I interviewed Aman Sapra who discussed International Logistics and the Impact on the Overall Supply Chain.
It’s nice to speak with you, Aman. I’m looking forward to hearing your views today on the topic of international logistics and the impact on the overall supply chain. Before we start, can you provide a brief background of yourself?
Certainly, Dustin. It’s a pleasure to speak with you. I appreciate the blog series that you’re running; very insightful and a lot of information there. Thank you for doing that for the profession. A brief background of myself. My name is Aman Sapra; I work with St. Onge Company. I’m a senior project manager for inventory and supply chain strategy. I work a fair bit with international logistics and also work a fair amount with forecasting, inventory deployment, sales and operations planning kind of problems that folks would be working creatively to address. I also work a fair amount with understanding commodity flow analysis, regional trends in terms of date-intensive trade and commodity flow data and just general in terms of service strategies and network strategies. I’ve been with St. Onge Company for about ten years, and it’s been a great journey.
What is the impact of international logistics on the overall supply chain?
The impact certainly is profound, as most of us would agree. It doesn’t matter … there are times when we would source finished goods into a country that we would have to distribute in, so we are potentially importing finished goods. We are importing raw materials at times, if we are producing finished goods within a country, we could be importing services from other countries. You could be looking at various things as the world becomes flat, more and morephysical flow of the product has gone international and to make physical product flow from the origin point to the destination point is what logistics does and international logistics has essentially brought to the fore this very critical component of ensuring that the product gets to the right place at the right time, in the right quantity, and at the right price. So international logistics does have an overall impact on supply chain whether you look at sourcing strategies, fulfillment strategies, how do you deploy … your deployment strategies, your network strategies in terms of network solution centers, where they should be located, what size they should be, what mission they should have. All of those get impacted by a single component and that is international logistics. It does have a profound impact on the overall supply chain.
Where do the challenges lie?
The challenges typically come from, …well, that’s a multifaceted question because the challenges could lie with being right at the very top, when the overall strategy has not been determined, or if it has been determined, it is somewhat dated. We could’ve made some sourcing changes or sourcing strategy decisions in the past couple of years, but the overarching strategy has not been changed in the past five years or has not been revisited in the past five years. That could have a fundamental impact or a fundamental disconnect between the strategic view and the tactical and operational uptake on the ground. You could also have challenges in just visibility to the supply chain, giventhat the supply chain is now longer. If I would source something in the country, I obviously do not have—I’ll take the example of sourcing something from China or from Korea or from Thailand and coming to the U.S. or to Europe. The length of the supply chain does grow by six weeks.
Now, what that also means is, you’ve got to now start forecasting six weeks in advance; you’ve got that much more forecast error that comes into play; you’ve got to figure out where you bring the product in; you’ve got to account for all kinds of risks in the supply chain. The challenges generally come from the lack of a strategy, as well as the visibility to the strategy and to the execution and also to the recording of various events within the supply chain.
The simplest one there, which I think everyone would agree with, is having visibility to exactly when a container leaves from the origin point or, even if you go back, when it left from the source location, when it got to the originating port, when it departed the originating port to somewhere, did it tranship through a location, when it got to the destination port, how many days it took to clear through customs and other formalities that come through. By the time you actually account for each of these elements, not only are you measuring whether your supply chain is actually working well, you are also auditing to make sure that you are recording each and every event.
It’s pretty much like the human body; you’ve got to take the pulse check and make sure that you are picking on every vital signal that the human body’s sending out. It’s the same thing with the supply chain. You’ve got to have every vital measurement being checked, and that might actually mean that you have to take just about each and every measurement before you can diagnose which one is vital and which is not, because the growth of a company and the maturity of a company will dictate what you want to measure, might vary by the phaseand the type of growth that the company’s going for.
Fundamentally, strategic alignment, visibility around supply chain, and recording of data down to the level where you track each and every instance of activity in supply chain essentially would be where the challenges come throughbecausein all the work we do, we find that to be a critical missing link a lot of times.
Just about every kind of project that we undertake, we would be spending somewhere about 40 to 50 percent of time in gathering and cleaning good data from which we can make inferences before we can determine the overarching strategy. Unfortunately, what should—or fortunately, whichever way you want to look at it—you want to have done that analysis prior to putting the strategy in place, which a lot of companies are fundamentally starting to do, but you see it the other way around, as well, where some strategies have been put into place, but there’s no data of that price strategy, and that is unfortunate, but at the same time, it’s reality.
Where have you seen some good results?
Good results have been with, essentially, I’ll echo the same thought. It’s been folks who actually are able torecord some of the very basic instances around transaction of data but also who are at the forefront of figuring out what their service strategies are and how the service strategy ties into the distribution strategy and how the distribution strategy then tie into the sourcing strategy. What you’re doing is starting with the voice of the customer and saying: “How do I need to service my customers? How do I need to segment my supply chain? How do I need to segment my SKU base? How do I reach out to the different channels within the supply chain? How are the different channels the stakeholders within the supply chain?”
And then build backward and ensure that all these strategy pieces—you know, to service, you need to distribute; to distribute, you need to deploy; to be able to deploy, you need to be able to position inventory; to be able to position inventory, you need to be able to source it properly.
To be able to do all that, you essentially are looking at a multifaceted approach, and most people who are successful are able to take a comprehensive outlook at the supply chain and essentially figure out where the issues are. As soon as you start looking at this entire chain, the entire value chain, it goes back to what’s initially being called the shiftingbottleneck problem.
There will always be a constraint in the value chain, and that constraint in the value chain is, by far, is the affecting bottleneck. The bad news there is that there is always a constraint in the value chain. The good part there is that you will always be able tocontrol of what you’re doing. The most important thing there is to fundamentally be able to understand what the pacemaker in the process is, what the pacemaker in the value chain is, what is the pacemaker that’s constraining the entire value chain.
Addressing that before moving on to other areas which might be addressed, but overall, holistically that might be a few projects that are being done individually under each and every cross-function of the supply chain but If you were to take the holistic view, where exactly is that problem, where is that issue? That is essentially becoming the pacemaker for the entire value chain.
Once you're able to get to that, once you’re able to start addressing that, once you’re able to get that approach into your supply chain, value proposition thinking, I think a lot of folks will start to gain benefit. I’ve been seeing that significantly with some folks who made a very conscious effort in ensuring that they, even with, a small portion of the supply chain being internationalthey put in a conscious effort in ensuring that they understand the impact of outsourcing, the impact of bringing in product from different countries, the impact of positioning product and deploying inventory and how new product should be introduced or regular SKUs should be introduced. All of that, when you start looking at all of those facets and you say, “Where exactly should I be concentrating?” that’s typically what has helped a lot of folks in ensuring that they know where to address their efforts in making the supply chains more efficient, more comfortable, easier to work with, and, in all essence, fun to work with for their own employees , as well as the other stakeholders.
Thanks, Aman, for sharing today your views on international logistics and the impact on the supply chain.
Certainly, Dustin.My pleasure. Good talking to you.
About Aman Sapra
Sr. Project Manager, Inventory &
Supply Chain Strategy + Analytics