Industry News

Richard Owens, CEO of DHL Asia Pacific had a featured article on Business Times commenting on the changing economy and the need for better integration throughout the supply chain.   The recession has forced many businesses to look for ways to lower costs and improve the customer delivery experience.

Supply chain management companies like Komar Distribution Services (KDS) have been called to executive round table discussions to map out how new technology and business processes can reduce the cost of delivered goods.  KDS has a 100 year history of working in partnership with manufacturers, suppliers and retailers to innovate the supply chain.

Richard Owens Excerpt

Richard Owens, tackles a piece of the challenges business supply chain partners are facing in his guest blog post.  Here is an excerpt from the Business Time article.

A customer walks into an electronics store to buy a new mobile phone. He has a brand in mind but it is not in stock. What does he do? Does he decide to go home and return when the brand he was looking for is available again? Unlikely. He will probably buy another model from a brand that offers similar features at the same price point.

In a world where the customer is increasingly informed and time-poor, convenience and efficiency can often drive a purchasing decision over brand loyalty. This means that companies must not only focus on marketing a product to create the demand, but equally importantly, businesses must ensure that the supply chain can deliver the product to store shelves around the world in an efficient and precise manner. Without the right supply chain, companies risk losing customers and ultimately market share.

The above example could just as easily have been a notebook PC, LCD TV or a non-consumer electronics product. Regardless of the market, businesses have to get their products to market and in front of customers on time, every time. And, to stay financially healthy, they have to do this without amassing large inventory levels. It’s a fine balance. It’s also one of the reasons that in recent times, I have witnessed the art of supply chain management moving from the warehouse into the boardroom.

So, has the current economic downturn elevated the importance of supply chain management in strategic business decision making? It would be an exaggeration to say that this recession is solely responsible for the increasing priority that businesses are giving to the supply chain. But what I hear from customers is that it has undoubtedly spurred on what has been a gradual evolution in that direction. Between the first half of 2008 and the same period of 2009, DHL Global Customer Solutions has seen a 133 per cent increase in consultancy for supply chain optimization projects.

Before the slump, our customers, especially those in the technology sector, had their supply chains designed around a high-demand scenario. They built up stock to meet insatiable customer demand. When the market slowed down suddenly without much warning, many companies were caught off guard and were left with over stocked shelves. Businesses cannot afford high inventory levels, least of all technology companies, who deal in products with extremely short lifecycles. The downturn has forced many businesses to immediately examine how they manage their supply chains and order-to-cash cycles.

A positive outcome we can see, partly due to the recession, has been an increase in true consultation and partnership between logistics providers and their customers. While this is part of the natural evolution of the industry, the recession has brought the need for closer engagement to the fore. Previously, the purchasing of supply chain services, including warehousing, freight and express services, was primarily driven by procurement groups and was very much focused on achieving the lowest transportation charges.   (Read full article)

Supply Chain Management

If you are a growing business looking to reduce the costs associated with your supply chain processes, contact the executive team at KDS.  If you are looking for a competent supply chain logistics partner with 100 years on experience with manufacturing, overseas transportation, warehousing and distribution of  retail goods across America, give us a call.

Komar Distribution Services
16 E. 34th Street, 10th Floor
New York, NY 10016
(918) 429-7779

Terminals and Transporation

KDS has provided helpful links to US terminals, ports and transportation services for your research and reference:

• St. Lawrence Seaway Authority, http://www.seaway.ca
• Air Transport Association, http://www.airlines.org
• Airports Council International, http://www.airports.org
• Association of American Railroads, http://www.aar.org
• Federal Express, http://www.fedex.com.
• Ship Photo Database, http://www.ship-photos.de
• Port Authority of New York and New Jersey, http://www.panynj.gov
• Port of Montreal, http://www.port-montreal.com.
• Port of Rotterdam, http://www.portofrotterdam.com/en/home/
• Panama Canal Commission, http://www.pancanal.com/
• World Oil Transit Chokepoints.
• Flags of Convenience, http://www.flagsofconvenience.com
• Freeway Management and Operations Handbook, http://www.ops.fhwa.dot.gov/Travel/traffic/freeway_management.htm
• International Organization of Motor Vehicle Manufacturers, http://www.oica.net/

We found a great article by Peter Bradley on DC Velocity website regarding the need for visibility in complex supply chain systems.  Komar Distribution Systems (KDS) agrees with the outlook and supply chain visibility needs established in this article.  KDS has developed 3pl systems that provide visibility to our clients as their trusted supply chain outsourcing partner.

