Outsourcing: Joe Lawler, Chairman, President And CEO Of ModusLink (Part 1)

By Sramana Mitra and guest author Aditya Modi

About Joseph C. Lawler
Joe Lawler is ModusLink Global Solutions’ chairman, president and CEO, with executive leadership responsibility for the vision, strategic direction, and performance of ModusLink Global Solutions and its subsidiaries. As CEO, Lawler oversees cross-company operations, financial management, and strategy implementation.

Prior to joining the company in August 2004, Lawler was executive vice-president at RR Donnelley (RRD), an $8 billion global printer with 30,000 employees. At RRD, he was responsible for seven business units as well as the corporation’s government affairs and corporate marketing efforts. During his 10 years with the company, Lawler succeeded in diversifying RRD’s business portfolio and driving growth through his integrated solutions approach. He was also known for his work designing RRD’s executive talent committee, global leadership team, and officer development program.

Lawler was the recipient of the 2007 Ernst & Young Entrepreneur of the Year Award in New England. He received his BS in business administration from Northeastern University in Boston and his MBA from Harvard University.

About ModusLink Global Solutions
ModusLink Global Solutions, Inc. (NASDAQ:MLNK) provides solutions for the supply chain, aftermarket and e-business processes of the world’s largest technology and consumer goods companies.  Its products span the multichannel product lifecycle:

• from supply chain activities such as sourcing, configuration and fulfillment;
• to revenue-generating e-commerce, customer service, and brand loyalty solutions;
• to aftermarket returns, repair and resale.

Sramana Mitra: Hi, Joe. Welcome to our outsourcing series. To start, would you tell us when ModusLink was founded and with what premise? What is the history is of the company and your focus, to give our readers some context?

Joe Lawler: Sure. ModusLink was actually the combination of two businesses, both of which served the supply chain outsourcing market for long periods, but we put two companies together in 2004 and formed ModusLink. Our premise at the time was that the overall outsourcing trend was really in its infancy and would continue to grow. [We knew that] companies were going to increasingly need help managing long supply chains across the globe from companies like ModusLink. We had subject matter expertise on the ground in a lot of those regions. So, we say that our role is executing critical supply chain processes for our clients, helping them to manage from the concept of product right through to the production and distribution of products and product lifecycle management, which would include things like configuration, fulfillment, returns management,  and e-commerce capabilities for our customers.

We do that across three primary regions in the Americas, Europe and Asia through 25 of our own solution centers. We operate in 14 countries around the globe. Our idea dates back to the start of ModusLink, which was about a six years ago. The two predecessor companies go back nearly 20 years before that. One is called ModusMedia. We put that together with a business inside of CMGI, but ModusLink is the company that we are going to talk to you about today.

Sramana Mitra: Would you talk about some of the customers and the types of products you are working on to give us a bit more color on what supply chain we are talking about?

Joe Lawler: We focus on technology customers. If you or some of your readers who are familiar with a Gartner’s supply chain top 25, we work with about half of their top 25 global supply chain customers. That would include customers such as Hewlett-Packard, MAD, Sony Ericsson, SanDisk, Linksys, and part of Cisco. Those would be representative examples of the kinds of clients we work with. Typically, these clients are working across multiple regions. Their supply chain extends from Asia to the Americas to Europe.

Our capabilities are fundamentally built around being near to where low-cost manufacturing is taking place and where consumption of products takes place. In our supply chain activities, there are two things we focus on. One is hitting what we call factory supply of complex components, complex kits that support products like notebook computers and cameras, where we take language complexity or power complexity, to the procurement of all the parts that would accommodate or go with those types of products. We feed those into contract manufacturers around the globe. An important part of our business, we refer to as optimized products configuration, which sometimes referred to as “postponement” in the industry. The idea of postponement is the final packaging of product at a low-cost manufacturer. [It] is oftentimes not the most economical way to get product to market. So, by estimating how many units are going to be needed in Eastern Europe and pre-packaging all of that product in Asia and bulking it into Eastern Europe only to find out the demand is really in Western Europe, whether that is the northern or southern part, where the language and power differ, ultimately means that you  have to dissemble the product, rework it, and repackage it. Postponement is an idea that was born out of a more economical way of getting product to market. Take the core product itself, load customized content as appropriate, version it, and associate it with power or language and configurations when the demand signal actually comes across. So, that is an important part of our business as well.

Sramana Mitra: Let me ask a few questions to help make this clearer. Do you do all the assembly and packaging as well; is that all part of your business? Is it a full contract manufacturing supply chain in the vein of Flextronics or Foxconn, or [does it have] alternative functions?

Joe Lawler: Let me try and explain the differences. A Foxconn or Flextronics could, in fact, package a final assembly of product. Let’s use a GPS package as a good example. A GPS device is prepackaged at one of their facilities somewhere in China, it is then bulk shipped into Eastern Europe. They sit in a warehouse for a matter of weeks or months, and then all of a sudden, somebody finds out that the software that was loaded on that particular product is an older version and needs to be updated, or the power configuration that was prepackaged with that product is appropriate for the U.K. but inappropriate for Hungary. Then, somebody has to open that product, repackage it, and modify it.

The cost of doing this is really excessive. Also, if you simply bulked in a GPS device as opposed to shipping a product that had all the packaging components as well and procure the packaging and materials in a local fashion, there are significant savings that go along with it. So, what ModusLink is enable an OEM to work with both a Flextronics and a Foxconn, bulk that product into the region, wait until we receive the demand signal, load the precise content that is a current onto the device, and couple it with the exact power requirements that are necessary. Therefore, [we] package it only one time and send it to the distributor, which will then take the product from there. Sometimes we go directly to retail.

This segment is part 1 in the series : Outsourcing: Joe Lawler, Chairman, President And CEO Of ModusLink
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