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Yusen Logistics (Americas) Inc

Innovation in the Global Supply Chain - Being Small and Innovative in a Big Market
Mark Davison, Yusen Logistics (Americas) Inc.

Being from a small country at the bottom of the world and now happily living in the continental USA occasionally invites one to reflect on the differences you see in scale, culture, and market forces inherent in a small economy verses the same at play within the world's largest economy. Like companies, countries have subtle (and non-subtle) pressures and influences that lead to innovation, which can lead to the evolution of a competitive advantage in the wider marketplace for the company and/or a nation. For example, in New Zealand, the economic history was based on farming to feed the United Kingdom. At the bottom of the world and miles away from the market meant that farmers in New Zealand had to be more efficient in producing top quality beef and wool. When refrigeration technology emerged at the beginning of the 20th Century, it was quickly adopted. When the UK joined the European Union in the 1970's, new markets emerged for New Zealand (did you know that the beef in a McDonald's burger originally munched grass in Australia or New Zealand?) new products were developed - cheese, milk powder, and deer meat. Due to the economic rise of China, the consumption of milk products has soared along with the New Zealand exports while the desire for healthy non-grain-fed meat played into existing farming practices. Yes, New Zealanders farm deer, with the venison exported to Europe, the velvet and hides to Asia, and other body parts going to China for... medicinal purposes!

The innovations and experimentation that resulted in New Zealand's national survival were large and small, and came into play over decades, but contributed to a wider national impact. Small companies within international trade can sometimes mirror these trends and the U.S. market is filled with examples of the successful retailer finding and exploiting its niche - some becoming world leaders in style, trends, and distribution strategy. Some of the innovation or changes in supply chain and distribution can be of a profound nature as reinvention and reaction to the market stimulates new ideas for remaining competitive and profitable. But there are also quiet and smaller innovative changes when companies or departments start with little fanfare and they contribute to the small but incremental progress of improving efficiency to successfully use the data and EDI connectivity now available within a supply chain and its associated 3PL's and partners. One recent example reminds me of a quote from a Harvard Business School article in 2012 that stated "First and foremost, innovators are good at associational thinking, or simply associating. They make connections between seemingly unrelated problems and ideas and synthesize new ideas."1

The compliance and freight payment manager of a medium size retailer viewed the manual processing of paper to facilitate payment from their bank to foreign suppliers with growing concern. Three headcount spent hours chasing and sending e-mails and paper to ensure payment was made; international volumes were also increasing. How could this be more automated as the headcount were needed elsewhere for other duties? The solution emerged with the realization that the full shipment of a purchase order can be verified by a 3PL partner and that this confirmation, along with other needed data elements - DUNS, PO, Letter of Credit, party names and quantities, etc. - can be included into an EDI message to the bank as soon as it sailed and the FCR was released. The bank, in turn, could receive that data along with any chargeback information and also send EDI status messages on the shipment payment status and other milestones. The development of a three-way EDI highway of data exchange allowed for the leveraging of existing supply chain partners and making the data work for the retailer. The results were impressive - improved payment timeliness to suppliers, accurate payment reconciliation, superior archive and audit trail, and it immediately saved headcount for more productive uses.

Countries or companies within International Trade spur innovation and experimentation. In the current era these efforts are complimented by the effectiveness of efficient data exchange and strategic partners allowing innovators to find new ways to increase efficiency within their supply chains.

[1] Get Creative: 5 Ways to Make Your Company More Innovative

Mark Davison has been working within International transportation companies since 1992 holding sales and pricing positions within Evergreen America, Sealand, & Maersk. In 2007 Mark joined NYK Logistics as the South East Regional Sales Manager before becoming the Director of Sales for Yusen Logistics - Origin Cargo Management Division - in 2013. Mark lives in Atlanta Georgia and is a graduate of Victoria University, Wellington, New Zealand.