Outsourced Supply Chain Management and Logistics from Nippon Express USA Achieves Record Service Levels.

Challenge:
The core competency for one leading consumer and office products company is marketing the world’s best audio, video and data storage media, not dealing with the intricacies of supply chain management tasks. In fact, inventory management and distribution center-related issues became so costly and time consuming for this company in 2003 that it decided to outsource these tasks to a third party logistics provider (3PL). The immediate requirement was to avoid high charge-backs from key retail customers due to order fill ratios and to reduce soaring transportation costs associated with re-positioning freight within its network of five distribution centers. The company also wanted a world-class 3PL that could provide a wide range of logistics services including customs brokerage, order management and fulfillment, warehouse management, reverse logistics, freight consolidation and distribution, and dynamic inventory control technology capabilities. To transform its logistics function into a competitive advantage, the company needed a 3PL that could provide real-time visibility of inventory and freight in transit, as well radio-frequency and bar-code capabilities that would enhance customer service. The company’s requirements were highly detailed. For example, they sought a paperless warehouse management system capable of a 99.65% on-time order fill rate and 99.65% inventory accuracy. Four leading 3PL companies made proposals, but the company selected Nippon Express USA.

Solution:
Following an extensive data collection and analysis effort that included network assessment as well as on-site surveys of work processes, Nippon Express USA’s cross-functional project team designed a two-distribution center model in which the company’s inventory of 1,100 SKUs would be positioned within Nippon Express USA facilities in Long Beach, CA and Columbus, OH. Cross-docking operations already were active in Long Beach, and all Nippon Express USA facilities have robust warehouse management systems with RF capability, real-time inventory visibility and bar-code technology.

Results:
In less than 90 days, Nippon Express USA consolidated the company’s inventory into the two DCs and implemented new receiving and shipping processes without any interruption of service. Orders are received, processed, picked and staged for outbound distribution within two hours. Stock-outs have been eliminated, order fill rates are in the 99% range, and charge-backs have plummeted. Nippon Express USA also designed a vendor-direct program with two key suppliers, whose inventory now is positioned in the two DCs. Order cycle times shortened dramatically, and the trading partners as well as the company’s sales personnel have real-time inventory visibility. The company hailed the program as a key reason the company met sales budget goals after the first year, adding that the company’s radically improved image for order execution helped fuel an increase in sales.