Amber Road Three Costs of Poor SCV E-Book

8/2/2019 Amber Road Three Costs of Poor SCV E-Book

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Three Common Global Supply Chain Issues that

A ect Your Bottom Line

eBook


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Three Common Global Supply Chain Issues that A ect Your Bottom Line

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When was the last time you heard o a large or even a medium-sized company that is strictly domestic?It happens, but not very o ten. Today, the vast majority o enterprise-class companies are global. Why?The bene ts o sourcing rom low cost countries and selling into new oreign markets are too strongto dismiss.

And while companies have ound a way to go global, many are still making due with sub-standard globalprocesses and technologies borrowed and tweaked rom domestic operations. Global transportationand supply chain visibility are two such areas.

Its not enough to track goods domestically; supply chain managers must monitor shipments aroundthe globe and account or the added complexity o moving goods across international borders.

A recent study by AberdeenGroup showed that only about 30% o companies have automated dataand event monitoring and/or have optimized process capabilities in place. From source to destination,the inbound process steps or milestones needed to synchronize product and in ormation fows are stillbeing monitored manually (phone, ax and email) in up to 49% o all companies. 1

Here are some questions to ask yoursel to highlight ways you may be losing money without the rightprocesses in place or goods that need to cross international borders.

1 Globalization: Linking Supply Chain Trans ormation to the Proft and Loss Statement, AberdeenGroup, Sep 2011.


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Over-Reliance On Expedited Shipping

While some shippers must always use expedited shipping because their products are time-sensitiveor perishable, many organizations use expedited transportation to compensate when something has

ailed elsewhere in the supply chain.

Overuse o expedited reight can quickly turn pro t into loss, especially when relying on expeditedshipments is the result o poor supply chain planning. By adjusting supply chains to allow or extratransport hours while still meeting customers demands, shippers can reduce potentially unsustainabletransportation costs without sacri cing service.

Through better planning and supply chain visibility, most global shippers can reduce expeditedreight by 1520% annually. This translates to signi cant costs savings or global companies with even

moderate shipping volumes. Ask yoursel some o these questions:

Does my outbound item need to get to the customer the next day, or will two days su ce? Isa ternoon delivery OK? Its still technically next day but may be less costly.

Do I need to pay or expedited inbound shipping rom my suppliers? Where can I nd more leadtime to build into the planning process?

Is my inventory system giving me enough in ormation about ordering time rames so I can avoidthe cost o rush orders?

Do I have enough visibility into my inbound shipments against orders to make trade-o s that willstill meet customer demand without having to expedite shipments?

Am I using expedited shipping as a crutch to compensate or unreliable suppliers?


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Incurring Demurrage And Detention Fines

The terms demurrage and detention relate to the transportation delays caused by late pickup o cargo (demurrage) and late return o equipment, such as empty containers (detention). Fees charged

or demurrage and detention compensate a transportation asset provider or time its equipment isunavailable or idle through no ault o its own. Carriers typically o er a grace period or demurrage anddetention, and the ees are incurred once that period is over. Depending on location, ees can rangein the hundreds o dollars per container per day, and quickly add up.

Demurrage and detention charges usually occur when planning schedules are out o balance, whencommunication and noti cation are poor, and when there are delays in clearing Customs. A companythat routinely incurs demurrage and detention ees is likely not care ully monitoring cargo arrival anddoesnt have a sound understanding o in-transit cycle times.

Real-time visibility and management o these assets can both accelerate and compress the supplychain, providing companies with a reduction in trailer assets, inventory and in the associated carryingcosts. According to the AberdeenGroup study, companies that pre-clear their entries with Customscan save 13 days where cargo might otherwise sit at the terminal. Real time visibility and coordinationcan help reduce demurrage and detention ees by 2550%.

Understanding your business processes is the rst step: How am I noti ed when reight arrives at the terminal?

Am I clearing Customs as e ciently as possible so the ree period in the terminal isnt exceeded?

How can I urther minimize transit times so I can return containers within the ree period?

Can I improve my yard and dock operations to ensure maximum throughput and preventtrailer aging?


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Poor Communication With Trading Partners

A particularly unproductive use o your customer service representatives time is answering questionsas to when deliveries will arrive. Their time would be better spent addressing issues with orders,payments and more complex problems in other words, providing real customer service that helpsbuild relationships and cultivate repeat business.

Similarly, purchasing specialists would work more e ciently i they had two-way communication withvendors and shippers. The ability to enter in ormation into the system once and share it across multipleparties in the shipping cycle will dramatically reduce errors and speed order ul llment. According tothe AberdeenGroup report, a US-based consumer packaged goods companys use o an SCV solution

has: Reduced number o days o inventory in hand by 24%

Reduced lead times by 28%

Improved on-time customer delivery rom 3374%

Many organizations still rely on closed systems that require re-keying o orm-based data or multiplephone calls and emails to place orders, yet todays technology can help acilitate and streamline thiscommunication. Ask yoursel whether customer and supplier portals would ree your sta to addressmore strategic initiatives.

How do I currently communicate delivery status to customers?

How do I place orders with my suppliers and receive delivery status rom them?

Are there ways I can improve communication and in ormation sharing along the entiresupply chain?

What is the percentage o time my customer service representatives spend providing orderstatus in ormation?


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Making The Changes

Recognizing areas where you may be losing money due to lack o supply chain visibility is only the rststep in improving operations. Implementing processes that improve the e ciency o those areas is thenext step in reducing costs.

As with any process optimization initiative, measurement o current per ormance is an important inputto uture improvement. Take some time to analyze some relevant in ormation:

What is the ratio o expedited shipping to standard shipping?

On what percentage o cargo do you pay demurrage or detention ees?

Out o the number o inquiries received in a day, how many relate to order status?

With answers to these questions and others posed earlier, youll be able to determine whether improvedvisibility into your supply chain will produce tangible results.

About Amber Road

Amber Road provides a single, on-demand plat orm that automates and streamlines global trade. Byhelping organizations to comply with country-speci c trade regulations, as well as plan, execute andtrack global shipments, Amber Road enables goods to fow unimpeded across international borders inthe most e cient, compliant and pro table way.

One Meadowlands Plaza East Rutherford, NJ 07073 (T) 201 935 8588 (F) 201 935 5187 www.AmberRoad.com

Copyright Amber Road, Inc., 2012. All rights reserved.


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Amber Road Three Costs of Poor SCV E-Book