Keeping the Supply Chain in Focus

July 19, 2007
The insight for todays shipping community is that competition is now between supply chains with the race going to not only the swiftest, but also to the

The insight for today’s shipping community is that competition is now between supply chains with the race going to not only the swiftest, but also to the most reliable and the one providing the clearest visibility. A key component in establishing and maintaining a competitive edge are distribution center (DC) operations—moving product in, storing it and moving it out. Striving to make them optimal is an ongoing process, as new ideas, operations and resources appear.

For Nikon Inc. (

), it is essential to maintain an integrated supply chain, one that takes full advantage of its third party supplier, UPS (

) that provides a full range of services. Most of Nikon’s product is manufactured offshore, explains Arnold Kamen, vice president of Operations who oversees activities within the photo and instrument divisions of the company.

In the competitive environment in which Nikon lives, speed is essential to success. As a result, most product moves by air. "Due to the product life of some of the cameras," Kamen explains, "by bringing them in by air, we can turn them around very quickly and get them into our customer's hands. With our integrated supply chain through UPS, from the time it leaves the factory to the time it gets to our distribution branch is either one or two days. It's not cross-docked. It's really stocked and shipped. But it could be stocked and shipped in a very short amount of time."

Most of Nikon’s goods move to UPS Louisville, Ky facilities. Those operations are close to the express carrier’s WorldPort, but a bit down the road from it, not on the airfield property. A lesser amount of product goes to New York. But the majority goes to Louisville where a number of functions are performed.

Among other things, Nikon has ABI (Automated Broker Interface) and Customs certification as well as being C-TPAT (Customs Trade Partnership Against Terrorism) certified and validated. As a result, movement of the company’s freight happens seamlessly and all electronically.

"So basically," notes Kamen, "UPS picks up the freight in Asia and flies it to the United States, having it cleared before it hits the ground. They bring it into their facility, then stock it, ship it the next day, or do something that happens to a great deal of our freight--they create packaging only done in the United States, or build a kit."

The speed with which UPS serves Nikon’s kitting needs is extremely important to the manufacturer. Freight can be brought in, kitted, converted to a new number and quickly shipped out.

Since Nikon has a number and variety of customers, many of them like to differentiate their products, which means the manufacturer must make different or special kits for them.

"It makes the supply chain extremely quick," observes Kamen, "and certainly makes us very responsive to our customers. These may be digital cameras with lenses that have to be kitted or maybe a consumer digital camera that we want to kit with a special holder or bag. Whatever the retailer wants. We can custom do that, in Louisville, with almost no time lost."

Before switching to UPS, Nikon brought its freight into Los Angeles, where it would be sent to a kitter. The kitter could take days or weeks to get the job done, and then send it back to Nikon. The manufacturer would then ship half of it to New York, and then on to the end user.

An advantage Kamen claims for the integrated supply chain is that the UPS employees in Asia are aware of what products are most urgently needed. So, hot shipment containers are loaded so that needed items are the first available as they arrive.

"We have total visibility with what's happening with our shipment," says Kamen, "where it is from the time it leaves. So if there's an exception, we'll quickly know that. And if we need to re-route a shipment in transit, we'll know right away."

Another value added is that as upgrades and new technology become available for some of Nikon’s products at the Louisville campus, UPS has technicians and engineers available to integrate it into the equipment.

When consumer digital cameras first came out, the original Nikon model was made up of about eight SKUs (stock keeping units), recalls Kamen. Today they are probably the company’s largest movers. "Transporting cameras can sometimes be touchy at best," he observes. "Transporting across the road and across the country, even locally, we feel much safer now that our cameras don't have to take two or three road trips to be ready to be shipped to our customers. There's always some exposure with electronics. Being on the campus in Louisville certainly not only improves our supply chain greatly but it also provides security."

Nikon’s Instruments Division has just opened a cross-dock operation in Miami for its larger sized goods coming from China by boat and heading to Latin America. Rather than bring them into the United States, clear Customs and then ship them from the company’s facilities here, the aim is to bring them to the Port of Miami, produce orders there—which are basically shipping instructions—and have them move directly into Latin America at great savings. UPS is working with Nikon on the project.

To smooth out the ebbs and flows of material through its warehouse and to flatten out the work load internally, Matt Ilitch, vice president of distribution for Blue Line Food Service Distribution (

) hit upon a unique solution that has been a great success for the company that is the internal distribution arm of Little Caesar’s Pizza. Ilitch explains that Blue Line business is more than just Little Caesar’s as it serves other foodservice customers and airlines as well as providing distribution of food.

Little Caesar's is growing and Blue Line handles both the equipment and foodservice for all of the stores. Between its domestic and international operations, it has approximately 3,000 locations, according to Ilitch. Although some items are drop shipped, almost all equipment comes from Blue Line’s one distribution center (DC) in Detroit. Foods are sourced throughout the United States in all the major cities.

"Our DC is around 50,000 sq ft., including our offices," explains Ilitch. "Although we’re in a growth mode we've been able to turn our inventory and not have to carry too much. Normally an equipment vendor has several months of inventory just because of lead times."

The reason Blue Line has been able to level is warehouse demand cycles is its use of PODS (Portable On Demand Storage.

) units to move equipment to the stores. Usually associated with residential storage and moving, the units have provided an ideal solution for Blue Line. Previously distribution involved negotiating the day and time a store could take delivery of equipment. The PODS contract includes 30-days of storage in the pricing which eases time constraints for delivery.

"What strikes you is when you're delivering equipment is the need to prepare in a series of steps," claims Ilitch. " You have to have a truck with a lift gate, and many people to help drag the equipment from the nose of the trailer to the end of the trailer. All of the pieces of equipment are in heavy crates to prevent damage. The POD eliminates all of the need for forklifts and rollbacks and everything else to set up the delivery."

Blue Line now loads in the fashion in which the construction contractor needs it. Generally, they start with what’s called the Lobby Area then work the way back, just the way the store is to be built. Ovens are shipped directly from the oven factory and delivered right to the store to be installed separately because they are such unique pieces of equipment.

In the past, when permits were issued, the stores were ready to go and wanted to quickly have their orders. With the PODS, when the stores say they are ready and will need the equipment within 30 days, Blue Line now has a 30-day grace period.

"We ship it out in advance," Ilitch explains, "We are able to move it through our system quicker because we're not holding equipment in anticipation of the order. It has helped in our turns. It has flattened our work weeks because our warehouse workers that put the orders together—they used to get hit hard with 10 or 15 orders all at once--now we've adjusted the work load where they can schedule everything throughout the week on an even basis."

Ilitch is pleased with the PODS Podzilla Lift System. It is a straight truck with a frame that surrounds the POD unit--a 16 foot long by 8 foot high container. The frame grabs the POD and maneuvers it off the truck bed onto the ground. Loading is just the opposite. The POD is picked off the ground and put on the truck. For inventory control, each POD has both a number and bar code.

Typically there are two or three PODS per store. "It's like building a home," claims Ilitch. "What day do your bring the bricks? What day do you bring in wood and so forth. Now that pressure is completely off the stores and they're not worried about the event. I think we're pushing over 60% of our overall shipping as PODS." Blue Line has a standing order with the supplier. Every time PODS are removed. they bring back the same amount.

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