There are lots of challenges in the technology supply chain ranging from sourcing decisions to global supplier selection and from management to distribution planning, but one challenge we haven't talked about before in this column is international shipping.
With 96 percent of consumers worldwide living outside of the US representing two-thirds of the world's purchasing power, the importance of the international marketplace is impossible to ignore, particularly as technology companies look to grow and expand. According to the US Small Business Administration, companies engaged in international trade:
- Are 20 percent more productive;
- Produce 20 percent greater job growth than non-exporters; and
- Are 9 percent more likely to stay financially solvent.
Growth is coming from numerous places, according to UPS's 2012 Change in the (Supply) Chain survey, conducted by IDC Manufacturing Insights. While North America remains the largest consumer market for technology goods, with China coming in close behind, high demand growth is anticipated in the following countries/regions where technology companies plan to fulfill/sell products over the next 3-5 years: India (22 percent growth), Middle East/Africa (22 percent), Brazil (18 percent), other South America regions (19 percent), Eastern Europe (15 percent), Korea (13 percent), China (8 percent), and other APAC regions (8 percent).
Along with international trade comes international shipping, which can prove challenging for many technology companies. Below is information on the four C's of international technology shipping challenges that companies should be prepared to plan around.
International shipping is obviously going to be more expensive than shipping product domestically, but companies often pay significantly more than they need to for international shipments. As the technology industry in particular is often faced with significantly condensed timelines, the pressure to make decisions quickly and the need to get product out the door in record time can cause shipping mistakes that lead to higher than necessary costs for the company.
Taking the time to create a plan for international shipping will pay off in the long run. This should not only include shipping rates and service options to global destinations, but also a plan for the variety of time-sensitive scenarios that a company will likely encounter. In addition, creating a well-developed plan will also help you minimize paperwork and take advantage of Free Trade Agreements, which will reduce administrative costs and tariffs.
It is vital to understand your options in order to ensure that you are getting the lowest-cost service that still meets time and customer-specific requirements. Plans should be updated often, as service offerings and costs can change frequently. Companies should work with their shipping/logistics provider on the front end to ensure that they have the right plan in place for maximizing international shipping spend.
In the supply chain, “clarity” means end-to-end supply chain visibility. Visibility throughout a shipment is not only increasingly important to end customers, but it is also a top priority for technology companies, due to the often high value of products. Visibility is even more essential in international shipping. When shipping internationally, technology companies should not only leverage technology services that allow for real-time tracking information and updates, but they should also put into place service-level agreements that provide for an alternate plan if a shipment is delayed. The ability to take action on delayed shipments is critical, thus you should ensure that you have the ability to intervene and reroute a shipment if necessary.
In conjunction with the importance of end-to-end visibility, technology items in transit also require a high level of security. The protection of these shipments is important due to the high value of items. Additionally, in a fast-paced market, it is important to keep new products on target to meet launch dates and stay ahead of the competition. When developing a shipping plan, check with your provider to see what their insurance will cover and what specific security measures they take to protect high-value items.
Possibly the most daunting challenge, but also one of the most important, is ensuring that all appropriate customs forms and processes are filled out correctly. Each destination can have a variety of forms based on the product, value, and method of travel. If they are processed incorrectly, your shipment could be significantly delayed, and/or fines could be levied against your company.
There are technology tools such as paperless invoice solutions that transform lengthy customs documents into simple electronic data and then transmit trade data electronically. These solutions speed the customs process, reduce errors from manual entry forms, save time by allowing companies electronic access to archived data, and have a positive environmental impact from reducing paper usage. It's key to ensure that your shipping provider has international customs brokers who have expertise in related duties and taxes in each country to not only ensure that you avoid customs-related delays and fines but also to help you get ahead.
With the right expertise, resources, and planning, technology companies can overcome these challenges and reap more global opportunities while keeping costs down.