Integrated Solutions Offered Around the GlobeMon, 09/01/2014 - 12:46
The investment boom in the automotive industry has thrown a gauntlet down at the feet of logistics service providers. They are now scrambling to find a way to provide integrated solutions as the needs of the automotive sector vary, says Sjef Minke, Director General of United Logistics Services (ULS). ULS analyses the client’s entire supply chain from its suppliers and transportations modes to warehouses, and then combines these to deliver an integrated solution. “For example, if an automotive client uses sea and trucking, ULS seeks to consolidate these areas in order to improve lead times, costs, and even safety.” Through customized integrated logistics solutions, Minke estimates up to 37% of supply chain costs can be saved for automotive companies.
Being fully immersed in the nuances of the automotive supply chain requires a proactive approach to software. ULS’ system tracks bookings and cargo readiness dates, which allows it to show clients a run-through list of suppliers, stating whether these are complying with schedules, if their lead times are reliable and how they are affecting inventory. This close scrutiny of the supply chain “does not happen often,” according to Minke, but is gaining momentum in Mexico and other Latin American countries. Even with typical bill of lading (BL) tracking, ULS’ software includes the list of suppliers and the value of the merchandise in its reports to the customer. “Knowing when containers arrive has no added value, but knowing when the inventory is in transit does. This means the client can keep track of how much inventory and money is in transit while monitoring the performance of their suppliers,” explains Minke. The global nature of the automotive industry and its constant movement of cargo means that ULS’ system runs 24/7 and “is continuously updated by offices in Mexico and around the world” through a single communications platform, that does not require manual input but sends the updates automatically to the clients.
Pushing for integrated solutions has allowed ULS to gain deep insights into the workings of the automotive supply chain. “The growth pattern of the automotive industry in Mexico has been erratic, compared to the worldwide market that moves slowly.” Minke attributes the rise in the demand for Mexican manufacturing to a decrease in European manufacturing activity due to “a stagnant market and rising labour prices.” ULS sees companies transferring operations to Mexico focus on two areas: moving machinery and finding the right operators. “ULS’ integrated system gives it an advantage in helping companies establish here by being involved in the early stages of such a move,” says Minke. “We run a complete door-to-door operation from packaging and insurance to follow-ups on maintenance. The service can go even further. For example, a Mexican client was sourcing raw materials from Italy as this material was not available in Mexico. ULS was able to find a supplier in China with the same certifications, which ultimately reduced logistical costs,” he adds. While such an integration process could appeal to companies of all sizes, ULS targets mediumsized companies for whom it believes it can add real value.
Maintaining a proactive and integrated service also demands specialised human capital. According to Minke, “there is a lack of experienced people in the logistics industry in Mexico, which also suffers from a high turnover rate.” When ULS began operations in Mexico, it hired highly trained people believed to be able to handle all its services. The company was soon disillusioned as these experienced people often clashed with the company´s established business model. As such, it applied a different HR strategy: hiring experienced staff for key positions but training the rest up from scratch, so as to be able to teach the company’s corporate culture and offer them career opportunities. At the same time, having an international staff has become “not a philosophy, or a strategy, but a must. ULS’s 24/7 system operating in 14 languages requires a highly developed communication network between branches. This means having “someone who speaks Mandarin here is advantageous as he is able to liaise between a buyer in China and a seller in Mexico,” says Minke. This global approach emanates from ULS’ determination to go “beyond being a typical forwarder.” Minke explains that “our whole scheme of solutions is not limited to Mexico. For example, our cargo insurance is contracted in Hong Kong but provides global coverage. This means ULS does not need to comply with the additional constraints applied on Mexican insurance such as agreeing to travel only on toll roads with an armed escort. A general worldwide policy allows ULS´ deductibles to be far smaller.”
“Transnational companies that establish themselves in Mexico feel more at ease doing business with a company that has a global outlook,” adds Minke. However, maintaining an international perspective overall can be detrimental when turning to the local applications of logistics. Cultural friction and language barriers can be created when trying to interact with other types of workforce. For Minke, “establishing a business plan requires a vision for the future, but at the end of the day, you must focus on the daily demands of a business such as incorporating a local workforce into your culture.” This is all the more necessary in Mexico, which ULS sees as a crucial emerging market. According to Minke, “the logistics industry is predicted to grow between 2-3% in Mexico for 2014. This means that maintaining a balance between an international and local vision is capital, especially when offering integrated solutions for the local supply chain and then branching out to the globalized automotive industry.”