We understand that reducing time to market is always the name of the game for manufacturers. When it comes to logistics for distributing cars, heavy rolling equipment and construction machinery, time is money. Anything that increases speed of delivery to the end customer has the potential to increase sales and market share for the OEM.
Velocity: Why it’s not just about speed
Velocity isn’t just about the speed of one leg of the journey. Many logisticians believe it’s about increasing the speed of the vessel, truck or barge to deliver small improvements to the overall journey time. There are often better ways of getting products to market more quickly.
Take one recent example: this year, we’ve seen major delays in the unloading of container vessels on the US West Coast. With delays of up to a week at ports like Los Angeles and Long Beach, it’s not surprising that customers sometimes turn to other shipping modes for transporting their goods.
In some cases, manufacturers in Japan have recognised that they’ll be able to get products to market more quickly by altering gateways, despite the longer RoRo journey across the Pacific and to alternative ports. Congestion at Los Angeles even means that it can be quicker to ship cargo from Japan destined for the Midwest via the Panama Canal and the US East Coast.
These examples illustrate that when working over long distances, there are numerous factors to consider when trying to improve velocity. Are customers adding flexibility into their network by analysing alternative gateway ports, both outbound and inbound? Are those gateways congested? Are there port pairs that offer faster or more robust connection to inland transport?
Analysing the overall supply chain
Overall supply chain optimisation has the potential to transform time to market. Making the supply chain more efficient includes the optimisation of destination port and port pair selection and boosting the inland supply chain.
Incremental increases of vessel speed cannot deliver the magnitude of efficiency that a flexible network can offer, although at times they can be appropriate. Reactive ‘boost vessel speed’ requests are often the result of some upstream logistics delay and come with drawbacks and increase environmental impact and costs.
Inland transport, equipment processing centres (EPCs) and vehicle processing centres (VPCs) are helping speed up time to market by becoming manufacturers in their own right, allowing for both quick delivery and the customisation of vehicles and machines for local customer requirements.
Customisation of a EPC stock unit can give the customer a three or four week advantage versus a competitor machine that still needs to be produced overseas. An EPC might process hundreds of units of rolling equipment per day, working to the strictest quality and performance targets.
Meanwhile, VPCs can respond to demand for vehicle accessorisation – fitting a higher specification radio or a splash guard, for example – in the local market, enabling OEMs to gain market share by responding to customer demands more quickly.
It’s very important to look at the supply chain holistically to boost velocity. Does your logistics provider have an efficient inland transport solution? It’s no good processing a vehicle quickly if a rail car or truck isn’t available to transport it to the customer. An optimised supply chain therefore relies on not only good partnerships within the inland chain, but also the ability to forecast demand accurately to ensure onward logistics capacity is available.
What does the supply chain of the future look like?
The services provided by EPCs and VPCs are constantly increasing in scope. In the future, the line between manufacturing and assembly at processing centres is set to be blurred even further as logistics providers can carry out increasingly sophisticated work for OEM customers. This is part of a global trend in which processing centres help manufacturers to align themselves ever more closely with local demand.
The ever-increasing capabilities of technology offer new possibilities for closer integration between logistics provider IT systems and customers’ sales forecasting and inventory management systems, with improvements to velocity as a result. At Wallenius Wilhelmsen, we see the closer integration of our information systems with those of our customers as inevitable.
Ultimately, we expect to provide real time visibility of the overall supply chain comparable with the services consumers are used to experiencing when they place an order for a package on Amazon today.
All of this means logistics providers must continue to change and grow with the market. In fact, for the modern supply chain, impermanence is a central theme. For logisticians, it’s not just a matter of setting a plan at the beginning of the year and sticking to it. Supply chain challenges are always cropping up and this means the plan has to continuously evolve if opportunities for velocity are to be maximised.