Global Logistics and Supply Chain Strategies - May 2008 - (Page 40)

forecasts into actual moves, says Rob Walpole, senior vice president of logistics and supply chain development. Schenker is responsible for the timing of the shipments. It will take a manufacturer’s forecast and examine inventory on hand next to the plant, as well as items in transit from suppliers. Then it translates that information into a “pull” signal at the supplier’s location. The supplier who bears responsibility for holding inventory, although Schenker manages the task of balancing stocking levels based on actual demand. “At the end of day,” Walpole says, “if there’s more inventory than necessary, it raises costs.” The need for just-in-time delivery, coupled with the sequencing of parts into the assembly line, make the job especially challenging. Not every supplier can maintain a stocking location close to the OEM’s plant, although automakers such as Toyota ask many of them to do exactly that. Others have to factor in the vagaries of long-distance transit in order to assure the timely arrival of their components, some of them complex sub-assemblies, at the plant. The trend toward outsourcing of large pieces of a plane or automobile has given birth to another partner in the supply chain, and yet another level of complexity. According to Walpole, many suppliers lack the skills to create such units, so another entity might stand between them and the OEMs. Its job is to bring together many parts into a system that is then shipped out to the plant for final assembly. Such partners also handle the job of supplier inspection and approval. In such cases, says Walpole, Schenker can act as logistics coordinator for multiple legs of the journey, in addition to recommending the best provider of a sub-assembly service in a low-cost production environment such as China. The LSP can also perform relatively simple tasks related to the customization of generic product to meet individual market needs, such as the packaging of peripherals into kits, and the inclusion of product literature in the local language. The electronics sector, with its heavy dependence on outsourced manufacturing, can benefit greatly from such services, Walpole suggests. The biggest difference between that industry and many others, he says, “is the nimbleness that’s required.” Oakland, Calif.-based APL Logistics, a long-time presence in Asia, plays a variety of intermediary roles within supply chains that draw on multiple sources of product. On the consumer-electronics side, it might merge speakers and stereo units into a single product, says Tony Zasimovich, vice president of international services. Or it might consolidate shipments from many locations into a single container. The company runs merging centers in Kaohsiung, Taiwan and Singapore, where it accepts parts from major Asia production centers and ships them out to overseas buyers. Providers like APL Logistics benefit from the increasing reliance of retailers and manufacturers on postponement programs. In what amounts to a vendor-managed inventory service, it will store product arriving from various locations, then wait for orders from distributors. In general, the customer has already taken title to the inventory. APL has also managed other VMI vendors, providing information on order status and shipping into Supplier Logistics Centers in the U.S. In those cases, Zasimovich says, the customer might not take possession of the goods until they are landed. Information can take the place of physical goods when a supply chain is stretched around the globe. Zasimovich says companies generally want to know when a shipment has passed through various key points in its journey, including transfers between handlers. Using the APL Logistics visibility tool known as SeeChange, they can go online and receive 20-minute status updates which reference specific purchase orders or even SKUs. When something goes wrong, exception messages are conveyed through management dashboards which allow for quick remedial action. The Holistic View When it comes to streamlining multisourced supply chains, the biggest successes have been in mature industries such as high-tech and consumer electronics, says Alex Thompson, vice president of product management with San Mateo, Calif.-based TradeBeam, a vendor of global trade management software. Companies such as Apple and Dell Computer have achieved a holistic view of their networks, enabling them to deliver the right product to the right customer. In general, though, “most companies have not taken advantage of globalization opportunities that are out there.” The main obstacles are organizational in nature, Thompson says. Many companies remain divided into functional silos that oper- ate within narrow areas of responsibility. As a result, they can’t reap the benefits to be had from merging physical and financial supply chains on a global scale. Information generated by shipments can’t easily be reused for data reconciliation, financial processes and other purposes. Throw in multi-country sourcing, and the disjointed supply chain becomes even more difficult to manage. One TradeBeam customer that has achieved some success in this area is the French automaker Renault. The company set out to build the Logan, a low-cost car with a target price of 5,000 euros. The goal was to win market share in middle-income economies such as Egypt, but Renault couldn’t reach it without streamlining the global import and export process. The company drew on TradeBeam’s software to create a single, centralized database of global trade data. The tool allowed it to work more closely with local suppliers and joint ventures, as well as logistics partners. At the same time, Renault could make better use of free-trade agreements for globalized product design and sourcing. The company ended up shipping parts to Romania, then complete knockdown kits to Morocco, where it performed light assembly. That last step qualified the cars for shipment to Egypt at a lower duty rate, Thompson says. Industries with a longer track record in outsourcing tend to do better when it comes to diversifying the supply base. The semiconductor industry is well along the path, having moved to an outsourced, “fabless” manufacturing model some years ago, says Ashok Santhanam, president and chief executive officer of Bristlecone Inc. in Milpitas, Calif. Such companies will buy silicon wafers from Asia, then conduct assembly and testing in other parts of the world, often relying on contract manufacturers for a large part of the process. One reason to deal with multiple suppliers is to play them off one another to obtain a lower price. But the real motivator is a need to create the most efficient and synchronized supply chains possible, Santhanam says. Different sources of parts and product might serve particular markets, based on capacity and access to logistics services. Local-content requirements within free-trade agreements can also drive decisions on sourcing. Supply chain planning software allows a manufacturer to look at various constraints related to inventory, in order to balance the 40 MAY 2008

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Global Logistics and Supply Chain Strategies - May 2008

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