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The Tariff Takeaway: It’s Time to Stress-Test Your Supply Chain

After announcing earlier this month that 10% tariffs would go into effect Sept. 1 on $300 billion in Chinese imports, the U.S. reversed course this week and said duties would be delayed until December on certain products. The excluded items include cell phones, laptops, footwear and toys. In addition, other items will be excluded altogether because of health, safety, national security or “other” factors. While the latest news gives some businesses a reprieve, the continued uncertainty – and ongoing tariffs on many Chinese products – have left businesses struggling to mitigate the impact to their operations and their bottom lines.

To deal with the continued fallout, many shippers are exploring ways to reshore goods to other countries. In a recent fashion industry survey, 80% of respondents said they planned to cut back on production in China. But moving manufacturing operations comes with its own disruptions, putting added pressure on already stressed supply chains.

The road to optimization

Whether it’s blanked sailings during peak season, West Coast port strikes or the ongoing drumbeat of tariffs, anything that can go wrong in logistics likely will. Staying competitive in this complex environment requires not just addressing issues as they occur, but also anticipating and planning for whatever may lie ahead.

“It’s been very reactive,” AGL CEO Jon Slangerup recently said of the shipper response to tariffs during the Journal of Commerce Gulf Shipping Conference. “I think everyone is just coming to grips with how they are going to deal with this long-term.”

So how can shippers build supply chains that are more responsive – and predictive – in the face of disruptions? It starts with analyzing your processes, tools and people to find vulnerabilities and opportunities for improvement. Here are three steps to help your supply chain stay strong when disruptions strike.

  • Map out your processes. While many businesses are looking to technology to improve supply chain performance, new solutions are destined to fall short if you don’t understand your problem first. Take the time to map every mode, carrier and handoff point across your supply chain. Many businesses skip this step, but it’s the best way to uncover bottlenecks, find new efficiencies and tailor your technology around your processes.
  • Adopt the right technology. If you’re still running your supply chain on spreadsheets, you’re not alone: 13% of firms still rely exclusively on Excel for supply chain management, according to American Shipper. But to stay resilient amid supply chain stressors, businesses need a more sophisticated approach. A centralized platform can help you gain end-to-end visibility across all shipments, allowing you to pivot quickly when needed and spot trends that can impact performance.
  • Build a high-functioning team. The logistics industry is built on relationships, which is why it pays to cultivate strong ones. A supply chain partner with a deep network can help you navigate hiccups more easily, whether you need spot capacity fast or want to explore alternative production sites.

Supply chain disruptions are inevitable, but they don’t always have to turn into supply chain crises. A proactive approach is the first step toward supply chain optimization, helping businesses handle whatever comes next.

As Peak Season Looms, Here’s How to Prepare

Halfway through 2019, ocean shipping costs have already inched up for businesses, with many carriers locking in rates $200 to $300 higher per TEU than the 2018 contract season. While those rate increases have left businesses less than thrilled, they could actually benefit organizations as the season ramps up by stabilizing schedules and reducing blank sailings that wreak havoc on shipping schedules.

The question of how much shipping will actually ramp up is still unanswered, however. Imports have leveled off compared with last year as businesses rein in restocking, while a number of factors could prompt demand and rates to rise or fall in the coming months:

  • Ongoing tariffs: After last year’s huge spike in shipping to beat impending U.S.-Chinese tariffs, some businesses are taking a conservative approach to shipping to avoid additional increases.
  • Reshoring: With many businesses moving operations to Malaysia or Vietnam, Chinese import volumes have dropped 5% – and rates could be the next to follow.
  • Fuel sulphur cap: Vessels are already coming out of service to prepare for the International Maritime Organization’s 2020 rule capping fuel sulphur levels. Depending on how import levels play out this summer and fall, those capacity cutbacks could boost spot rates.

 3 ways to prepare for the peak

 For businesses with large global supply chains, preparing for uncertainty all year round is essential – and particularly important during the busy peak season. Combining the right tools, people and processes can help organizations navigate fast-changing conditions, operate more efficiently and ensure they’re meeting customer expectations. Here are three areas of focus to keep in mind:

  • Gaining end-to-end visibility. Purchase orders are notoriously difficult for businesses to track, creating ripple effects down the supply chain when milestones are missed. By adopting technology that offers insight into each step of the production process, businesses can plan effectively during the busy months and seize opportunities for efficiencies, like opting for a less expensive but longer route when products are ahead of schedule.
  • Delivering as promised. If a business books 10 containers but only delivers three, the carrier might not be willing to book 10 again next time. Respecting advance notice polices and forecasting accurately can help businesses build stronger carrier relationships – and avoid having to scramble for more expensive alternatives.
  • Make exceptions the rule. Seventy percent of businesses have experienced a supply chain disruption in the past year, and the peak season makes organizations even more vulnerable. When exceptions arise, a centralized technology platform can help businesses identify the issue quickly and make the carrier or mode adjustments needed to keep things running smoothly in the future.

