When The Jones Group (formerly Jones Apparel Group) installed a visibility system a decade ago, it had just one goal in mind—to get a better handle on its sprawling international supply chain. With suppliers scattered across the world, tracking orders and goods in transit had become a task of monumental proportions. "We needed to know the whereabouts of all our shipments," says Jodie Mendoza, the company's senior vice president of corporate logistics, "and trying to keep up with it on a manual basis was just impossible."
What the company could not have foreseen was that the same visibility system would become the linchpin of its regulatory compliance program. Not long after Jones Group started rolling out the system, the nation was rocked by the 9/11 terrorist attacks. That led the U.S. government to step up its cargo screening efforts, with the result that importers today face a host of new data collection requirements. Although it had to make minor adjustments to its operations, Jones Group has found compliance to be a breeze. Its visibility system provides all the data it needs to meet the new requirements and keep its merchandise flowing smoothly through the supply chain.
Coming into the country
Headquartered in Bristol, Pa., The Jones Group is a designer, marketer, and wholesaler of branded clothing, shoes, and accessories for women, men, and children. Its well-known brands include Anne Klein, Jones New York, Nine West, and Easy Spirit. The company reported about $3.3 billion in total revenue for 2009 from sales through specialty retail stores, outlets, and e-commerce sites.
Most of the company's merchandise is made overseas by contract manufacturers in Asia, the Middle East, and Africa (Kenya), and shipped to the United States by ocean. (Although Jones Group does use air freight on occasion, close to 95 percent of its products move via steamship.) While ocean has the advantage over air when it comes to cost, it also has a downside: lengthy and unpredictable transit times. That makes it difficult for importers like Jones Group to keep tabs on merchandise while it's in transit from the factory to North America.
About 10 years ago, those visibility problems came to a head, prompting the apparel company to take the software route. "At that time, we were having so many shipments that could drop in a black hole," says Mendoza. "So it was a top priority for us, because we needed to know when the goods were going to hit [U.S. shores], so we could pull out the correct goods to ship to our stores."
Today, all of the Jones Group divisions as well as their vendors and trading partners are connected to an online pOréal that serves as a repository for both product and shipping information. When an overseas factory is ready to ship merchandise to the United States, it pulls up the purchase order electronically and enters the packing list data into an online database (including such details as the style and color of each item in a carton). The freight forwarder or NVOCC (non-vessel operating common carrier) that picks up the shipment then adds further details, like the name of the ocean carrier, to the database. The process continues all the way down the line.
All of the information provided by Jones Group's supply chain partners—vendors, ocean and air carriers, freight forwarders, NVOCCs, customs brokers, domestic consolidators, and so forth—is held in a common database. Although these partners all have rights to enter data into the system, Jones Group strictly controls who has access to what information. "We share this information with the different partners based on whether they have a need to know," says Mendoza. "For example, the freight forwarders will only see what they need to see."
All told, it took nearly a decade to get all of Jones Group's suppliers up and running on the visibility system. But the company considers it time well spent. Among other benefits, the system gives Jones Group and its partners visibility into the contents of incoming containers, which enables them to decide in advance how they'll route the products once they arrive in North America.
More importantly, the visibility system notifies Jones Group when things aren't going to plan. For example, if a factory runs late with production of an order and misses a scheduled ocean sailing, the system alerts Jones Group to the problem so it can find an alternate way to move the goods. "When things are not in the time frame they should be, we're not out chasing the information. We can concentrate on errors," says Mendoza. "When you're controlling so many partners, this happens."
Meeting the 10+2 challenge
Although it was originally implemented as a shipment tracking tool, the visibility system now plays a central role in Jones Group's regulatory compliance program as well. In January, U.S. Customs and Border Protection (CBP) began enforcing its Importer Security Filing (ISF) rule. The ISF rule is intended to help CBP learn more about imports and their origins, intermediate stops, and destinations in order to target high-risk shipments for further inspection; it is more popularly known as "10+2" (a name derived from the number of data elements importers and ocean carriers must provide to CBP).
In order to comply with the ISF rule, importers must submit 10 specific pieces of information to CBP before a container arrives at a U.S. port. The required information includes the names of the supplier, seller, and buyer; the container's stuffing location and country of origin; and the commodity's Harmonized Tariff Schedule number, among other things.
Since Jones Group brings in 18,000 to 20,000 shipments a year, of which 12,000 to 14,000 are ocean containers, this reporting requirement has the potential to be a headache and a half. But with the visibility system in place, filing is a snap, Mendoza says. "Now, because everything is sitting in one database, we have the opportunity to use this information to do all the security filings we need."
Mendoza says the visibility system has become "absolutely critical" to her company's 10+2 compliance efforts. And it's not just because the system allows the company to process huge volumes of information swiftly, she says. It's also because the setup assures data accuracy.
"If you control the base of information, like the purchase order, the style numbers [you eliminate the risk of] misspellings and other inaccuracies in the security filings submitted to Customs," she explains. That helps assure the quick acceptance of a filing, which allows imports to be cleared in a timely fashion, she adds.
Mendoza is as surprised as anyone about the way things have worked out. The company's sole purpose in implementing the visibility system was to keep tabs on shipments, she says. The discovery that the system could also streamline ISF compliance was welcome—though wholly unexpected. "When we did this 10 years ago," she says, "nobody had this in mind."