Executive Briefings

Osram's Supply Chain Is as Clear as Glass

With all of the changes that Osram Sylvania Products Inc. has undergone in the last 40 years, it's no surprise that the company would have built up a veritable army of logistics providers around the world.

The well-known maker of lighting products has had several ownership changes over the years. GTE bought Sylvania, originally established nearly 100 years ago to serve the market for replacement fluorescent tubes, in 1958. Germany's Osram, a subsidiary of Siemens, took Sylvania off GTE's hands in 1993, getting a company with a greatly expanded product line from its distant origins.

In the process, Osram Sylvania had acquired a roster of more than 125 freight forwarders and customs brokers in the United States alone, according to Bill Rooney, international traffic manager at the glass division in Exeter, N.H. Toward the last half of the 1990s, the company began to view that setup as inconsistent with the goal of establishing an efficient global supply chain. Many of its service providers were small mom-and-pop shops, Rooney said, better suited for niche markets located close to manufacturing points.

In 1996, Osram Sylvania launched an intensive search for a single provider to handle as much of its business as possible. But it was pulled up short by many of the larger forwarding and brokerage houses, who were eliminated from contention one by one because they lacked the ability to function in multiple markets. Said Rooney: "There was a lot of fluff, and no stuff."

Making the search even more difficult was the still-undefined nature of Osram Sylvania's needs. To a large extent, they would end up being shaped by the abilities of the chosen provider. Rooney said the company wasn't even sure it would find a truly global partner, and that its original ambitions didn't necessarily lie in that direction anyway. "Initially we were doing it to improve what we had in the states," he said.

BDP sent its own personnel to the Osram Sylvania factory in China to set up
standard operating procedures for shipment processing.

The glass division of Osram Sylvania acted first, choosing BDP International as its favored provider. BDP, a Philadelphia-based freight forwarder and customs broker, is known for its heavy investment in information technology. In fact, it was systems that served as BDP's biggest selling point to Osram Sylvania. "They had instant access to everything," said Rooney.

BDP got the account at the end of 1996, and the relationship blossomed over the following year. Since then, BDP's position in the Osram Sylvania supply chain has extended deep into global markets. It now acts as sole freight forwarder and customs broker, handling imports and exports by ocean and air, for the glass business of Osram Sylvania. BDP Transport, a newly formed non-vessel operating common carrier, consolidates smaller export loads into full containers.

On the import side, BDP coordinates inbound shipments to Osram Sylvania's customers in the U.S. Using 15 ports of entry, it clears all freight with Customs via remote location filing from its Boston office, according to Rick Correnti, general manager of BDP Boston. For Osram Sylvania, the arrangement provides the kind of economies of scale that were impossible to achieve with the host of smaller brokers that had previously cleared shipments at the ports.

Currently, BDP is focusing on the client's shipments to and from China. The forwarder sent its own personnel to the Osram Sylvania factory in China to set up standard operating procedures for shipment processing, Correnti said. As a result, BDP's internal systems allow for visibility of product all the way back to the source. Osram Sylvania has access to all purchase orders, along with information on Customs clearance and delivery, on a real-time basis.

Before, said Rooney, "we never knew where the containers were. We were notified when they left. Eight weeks later they showed up at the dock. In between there was nothing." Poor communications might also result in containers sitting on the docks for up to two weeks, piling up demurrage charges.

BDP has shown itself willing to help out even when it was not directly responsible for the shipment. In one case, Osram Sylvania turned to BDP to rescue some stalled containers at the port. Within three hours, the boxes had been delivered to destination. In Canada, another forwarder was stymied when Canadian Customs announced that the fumigant used in a shipment from Asia was banned in that country. BDP stepped in and quickly resolved the problem with Customs officials.

In less than three years, Osram Sylvania has revamped its global distribution network, with the U.S. serving as hub. The next step, said Rooney, is to link the various spokes, setting up traffic lanes that bypass the U.S. altogether.

The partnership with BDP exists at all levels of Osram Sylvania, with an emphasis on new ideas and long-term planning. "It's a case of not just upper management, but also the people that are doing the work," said Rooney. "They're the ones that can tell us yes or no."
Osram Sylvania executives are now working to make BDP the exclusive logistics provider for the entire company. "It's a slow process," said Rooney. "People within Osram Sylvania have got relationships built with existing forwarders. It's hard to get them to change."

