Media Coverage
Eight companies beat logistics heat
By Staff, Manufacturing Business Technology, 1 April, 2006
International logistics, an essential activity for companies that outsource and partner globally, requires reconceived business models to make processes more transparent, reliable, and flexible. In January, Boston-based AberdeenGroup issued eight International Best Practices Awards to companies demonstrating exemplary logistics initiatives (see box).
Aberdeen surveyed 400 companies to assess strategies and determine which businesses achieved significant business transformation in four areas: global inventory control, transportation spend management, import/export process management, and international logistics outsourcing.
“We selected companies that are applying automation and achieving quantifiable benefits,” says Beth Enslow, VP of enterprise research. “The common thread throughout was information availability. International logistics is a multiparty process that takes place across time zones. The ability to move data so as to have one version of the truth is crucial. It’s what enables these companies to drive huge improvements.”
Among them is clothing designer Liz Claiborne, which sources more than 250 million product units from 3,000-plus factories in 35 countries. Greater regulatory requirements from U.S. Customs prompted the company to improve visibility of goods movement on a global basis—a cumbersome task with its client/server technology.
Liz Claiborne now uses a global trade management solution from TradeBeam to attain automated shipment visibility via Web browsers.
The company also enacted a more streamlined process for electronic data transmission of customs declarations so that the import team can focus primarily on exemption and exceptions handling. Shipment status is available from the time the product leaves the factory to arrival at its final destination. The improved visibility has reduced transit times by five to seven days, and removed seven to 10 days of inventory in the first 18 months.
IBM’s Integrated Supply ChainGroup uses a unified import management process that replaced a complex multicountry process—without sacrificing flexibility to handle local requirements. IBM deployed a technology backbone that supports integrated controls, but leverages a single data services gateway.
“It allows us to take advantage of our suppliers’ capabilities,” says Dipan Karumsi, IBM supply chain program manager.
“Brokers have systems capabilities that IBM can use to reduce costs. For example, a broker today already has communication interfaces with U.S. Customs. We’ve taken that out of our module as we don’t want to rebuild technology our suppliers already have. We’re taking away that level of code that we would have to support and maintain over the life of the system. The brokers like it because they do not have to come into the IBM system to rekey the data, and it helps them maintain consistency among their customers.”
IBM says the gateway has reduced transaction costs from $0.35 to $0.03, netting a savings of $400 million in six years for IBM.
International logistics best-practices winners
Global inventory control:
- Liz Claiborne: Removed seven to 10 days of inventory using TradeBeam global trade management solution to avoid delays, improve visibility
- Black & Decker: Multimillion-dollar inventory reduction using Optiant for multi-echelon optimization
Transportation spend management:
- Williams-Sonoma: Multimillion-dollar reduction in ocean freight costs using GT Nexus’ global supply chain control solution
- Multinational manufacturer: 25-percent reduction in air/ocean rates using CombineNet solution for bid optimization
Import/export process management:
- Haworth: Avoided $1.2 million in duties using Management Dynamicsglobal trade management solution for automating NAFTA declarations
- IBM: Saved $400 million using IBM solutions to reengineer import process with brokers
International logistics outsourcing:
- Redback Networks: 30-percent reduction in logistics costs using D.W. Morgan for outsourcing
- Royal Phillips Electronics: 50-percent cycle-time reduction using UPS for outsourcing
