RyderÆs æcontrol towerÆ
Says purchase order management can help replace inventory with information.
By Chris Dupin
The economic downturn accelerated retailers' focus on reducing inventory in their supply chains through the use of purchase order management systems, said Darin J. Cooprider, vice president and general manager of retail/consumer packaged goods for Ryder Supply Chain Solutions.
| Cooprider |
Increasingly retailers want smaller, more frequent deliveries of product closer to time of sale, he said. That's desired over taking merchandise 'in large chunks, generally well before the time of sale ' so receiving Christmas and holiday goods in the summer months and having a major sell-off in the fourth quarter.'
Retailers use purchase order management services like an air traffic control tower to coordinate activity from many suppliers who may be located in multiple locations, reduce minimum order quantities and keep goods flowing, he said.
Ryder Supply Chain Solutions, which is part of Miami-based Ryder System Inc., has about 3,000 employees and 80 offices in Asia, and helps coordinate the movement of about 100,000 containers annually to U.S. and worldwide destinations.
Supply chain services account for about $1.1 billion or 23 percent of Ryder's revenue. In 2008 it discontinued supply chain operations in South America and most of Europe in order to focus on the United States, Canada, Mexico, Asia and the United Kingdom. (Ryder's dedicated contract carriage provided 10 percent of revenue in 2009, while its truck leasing, rental and maintenance segment accounted for the other 67 percent.)
In February 2010, Ryder entered into a partnership with Cargo Services Far East Ltd. (CSFE), an Asia-based logistics services provider specializing in export consolidation services, to help retailers and other U.S. importers design, plan and manage their product flows from factories in Asia to retail stores across North America. It also closed out 2010 with the purchase of Holland, Mich.-based Total Logistic Control, a supply chain services provider to food, beverage, and consumer packaged goods manufacturers.
Retailers may commit to ordering a large quantity of goods to get the best price, but may not necessarily want to receive all those goods at the same time or the same location. Cooprider said. Purchase order management systems can help 'parse that block order out into smaller shipments that they can time closer to the point of use.'
Use of third-party purchase order management services has become widespread, even among the largest retailers, he said.
Ryder operates an end-to-end service ' arranging shipment from factories and operating consolidation centers in Asia where products from multiple vendors for the same or different products can be consolidated and stuffed into common containers. The company does bookings with ocean lines and handles export documentation from Asia, including management of Importer Security Filings for U.S.-bound goods.
Once cargo is in the United States or Canada, Ryder arranges brokerage clearance if required by the customer, and can do container deconsolidation, warehousing and delivery of containers or trailers to distribution centers or retail stores. He said the company runs dedicated truck fleets for some of America's largest retailers, and has about 20 million square feet of warehouse space in North America.
For example, Cooprider said Ryder helps a company in the home d'cor business consolidate products from 300 vendors in northern China and move shipments into six U.S. distribution centers.
The purchase order management services vary according to customers' and suppliers' needs, but Cooprider said Ryder can help coordinate shipments from small manufacturers who may 'operate out of a space no bigger than your garage.'
For example, it can help firms that have limited technology resources use the Internet to connect to a Ryder site where they can do bookings, obtain container space and contact Ryder for cargo pickup.
Ryder can also bypass distribution centers and deliver directly to retail stores. Distribution center bypass has become popular among some North American retailers, particularly for initial shipments of seasonal merchandise. Cooprider said building pallets for particular stores, including labeling and pricing merchandise at point of origin in Asia, has also become popular for goods moving to stores in Australia.
Ryder does not act as an non-vessel-operating common carrier itself, and Cooprider said most retailers moving 2,000 containers or more like to negotiate directly with ocean carriers to do some disintermediation and obtain better freight rates.
'What we do is manage within that allocation,' he said. 'A customer will say, for example, 'I am under contract with these three carriers in this particular lane and I have a 40-30-30 split on the containers with these minimum guarantees.' We handle the bookings with those ocean lines so they meet their guidelines with each of those container lines, but we have the flexibility to move the freight as the freight needs to be moved and as space is available.'
Cooprider said purchase order management services are offered by large carrier-owned logistics companies such as Damco, NYK Logistics and APL Logistics, as well as forwarding and logistics giants such as Expeditors, Kuehne + Nagel and DB Schenker.
Ryder's services go beyond transportation to include vendor management.
Ryder can help train manufacturers about customers' expectations, quality demands, how to books shipments and record information. They can ensure manufacturers have prepared purchase orders, performed quality inspections on time, and that products are ready to move in a timely manner.
The ability to communicate with third-party vendors in their own language, when they may be more than 10,000 miles from a retail store, is a key to making a supply chain successful, Cooprider said.
During the past year, Cooprider said transpacific capacity was ample, in part because some shippers moved deliveries forward to early or mid-summer.
In 2011, he said the capacity outlook is uncertain, and would depend on the strength of the economy and carrier decisions about how much capacity to put into trades, whether slow steaming remains as popular as well as levels of container production and ordering. He noted capacity constraints were caused not only by space on vessels but the availability of containers for cargo.