Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
The old tune may assert that it's a small world after all, but to assume that makes cross-border trade simple is still a bit of a fantasy. Time differences, language barriers, distance, customs (and Customs) considerations, security, and arcane and ever-changing trade rules make managing international trade far more complex than its domestic counterpart.And that can mean headaches for businesses— particularly as retailers and consumer goods and electronics companies source an evergreater portion of their products from suppliers in Asia or Latin America.
But supply chain managers aren't entirely on their own when it comes to navigating the sometimes treacherous currents of global trade. They can choose from a dazzling array of sophisticated software tools—platforms that provide visibility from the foreign factory through to the local DC, and that can assure compliance with varying and oft-changing trade, security and documentation rules.
What the best of those tools provide, says Beth Enslow, a specialist in international trade research for Aberdeen Group, are three major components. The first is visibility into the flow of goods and the ability to manage that flow. Second is trade compliance—the varied documentation needed to assure that the information flow enhances, rather than impedes, product movement. That includes keeping shippers in the good graces of security agencies, which keep a close watch not only on what's moving, but also who's doing it.
"The third pillar we define as trade finance," she says. "We're finding that most of the data you need for transportation and logistics are the same data that you need to handle financial processes. A central repository of trade data can be used by multiple functions."
Enslow adds that this last capability has captured the attention of senior management."We're seeing CFOs become cheerleaders for these [global trade management systems]," she says."They are seeing financial ... benefits such as better cash flow and better working capital optimization."
Jim Preuninger, CEO of Management Dynamics, a company that provides trade management software, agrees. "That is an emerging trend," he says. "They are always concerned about where the money is." He notes that senior management is paying more attention to international trade finance issues as international trade's share of corporate business grows.
Trade management software's financial management capabilities have come a long way in recent years. Historically, it's been difficult for shippers to obtain a real-time view of the true landed cost of imports—that is, the product cost plus all the associated logistics expenses. But that's starting to change, says Greg Johnsen, a vice president with GT Nexus, another trade management software provider. Johnsen and other trade management software vendors claim that the latest tools go a long way toward overcoming that problem. Johnsen says the very tools that track inventory can, with additional applications, track costs as well. "Precisely because we have an integrated network providing physical visibility, we can get into financial visibility," he says. "It is not a quantum leap."
Expertise on demand
Software tools for managing international trade come in a variety of forms, but what seems to be gaining the most traction with shippers right now is software offered on an on-demand basis. Instead of buying and installing the software, customers "rent" the software, which is hosted and updated by the provider, on a pay-as-you-go basis.
What attracts companies to the on-demand model? To begin with, it minimizes their IT investment. Though the end user's IT team still plays an important role, it does not have to take on the responsibilities (and headaches) of a full- scale integration.
Second, on-demand arrangements can be implemented relatively quickly. Enslow says that a recent Aberdeen study showed that about two- thirds of the respondents using on-demand platforms were able to begin operating on the platform within three months of selecting a vendor, and had a return on the investment within a year. "That's two to four times faster than a traditional application," she says.
In addition, because on-demand vendors are continually expanding their connections with governments, manufacturers and logistics providers, it's a relatively easy matter for a shipper to change suppliers or carriers or to shift sourcing to another nation. These days, shippers are likely to find that about 70 percent of the companies they want to hook up with are already connected with a given provider, says Enslow. And the rates are accelerating.
Enslow believes the on-demand model has much to offer in comparison to installed software. "On-demand is compelling, certainly, for supply chain visibility," she says. "Any time you can leverage an existing system, you reduce the overall project risk."
Further, by signing on with an on-demand service provider, customers get almost instant access to the wide information infrastructure many of those companies have built. "The analogy I like to use is that we're like a power plant that supplies your electricity," says Johnsen of GT Nexus. "It's built—you're just using the electricity."
Trade management provider TradeBeam, for example, supports about 90 percent of international regulations, according to Duncan Jackson, the company's vice president of business development and marketing. Jackson says TradeBeam has 3,000 customers globally and users in more than 100 countries.
For its part, Management Dynamics taps into more than 280 sources of information for 118 countries to keep up with trade and security rules and regulations. "It's almost impossible for one company to do that," says Preuninger. "We have 13,000 users, so we can afford to do it."
One step at a time
It is not plug and trade, however. As eager as customers may be to automate everything at once, it's unlikely that any system—even an on-demand system—could be fully functional in all trade management tasks in three months. They're simply too complex.
A better strategy is set priorities and take it in stages. "You have to have defined the process and take it in incremental steps," Enslow says. "Using on-demand, you can be laser focused on what part of the supply chain you want to deploy to. The worst thing you can do is say 'Track these 12 events, provide these 20 alerts.' It would take too long, and there are too many data quality issues. It would just become noise, and your users wouldn't use it. Start with three or four events and two or three daily reports."
