Komar Distribution News

Case Study: Garment on Hanger Services

Customer Profile

A leading supplier of women’s wear to major retailers throughout the US.

Customer Challenge

To preserve the condition of factory pressed garments during transit to retailer without significantly increasing costs

Komar Distribution Solution

The client’s garments were arriving at the retailer looking shopworn and wrinkled. As a result, the brand was experiencing lackluster sales.

Komar worked with the client and devised special loading and packing instructions to maximize GOH ocean container capacity while maintaining the factory perfect condition of the garments. This drove down cost as more units per container were realized.   The client then piggybacked on advantageous KDS freight rates and transit times, driving down cost further.

Upon arrival at the KDS distribution centers, customer care teams carefully inspected the garments, working closely with the customer and factories to improve arriving garment condition. Images and video conferencing made the task highly efficient.

Engineered handling, attentive packing instructions, and in-depth training of KDS associates ensured the garments arrived at the retailer in pristine condition. Sales jumped twofold as the brand now commanded coveted aisle space.

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Cargo Traffic Jumps at Local Ports

Los Angeles Times, April 16 2010

The ports of Los Angeles and Long Beach, which together make up the nation’s busiest shipping container complex, showed gains in cargo traffic for the fourth straight month in March, boosting trade-related employment in Southern California.

In Los Angeles, the largest U.S. port, exports jumped 15.8% compared with March 2009, driven by such items as scrap paper, scrap metal, agricultural products and finished manufactured goods. Long Beach’s exports also rose strongly, 10.9%, as both ports benefited from the weakness of the U.S. dollar against other major world currencies.

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How to Build State of the Art 3PL Relationships for the 21st Century

A manufacturer’s and 3PL provider’s perspective

By Jay Harris, President, Komar Distribution Services and Chief Operating Officer of The Komar Group

Solid business rules and logic, combined with the power of great systems, make it possible to successfully manage a 3PL relationship and gain competitive advantage.  Opportunities with the right 3PL services provider should reduce net cost of distribution resulting from enhanced supply chain management, reduced transportation costs, fewer operational chargebacks, improved on-time performance and superior retailer scorecard grades.

A Quick Overview of the 3PL Business

Third-party logistics providers, or 3PL’s, originated on the simple premise of allowing manufacturers the opportunity to let somebody else manage their transportation or warehousing.  It may come as some surprise that automotive manufacturers are heavily dependent on 3PL’s.  Toyota, General Motors, Ford Motor and Chrysler all use more than 40 third-party logistics providers.  That begs the question: Why? The utilization of 3PL’s, most research firms would say, is one of the simplest concepts.  Companies outsource to focus on their core competencies, while the 3PL becomes responsible for supply chain information, business processes, and technology solutions.

This sounds great in practice, but in our experience, the decision to outsource some or all of a company’s logistics, distribution and transportation is not one to take lightly.  The logistics landscape is littered with failed relationships between 3PL’s and manufacturing companies.  In many cases, the seeds for these failed ventures are sown early in the process.

Project Management is a Key to Success

We believe a crucial part of the process in overcoming the failures others have experienced with 3PL’s is placing special attention on project management.  An effective 3PL’s project manager is skilled at identifying opportunities and uniting parties, systems and processes.  A great PM strives to take proven best practices, embed them into the customer’s organization or the 3PL and make them durable, permanent and lasting.  These best practices include:
·         Improving Stock Arrival Dates at the DC
·         Reducing Storage Costs
·         Exceeding Vendor Compliance Requirements
·         Actually shipping on Customer start date – always
·         Scorecarding of the 3PL, the Vendors, The Retailer, The Customer
·         The perfection of many processes

In the beginning of the relationship, the project manager is what we would call a true project manager – they may handle many singular/one-time events such as writing or fine-tuning an SOP (Standard Operating Procedure) or Best Practice.  There may also be an extended discovery period between the partners while they explore supply chain opportunities such as squeezing money and days out of the supply chain, setting up meaningful metrics, and so on.  Eventually, the relationship evolves, and while there will always be singular task and improvement opportunities, the relationship should fall into a comfortable and natural cadence with weekly status meetings monitored by both parties.  The PM often acts as a meeting facilitator.

