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Insights
on Excellence | "Insights
on Excellence" Archive
Drop ship direct to customers from
your plant in China? Why not?
ABOUT
THE AUTHOR |
 Stephen
Hawley Martin is
a former principal of The Martin Agency
in Richmond and the author of more than
half a dozen books including his newest,
Lean Enterprise Leader: How to Get Things
Done Without Doing It All Yourself.
He is editor and
publisher of The
Oaklea Press, a book publishing business
dedicated primarily to helping business
executives increase productivity.
He can be reached at shmartin@oakleapress.com
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by Stephen
Hawley Martin
for Virginia Business
August 31, 2007
Today, companies are facing a range of difficult issues.
Energy costs and labor costs are rising, and the currency
exchange is not as favorable as it used to be. On top
of this, the market is flooded with consumer goods, making
it impossible to raise prices. What should a company
do?
One answer is to look for ways to cut costs outside
of manufacturing. Logistics may be the place to start.
One reason Wal-Mart's early and large investment in IT
and logistics is one reason for its victory over K-Mart.
So consider taking a page from the Wal-Mart playbook.
If you haven't done so already, you may profit by investing
in warehouse logistics software and by teaming up with
a shipping supplier such as UPS to work out a system
that serves your customers well and saves you money.
Suppose you move your manufacturing to China. Why pack
everything up, put it in containers and ship it to a
warehouse in the U.S. where it will have to be unpacked,
separated into individual orders and shipped off to customers?
Think of all the time, money and unnecessary handling
that involves. Depending on the type of business you
have, it may make more sense to package up individual
orders in China, label them, combine them according to
the U.S. port closest to a group of customers - such
as Seattle or Long Beach - and ship them straight to
that port.
Let's say, for example, you have a number of orders
going to customers in southwestern states. Your system
will combine these and send them in a container that's
going to Long Beach. UPS, Fed Ex or whatever shipping
outfit you select will pick up the container from customs
and take it to a nearby distribution center. Out the
packages will come from the container and away they will
go, direct to customers.
It only takes about a week for a ship to travel from
China to the U.S. West Coast. Given a day or two at each
end for processing, and a couple of days for ground transportation,
your shipment will arrive at a customer's place of business
in two or three weeks. Unless it's a rush order, most
customers can live with that.
You'll save a bundle on logistics and cut down significantly
on the inventory you must carry.
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Stephen Hawley Martin is a former principal of The Martin Agency in Richmond
and the author of more than half a dozen books including his newest, Lean Enterprise
Leader: How to Get Things Done Without Doing It All Yourself. He is editor and
publisher of The Oaklea Press, a book publishing business dedicated primarily
to helping business executives increase productivity.
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