on outsourcing for Diebold isn’t about logistics but it is about corporate strategy. “If I take a look at my three-year business plan and I don’t partner with an outsource logistics firm, will my strategic business plan be inhibited by those functional deficiencies? And if the answer is ‘yes’ you have to eliminate that functional deficiency,” explains Natali.

A central point of the conversation Natali and Diebold had with Menlo Worldwide Logistics was about Diebold’s strategic vision in terms of global supply chain, product offering and what Diebold’s customers’ needs were. Then, they talked about what Diebold needed in order to get to where it wanted to be.

“We spent a lot of time talking about what our in-house capability truly was,” says Natali. “We had a global logistics department for the manufacturing supply chain piece of the business that consisted of a grand total of three people. We had entrusted that movement to our carriers. There was a certain model they had for doing business, and it didn’t necessarily match with our strategic vision of where we wanted to go.”

“For Diebold, the focus is on turning their supply chain into a core competency and competing on the strength of the supply chain,” says Carl Fowler, director of account management for Menlo Worldwide Logistics. “As markets globalize,” he explains, “companies find their supply chains stretched beyond their capabilities to manage what they have with a meager group of supply chain resources.”

Fowler continues, “Whether it’s an ATM or an automobile, the cost of manufacturing is pretty consistent when you look at it region by region. And where the companies are competing today is on the strength of supply chain. You need something that’s more flexible. You need to be able to get the parts on the shelf a little faster and a little bit cheaper while shrinking the inventory footprint in the field.”

With Diebold, specifically, Fowler explains, the partnership between user and logistics provider focused on supply chain evolution and supply chain integration. It all came down to putting a common supply chain vision out and rolling the disparate operating divisions in to support that one vision, that one goal, says Fowler. It meant using the strength of the supply chain to compete more effectively in new and emerging markets.

“The best machines are the ones that don’t have that many moving parts,” Fowler says. “Looking at a global entity or global enterprise like Diebold, our focus has been on rationalization; simplification of the supply chain.” By definition, he adds, transportation and warehousing are waste. Eliminating the movement and warehousing of goods whenever and wherever possible using lean tools and techniques helps drive waste out of the supply chain. “As lead logistics provider (LLP) for Diebold globally, our job is to find out where that waste is.”

“This becomes more than doing the movement efficiently,” adds Natali. The focus becomes, “Why am I moving so much?” “Because,” says Natali, “moving material around doesn’t service our customers.” Diebold and Menlo started looking at how Diebold was using warehousing and transport, how they organized their outbound network and where Diebold adds value in that outbound network.

“I have no desire to have a logistics partner that simply executes what I tell them to do. I need them to be a partner in not only creating my logistics strategy but a leader in creating my logistics strategy and a partner in creating my business strategy,” says Natali.

In a strategic partnership explains Natali, it’s more than driving continual cost improvements, though that's important. In today’s competitive environment, you have to be getting better every day.