With the state of ocean freight still uncertain in 2019, businesses that invest in the right supply chain technology and expertise will be well-positioned for whatever peak season brings.

Competing in a Consumer-Focused Age with an Agile Supply Chain

From a new couch to a week’s worth of groceries, shoppers can summon nearly anything to their doorstep, local store or delivery locker with just a few clicks. Some of the most significant consumer changes impacting supply chains include:

  • Shifting demographics. While in-store purchases still dominate among shoppers of all ages, younger consumers are continuing to migrate to e-commerce, underscoring the importance of a strong omnichannel supply chain.
  • Shifting buying patterns. Emerging trends, including subscription boxes and purchasing large-scale items like furniture online, are creating complexity and forcing businesses to reexamine their last-mile strategies.
  • Shifting technology. In a role reversal from the last few decades, consumers are pulling ahead of businesses when it comes to technologies like artificial intelligence. These tech-savvy customers expect connected yet frictionless experiences from their brands – forcing many businesses to play catch-up.

Increasing agility through technology

Faced with these pressures, business leaders recognize that agility will be the key to success in the coming years. A KPMG survey found that 68% of CEOs believe that being slow to adapt to change will lead to obsolescence, while Gartner revealed that 82% of CEOs intend to change their business models by 2020 to stay relevant.

For supply chains, a technology-enabled approach is essential to drive agility and keep up with consumer demands. According to a World Economic Forum analysis, digital transformation will generate $1.5 trillion in value for the logistics industry over the next five years. Among businesses that adopt digital supply chains, executives report a 3.2% average increase in annual earnings – the highest ROI of any business function.

As supply chain executives recognize the importance of technology investment, an analysis conducted by AGL and Logistics Trends & Insights found that total logistics IT spending will rise 17% to $87.8 billion between 2017-2022. Yet a data-driven, agile supply chain remains a dream for many businesses, with a significant number of organizations still relying on Excel and email to manage complex supply chain functions. For organizations that master digital transformation in the supply chain, the benefits are big – faster time to market, increased efficiencies and better customer experiences.

Improving Supply Chain ROI in a Tough Tariff Environment

After duties on $200 billion in Chinese goods jumped from 10% to 25% earlier this month, businesses barely had time to blink before receiving news of yet another tranche of tariffs. These duties would cover $325 billion in goods, hitting the price-sensitive apparel sector particularly hard and taking a significant bite out of business’ bottom lines.

While no timelines are available yet for the new tariffs, NRF is expecting “unusually high” import levels in the coming months as shippers scramble to beat the duties. In its latest Port Tracker report, the organization estimated that TEUs would hit 1.9 million in May – the first time ever TEUs have risen to that level before July. That surge in shipments could lead to another chaotic peak season and higher prices for shippers, who are already paying 20% higher ocean contract rates than last year.

Some businesses may also turn to more expensive airfreight to get high-profit merchandise like electronics into the country faster. And once goods cross the border, tight warehouse capacity on the West Coast could push up prices as well, creating additional supply chain pain. For businesses grappling with these issues, a focus on optimization is increasingly critical. Here’s how combining a technology-enabled supply chain with the right logistics expertise can help deliver ROI that carries you through whatever comes next.

  • Find cost-effective capacity. With ocean spot rates already 40% higher than they were a year ago, sourcing affordable spot capacity to beat impending tariffs is likely to be a challenge once again during peak season. A centralized supply chain platform makes it easier to compare carriers and routes to find the most cost-effective solution, while an experienced supply chain partner with a deep logistics network can give you extra leverage in negotiations.
  • Shift your sourcing. As the cost of doing business in China continues to climb, many of AGL’s own customers are weighing the pros and cons of moving to neighboring countries. A supply chain platform that offers an end-to-end view, from production to final destination, lets your business compare suppliers and make the right choice based on production and logistics costs, vendor reliability, and more.
  • Check your classifications. For businesses that haven’t reviewed their classifications recently, the latest round of tariffs is a good reminder to keep current. A centralized platform makes it easier to review classifications in one spot to avoid penalties and identify opportunities to substitute products not subject to duties, if possible. A partner with customs expertise can help find additional ways to save time and resources, such as improving auditing procedures.
  • Automate routine activities. A more efficient supply chain starts with understanding all the touchpoints across your operations and seeing where there’s room for improvement. By managing every shipment in a single platform, you can uncover those efficiencies more easily. Technology that enables management by exception, rather than reviewing every single shipment, can also free up significant time for large global importers.
  • React faster to disruptions. Supply chain disruptions are inevitable, but being able to make adjustments on the fly can help keep issues from ballooning into disasters. For example, when faced with fast-approaching tariffs, a technology-driven supply chain can help you decide whether shipping via airfreight or paying additional duties will ultimately be less costly.

