If your international supply chain partners aren't able to operate at optimal efficiency, they pass increased pricing on to your company. When partners don't meet your expectations, it's difficult to standardize the logistics flow, which reduces efficiency and decreases their level of commitment to your goals. Add the extra time your personnel spend working through the chaos to the costs of the resulting inventory sub-optimization, and you have the current state of international logistics management at most U.S. companies.
Inefficiency is amplified if your company is missing the following five components of complex international logistics operations:
- Strong partnerships. International supply chain partners share a general lack of trust. Many companies have been burned in the past, and are unwilling to make a commitment to do anything out of the reactive norm.
Even if they do agree to work within a standardized, proactive model that provides communication and visibility, they likely will be unable to deliver on the commitment due to inefficient processes in other international logistics relationships. Building strong partnerships requires a serious effort to communicate and demonstrate your own level of commitment to achieving your vision.
- Standardization. It is critical to establish standards for each supply chain partner. These standards not only benefit your company, but also drive the same consistent, reliable flow for each partner.
To establish trust within your supply chain, consider all parties involved. In a truckload shipment from the United States to Mexico, for example, the Mexican carrier must be confident that the shipper, U.S. carrier, Mexican customs broker, and border/drayage carrier are meeting their standards. When the Mexican carrier knows a trailer will arrive by a designated time, it can proactively allocate a tractor and a rested driver.
Now assume the Mexican carrier delivers and drops the trailer on time at the consignee in Mexico, and the consignee unloads the trailer within the standard. The carrier is able to proactively plan for pickup at the designated time, ensuring efficient equipment utilization.
- Visibility. Sharing service standards builds a foundation for efficient, consistent, and reliable logistics flow. Full visibility for each partner in your supply chain enables efficiency. Workload imbalances are amplified in the international realm, but as your supply chain partners look upstream, each one is able to plan and allocate resources to assist overall efficiency, and ensure high service levels to your organization.
- Communication. Factors affecting the standardized flow of a complex global supply chain—such as inclement weather or heightened border security—will always be present. Enabling proactive communication downstream allows each supply chain partner to take immediate action as needed.
- Controls. The need for controls is amplified in the international realm. More parties are involved, creating greater complexity. There are also internal dynamics to consider within an organization. Lacking full alignment toward strategic goals results in higher direct costs, and can challenge the day-to-day flow of logistics operations.
Consider implementing a centralized decision-making process, proper organizational structure and division of responsibilities, internal audits, and a formal problem-solving process.
About the Author
Pieter Kinds (41) is Director at ControlPay, a global Freight Audit provider and the CEO of TenderTool, a cloud-based logistics sourcing platform. Active for over 14 years, Pieter is eager to share insights, thoughts and experiences via his blogs.Follow ControlPay on Twitter More Content by Pieter Kinds