When it comes to managing global supply chains, international transportation is where the rubber meets the road. But as many companies quickly find out, managing international transportation is very different from managing domestic transportation.
I discussed the risks and complexities of international transportation in a recent episode of Talking Logistics with Russ Romine, VP of Global Transportation Services at LEGACY Supply Chain Services (a Talking Logistics sponsor). I asked Russ, “From your perspective, where do many companies fall short in terms of their ability to manage international transportation effectively?” Here’s what he said:
It starts with sourcing. As much as I think the industry has matured…the places where companies are sourcing from now, and the diversity of sourcing patterns, have created a lot more complexity in the supply chain. So I think it starts with companies on the sales front — sales leadership needs to be very much in tune with the logistics team, with the sourcing team, so that everybody has clarity on timelines, expectations, what [the supply chain] looks like, and what the potential disruptions are in the supply chain.
But I think where shippers fall down a little bit — and it kind of depends on the size of the shipper — is [having] visibility to [the broad supply chain] and predictability, that’s the challenge I see right now.
I used to be a shipper — managed a large exporting [and domestic] operation — and what we really wanted, more than anything, was price stability and consistency in service. As long as we got that, and we had an understanding that our competitors were in a similar environment in terms of pricing [and other factors], we were satisfied. [Today], with the diversity of the global economy and where [companies] are sourcing from, and all this [infrastructure] congestion and [other challenges we talked about], as you start to add those pieces into this, having a handle on…potential disruptions in the supply chain is a big deal, and I think that’s where shippers get sidetracked sometimes, working with partners that maybe don’t provide the right kind of visibility to them, partners that are not progressive in terms of visibility…
In a nutshell, poor visibility and risk management capabilities are the main challenges shippers face (for related commentary, see GM Supplier Factory Explosion: Thoughts on Supply Chain Visibility and Responsibility and Doing Nothing on Supply Chain Risk Management).
But are the challenges the same for large and small shippers?
Generally speaking, small shippers tend to lack internal expertise (i.e., people highly knowledgeable and experienced in international transportation), while large shippers (or those with very complex and fragmented supply chains) struggle with getting a consolidated view of their supply chain because they have to integrate and exchange information with many trading partners. Of course, those are all capabilities that 3PL partners can bring to the table (see 3PLs, What Business Are You In?).
Russ and I discussed many other topics related to international transportation, including the attributes shippers should look for in a 3PL warehouse provider that can help them manage their international transportation operations, so I encourage you to watch the rest of the episode for additional insights. Then post a question or comment and keep the conversation going!
(For related commentary on this topic, see What’s Going on in Ocean Transportation?)