As shippers prepare for more tariffs and a potentially wild peak season, investing in effective tools, people and processes can help offset the impact to their operations and their bottom lines.

Why Businesses Must Look for More Than Supply Chain Visibility

Businesses today have more resources and technology than ever to manage their logistics processes. So why did a recent Business Continuity Institute report state that two-thirds of them lack end-to-end visibility into their supply chains?

Juggling logistics providers, inaccurate data and outdated processes are all prime culprits behind poor visibility. As more global shippers rely on multiple carriers to mitigate risks and costs, establishing a single source of truth for all logistics information is a challenge.

Many shippers check three or four carrier systems directly for updates or circulate error-prone spreadsheets via email, slowing down their workflow and causing confusion. Information supplied by carriers can also be riddled with errors, yet incorrect data often slips through unnoticed by time-strapped employees and makes supply chains even more opaque.

True visibility into each step of the supply chain is essential for peak operations, particularly in today’s uncertain global landscape. The Business Continuity Institute’s 2016 Supply Chain Resilience Report found that 70 percent of businesses had experienced at least one disruption over the past year, ranging from IT outages to supplier insolvency.

To remain competitive, businesses need the technology, processes and systems to identify where products are and redirect them quickly around the globe.

A focus on real-time technology

As shippers seek greater visibility and control over their freight movements, the supply chain tech industry has seen several notable acquisitions this year aimed at delivering a new level of service to customers. “Real-time visibility” is the promise for many of these providers, offering businesses the ability to see every SKU’s path through the supply chain as it occurs.

But technology is only one piece of the solution. How helpful is total visibility if you can’t manage the massive amount of data produced? Does it matter if you receive real-time carrier updates if the information is wrong?

A better approach involves combining the right technology with the human capital to establish and support effective logistics processes.

A holistic supply chain partner combines systems, logistics expertise and service to ensure you can see and manage everything you need to — and nothing you don’t. Here are two areas where the right solution can help you go beyond real-time visibility.

1. Gaining transparency, not just visibility.

While visibility means having a full view into your supply chain operations, transparency means empowering the right people at the right time with the right information — and the ability to adjust as needed. This requires building your supply chain platform around your business rules, so you can manage by exception, rather than having to wade through a deluge of data for every shipment.

One often overlooked area is the actual production process. As shippers use just-in-time methods to pare down inventory levels to the essentials, an overseas factory that doesn’t hit its manufacturing target can mean delayed shipments and unhappy customers.

For one business with a five-step production process, a lack of information about what was perceived as insignicant to production progress resulted in signicant ongoing issues downstream.

By working with a supply chain provider to establish a platform that offered complete insight starting with the purchase order, the company was able to spot any items that didn’t meet expected lead times, adjust shipping timelines where necessary and identify long-term trends that allowed it to operate more efficiently.

While a robust technology platform is the backbone of a successful supply chain, businesses need to devote ongoing resources to determining which areas they can manage via exceptions and monitoring new areas for potential cost savings.

For lean internal teams, a third-party provider can offer the industry knowledge, such as sourcing international carriers for a company for the first time, that enables greater supply chain transparency and control.

2. Ensure data accuracy, not just speed.

Aggregating real-time data is a major focus for today’s supply chain tech players. But without the assurance that a carrier’s estimated time of arrival or spot rate is accurate, receiving data fast doesn’t do shippers much good.

The carrier industry is not historically known for attention to detail, a critical component of the data communication process. Claims by many providers to provide visibility alone, without accountability for its accuracy, is often misleading and, in many cases, irresponsible.

For example, Maersk reported that 12 percent of its shipper invoices had errors in 2013, according to JOC.com, while several industry observers estimated overall error rates of up to 25 to 30 percent. For businesses already overloaded with logistics tasks, poring over each carrier document in an attempt to glean data and determine their validity is neither reliable nor feasible.

A supply chain provider with the right resources, technology and commitment to service can scrub data in near-real-time, using algorithmic intelligence to determine whether it’s correct. If it’s not, they’re responsible for following up with the carrier to reconcile errors and omissions, enabling your business to make data-driven decisions.

