World Trade - October 2008 - (Page 21)

ing programs, and implementing alternative power unit (APU) devices on their trucks—savings which will help Werner control their own costs, and ultimately, their customers’ transportation costs. Currency ﬂuctuations are wreaking havoc on business balance sheets as well. The falling U.S. dollar changed the landed cost of globally sourced products, components and raw materials. At the same time other currencies, particularly the Chinese RMB, are increasing, leading businesses to question their current sourcing strategies and leading them to consider newer emerging markets. “Customers are modifying their vendor base and moving to places like Vietnam, Indonesia, India and becoming less dependent on China,” says Tony Zasimovich, vice president, international logistics, APL Logistics. What can your provider do for you? Books Are Fun Turns the Page on Warehousing and Distribution With challenges come opportunities, a fact that both Books Are Fun and C.H. Robinson are able to capitalize on. Books Are Fun, Ltd. (a Reader’s Digest company) is a leading display marketer of books and gifts. The company employs a network of over 850 independent representatives and serves schools, corporations, early learning centers, and numerous hospitals, universities, government ofﬁces, and non-proﬁt organizations across North America. In an effort to streamline their warehousing and distribution process, Books Are Fun contracted C.H. Robinson to conduct a warehouse optimization study. “C.H. Robinson was able to help us take out costs by re-engineering parts of our supply chain,” says Michael Small, vice president, operations, Books are Fun. Small says that C.H. Robinson was able to look at the location of both their warehouse and reps, re-route some shipments and re-engineer the ﬂow of goods to various warehouses and distribution centers. They also helped negotiate some of the warehouse contracts, allowing Books Are Fun to variablize most of their costs, and helped the company re-engineer a reverse logistics process to make it more efﬁcient. While that may have been the biggest project, Small says that C.H. All of this causes pain throughout the entire supply chain as businesses analyze every aspect of their operations. Most of the providers are ﬁnding that what customers really want are options. They want to know what the best mode mix is for shipping their products, what options they have for warehousing and distribution, and what alternatives there may be to their current transportation designs. They know they need to make changes and are asking for help in identifying the most effective moves. One of the ﬁrst things you can do, according to Zasimovich, is to get the goods where they need to be when they need to be there, as cheaply as possible. Services such as APL’s OceanGuaranteed service, offer a lower cost alternative to airfreight with a money back guaranteed transit time at about 25 percent of the cost of airfreight. Sometimes the most basic steps such as identifying inefficiency and squeezing out waste, are made with a new sense of urgency. As an example, Werner was recently asked to remodel a traditional container import program to shorten transit time and reduce costs. Originally, the customer was loading full containers by SKU in China for delivery to a U.S. warehouse where the product was unpacked and repacked, then delivered over the road to the U.S. retailer. Werner’s solution was to load store ready containers at a central consolidation warehouse in China for direct delivery to retail locations in the U.S. Savings to the customer were signiﬁcant; results were achieved by maximizing on the lower cost warehouse labor in China, loading the product once as opposed to twice (less handling also reduces the chance of damaged goods) and streamlining transit plans within the U.S. “The complexity of the problems our customers are dealing with are greater now. Organizations are getting leaner and must get better at integrating domestic and international freight. That means that you can no longer manage with two separate transportation departments; today’s solutions really need to overhaul the entire supply chain,” explains Stoffel. Third-party logistics providers, in particular, are ﬁnding their key customers asking them to take a more proactive involvement in their business. Zasimovich gives the example of a Fortune 500 company with 30 divisions, each managing it own transportation activities. Robinson has also helped in smaller ways. With costs increasing overall, especially fuel surcharges, which are constantly escalating, C.H. Robinson helped standardize the company’s accessorials, establishing ﬂat rates for individual carriers. While it doesn’t lower the rates, it provides more consistency for planning and forecasting. Small believes that their relationship with C.H. Robinson will continue to evolve, with the company becoming more involved in supply chain design with Books Are Fun. He talks about C.H. Robinson as a ‘true partner.’ “I don’t use that term loosely,” says Small. “We hold them accountable, and treat them as we would an employee. That means we have ongoing communication; we can’t make demands like that and keep them in the dark.” APL centralized the booking and control for all divisions, enabling the company to better manage its transportation costs by redirecting air shipments to ocean where possible, using expedited where needed, and creating visibility throughout the entire organization. “If you have a close relationship with the customer it’s fairly easy to identify things that will make them more efﬁcient and maximize their spend,” says C.H. Robinson’s Butts. With budgets under pressure, many businesses are choosing to outsource more of their supply chain functions. “Over the past few weeks, we had one customer who was looking to outsource their overseas operations in order to variablize cost, and another who was looking for more of an outsource/in-house blend,” says Zasimovich. Werner’s Stoffel sees a similar trend. And in keeping the focus on customer needs, he says that they are creating a lot of hybrid solutions, involving a customer’s existing carriers, using WWW.WORLDTRADEMAG.COM 21 http://WWW.WORLDTRADEMAG.COM

Table of Contents Feed for the Digital Edition of World Trade - October 2008

World Trade - October 2008 Contents Tune Up Your Supply Chain Globalization: The Real Competitive Threat Supply Chain Watch Tradewinds Shippers and Providers Collaborate to Take on a Challenging Economy Tweaking the Supply Chain to Optimize Value and Minimize Cost Supply Chain Software Morphs Into Enterprise Management Can Warehousing Really, Truly Be Strategic? Everybody is Global Between the Devil and the Deep The Hidden Costs of ‘Free’ Translation Blowing Smoke

World Trade - October 2008

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