A Midsized US Distributor of Medical Equipment
The client had experienced significant and rapid growth over the past 3 years. The client sources from multiple suppliers in the Far East.
Supply Chain processes which had been fit for purpose 3 years ago had proven not to be scalable and as a result, the client had experienced a range of challenges in terms of visibility, control and cost management.
Due to the lack of control and visibility of their supply chain, the client was unable to accurately maintain vital compliance-related audit trails. This resulted in financial penalties for late and incomplete filing together with a significant burden on their teams in terms of time and effort.
Inbound consignments were often subject to storage/demurrage charges, due to the delay in submitting accurate documentation to effect customs clearances.
A significant amount of time and effort was devoted to managing their supply chain, monitoring orders, re-inputting information – which meant they were unable to take a strategic approach and explore solutions. Additional personnel were hired in an attempt to cope with the ever-growing requirements – all adding cost. Much of their time was focussed towards “fighting fires”, rather than addressing the root cause.
Their trading terms with much of their supply base were C&F, meaning that their suppliers were able to choose through which freight forwarder their orders were routed. This resulted in a continual barrage of consignments arriving at (often incorrect) destination ports without any prior notice. In many cases, the client only learned of the arrival after consignments had been waiting at destination port for weeks. By this point, storage fees had already been incurred.
As the business continued to grow at a rapid pace, the situation was exacerbated and it became clear to the client that something had to change.
Horizon International met with the client and reviewed their supply chain processes. It became immediately apparent that the key root cause of their issues was their rapid growth, coupled with processes which were not scalable.
There were some clear and quick “wins” – the first and most important was to change the trading terms from C&F to either Ex-Works or FOB – giving the client the ability to choose their own nominated freight forwarder to manage consignments.
This change was pivotal. It enabled the client to take control of their supply chain.
With this change in terms, Horizon were able to implement further solutions to achieve benefits.
Through Horizon’s enterprise supply chain system, hiCloud, the client was able to notify us when a purchase order was placed with an overseas supplier. This immediately triggered Horizon’s origin station to contact the respective supplier to confirm receipt and “goods ready” dates. Throughout the production process, Horizon would maintain contact with the supplier, thereby enabling us to plan collection from factory and protect space for shipping be either air or oceanfreight.
This advanced view of production schedules and orders “coming down the pipe”, also served to enable Horizon to plan multi-order assembly shipments – reducing unnecessary duplication of costs and simplifying processes.
All documentation related to the order was uploaded via hiCloud – enabling early and advanced preparation for arrival and customs clearance at destination, enabling the client to maintain a robust and accurate audit trail for compliance purposes.
The client experienced immediate benefits.
The time and effort devoted by the client to managing their supply chain reduced significantly – and they changed their focus from “fighting fires” to strategic planning.
Compliance and regulatory issues disappeared, as the client was able to build and maintain a robust and accurate audit trail.
Costs were reduced by a substantial amount, due to taking control of the choice of freight forwarder and thereby having transparent costs agreed. In addition, through combining multiple consignments together at origin lead to reducing unnecessary duplication for multiple customs clearance, handling, documentation and delivery fees.
Allowing Horizon to manage orders from the point that purchase orders were placed, through to final mile delivery enabled us to eradicate any storage/demurrage fees at destination port – reducing their overall supply chain spend considerably.
As the client continues to grow at a rapid pace, Horizon’s scalable solution continues to support them. Our continual improvement philosophy also serves to ensure that as their business grows and their needs change, Horizon will respond and make changes, suggest improvements and identify opportunities for the client in the future.