I interviewed Julie Thompson who discussed Supply Risks and Transportation Management.
...Julie, and looking forward to discussing with you supply risks and transportation management. Can you first provide us with a background about yourself?
- I have been in transportation, logistics, and supply chain for only 30 years. I started first as a freight forwarder and then gradually made my way over to work in different international settings. Through the work, I've also been able to work from a supplier standpoint in a client's supply chain doing warehousing, demand planning, as well as supply planning. So I've had a pretty broad experience base over the past 30 years, both on the transportation and in the supply side and planning side as well.
Can you first define what are supply risks and transportation management?
- I have seen, specifically since 2008, a massive change in both road, air, and ocean transportation, particularly as it relates to international transportation. And specifically, what I'm talking about is, since the 2008 economic crisis, transportation has inherently changed.In our world, when you start talking about ocean freight, for example, concepts like slow steaming have really come to be really part of the common-day transportation. I think what has happened a lot in our world is, while there is increasing demand from a client-base for accurate transit times to be able to fulfill orders, transportation has not kept up with that. They are increasingly going to hub and spoke in air freight modalities where you don't have direct flights from point A to point B but rather through second, third, or different routings.
And on the ocean freight side, like I said, slow steaming, as well as other transportation-related infrastructure issues, have really hindered accurate on-time performance.
On top of that, many countries have also implemented increased and enhanced security measures that have really been evolving, particularly over the past decade. And I find that many of our clients are not keeping up with either one of these trends when we start talking about lead time accuracy, start talking about landed cost analysis. A lot of those concepts are not actually filtering into reality. So what a lot of my clients are finding is that things are arriving a lot slower than they thought and at an increased cost than what they had anticipated.
Can you share some more details about why supply risks and transportation management are important?
The bad bone from a planning perspective is when I buy something, am I going to get it when I need to? Can I fulfill that order? Can I fulfill the line in a reliable way, in that I also don't have to worry about inventory carrying costs. I mean, everybody wants that perfect vortex of not having an inventory as well as fulfilling the client orders or the line orders the way that they need it to.
It takes a very nimble and very flexible supply planning process to keep up with all that is happening inside the actual transportation world. And sometimes I feel, from a client perspective, that many of our clients, they don't have nimbleness in the most basic processes, like their lead time tables. How long does it take with all the different influences in there? Did they factor in increased security into the US, for example? Did they factor in the cost and the lead-time impacts of the ocean freight carrier potentially not coming in time? Did they factor into their lead time tables and the cost potential time delays at any of the ports in the world that are unable to handle the huge vessels that are now coming in?
So I think it boils down to the demand side really understanding how transportation works on a real time, having that kind of dialog with their transportation or their supplier base so that they understand the obstacles that are there, so that they aren't constantly behind the eight ball or running out of stock or supply or whatever.
And can you share with us how this is done effectively?
The most effective groups that I work with are ones that have an ongoing dialog on a lane-by-lane basis. And I think it does take a real partnership with the transportation end of your supply chain. And I think that's where someone who is looking to add more reliability from a cost or from a transit-time perspective, what they really need to do is develop that sort of relationship with their underlying carriers and freight forwarders, that there is a dialog and an expectation that risks are being... There's an ongoing dialog about those risks. They are changing all the time. Now that, let's just say, inbound into China, we have advanced manifests requirements. What does that mean for the clients that import goods into China? What does that mean from a cost perspective? What does it mean from a transit perspective?
What it means from an exporter's perspective from the US is that the client has to get their documents that much earlier to the right authorities and into the steam ship lines so they can advance and manifest all of the cargo. Sounds like a small deal, but I've seen more cargo roll going into China because clients didn't understand they couldn't wait until the last minute to do the documentation to fulfill the security measures. A small example, but it's one that can have reverberations all the way through your supply chain.
Thanks, Julie. My final question is do you have any final recommendations?
In my mind — and this is not just because I am a freight forwarder or because I'm in logistics — but it's extremely important that you work with your logistics providers to understand deeply what's going to happen with whatever lane they're working with you on. I like to think of myself as being partnered with my clients in order for all of us to understand how can we serve you better. And we can't serve you better unless we understand more about you. And I think that's really the message I would like to get across, that we need to work together to develop that knowledge base and that dialog so that we are able to help the clients, the supply chain groups, avoid unnecessary expenses and in an unnecessary shortfalls in supply. If we work together and we work on a dialog together, ongoing, that, I think, can help immensely in avoiding any kind of destructions inside the supply chain.
Thanks for sharing together, Julie.
Absolutely. Thank you so much for allowing me to participate. I appreciate that.
About Julie Thompson
Experienced high energy supply chain professional at KOG USA Inc