Companies are bombarded daily with multiple logistical challenges as they respond to industry buzz words-automatic replenishment, speed-to-market and customer service. Asset relocation-often referred to as reverse logistics-has taken on a new level of importance in today's marketplace. It plays an integral role in corporate competitiveness and profitability. From the creation of an asset relocation plan to the management, packaging and transportation of products through the supply chain, there are many trends, best-in-class strategies and challenges to consider when managing in reverse.
Asset relocation is more than opening return shipments to be restocked to inventory. It can be moving 1,500 servers to a new data site or sending a recycled MRI machine to South America. A solid asset relocation program encompasses a wide range of product recovery options in addition to return/exchange. Other programs could be initiated for repairs, refurbishment, remarketing, and the final disposition of products, including scrapping.
Accounting for nearly one percent of the U.S. gross national product, asset relocation is an essential component when it comes to being competitive. Applications include interoffice moves, lease returns, workstation repositioning, IT and telecom equipment changeovers, convention and trade shows, facility or plant relocations, business continuity and sensitive one-of-a-kind assets to name a few.
Crossing over many industry sectors, including aerospace and defense, high-tech, telecommunications, industrial equipment, finance, medical and consumer goods, asset relocation-and more specifically reverse logistics-is an emerging area of focus for businesses. This process is a recognized source for additional revenues, marketing positioning and meeting market product demands.
A growing number of large and small companies are seeking a total solution when it comes to their asset relocation programs. Their logistical needs often include high-value, time-critical and multiple pick-up and delivery requirements around the world. These needs demand a solution that includes pick-up, packing, crating, shipping, real-time tracking, insuring, delivery, and unpacking.
When implementing an asset relocation program, choosing the right partner is essential to a company's success. The process is everything. Every link must operate quickly, efficiently and effectively. A solution is not complete unless it is end-to-end and has contingencies for any problems that may arise.
Companies with internal logistics teams can also benefit from the use of an outside partner. Project management should oversee both the internal and external logistics team as one force working on a common solution. The solution should be built on good policy, be consistent and have well-defined features. A solid program is a vital part of a company's growth strategy, because it generates additional revenues by extending lifecycles, supports the market demands by putting assets in the right places and retains customer loyalties by being timely.
Whether a company chooses a logistics partner through a telephone call or a formal RFQ process, questions must be specific since words have multiple meanings. For example, take the word "package." A cardboard box is a "package", as is a well-engineered custom wood crate with 2 inches of poly foam on all 6 sides. In the absence of particular specifications, the undefined "package" may not be the one you need, resulting in asset damage which impacts the bottom line.
When asking for a quote for an outside logistics provider, make sure that it includes everything that the company needs for the asset relocation project-from packaging specs, transit time requirements, insurance needs, to delivery and unpacking on the other end. It is very common for a company's assets to be decommissioned for a period of time waiting for redeployment. If this is the case, storage is required and those costs should also be included in the allocation plan or RFQ.
The project manager plays a critical role in the process, and an asset relocation partner should offer project management utilizing a single point of contact. Perhaps one of the largest challenges of asset relocation projects is up-to-the-minute, concise communications. A good project manager always knows the big picture, keeps everyone informed in real time and has the flexibility and the authority to make changes as necessary. This should be designated in the RFQ to ensure there is a strong communications process in place.
Timeliness means money saved and customer satisfaction earned. The company and the logistics provider should have a clear understanding of lead times to make sure that products get to where they need to be on time. This is often a challenge and, if a breakdown occurs, it could mean thousands or even millions of dollars. Imagine the money lost if a server is not in place to handle credit card transactions during the holiday season. Or, if a computer contract expires at the end of the month and there is not enough time to get the equipment back to the leasing company. The company pays for another month to lease it.
Companies must also be ready when the logistics partner arrives. Carriers need to be advised in advance about everything that must be completed as part of the relocation. For example, decontamination of medical equipment or the dismantling of a larger server should be done ahead of time. Stairs and elevators can cause time delays in moving crates and boxes on schedule.
Various modes of transportation, whether by land, air or sea, can have an enormous impact on timeliness and must be built into any plan. Running late can mean locked doors on the other end, which not only reinforces the importance of timeliness, but the importance of having a contingency plan in case this happens. Often running late also creates the need to expedite, which can drastically increase the cost of transportation. Fourteen days notice is usually more than adequate on the majority of relocation projects, but the more notice the better.
Visibility is an important trend in asset relocation. Companies not only demand timeliness, but they need to know where assets are in real time. A logistics partner has to be able to provide 24-hour access to this information along with reference, purchase, and job numbers, and in some cases barcodes. Lack of visibility can lead to the question of security.
A large portion of asset relocation involves items containing sensitive information. If assets are going to be destroyed, such as computers, clear the hard drives first. If assets are just being moved which hold proprietary information such as social security numbers, then the security of the information needs to be considered. What level of security is necessary to protect sensitive information? What are the security protocols? Is an observer required to watch the assets being crated on site and loaded on to the waiting truck? Will the locked vehicle doors be accessible to the drivers? Are there two drivers who can only stop for fuel? Will the vehicle have a GPS system for tracking purposes? Will the truck be sealed to ensure the cargo has not been tampered with? What happens if the truck stops for more that 20 minutes?
As companies continue to grow, more business could be conducted outside of the United States. When looking for a logistics partner, pick one with international as well as national domestic experience. Restrictions and laws vary, so be sure to ask questions, including who pays the customs brokerage, duties, and taxes. Be sure to ask for references as well.
One of the greatest challenges in relocation logistics is the packaging process. Most relocation assets do not have the original containers they came in and might not be suitable for use anyway. The proper use of skids and pallets, as well as boxes or crates of the appropriate size and materials for their contents, will minimize damage. Containers should be properly cushioned and braced for shock and vibration mitigation and adequately sealed and filled when possible with the weight evenly distributed.
Containers and inner pack material going out of the country should be used in conjunction with moisture-resistant material such as desiccant and barrier bags. Use a logistics company that is certified in International Standards for Phytosanitary Measures No. 15 (ISPM-15), which requires that all solid wood packing material for international shipments be heat-treated and stamped with an official mark. Straps, seals and shrink wrapping help minimize pilferage. Some insurance companies will deny a claim if there is inadequate packaging or improper packing.
It's important to understand your service provider's certificate of insurance and coverage limits. Learn what damages are covered, how a complete loss is handled and what the coverage is for bodily injury. Some insurance carriers only pay so much per freight pound regardless of its value. Policies can contain numerous exclusions, so it is better to put them in the declaration to eliminate confusion. A company may have some transit coverage included in their general liability policy, so check on your company's current insurance coverage before buying more from your service provider.
Asset relocation is a dynamic moving process. By learning a few strategies and overcoming some challenges, asset relocation offers companies a new opportunity to minimize inventory risk, reduce cost, extend product life cycles and improve customer service by moving assets forward.
Diane Gibson is president and CEO of Craters & Freighters, which provides packing, crating and shipping services to businesses and residential clients. Visit www.cratersandfreighters.com
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