IT Tracks Goods Around the Globe
Consumer Goods Technology, Nov./Dec. 1998 - BY KIT DAVIS, Contributing Editor

Manufacturers are gaining more rapid time-to-market, increased supply chain visibility for inventory reduction, and greater compliance with federal regulations by implementing systems for planning the sourcing of goods globally and for tracking import/export.

Different companies have different needs, of course, and they find different solutions from a variety of software vendors. Following are four examples of how forward-thinking firms are gaining benefits in global operations.

Parmalat Milk’s Benefits

Parmalat Canada, a division of the Italian firm Parmalat Finanziera, imports and exports dairy and other products to processors and distributors in Asia, Europe, and the US. The company looked for a global system that could identify and track products by lot, production date, and grade, which can change.

Tracking is a challenge for the company because it drop-ships much of its product. "We purchase from multiple suppliers and sell right away," explains Chris Loucks, controller for Parmalat Canada. "Often we never take actual delivery on goods. Some goods are in inventory, but most are in transit to the customer. We ship directly from the supplier to the end user, and from one country to another, so the goods may not flow through Canada."

Parmalat Canada also requires visibility into inventory and orders, as well as order-processing and purchase-order-management capabilities. The company wanted to account for all products and generate a profit/loss statement at the end of each day. In addition, it needed a system that could handle unique pricing challenges caused by exchange rates and by fluctuating product values.

To meet these complex needs, Parmalat Canada chose 3rdwave from Toronto-based Blinco Systems. Parmalat Canada has found that installation of the product is complex, especially since the company has only 22 employees and no full-time IS professionals. "We haven't dedicated sufficient time to 3rdwave," acknowledges Loucks. "It's an involved process."

Yet Parmalat Canada is already gaining benefits, Loucks says, "The system is information-rich. It's a good database system and tracking system. We can track trades in all stages, from when the purchase order is issued, to the final sales."

Loucks continues, "We're also getting some sales and profitability reporting. We can compare our projected profits to our real profits. We get a report on our open trade position, what we've not yet sold. We can look at all our purchasing contracts, see our unsold purchases, and see where we have made sales and not yet bought the goods."

Unilever Gets the Grey Out

Unilever HPC is a Connecticut-based management group comprising Helene Curtis, Cheesebrough Ponds, and Lever Brothers. Products are manufactured in the USA and overseas; some are dropshipped from overseas plants to distributors in other overseas markets

Using Syntra software, the company has established a discrete export system. Says John Collins, director of export administration for Unilever, "A major benefit is that our domestic system is not burdened. Our export business runs as a stand-alone operation, so our domestic system need not conform to international requirements."

One of the major challenges of the drop-shipping operation lies in combating diversion to the grey market. Collins explains, "Products sold at a discounted price for the overseas market can be [illegally] shipped to a higher-priced market such as the US," with the diverter pocketing the price difference. But the Syntra solution helps Unilever avoid this. Collins says, "Syntra generates the export documentation, and allows us to structure the business forms and change sale terms so that the title documents do not pass until the product arrives in the foreign port." This prevents the potential diverter from taking possession of the goods and diverting them.

Unilever also uses the system to track carrier costs. This enables Unilever to evaluate carrier performance accurately and negotiate favorable rates, Collins says. In addition, Syntra enables Unilever to create country-specific profit-and-loss statements. Collins notes, "Domestically, we track profit- and-loss by brand, but internationally we evaluate profit-and-loss by country. Syntra facilitates the retrieval of management information and enables us to do this."

SAP Suits the Pink Panther

Owens Corning, the inventor of glass fiber, is a $3.6-billion, global manufacturer of advanced glass and building material systems. It operates in more than 30 countries on six continents. To enhance global operations, the company implemented SAP's R/3 early in 1997. Reports David Johns, CIO: "We have a single SAP implementation at our corporate headquarters in Toledo, Ohio. All businesses and regions worldwide use this system."

A single system means one set of processes and common data across all businesses, says Johns. This unity brings many benefits to a global company.

Johns explains, "We source material all over the world for 100 manufacturing facilities. By using a single system, we can set up global agreements with our suppliers that leverage the true size of Owens Corning."

He adds, "We also have global visibility into the supply chain and can view raw materials as well as finished goods and products available for our customers. For example, if our North American plants are having trouble keeping up with the demand for insulation, we can import insulation from our UK plants to satisfy customer demands. The SAP system gives us the visibility and the tool set to do this."

Johns concludes, "SAP is the backbone of our global business strategy. It has been a challenge to implement, but it will get us where we need to go."

Compliance is Key in Car Parts

Robert Bosch Corporation is a manufacturer and supplier of automotive parts for OEMs and the consumer aftermarket. The company exports products to Brazil, Argentina, Chile, and Peru. Last spring, Bosch implemented Vastera's EMS-2000. "We're using EMS 2000 for export compliance," explains Kamran Ashraf, manager of corporate financial systems Bosch. "We want to make sure we are adhering to Department of Commerce regulations."

EMS-2000 handles several categories of compliance-checking. Ashraf reports, "It screens the order by checking the ordering entity, freight forwarders, final destination, and so on against the U.S. Department of Commerce list of denied parties. It also checks licensing regulations and documentation requirements."

In the past, compliance-checking was handled by freight forwarders. "But we were still liable in the event of non- compliance," says Ashraf.

Seeking greater control, Robert Bosch chose to take the function in-house. "We want to remain in good standing. By handling compliance in-house, we have more confidence," he affirms. "We know we are handling it correctly."

Other software vendors also provide global solutions. RockPort Trade Systems helps to manage, integrate, and optimize a supply chain involving both imports and exports. Sue Welch, RockPort's CEO, reports that her product can help streamline supply chain management, reduce time-to- market, and reduce inventory carrying costs.

The consumer is the ultimate beneficiary of global systems. A recent report by consultant Kurt Salmon Associates that projects a $54 billion savings for soft goods consumers through full implementation of quick response (QR) and streamlined supply-chain management practices. When also implemented in all general merchandise and consumer durables industries, the opportunity for savings climbs to $102 billion.

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