How to Harness a Changing North American Logistics Landscape for Growth

If black swan events don’t make waves in the supply chain sector, businesses and consumers sure know how to make them on their own. From ongoing trade wars, raw materials scarcity, emerging markets and economic uncertainty – supply chains continue to navigate widespread uncertainty, whether they acknowledge it or not.

For many businesses, the environment has softened since the pandemic and most are eager to cut costs and get back on track with stable operations. But other manufacturers, the ones who recognize that deep-cutting disruption could strike again, are leaning into the slow down to make serious changes to their supply chain and find the sweet spot between cost and fragility.

Tips on Staying the Course When Making Changes

One of the biggest changes happening in North America right now is the shift to Mexico in what is being called “nearshoring” or “friend-shoring”. From major railroad mergers and alliances, to increased border-crossing capacity, the race is on to ensure infrastructure is ready to support the shift of production from the Pacific.

But in a time where budgets are under so much scrutiny and top-line revenue walks a tightrope, conservative business practices can mean being left behind as your peers innovate. And without the right tools, eager businesses looking to make changes in their supply chain might find themselves in a sticky situation.

The following tactics are designed to give you the upper hand when making broad-sweeping changes to production, ensuring your business controls its own destiny. 

Increase Shipping Flexibility

As supply chains shift to North America, existing infrastructure will be tested. While a robust rail system, relaxed COVID-19 requirements and one of the densest dray regions in the continent will support growth, odds are freight will come quicker than capacity.

This poses a significant barrier to entry, as new regions require new providers, methods of shipping and documentation. A few tactics include:

• Introduce New Modes
  In addition to truckload, a shift to North America opens up the robust and highly-competitive rail network. With both 53’ domestic intermodal container capabilities to railcar sidings across Mexico, using new methods of shipping can maintain inventory movement, reduce costs and even support your sustainability initiatives. The rail industry has already started planning for a shift to Mexico, with recently announced mergers and alliances.
• Tap into Brokers
  Unlike transPac shipping, North America’s capacity pool is significantly more nimble, offering short-notice service and more competition for your freight. Brokers can help do the heavy lifting by tapping into their existing relationships with providers in your region, procuring the exact ones that meet your business needs.
• Use Consolidation to Your Advantage
  It might be a surprise to know that many over-the-road providers don’t actually go all the way to the final destination once they reach stateside – instead, they use transloading facilities along the border. If you have multiple production plants in Mexico that are shipping cross-border, use the handoff as a point to consolidate freight earlier, improving speed-to-market and reducing costs.

Visibility is crucial for shipping flexibility. Last-minute changes, multimodal networks and new geographies and expectations can come with growing pains and major learning curves. Integrating your entire network into a standardized, centralized platform empowers your daily operators to cut through disparate communication channels and have more control as your business changes.

Enable Your Team To Manage Sticky Orders

Whether your supply chain is doing a full-stop shift to a different region for production over the next few years or switching to a hybrid or China+1 (C+1) model, there’ll likely be a period of transition. With orders coming from multiple locations and being serviced by different providers, how can you be certain you’re providing the highest level of service to your customers and employees?

• One Order. Multiple Line Items. Thousands of Providers
  An order can have dozens of line items, each needing to be sourced from different points across your supply chain. While your logistics teams are focused on the loads carrying each order, keep in mind your frontline associates who require order-level visibility. Being able to quickly surface key information on each SKU in an order can help reduce time to response, enable deeper collaboration, and make your network transformation project a launch pad for value rather than a self-inflicted disruption.
• Stay on Top of New Forms of Documentation
  While not as complex as ocean shipping, which can average between 12-15 documents per load, cross-border shipments still require customs documentation and different forms of compliance. Digitizing your library of documents can help teams stay on top of requirements, improve communication with providers responsible for customs brokering and keep costs low, all while ensuring reliable record-keeping.
• Foster Collaboration and Autonomy
  Nearshoring creates a faster-paced environment for your team to operate in. Gone are the long transits of transPac shipping – your freight is rapidly moving the second it leaves your facility, and time is critical. Giving teams not only insights but recommendations and a path to resolution can help minimize the impact of disruptions and help avoid them altogether.

Your technology investments are critical in reining in complexity. If your current tech stack is ill-equipped to surface supply chain-related information to more than your logistics teams, you may be adding weight to an already burdensome time in your transformation project. Self-service tools allow internal teams to collaborate across their functions to tackle the most serious supply chain issues while improving their ability to be autonomous within their own role and avoid escalations.

Create Cash For Transformation Projects

Transformation projects, like nearshoring, are long-term strategies intended to generate stability for your supply chain. For many, the tradeoff with cost is worth it, as new efficiencies, lower transportation costs and shorter lead times can help offset lost savings on labor. However, the truth is that the intricacies involved with the shift to North America offer more room than ever for you to optimize your processes and maintain a lean budget.

• Manage Capacity With Laser-Precision
  With more frequent outbound loads from production facilities in Mexico, it’ll be easy to get caught off guard by how quickly accessorial spend can get out of control. Whether demurrage charges at a rail yard, driver detention costs, or capacity dwell at your facilities, detention charges can quickly accrue without visibility to each unique unit. On top of that, teams need to know how much free time they’re dealing with when a trailer arrives at your destination to make sure they can fully prioritize their unloading schedules to minimize costs.
• Avoid OTIF Penalties In Retail Channels
  If you’re a manufacturer working in retail channels, OTIF penalties are being strictly enforced again. Moving production across the Pacific might help you reduce lead-time, but it also gives you much less time to react to potential disruptions. Having the ability to detect potential exceptions and qualify alternatives on the fly can help your supply chain remain nimble and accurate while operating under constant scrutiny.
• Manage Schedules With Less Lead Time
  Nearshoring brings a significant advantage outside of reliability – it helps reduce your lead time to fulfillment. Yet getting warehouse capacity, schedules and demand cycles to link up – especially in a softening environment – can be tricky. Some shippers are opting for a creative approach to faster-than-required lead times, using slower transits and different modes to keep inventory in the network longer and avoiding warehouse congestion. The key to reaping those savings benefits is being able to track inventory across all streams of your supply chain to help reduce carrying cost, reduce excess warehouse space, and maintain optimal control over your supply lines.

When complexity is added to the equation – even temporarily – cost isn’t too far behind. But what if you could automate notifications across your supply chain when approaching avoidable costs, before they occur? And on top of that, what if you had the ability to optimize processes that generate significant reductions in cost without sacrificing operator efficiency? Visibility tools can help generate a continual stream of information – and recommendations – to ensure each move is the best.

A Central Component of A Business Transformation Project

Whether shifting production to North America is in the cards or your business is handling a supply chain transformation project on a smaller scale, having technology at your disposal is key. From improving your flexibility to reining in complexity and avoiding unnecessary costs, visibility tools are designed to take the guesswork out of the intelligent management of your supply chain. When people are given real-world impact analysis and a set of decisions and outcomes, you can be assured that each decision has your business’ best interest in mind.

Need help understanding how supply chain visibility can play a role in your forward-looking strategy? Contact your FourKites associate or reach us at [email protected]