When we were much younger we learned to put things in the right places. Sometimes we would use a hammer to try to force a square peg into a round hole, but we soon learned that finesse was better than brute force.
With the challenges that many are facing sourcing and using containers effectively, now might be a time to relearn some of the lessons of our younger years. We need to be much smarter as we figure out what goes where and how much to force a solution.
Even more challenges
Covid-19 has been a major factor in changes we have experienced. Initially we saw a collapse of demand, and then it shifted from traditional sectors to new ones. Uncertainty has increased as we went into and out of lock down, and as the world comes out of lockdown we find ourselves struggling to get the goods that people and businesses need as trade recovers.
The most obvious manifestation of this is the difficulty of sourcing containers and the fivefold and more increases in container pricing.
Now, more than ever businesses are facing challenges to:
- Maximise container utilisation and use the available space as effectively as possible
- Keep the costs down as container shipping costs skyrocket
- Minimise the transhipping costs
If they can’t fill containers some businesses are resorting to leaving stock with their suppliers until they can get enough to fill a container. This is of course fraught with danger as delay could easily mean you stock out of important product.
Probably far better to fill a container but then you face the challenge of potentially filling it with the wrong sort of stock and taking ages to ultimately clear it.
Some businesses are also being asked to specify the containers they expect they will need when they place stock orders. They are being drawn into solving the supply challenges of their suppliers.
Confronting questions
How much container capacity is needed for upcoming orders? If there is spare space, what should you add to the order to ensure you use the capacity to the maximum?
Once the shipment is ready for despatch, what should you then ship to where? If you are bringing in containers to Sydney and Brisbane, how much should then be transhipped to Melbourne, Adelaide and Perth, and via which importing location? Has the original container shipping plan changed since the original order was placed?
Tim Furze, CFO at Australian Automotive Parts has to answer these sorts of questions. In the past, it has taken hours and hours and involved some big spreadsheets to come up with answers.
Fortunately, the Horizon software has helped Tim produce optimum answers and to do so in minutes, not hours.
Top-up
This is a tool to help you easily answer the question, “If I need to fill one or more containers, what extra stock should I order?” It helps to determine the right mix of popular and less popular products so that you get extra where you do not expect to take too long to sell it. It will optimise across multiple factors including your demand forecast, inventory risk, carrying and transport costs.
In a relatively short time you can generate the necessary supply plans and optimise the mix of orders to maximise what you are shipping within the constraints of the containers you plan to use.
Split shipments
The next sort of challenge that people like Tim face is just before shipment. Have requirements changed in the months since the original order? What containers can finally be used? Where should the stock go to? If you have to tranship via linehaul, where should the initial import point be and how can the linehaul costs be kept to a minimum as well.
The Horizon solution to this is a tool that allows you to produce optimum answers in just minutes, and consider hundreds of SKUs from a supplier, DCs in all states, over a quarter of a million permutations of container usage plans , each with a model to pick the least cost line haul solution too.
Optimisation Benefits
Tim indicates …
“These tools certainly help me quickly solve what ultimately are very complex problems.”
“We can be confident in the quality of the solution as it is built on robust forecasts and supply plans.”
“And as container costs have risen it is even more important that we utilise our shipping capacity and subsequent linehaul as effectively and efficiently as we can.”
“We are saving thousands in shipping and handling costs, time and even more in having the right product available in the right quantities for our customers.”
Maybe it is time to ask if you need to finesse your shipping solution too?