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The future of Forwarding

The future of Forwarding

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Published by Salman Hamid
Freight Forwarding, Shipping and Logistics
Freight Forwarding, Shipping and Logistics

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Categories:Types, Business/Law
Published by: Salman Hamid on Dec 02, 2012
Copyright:Attribution Non-commercial

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11/07/2013

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TheFutureof Forwarding
 
“Our biggest challenges are tracing freight, knowing where it is and tracking it,” says Wayne Martin, senior account managerat Global Link Logistics, an Atlanta-based freight forwarder. This is no small task for a company that manages the movementof more than 40,000 containers a year for its clients. “We use multiple carriers to handle cargo throughout the United Statesand Canada. We need to know what’s happening with our customers’ cargo at any point in its movement.”Thanks to its state-of-the-art information management system, Global Link can do exactly that.A customer calls and wants to know where their shipment is,” Martin explains. “We can get a container number, or a purchaseorder (PO) number, and access that shipment record in our system. Every event that occurs in a shipment’s life we record. Wecan tell the customer their container was sighted in Yuma, AZ, and its ETA in Memphis is three days, and four days to deliverto their distribution center. Or a customer calls and thinks their container was not delivered. We check and find that it was —the warehouse simply hadn’t informed corporate of the arrival yet. The customer can check all of these things themselves on the website. They dont have to stop to make a phone call. And we’re more productive. We can move on to their next container.”Global Link provides these immediate answers through its robust freight forwarding software solution, developed by SilverBullet Technologies of Miami. “Our old IT system didn’t allow us this real-time access to information. Nor did it allow us toprocess information to the Web,” Martin remembers. “We used paper-based spreadsheets and manually input data. If a cus-tomer called with a question about a container, it might take us the better part of an hour to track down the answer with a man-ual spreadsheet-based system. With Silver Bullet, we can access that information immediately. That’s a huge time savings.”
Global Market Drivers
Global Link’s business, like that of its fellow freight forwarders and third-party logistics service providers (3PLs), is all aboutmanaging customer inventory movements around the world on a 24/7 365-day basis. “The world has evolved from a col-lection of national economies with import-export activity to a global economy,” says Satish Jindel, an air industry econo-mist and principal, SJ Consulting, Pittsburgh. “We have gone far beyond just import-export. A U.S. shoe manufacturermay buy leather in Brazil, ship it to China to manufacture shoes, and then import the finished product to the United Statesfor sale. This behavior creates a complex criss-cross flow of goods around the globe, occurring on a greater order of magni-tude than ever before.”
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The demands of this business environment are changing the face of freight forwarding today.Companies shift sourcing and manufacturing locations around the world in their continual search for better or less expensiveraw materials, components, labor and production capacity. At the same time that businesses are expanding their global supply chains, they are reducing inventory – substantially wherever possible. And they are increasing the velocity of the inventory thatthey do hold to accelerate the cash-to-cash cycle.Leaner inventories have one downside, however. They make supply chains significantly more sensitive to disruption andinterruption.
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“The globalization of business introduces its own risks and uncertainties,” notes Yossi Sheffi, professor of systems engineering at the Sloan School of Management at the Massachusetts Institute of Technology in an interview for
Strategy + Business 
maga-
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 ©2006 Silver Bullet Technologies, LLC – All Rights Reserved
The Future of Forwarding
 Mid-sized freight forwarders are under the gun. They must broadentheir service portfolios to meet the increasingly global service needs of  customers. Affordable, state-of-the-art IT makes this possible.
 
zine. “First of all, lead times grow. So we have to forecast further in advance. And one of the basic truths about forecasting is,the longer the period you have to forecast, the less certain you are about the outcomes.“Second,” Sheffi continues, “globalization brings a lot more participants into the supply chain. These include foreign manu-facturers and their supplier networks, foreign transportation and port operators, and myriad government regulators. Theglobal network of participants is not always transparent, and there are many more opportunities for theft, accidents, use of sub-standard labor practices and terror, so you introduce a lot more uncertainty on both the demand and the supply side.” With more players on the supply chain team spread out across the world, communication requirements become exponentially more complicated. This can create challenges that exceed traditional homegrown information processing and telecommunica-tions infrastructure.These in-house systems may not be able to handle such unforeseen supply chain disruptions as unexpected cargo delays causedby port congestion or work stoppages. Such delays can wreak havoc on company operations, shutting down assembly lines,costing retailers sales. During the past year or more, for example, rail congestion on the U.S. West Coast has been causing headaches for many companies. “The steamship lines are having trouble moving freight out to the rails, and there is a lot of congestion on the railroads as well,” reports Martin of Global Link. “We have to be able to stay on top of all these develop-ments in real time.”
The Value of Certainty 
“Supply chain executives within global organizations value certainty, predictability and reliability over cost,” says BrooksBentz, co-manager of Accenture’s Transportation Skills Group within the Supply Chain Management Practice. “What they re-ally mean is that they want high reliability at the lowest possible cost. No supply chain executive wants to tell the CEO that thereason we had stock outs before Christmas is because we saved a nickel a mile on transportation.“So the fundamental driver in supply chain management today is reliability, predictability – or the lack thereof,” Bentz says.“Companies typically hedge against uncertainty by adding inventory at various points in the channel. Naturally, this ties upvaluable capital and ultimately eats away at profit margins and performance.”This supply chain uncertainty presents a significant opportunity for freight forwarders. Bentz elaborates: “If I’m a category manager for shoes at a major retailer, and I can see the inventory in my pipeline – not just what’s in the distribution center, but what’s in transit, at port, on a vessel, with the consolidator in Asia, on the shipping dock at the manufacturer and so on – I canadjust my pipeline accordingly. So say I have a trailer load of patent leather pumps going to New York, but I see that the shoesare selling well in Seattle and I’ll soon be out of stock. I want to be able to strip that container when it lands at Long Beach andsend half those shoes to Seattle and the other half to New York. Supply chain visibility lets me do this.“The other thing visibility does,” Bentz continues, “is enable you to look at the events at the various links and nodes in the sup-ply chain, and set performance standards all the way from point of origin to destination. You can then measure actual perform-ance against those standards to give you reliable statistics and show you where bottlenecks exist.“If you look at inventory in the pipeline, there is always more than there ought to be,” the Accenture manager notes. “So theissue is not about speeding that inventory up but having better visibility into the pipeline so I can make alternate choices, fix or eliminate delays, or re-set my performance standards. All of this creates a more reliable supply chain, and that has tremen-dous implications. If my supply chain is 21 days door-to-door and I’m hitting that schedule 99 percent of the time, I can re-duce the amount of buffer inventory I carry.”Claude Germain, chief operating officer of Schenker Canada Ltd., agrees that managing supply chain unpredictability is crit-ical for logistics services providers. “We have to engage in managing our clients’ working capital more than ever,” says Germain.Schenker of Canada is an operating division of Schenker AG, a global 3PL.
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 ©2006 Silver Bullet Technologies, LLC – All Rights Reserved
The Future of Forwarding

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