Bridging Infrastructure Gaps In Latin America
By partnering with a 3PL, Lucent moves inventory closer to its end consumers, reduces inventory-carrying costs, and better manages product flow.
Overcrowded ports, poor highway infrastructure, and railroad disconnects make getting product to Latin America a unique challenge for shippers, regardless of urgency. Couple these roadblocks with geographical constraints and rigorous customs compliance regulations and the task of ensuring time-definite service to a customer in far-reaching corners of the Andes or the Amazon is as unpredictable as the terrain itself.
When looking to revamp and enhance its existing supply chain network in Latin America, Lucent Technologies was faced with these same infrastructure obstacles.
But rather than invest in its own facilities in Latin America, the Murray Hill, N.J.-based telecommunications juggernaut opted to piggyback on the resources of Danzas AEI, Darien, Conn.
To help support information and product flow, Danzas AEI leverages its network of distribution facilities in the Caribbean/Latin America (CALA) region and integrates visibility software and warehouse management systems among its customers, their suppliers, and consignees to improve shipment visibility and efficiency.
"As more and more companies move into the Latin American region," says Milton Kohler, senior director multinational customers telecommunications sector, North America, Danzas AEI Intercontinental, "we develop warehousing to support their on-demand structures and projects."
Infrastructure gaps that once choked supply chain flow no longer pose as much difficulty for Lucent. By partnering with Danzas, it has moved inventory closer to its end consumers, expedite product turnaround, create more flexible customization strategies, and enhance customer service.
"We wanted to position our inventory as close to customers as possible, regardless of where they were located," says Gregory J. Johnston, Lucent's manager of logistics in the CALA region. "To do this, we had to develop new strategies that improved the speed and visibility of product flow."
From a strategic perspective, Danzas provided the flexibility to serve Lucent's varying warehousing and distribution demands.
"We have two models," says Kohler. "One is the forward positioning of inventory, given the ability to take committed inventory out of facilities already in the country and service our customers. The second is warehousing on demand, creating temporary facilities for a given period of time."
Creating a functional Latin distribution network demands a collaborative effort—in terms of facility management and IT integration—from both the customer and the logistics provider.
"Before we built this network with Danzas, we shipped out of our factory locations and material came in from every direction," says Johnston. "Eventually most material destined for Latin America went through Miami, but we were at a loss by not consolidating and having no visibility."
The challenge for Lucent was to consolidate its stateside facilities, while enhancing visibility into its supply chain—from supplier to end user.
The decision to collaborate with Danzas AEI was not without precedent. Danzas had already been operating as a 3PL partner with Lucent in the Latin American region as well as managing facilities in the Asian Pacific ring. From a tactical standpoint, Danzas was the total solution Lucent was looking for, with expertise in integrating warehousing, brokerage services, freight forwarding, and information technology.
"We're not in the logistics business," says Johnston. "We're in the telecom business. Like most companies we focus on our core competency, leaving the logistics, warehousing, and distribution to the experts."
Collaborating with Danzas AEI, Lucent consolidated and enhanced its two pivotal export hubs in Miami, Fla., and Laredo, Texas. It then linked Danzas' 10 in-country warehouses with the two stateside facilities, providing a consolidated hub-and-spoke distribution network.
Creating a matrix of facilities to redistribute product to installations throughout Latin America was the first component of Lucent's strategy; the second element was creating a transparent pipeline of information flow.
Prior to its initiative with Danzas AEI, Lucent began using Optum Technology's TradeStream supply chain collaboration tool to gather and aggregate fulfillment data from multiple channel partners and logistic providers worldwide.
To complement TradeStream, Danzas and Lucent cooperatively developed the Lucent Information System (LIS), a web-based solution that automates order management processes and enables real-time shipment tracking across the supply chain. Leveraging the system, Lucent can electronically pick and pack products from any warehouse and release them quickly for shipping to the end user, all while providing real-time visibility throughout the pipeline.
Because dynamic information sharing is critical to ensuring total visibility into inbound and outbound shipments, this past July Danzas helped Lucent integrate TradeStream with LIS to provide total visibility from order placement to delivery, and every event in between.
"When the material gets to Miami from our supplier all the way to its Latin American destination, we have visibility," says Johnston. "But we also have visibility from suppliers into Miami and Laredo. We literally capture all the supply events where we can see material not only from Miami but all the way upstream to the source."
Having seamless information flow and visibility of product movement both inbound and outbound gives Lucent more leverage in documenting carrier performance.
"In the past suppliers managed a lot of our transportation," says Johnston. "Without visibility it was difficult to account for performance. Now we are much more involved in carrier selection and determining if it is as efficient and cost-effective as possible."
These same efficiencies trickle down to Lucent's end customers, giving them visibility into shipment status.
"Our installers have complete visibility of our materials," says Johnston. "This facilitates initiatives such as sequencing material, so when product reaches a delivery site, installers can immediately pull it off the truck and begin installation."
As the system matures, Lucent hopes to streamline its network even further, bypassing the 10 hubs and shipping on- demand directly from crossdocks.
"We're looking to potentially consolidate our in-country warehouses, keeping the material positioned in Miami or Laredo, then only ship when we're ready for installation," adds Johnston. "This process would take some expense out and cut inventory carrying costs so Lucent products can go literally from a U.S. warehouse directly to the installation site."