With global businesses looking for innovative ways to decrease costs and reduce waste in the supply chain, the executive team at KDS has new offerings in 2010 to meet market demand for cost effective 3PL solutions.  KDS offers a complete line of service that include cross docking, inventory warehousing, foreign trade zone (FTZ) logistics, GOH and supply chain management.

Visibility in The Supply Chain

Here is the beginning of the Peter Bradley article and you can read the full version on DC Velocity Website.

When the global recession hit last year, companies around the world found themselves stuck with inventory that suddenly stopped moving. Within days, the repercussions for cash flow started to become apparent. All that inventory meant lots of working capital was tied up in product —and was not available to pay the bills, says Rick Becks, senior vice president of E2open, a company that offers Web-hosted supply chain visibility tools.

Few could have predicted the extent and depth of the recession, but it’s a good bet that companies that had good visibility across their supply chains —that could see actual orders, production, goods in transit, and so on —fared better than those that did not. As for the source of their advantage, it’s a simple matter of exposure.

The companies with the best visibility were less likely to have amassed vast stores of inventory as a hedge against uncertainty —demand fluctuations, forecasting errors, supplier failures, and the like. Visibility into their own and their suppliers’ stocks gave them the confidence to keep global inventories as spare as possible.

The argument for the importance of supply chain visibility is hardly new, and technology that can provide it has been around for more than a decade. But the financial exposure created by the recession sheds new light on just how crucial visibility can be in managing risk.

The imperative to create a clear, near real-time view of the supply chain has only become more pressing over time. Professors Hau Lee of Stanford and Martin Christopher of the U.K.’s Cranfield School of Management argued in a 2004 paper in the International Journal of Physical Distribution & Logistics Management, that a number of forces were combining to make supply chains more vulnerable and turbulent.

Demand in nearly every industrial sector was becoming more volatile, product life-cycles shorter, and competition more intense, they wrote in the article, “Mitigating Supply Chain Risk Through Improved Confidence.” Supply chains had become more subject to disruption from external factors such as wars or strikes and internal factors like shifts in strategy. Lean practices that minimize inventory, the outsourcing of key components of the supply chain, and reliance on fewer suppliers across far-flung networks added to the risk.

That risk has only become greater. “I think it is clear that supply chain vulnerability has increased significantly in recent years,” Christopher wrote in an e-mail reply to a DC VELOCITY query. “The reasons are partly to do with economic and geopolitical uncertainty, but mainly due to increased volatility and turbulence on both the demand side and the supply side. Everybody I meet tells me that it is much harder to run the business on the basis of a forecast and that long-range planning is a thing of the past. Instead, we have to build in the capability to react to the unexpected —this is what I believe resilience in a supply chain context is all about.”

Nari Viswanathan, vice president and principal analyst for the Aberdeen Group’s Supply Chain Management Practice and co-author of a supply chain visibility study published earlier this year, said in a recent interview that while supply chain managers may strive to shave inventories, improve data flows, and compress lead times, several factors are working against them. Fewer suppliers can mean greater risk of supply disruption. Geographic expansion across China, India, other parts of Asia, and Eastern Europe can extend lead times, which leads to greater amounts of inventory in the overall system, once again creating greater complexity and greater risk.

The risk spiral

Now, another development threatens to further complicate supply chains, and thus increase the need for visibility: Supply chains that once were one-way channels are fast becoming multi-directional as countries like China —perhaps China especially —rapidly develop a large consumer market.

Lee and Christopher argued back in 2004 that one of the keys to mitigating the risk caused by complex supply chains lay in developing end-to-end visibility. Visibility helps eliminate one of the major causes of supply chain volatility, what they called the risk spiral —i.e., if a participant in a supply chain lacks confidence in, say, when goods will arrive, the response may be to add safety stock, which in turn creates added pressure on production and extends lead times, resulting in a further erosion of confidence.

The lack of confidence is exacerbated as increases in physical distance and the number of outsourced participants add time to material flow and reduce visibility of any participant in the supply chain to the activities of others.

To read remainder of article, click here.