And do you know this information to a level of detail sufficient for the new regulations that will come into effect in October? If so, then electronic submission of all cargo contents coming to you from your overseas supply chain members will simply be an outgrowth of your existing tracking procedures. If not, then you have some work to do. The U.S. government’s efforts to ensure security will have a huge effect on material handling processes, and not just in logistics. Logistics will see the changes first, but these changes will be felt on all processes involving inventory control, stocking and order processing, as well as distribution.
In October, Customs and Border Protection (CBP), formerly known as the U.S. Customs Agency, will enforce the requirement of electronic submission of cargo contents 24 hours before a vessel sails, flies, or travels by other means to U.S. borders or ports. This requirement will have several ramifications.
One will involve the coding used to describe the contents. CBP wants a detailed accounting of contents. To obtain such a level of detail, retailers, merchants, warehouses, distribution centers, and other members of the supply chain will need some type of code that can hold lots of information. CBP may require detail to the SKU level, which means supply chain members may need to include every bar code number of every item in a container.
Another factor affecting coding is the Sunrise Date — January 1, 2005. After that date, UPC 12 will no longer be supported. The UCC wants to change to a 15-digit format for UPC codes, primarily because it is running out of numbers. The good side to this change is that it could help meet the CBP requirements for more information.
While expanded bar codes may give the SKU detail needed, some parties are looking into RFID tags, encouraging them to become the preferred solution. Reports keep coming on how the cost of RFID will drop, eliminating a major barrier to implementation. But RFID offers other advantages. In addition to holding lots of data, they can be scanned at up to 300 items per second, with faster rates sure to come. Such faster scanning will help reduce the inevitable delays as CBP verifies the contents of containers and cargo.
Speaking of delays, another ramification is how these new requirements will affect your supply chain processes. “You have new logistic events coming into play,” said Gordon Fuller, practice lead, secure logistics, Covansys. “You have new or changed data fields, load or no-load indicators; you have further detail required on your goods, you have expanded bar code fields, and you have new management processes to handle the oversight and the exception handling for any of these events.”
“In many cases,” continued Fuller, “companies only receive information about their goods two days before the vessel arrives in the U.S.” (Contrast this with the 24 hours notice CBP requires before a vessel even leaves its port of origin.)
“Now, what happens if you still have processes in place that are automated and you receive shipping instructions ten days earlier?,” continued Fuller. “Your trucks will go out early to the docks to pick up the cargo, and nothing will be there. So, you may have to re-engineer that process. If your systems can’t receive this detailed information, if you have always received general department store merchandise, for example, on the shipping instructions, and now the broker wants to send you detailed breakdowns of your cargo that match the customs reporting and your systems can’t handle it, what are you going to do?”
And what if you are moving more towards a build-to-order system? Demand systems tied directly into production demand a tight supply chain. Any delays, because paperwork wasn’t filled out or filed properly, visual inspections of containers, or other problems will really crimp your processes.
Material handlers must find answers to these and other questions, as they will impact your stocking operations, your fulfillment processes, and your controls and systems, which will have to be reconfigured to handle all the extra data coming in. “Plus, with the electronic reporting regulations coming,” said Fuller, “you will have to renegotiate your expectations from your suppliers. Companies like Wal-Mart have already said they expect their suppliers to provide information electronically in a specific open standard format, AS2.”
What about your supply chain partners? Are you and they ready to handle the coming changes? It’s all about knowing where your assets are.
Leslie Langnau, contributing editor [email protected]