For distributors and manufacturers, Trans-Pacific trading — once seen as a low-cost sourcing option or an impossible market to crack — has become a major, and therefore essential, part of many companies' supply chains. As the demand for low-cost products from the region continues to increase, trade with Asia has become the major or even sole source of some product segments or industries. As both importers and exporters are seeing increased activity in this link of their supply chains, the opportunity now exists to apply proven domestic supply chain strategies to Trans-Pacific trade with the same results — lower costs, improved customer satisfaction and market-share leadership.
As western companies continue to leverage their Asian operations, they have big, clear challenges they cannot ignore, and the difficulty is compounded because security and supply chain optimization are not easy to tackle in an international environment. In the past, companies could get away with putting off supply chain initiatives and accept increased expenses and inflated inventories. With the experiences of last year's work stoppages at West Coast ports and the 9/11 terrorist attacks in 2001, now companies see the prospect of closed factories or retail outlets, inoperable production lines, unsatisfied customer obligations and lost profits. Today, many companies are investigating what technologies, strategies and network adjustments they should be considering to ensure consistent and uninterrupted service for their supply chain.
Key areas include:
• Understanding and evaluating your supply chain: No matter how long it takes a shipment to get from one point in the supply chain to the next, it's the speed and reliability of the whole pipeline that's important. With new requirements for more detailed information on shipment manifests, greater concerns about inventory and safety stock, and the need for better ways to manage documentation and provide visibility of shipments, looking at supply chain performance has never been more important.
• Information systems that provide visibility: One of the greatest needs in Trans-Pacific supply chains is technology to uncover black holes in the supply chain. Technology solutions will make information about the supply chain visible so that you can deal with inventory issues, disruptions, and security concerns in real-time, allowing you to make decisions right away.
• Managing inventory: Rethinking inventory strategies must be a focus for Trans-Pacific companies, for whom inventory is particularly challenging due to long and sometimes highly variable cycle times, weak forecasting abilities, and poor visibility. Many companies pursue strategies such as buffering inventories and relocating production as safeguards against supply chain disruptions or bottlenecks.
• Increased use of third party logistics (3PL) providers: Many companies are turning to 3PLs for the Trans-Pacific market. Today, many 3PLs have invested in the technology and operations infrastructure to provide complete logistics services that allows international brands to be more nimble in their global operations. Companies have these 3PLs handle all multi-modal moves from plant source in Asia to U.S. manufacturing plant or DC, or even directly to the customer. The 3PL's greater ability to integrate functions and bridge borders makes it an attractive option for many companies.
• Understanding and responding to government initiatives: It is critical that we understand C-TPAT (Customs-Trade Partnership Against Terrorism), the 24-Hour Rule and initiatives from the U.S. Department of Homeland Security.
Learn more about the current challenges in Trans-Pacific trading and how to improve supply chain performance to alleviate these obstacles. You can download the white paper, "Creating a Trans-Pacific Supply Chain Strategy: A case study in international logistics" from Tompkins Associates at www.tompkinsinc.com.
Tompkins Associates helps clients achieve Supply Chain Excellence through supply chain consulting and integration solutions. For more information visit http://www.tompkinsinc.com/