The right combination of supply chain remodeling and EDI integration lead to massive savings for an appliances giant.
The Background
Over the years, many companies have moved their manufacturing to China to take advantage of skilled labour and low manufacturing costs. In the same spirit, our customer – a global leader in household and commercial appliances, with presence in over 150 markets – also decided to change their sourcing model from 80% manufactured in Australia to 80% manufactured in China. Since this was a huge strategic move, they needed a logistics partner who could design and manage complex supply chain processes at scale.
The Challenge
The customer was keen on swift completion of the move, but with one critical requirement - the new supply chain model must be built on their in-house IT system.
A few other key asks were:
- Creation of end-to-end SKU-level visibility on pre-defined milestones
- Delivery of complete EDI integration and online reporting
- Reduced costs (both domestic transportation and storage were in scope)
- Operation of finished goods and components from own consolidation facilities in China
The Solution
Even though the requirement was challenging, our teams went to work immediately. We began by putting together a team of experts, who would study the existing sourcing model for strengths and weaknesses. Next, we established milestones and distributed them across phases for a seamless transition. Finally, the solution architects designed a process that was agile, scalable and tailored for the new geography.
Since this project was critical to the customer's business, we split the implementation into two parts. Both rolled out at the same time, to avoid any disruption.
Part One of the solution included:
- Booking coordination and proactive follow up with factories in China
- Purchase order and SKU data collection at origin
- Flexibility between FCL and LCL consolidation
- Carrier management and exception handling
- Full system integration (EDI) and in-transit online visibility on every shipment and SKU
- Deconsolidation and delivery at destination
- Direct delivery model (DC bypass) for selected products to reduce inventory holding and product lead time
- Setup of consolidation hubs in both
- Shanghai and Yantian and parts distribution centres in Australia
Part Two was called “The China Hub Project”
To bridge the geographical distance, we set up a local team in China to manage the processes and follow up at close quarters. A robust EDI solution further integrated the shipment milestone information into the customer’s existing systems and created visibility into the entire supply chain.
The Result
The improvements in the origin processes reduced the annual costs by USD 400,000. Another USD 700,000 materialised in savings from the restructuring of the domestic transportation model within Australia.
The LCL consolidation programme increased cargo control and visibility and reduced the lead time. Additionally, our supply chain visibility tool improved the Sales & Operational Planning and fact-based carrier negotiations.
Today, the customer controls their off-shore supply chain with unprecedented flexibility and savings.
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