With memories of the 2004 Los Angeles/Long Beach port complex peak season crisis in mind, many shippers have taken action to avoid such problems this year by moving shipping dates back wherever possible. In fact, as Brook Bentz, partner in Accenture's Supply Chain Management Practice (www.accenture.com), observes, "There's no such thing as peak season anymore, it's just heavy volume all year long, with slightly higher volumes in the fall, although that may be a bit of an exaggeration."
For many years, peak was seen as being in September and October, observes Bentz, but now it begins in July. "The span of the season has gotten broader, because there's more global trade going on and people are anticipating difficulties."
Mizuno USA (www.mizunousa.com) has had shipments delayed by West Coast backups in the past. Over the past 18 months it has taken measures to make sure such delays don't happen again, says Glen Pettit, the company's vice president supply chain.
Mizuno is a $1.2-billion distributor of golf equipment, baseball and other athletic products. It does some assembly, of mostly golf products, at its headquarters in Norcross, Ga. However, most of its products are manufactured and imported from the Pacific Rim and the Philippines. The company deals with seasonality by bringing in product throughout the year.
"Our biggest quarter for shipping to our customers is January, February and March," Pettit says, "because golf and baseball are beginning. We're importing that product against the Christmas peak, although just a little later than the holiday."
The ongoing challenge for Mizuno and other retailers is to have product on the shelves when customers are shopping and ready to buy.
"The issue for retailers or those who are selling to retailers is that products just can't get on the shelf late. Fashion merchandise, for example, is almost a perishable product," says Accenture's Bentz. Miss the cycle and suppliers have to deal with markdowns and returns. Reverse logistics costs can destroy margins.
The first step for Mizuno in reducing its risk was to join with U.S. Customs and Border Protection (CBP) to become Customs-Trade Partnership Against Terrorism (C-TPAT) certified.
"We have a dialog with Customs and are beginning ISA (Internal Self Assessment) certification, as well," explains Pettit. "That's really helped us reduce our port inspections and helped our cycle time reliability because we're getting fewer containers inspected now. With inspections going down dramatically, containers are flowing through the ports, whether Los Angeles or somewhere else, much better than previously."
Mizuno next sought a new freight brokerage company to replace one that didn't serve its needs, in fact was causing problems. After a thorough search process, the company chose UPS (www.ups.com) as its freight broker.
"They brought us a technology infrastructure that was easy install," says Pettit, "one that allows us to track and trace our product from the factory to the port, across the ocean and into the U.S."
As Bentz notes, in dealing with peak season issues, both the challenge and solution is visibility. "With a reliable, predictable supply, at whatever speed it operates," he claims, "you can then do the things that really have the biggest impact, including getting excess inventory out of the pipeline." The other advantage of a more visible supply chain is that bottlenecks can easily be pinpointed.
A major step toward supply chain visibility taken by Mizuno was to visit its overseas factories along with UPS and set up standard operating procedures that worked well with UPS's capabilities. As a result of the new procedures and enhanced product tracking and tracing, Mizuno is now using fewer containers to ship product. Previously, most of its freight moved in 20-foot containers. Now shipments are consolidated at the factory and move in full 40-foot containers.
"That means less container movement with the same amount of product," says Pettit. "Not only do we reduce our cost, but we also improve our throughput because we have fewer containers." The company has shaved five days off of its transit time from factory to port.
To mitigate problems associated with peak volumes and to achieve a more reliable, predictable pipeline, it's necessary to continually engineer and monitor the supply chain. At Mizuno Pettit continually monitors port volumes and congestion and works with UPS to examine import options. As a result, Mizuno now often uses an all-water route from its Asian supplier to Savannah.
"Pricing changes every couple of months," he says, "which also determines the route. If we're spending a lot of money in L.A. and product is sitting in demurrage, there's a cost to that. So, paying for all water isn't that expensive with those considerations. Some of the all-water times into Savannah have been equal to coming across by rail from Los Angeles when there's congestion there."
Another step Mizuno has taken for its large customers is that it packs store-ready shipments, allowing customers to crossdock product through their own DCs.
"For Dick's Sporting Goods, for instance," says Pettit, "previously we would ship products to their two DCs, where they would unload and store it in their warehouse, then ship it to their stores. That was a two-week cycle. We now get and pack store orders from them. We're packing 350 orders per week for them, still delivering to their DC, but they just cross dock it. So that's taken about one to two weeks of cycle time out of our system."