For example, if one of your carriers consistently delivers later than stated, having that information at your fingertips can help you choose a better alternative for the next shipment.

3. Beyond visibility.

Achieving true supply chain visibility starts with understanding not only what’s possible, but what’s best for your business. By working with a supply chain provider, organizations can build a more transparent supply chain that offers unprecedented control over operations, allowing them to deliver a better experience to their own customer.


Article written by Blake Shumate. Blake Schumate co-founded American Global Logistics in 2007 as part of an accomplished team of logistics professionals. With more than 20 years of global logistics experience, he currently aligns IT, process improvement and service operations to drive positive customer experiences as AGL’s chief operations officer. Contact him at bshumate@americangloballogistics.com.

Creating a Successful Supply Chain in a Customer Experience-Focused World

For organizations with complex shipping operations, the supply chain offers one of the best opportunities to impact customer satisfaction directly.

In the “Age of the Customer,” it’s no surprise that nearly three-quarters of businesses say improving customer experience is their top priority. For organizations with complex shipping operations, the supply chain offers one of the best opportunities to impact customer satisfaction directly.

An effective supply chain can delight customers through timely service and clear communication, while late or inaccurate deliveries erode customer trust fast. As shippers seek to meet growing customer expectations, many are turning to process enhancements across the supply chain. In a recent retailer study, for example, 71 percent said they need to improve access to clear order, consumer and carrier data for shipments to deliver a quality customer experience.

With unpredictability lurking throughout the supply chain, getting goods to the right place at the right time also requires proactive, around-the-clock management. From capacity crunches to an unexpected call from regulators, shippers need deep supply chain expertise and careful attention to detail to find solutions that minimize impact to their own customers.

A Shared Focus on Customer Experience

To help them manage increasingly complex supply chain operations, 90 percent of Fortune 500 companies now rely on third-party logistics providers, a figure that has doubled since 2001. These partnerships go far beyond the transactional: Three out of four shippers say they depend on their supply chain partners for innovative ways to enhance logistics effectiveness, a recent Council of Supply Chain Management Professionals study found.

As businesses seek to enhance the customer experience, a supply chain partner equally focused on customer satisfaction—both for the shipper and its customers—is key to meeting that goal. By combining technology, processes, industry relationships and service, the right provider can help businesses build stronger customer relationships in the following ways:

  • They create efficient technology-driven processes. From spreadsheet-based processes to outdated systems, many businesses lack the right technology to manage operations effectively. Two-thirds of retailers, for example, say their current systems do nothing to improve the customer delivery experience. A partner that offers a single platform for all data, from purchase order to final destination, can help businesses can gain a clear view of the entire supply chain. Features like exception-based management allow shippers to identify what needs attention and head off potential issues quickly, rather than wading through data on every shipment. That said, technology alone won’t deliver the supply chain control that large shippers need. As businesses juggle a changing mix of shipping locations, modes and carriers, a dedicated provider that understands their supply chain and their business can help them adapt systems and processes accordingly.
  • They help shippers address issues when—or before—they arise. When you’re facing apotential disruption, speed and expertise are essential to fix problems before they spiral. A supply chain provider who takes the time to understand customers’ shipping preferences, employee workflows, reporting requirements and business rules can oer immediate, knowledgeable support. For example, when U.S. customs officials contacted one tire distributor with questions about countervailing duties, the business turned to its supply chain partner for assistance. The provider attended an on-site interview and gave a thorough overview of distributor’s import compliance program, helping the business avoid a potentially lengthy audit and importing issues that could have compromised customer deliveries.
  • They ensure accuracy. Providers that offer a dedicated support team to each business can help ensure nothing falls through the cracks, keeping the shipper’s customers happy while allowing the business to focus on other priorities. That point of contact is accountable for verifying data, shipping milestones and other due diligence needed to move goods around the globe. This allows businesses to reallocate internal resources, focusing on other aspects of the business to create differentiated customer experiences.

Choosing a Provider

As your business consider potential supply chain partners, do your research to uncover which ones are as devoted to customer experience as you. Network with companies both in and out of your industry, develop a short list of candidates, and review key analyst and research insights to find the right fit. By combining hands-on support, technology and logistics services, a dependable partner can be a valuable asset in your company’s efforts to deliver customer experiences that are memorable for the right reasons.


Article written by Blake Shumate. Blake Schumate co-founded American Global Logistics in 2007 as part of an accomplished team of logistics professionals. With more than 20 years of global logistics experience, he currently aligns IT, process improvement and service operations to drive positive customer experiences as AGL’s chief operations officer. Contact him at bshumate@americangloballogistics.com.