July 2012 | Commentary | 3PL Line

Managing Global Complexity: The Right Tools for the Job

Tags: Supply Chain Management, Global Logistics

Rajiv Saxena is Vice President, Global Supply Chain Engineering, APL Logistics, 602-586-4771

Henry Ford is popularly quoted as saying that his customers could have any color Model T they wanted—as long as it was black.

For years, global logistics professionals using optimization could relate to Ford's quote, because they could apply this highly respected engineering practice to virtually any shipping challenge they faced—as long as they were content with a single-faceted, sub-optimized result.

But cars and times have changed. Today, new optimization tools allow shippers to address multiple global freight challenges at once.

Mode and Route Selection

Although most international shipments travel via sea, determining the best mode and route is rarely as simple as booking space on a containership. From multiple sourcing origins and delivery doors to airports or seaports with varying regulations and risks, the global element adds many variables.

For example, when making an Asia-to-U.S. East Coast shipment, companies can choose from the following methods:

  • Air. Swift and direct, but usually the last resort due to its high expense.
  • Air-sea or sea-air options. Requires determining which seaports or airports offer the best transloading costs, availability, and connectivity.
  • All-water to the East Coast. Involves myriad load/discharge port options, and can be direct or indirect.
  • Water to the West Coast combined with a transload. Another alternative that can be direct or indirect, and includes myriad load/discharge port options.
  • West Coast mini landbridge. Involves all the standard transload elements, along with the incremental complexity of adding another transport mode and more carriers.

Shippers must also choose from among the hundreds of regularly scheduled liner and air shipping services that serve a particular route. With global optimization tools, shippers can filter through these options, readily identifying the shipping scenario that best meets their key parameters and business rules.

Case-by-Case Space Utilization

The standard size of ocean containers ranges from 20 to 53 feet, and shipping options include a choice between full containerload or less-than-containerload. There are also several approaches to loading containers at origin and unloading them at destination, including single-country consolidation, multi-country consolidation, co-loading, expedited ocean shipping, deconsolidation, and distribution center bypass.

Each option offers distinct advantages in cost, consistency, and overall transit time. Yet time and resource constraints frequently prevent shippers from weighing these elements as often or as creatively as they should. As a result, they miss a range of possibilities for grouping and ungrouping their products, configuring their container size mix, and maximizing space—and the potential time- and cost-savings that could result.

New global optimization tools eliminate those constraints. Companies can select the best combination of options based on shipment compatibility within stockkeeping units, container tonnage and dimension limits, and other pre-defined rules.

World-Class Timing

Shipment timing requires greater levels of precision when global suppliers and transits are involved. One small glitch early in a finished good's production cycle may result in a company missing a pre-booked vessel's sailing date, having to change to a more expensive transportation mode, or losing a valued customer due to a delivery delay.

On the other hand, having goods produced and ready to ship before they're needed can create higher inventory carrying costs and warehousing expenses.

Global optimization tools provide a date-based planning and scheduling function that creates a precise—yet realistic—production and origin logistics schedule for vendors, providers, and integrators to follow.

If a trade partner or service provider isn't able to follow the schedule, global optimization tools help adjust the plan. Taking into account the latest set of conditions—such as a supplier's delivery delay, a carrier's schedule change, or a cancelled order—these tools create a new "best possible" plan, even if it is vastly different from the original.

That flexibility also applies to shifting business rules. If a company finds itself with a huge surge in demand, it can use optimization tools to change the business rule for speed, then almost instantly convey and apply the new priority to its shipments throughout the world.

All of the Above

Finally, global optimization tools enable companies to weigh all these factors at once—without consuming too much of their time or engineering bandwidth.

For example, one international shipper now uses these tools to arrive at an optimal shipping plan in one fully automated run that takes approximately 90 minutes. By contrast, the shipper's old decision method required two days, multiple iterations, and significant human intervention.

That shipper's experience is not an anomaly. Regardless of companies' unique global shipping preferences, requirements, and constraints, new optimization tools are capable of considering all appropriate shipment flows, modes, routes, and cargo to come up with an ideal workable plan—as often as needed and any time things change.

If you think your company has tapped into all optimization has to offer just because you've used it before, think again—because this new model may just fit your company to a T.