Desired Capabilities

An accomplished full service 3PL provider should be highly capable of driving competitive advantage and operational savings.  While the list is extensive, these are examples of leading opportunities:

1.     Savings in Ocean and Domestic Transportation Cost – It is very possible and desirable to find a 3PL relationship that will leverage cooperative buying power to save transportation dollars and optimize ocean transport and supply chain days.  The relationship can provide valuable insight into the murky world of ocean transport.  It can help mitigate arbitrary price increases and create savings using a dynamic RFQ environment.

2.     Foreign Trade Zone Benefits – Leveraging Foreign Trade Zone operations provides two key financial benefits.  First FTZ operations defer duty payment until goods are shipped.  Second, which may be the greatest cost savings, is the advantage of weekly consolidation of entry fees.  For example, a company processing 10 shipments per week, each with an entry fee of $150 would pay $1,500 vs. one $150 consolidated entry fee in a Foreign Trade Zone.  A company with a sales volume of $100 Million could save upwards of $250,000 per year leveraging FTZ operations.

3.     Supply Chain Management and Collaboration Software – Efficient communication with overseas suppliers, shipping forwarders, customs brokers and truckers can have a dramatic and profoundly beneficial effect with production order management.  The aim is collaborative clarity between buyers, vendors and logistics companies so that all parties are always aware of where product is in the supply chain.  Good systems should predict early and late product arrivals, provide succinct communication threads between parties, and highlight operational remediation.  Advanced 3PL’s often provide and insist on the use of such software as it is recognized as vital operational glue.

4.     Vendor Compliance and Chargeback Reduction – The 3PL should be expected to understand Vendor Compliance and share in the responsibility, including chargebacks.  Many 3PL providers will talk of their compliance but shirk at taking any responsibility for chargebacks beyond their provided fees.  An effective provider must be willing to take responsibility for operational chargebacks that directly result from their lack of performance as well as have a proactive compliance officer in place so that chargebacks do not become the business relationship focus.  The focus should be in driving the retailer performance scorecards to an “A.”

5.     Face to Face Meetings – The 3PL PM should be expected to visit the operational headquarters of the client with appropriate frequency to create a true extension of the businesses and a synchronous and harmonious relationship between the parties.  Such visits also make it possible for all stakeholders to become involved, including sales.  As an example, proactive 3PL’s will visit the client during trade or market weeks to interact with sales and even client customers taff . thus getting closer to the end customer requirements.

6.     Scorecard/Report Card – While the 3PL staff and certainly 3PL PM face time with the client is a best practice, it is very important to have a weekly report card that asks important questions and defines the health of the various process requirements between the parties.  This will quickly frame and define expectations of the relationship.  The goal should be an “A.”

7.     Reduced Time to Market – Consider reducing product time to market by two weeks for every season – this could result in one extra month of selling!  Process and lead times can be reduced by using collaboration visibility tools, multi-location points of distribution, proactive flow and pick processes, C-TPAT, Foreign Trade Zones and, of course, choosing a 3PL with the same vision and the resources required to accomplish this goal.

8.     Sharing of “Other” Best Practices – A 3PL provider may also provide other unexpected but welcome synergies in areas such as operational best practices outside traditional supply chain areas.  A willingness to share an extensive network of support, contact and ideas can also be expected with a top 3PL provider.

Sometimes the Takeaway is Knowing What is Possible and Achievable

We have identified some of the 3PL opportunities through which a company can achieve significant operational results and business growth.  The relationship between a client and 3PL can be such that the sum of the parts is much greater than the whole.  Today’s advanced 3PL’s are truly capable of identifying opportunities and garnering operational support to take advantage of them.  There is no question achieving solid results with an advanced forward thinking 3PL service provider is a goal all companies should identify and act on.

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