Executive Briefings

Import Warehouses-The Next Bottleneck in Global Supply Chains?

As port congestion eases, other factors are complicating the transloading and distribution process, according to the editorial staff at Supply Chain Digest. At one level, global logistics managers have been able to relax a bit in 2007, as congestion at U.S. ports has been substantially reduced from the levels faced by importers in previous years, they report. However, a variety of factors are causing throughput challenges in many "import warehouses" the facilities used to process and transfer inventory coming in from offshore supply sources.

For example, the "mega" cargo ships increasingly being used to move goods from Asia have altered the incoming container profile for many importers who now receive fewer shipments of more containers, playing havoc with labor requirements and workload balancing. With ships continuing to get larger and congestion likely to worsen again, these problems are not likely to disappear any time soon. High prices and lack of availability of land is also pushing import warehouse further and further from port facilities, especially in the Long Beach/LA port complex. Combined with heavy traffic congestion, the ability of importers to quickly get containers from terminals to the warehouses for processing is often constrained.Import warehouses serve several different purposes in an increasingly complex global supply chain process, including transloading, distribution, warehousing and additional value-added services such as such as electronic processing. A given import warehouse can be involved in one or several of these functions. Many companies use third parties to manage their import warehouse, while others, especially in the retail sector, run their own operations.

The need for import warehouse has naturally grown in direct proportion to the double digit annual growth in import volumes in the US over the past decade. The most important of these operational challenges are as follows:

• Variable and unbalanced work load requirements due to ocean carriers schedules and long unloading times
• Poor visibility to inbound movements due to manual systems and lack of integrated visibility portals
• Limited flow of containers due to union rules and hours of port/terminal operations

As a result, import warehouse managers often have a very tough job, and operational challenges are an increasing bottleneck for many importers, adding to supply chain variability, often placing warehouse managers in a position where they are no longer masters of their own fate. Rather, their efficiency and productivity depend not just on how well they execute their own operations, but also on how well the other players within the import supply chain-the steamship lines, longshoremen, freight forwarders and customs brokers, and the Customs and Border Patrol personnel-integrate and execute theirs.

Addressing this situation, researchers Arnold Maltz, Professor of Supply Chain Management at Arizona State University, and Thomas Speh, Professor of Distribution at Miami University (Ohio), in a recent report, offer a number of recommendations on how import warehouses throughput and effectiveness can be improved.

• Establish better availability of real-time information on the end-to-end status of ship and container arrival, unloading, customs clearance and drayage pick-up and container pick-up hours (now limited) aligned with ship unloading hours (usually round the clock) will help
• Provide automated security for entrance and exit; real-time monitoring of dwell times; centralization of the port chassis pool; and 24-hour delivery availability at the receiving warehouse and/or drop yards
• Locate WMS operations to minimize inbound/outbound traffic congestion--either near a port, near outbound transport, or on dedicated rights of way
• Implement electronic access to a single reliable source of complete, accurate information
• Create a pool of temporary labor to better deal with highly variable volumes
• Ensure physical buildings are optimally configured to support the mission (transloading, distribution, distribution and storage, maintain on dock double stack rail capability, and have adequate, timely truck capacity availability

Of these recommendations, relatively few are in the importer's direct control. More flexible port operations are in the hands of the port authorities and their negotiations with the Longshoremen's unions. The Pier Pass program at LA/Long Beach, which allows for 24 hour pick-up during the work week and on Saturday, has generally been considered a success. The concept needs to be expanded elsewhere. As for improved visibility-that's the Holy Grail of WMS. While there is constant progress, the answer to that still looks to be a long haul.
http://www.scdigest.com

As port congestion eases, other factors are complicating the transloading and distribution process, according to the editorial staff at Supply Chain Digest. At one level, global logistics managers have been able to relax a bit in 2007, as congestion at U.S. ports has been substantially reduced from the levels faced by importers in previous years, they report. However, a variety of factors are causing throughput challenges in many "import warehouses" the facilities used to process and transfer inventory coming in from offshore supply sources.

For example, the "mega" cargo ships increasingly being used to move goods from Asia have altered the incoming container profile for many importers who now receive fewer shipments of more containers, playing havoc with labor requirements and workload balancing. With ships continuing to get larger and congestion likely to worsen again, these problems are not likely to disappear any time soon. High prices and lack of availability of land is also pushing import warehouse further and further from port facilities, especially in the Long Beach/LA port complex. Combined with heavy traffic congestion, the ability of importers to quickly get containers from terminals to the warehouses for processing is often constrained.Import warehouses serve several different purposes in an increasingly complex global supply chain process, including transloading, distribution, warehousing and additional value-added services such as such as electronic processing. A given import warehouse can be involved in one or several of these functions. Many companies use third parties to manage their import warehouse, while others, especially in the retail sector, run their own operations.

The need for import warehouse has naturally grown in direct proportion to the double digit annual growth in import volumes in the US over the past decade. The most important of these operational challenges are as follows:

• Variable and unbalanced work load requirements due to ocean carriers schedules and long unloading times
• Poor visibility to inbound movements due to manual systems and lack of integrated visibility portals
• Limited flow of containers due to union rules and hours of port/terminal operations

As a result, import warehouse managers often have a very tough job, and operational challenges are an increasing bottleneck for many importers, adding to supply chain variability, often placing warehouse managers in a position where they are no longer masters of their own fate. Rather, their efficiency and productivity depend not just on how well they execute their own operations, but also on how well the other players within the import supply chain-the steamship lines, longshoremen, freight forwarders and customs brokers, and the Customs and Border Patrol personnel-integrate and execute theirs.

Addressing this situation, researchers Arnold Maltz, Professor of Supply Chain Management at Arizona State University, and Thomas Speh, Professor of Distribution at Miami University (Ohio), in a recent report, offer a number of recommendations on how import warehouses throughput and effectiveness can be improved.

• Establish better availability of real-time information on the end-to-end status of ship and container arrival, unloading, customs clearance and drayage pick-up and container pick-up hours (now limited) aligned with ship unloading hours (usually round the clock) will help
• Provide automated security for entrance and exit; real-time monitoring of dwell times; centralization of the port chassis pool; and 24-hour delivery availability at the receiving warehouse and/or drop yards
• Locate WMS operations to minimize inbound/outbound traffic congestion--either near a port, near outbound transport, or on dedicated rights of way
• Implement electronic access to a single reliable source of complete, accurate information
• Create a pool of temporary labor to better deal with highly variable volumes
• Ensure physical buildings are optimally configured to support the mission (transloading, distribution, distribution and storage, maintain on dock double stack rail capability, and have adequate, timely truck capacity availability

Of these recommendations, relatively few are in the importer's direct control. More flexible port operations are in the hands of the port authorities and their negotiations with the Longshoremen's unions. The Pier Pass program at LA/Long Beach, which allows for 24 hour pick-up during the work week and on Saturday, has generally been considered a success. The concept needs to be expanded elsewhere. As for improved visibility-that's the Holy Grail of WMS. While there is constant progress, the answer to that still looks to be a long haul.
http://www.scdigest.com