That was the approach taken by fashion retailer and marketer Liz Claiborne. Its import staff worked closely with the retailer's software vendor, TradeBeam, to determine requirements and to implement the tools. (See the accompanying sidebar.) Implementation took place in stages, not all at once. According to the Aberdeen Group's report on the implementation, EDI integration began with the highestvolume products and largest logistics providers, and then others were added. Liz Claiborne continues to expand its use of the system, adding functions like product classification, restricted party screening, calculating dutiable values, and filing customs declarations.
Then the work really starts
But implementation is only a part, and perhaps the easiest part, of the journey to automated trade management. What counts is what happens next. The real power of any such tool comes not from the information it provides, but from how shippers make use of that information.Used properly, visibility into each step of the supply chain can provide end users with a competitive edge—supplying the information they need to lower costs, reduce cycle times and inventory, reduce working capital, and find and eliminate the inevitable snarls in the supply chain. But no software will solve shippers' problems for them.
"Too many companies think of visibility as track and trace and magically lead times and inventory are improved. That's dead wrong," Enslow warns. "The whole key is [understanding] that when you turn the system on, you will get information, but unless you do something, you will not see improvements."
What visibility will provide, she says, is the information needed to diagnose supply chain problems and locate recurring bottlenecks.With that information at hand, managers can take actions to reduce variability in the supply chain. "Once you have confidence in where your inventory is, you can manage in-motion inventory more actively or you can have the confidence in when goods will arrive and use that in safety stock calculations."
Further, the information available through trade management tools can prove very useful for strategic decisionmaking. Jackson cites the experience of one large customer, the automaker Renault, which used the tools to analyze where it should build a new low-cost vehicle for the Egyptian market. The solution—sending semi-assembled vehicles to Morocco for completion in a free trade zone and then shipping to Egypt—took advantage of a free trade agreement between the two countries, substantially reducing Customs costs for Renault.
Preuninger says the process of taking on a trade management system starts with sourcing strategy and builds from there. "It's fairly encompassing," he says. "You work with suppliers to adjust for errors or problems. You can start to implement new strategies, such as DC bypass or in-transit allocation. You get rid of as much paper as you can."
He also urges managers to look at both the tactical and strategic capabilities. "The tactical set of tools gives you supply chain visibility and alerts that give you the ability to understand when a problem occurs or is about to occur well before you might have without a sense-and-response system," he says. "On the strategic level, you can see how your vendors and logistics companies perform, or look at performance by commodity or by trade lanes."
Johnsen adds, "The first thing the importer has to bring to the equation is a real vision of what the supply chain will look like in two years. From there, it is all about execution."
fashioning a solution
Even before Sept. 11, 2001, Liz Claiborne's import staff had its hands full. Part of it was the sheer volume of imports. The fashion retailer imports more than 250 million units (garments, accessories, shoes and so forth) each year, sourced from more than 3,000 factories in 35 countries. Another challenge was its antiquated global trade system—a client/server setup that required time-consuming manual data entry.
Then came the Sept. 11 terrorist attacks and their aftermath. In the months following those attacks, the U.S. Customs Service began to add demands on importers. As those demands escalated, Liz Claiborne's staff found that their manual system was fast becoming untenable. It was time for a change.
The company turned to Beth Enslow, a specialist in international trade research for Aberdeen Group, for help finding a solution. What her client primarily wanted, says Enslow, was visibility and linkage. Its top priority was obtaining better product and shipment visibility from its suppliers and logistics providers. "They wanted automated shipment visibility for all the stakeholders, enabling them to manage uncertainties," she says. The company also wanted to link to its partners electronically to provide instant product classification and other information to brokers and to prepare documentation for Customs.
Once it began reviewing its options, the company quickly narrowed its list to on-demand offerings. Lois Davis, vice president of global logistics for Liz Claiborne, told Aberdeen that choosing an on-demand trade management tool meant that the company wouldn't have to burden its IT staff with a complex installation or upgrades. It would also be able to avoid hardware purchases. In addition, use of an outside provider would allow quick connections to new acquisitions and suppliers.
Eventually, the company selected TradeBeam's on-demand solution. The shift to the new system began in 2001, with the company's import staff working closely with TradeBeam. Implementation took place in stages, not all at once.
Today, Enslow says, Liz Claiborne's staff can monitor and manage products from the supplier's dock to the destination DC. Freight payment and the return of containers are also done through the system. The information available through the system gives the company's DC managers visibility into packing list details, enabling them to plan customer allocations.
One particular advantage is that the staff can make changes on the fly. "Now they can work by exception," Enslow says. "They can do such things as send a container to a different port or transload facility to bypass congestion or accelerate a shipment."
And the results? The company credits the TradeBeam system with enabling it to cut five to seven days from transit times for international shipments, according to an Aberdeen report on the project. It has also accommodated an increase in the number of shipments handled by 50 percent without adding staff. And in the first 18 months alone, it eliminated between seven and 10 days of inventory as a result of the shorter leadtimes and greater certainty of shipment status.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.