With all of the changes that Osram Sylvania Products Inc. has undergone in the last 40 years, it's no surprise that the company would have built up a veritable army of logistics providers around the world.

The well-known maker of lighting products has had several ownership changes over the years. GTE bought Sylvania, originally established nearly 100 years ago to serve the market for replacement fluorescent tubes, in 1958. Germany's Osram, a subsidiary of Siemens, took Sylvania off GTE's hands in 1993, getting a company with a greatly expanded product line from its distant origins.

In the process, Osram Sylvania had acquired a roster of more than 125 freight forwarders and customs brokers in the United States alone, according to Bill Rooney, international traffic manager at the glass division in Exeter, N.H. Toward the last half of the 1990s, the company began to view that setup as inconsistent with the goal of establishing an efficient global supply chain. Many of its service providers were small mom-and-pop shops, Rooney said, better suited for niche markets located close to manufacturing points.

In 1996, Osram Sylvania launched an intensive search for a single provider to handle as much of its business as possible. But it was pulled up short by many of the larger forwarding and brokerage houses, who were eliminated from contention one by one because they lacked the ability to function in multiple markets. Said Rooney: "There was a lot of fluff, and no stuff."

Making the search even more difficult was the still-undefined nature of Osram Sylvania's needs. To a large extent, they would end up being shaped by the abilities of the chosen provider. Rooney said the company wasn't even sure it would find a truly global partner, and that its original ambitions didn't necessarily lie in that direction anyway. "Initially we were doing it to improve what we had in the states," he said.

BDP sent its own personnel to the Osram Sylvania factory in China to set up
standard operating procedures for shipment processing.

The glass division of Osram Sylvania acted first, choosing BDP International as its favored provider. BDP, a Philadelphia-based freight forwarder and customs broker, is known for its heavy investment in information technology. In fact, it was systems that served as BDP's biggest selling point to Osram Sylvania. "They had instant access to everything," said Rooney.

BDP got the account at the end of 1996, and the relationship blossomed over the following year. Since then, BDP's position in the Osram Sylvania supply chain has extended deep into global markets. It now acts as sole freight forwarder and customs broker, handling imports and exports by ocean and air, for the glass business of Osram Sylvania. BDP Transport, a newly formed non-vessel operating common carrier, consolidates smaller export loads into full containers.

On the import side, BDP coordinates inbound shipments to Osram Sylvania's customers in the U.S. Using 15 ports of entry, it clears all freight with Customs via remote location filing from its Boston office, according to Rick Correnti, general manager of BDP Boston. For Osram Sylvania, the arrangement provides the kind of economies of scale that were impossible to achieve with the host of smaller brokers that had previously cleared shipments at the ports.

Currently, BDP is focusing on the client's shipments to and from China. The forwarder sent its own personnel to the Osram Sylvania factory in China to set up standard operating procedures for shipment processing, Correnti said. As a result, BDP's internal systems allow for visibility of product all the way back to the source. Osram Sylvania has access to all purchase orders, along with information on Customs clearance and delivery, on a real-time basis.

Before, said Rooney, "we never knew where the containers were. We were notified when they left. Eight weeks later they showed up at the dock. In between there was nothing." Poor communications might also result in containers sitting on the docks for up to two weeks, piling up demurrage charges.

BDP has shown itself willing to help out even when it was not directly responsible for the shipment. In one case, Osram Sylvania turned to BDP to rescue some stalled containers at the port. Within three hours, the boxes had been delivered to destination. In Canada, another forwarder was stymied when Canadian Customs announced that the fumigant used in a shipment from Asia was banned in that country. BDP stepped in and quickly resolved the problem with Customs officials.

In less than three years, Osram Sylvania has revamped its global distribution network, with the U.S. serving as hub. The next step, said Rooney, is to link the various spokes, setting up traffic lanes that bypass the U.S. altogether.

The partnership with BDP exists at all levels of Osram Sylvania, with an emphasis on new ideas and long-term planning. "It's a case of not just upper management, but also the people that are doing the work," said Rooney. "They're the ones that can tell us yes or no."
Osram Sylvania executives are now working to make BDP the exclusive logistics provider for the entire company. "It's a slow process," said Rooney. "People within Osram Sylvania have got relationships built with existing forwarders. It's hard to get them to change."