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Issue #592

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2014 Media Kit

Challenges force flexibility in supply chain approaches

By: | at 08:00 PM | Intermodal  

By Paul Scott Abbott, AJOT

Facing limited motor carrier capacity, increasing road congestion and heightened security challenges, logistics professionals are looking to supply chain solutions ranging from alternative routings to inventory buffers while seeing service as even more important than price.

At the NASSTRAC Shipping Strategies & Logistics Conference and Exhibition, held May 4 through 6 in Naples, FL, logistics leaders shared such thoughts on how they continue to get products into the marketplace. (Formerly known as the National Small Shipments Traffic Conference, NASSTRAC is now simply referred to by the acronym.)

Inventory management practices are shifting, according to George Yarusavage, manager of procurement for Orangeburg, NY-based cellular phone giant Verizon Wireless.

“Somewhere between just-in-time and just-in-case will be just where we are at, and that will vary from company to company and individual to individual,” said Yarusavage. Yarusavage said his company employs a multiple distribution center approach to ensure an “inventory buffer” and to protect the company from a situation in which a single airport may be shut due to security-related issues. “We need some redundancy,” he explained.

Use of multiple seaports for entry of goods also is increasingly the case, according to several logistics executives who spoke at the conference.

“We spread the wealth there,” Frederick Johnson, director of logistics, planning, analysis and systems for Radio Shack, said of seaport usage. The Fort Worth, Texas-based electronics retailer, which now counts on cellular phones for half its business, historically has directed its imports through the ports of Los Angeles and Long Beach, but the 7,000-store chain now uses Seattle, Charleston and Norfolk as well.

Eric Morley, director of logistics for Minneapolis-based Best Buy Co. Inc., said his firm, a leader in consumer electronics retailing, also looks to multiple ports to, as he said, “spread the pain a little bit.”

Joe Estrella, director of transportation and logistics network for Woonsocket, RI-based CVS/pharmacy, said he keeps more than 5,000 stores stocked by “buying early” and using several ports, including New York, Savannah, Norfolk, Los Angeles/Long Beach and Seattle.

Noting the need to be sure sufficient stock of advertised special items are in stores when fliers hit consumers, Estrella commented, “Price is important and it always will be important, but service is paramount.”

CVS, like many other major chains, does not use online bids in selecting transportation partners, he said, adding, “Transportation is unlike buying pencils.”

Estrella also shared the sentiment of other logistics professionals when he said, “Capacity is certainly an issue.”

Indeed, Natalia Armstrong, global trade optimization operations manager of Johnson & Johnson Sales & Logistics Co., a division of New Brunswick, NJ-based health care product megaforce Johnson & Johnson Consumer Companies Inc., identified tight capacity as the No. 1 issue facing today’s logistics professionals.

“Capacity is a real problem at this point,” she said.

NASSTRAC’s president, Randy W. Schaeffer, who is manager of rail fleet procurement for Allentown, PA-based Air Products & Chemicals Inc., said that, for the first time in his 31 years in logistics management, “Our supply chains are at full capacity.

“It’s busting at the seams,” Schaeffer continued, citing factors such as port congestion and shortages of both drivers and equipment. “We’ve got rate increases because of it.”

Doug Flores, director of USA transportation for Beaverton, OR-based Nike Inc., said three-quarters of major seaports throughout the nation are dealing with significant overcapacity issues, thus challenging him in getting more than 100 million pairs a year of Nike brand shoes to US consumers.

“I wish our supply chain was as effective as our marketing,” Flores said. “We’re not just looking at price. We are looking at solutions.”

Among the solution