Taking a global operating approach to business is a necessary step for most companies to succeed today but in order to be borderless, organizations and supply chains must recognize the impact and costs associated with longer distribution process and lead times, less sophisticated infrastructures and harder-to-maintain quality control to fully evaluate the benefits and risks associated with the product outsourcing process.
There are many additional steps involved in transporting goods produced overseas to the US versus transporting goods produced in the US. These additional steps add fuel costs and can increase the risk of damage to the product. When items are produced in the US, they often follow a three-step process to reach the consumer. This process includes packaging and shipping items to warehouses in pallet load quantities, breaking down the pallets for shipment to retailers and then selling the products to consumers.
Items produced overseas and shipped back to the US most often require additional steps to reach the consumer. Once items are produced, they may be packaged and palletized at the plant then placed in containers and shipped to a seaport, where the containers are loaded onto ships and sent across the ocean. When the ships reach the destination port, the containers are offloaded onto trucks. The trucks can then be placed on rail cars and shipped via rail to central warehouses/distribution centers around the country.
At this point some products can be shipped on pallets to the retailers warehouse, where they are broken down and sent to the retailers store. Remaining pallet loads stay in the distribution centers until receipt of an order, when they are removed from stock and shipped single parcel via UPS or FedEx directly to consumers.
Transportation Infrastructure: Another consideration in overseas production concerns that countrys transportation infrastructure. Many of the emerging, low-cost labor markets have under-developed roads and highways and often use manual labor to load and unload trucks both of which can contribute to an increase in damaged products during shipment. The trucks themselves may not be the best vehicles for the job, either, so companies need to be sure that the manufacturing facility producing their items has appropriate trucks and tools to unload and load these vehicles. The transportation infrastructure also must include reliable boats, trains and warehousing, or the company can offset the benefits of shifting production to outside the US.
Lead Times: Lead times can easily affect the bottom dollar and can increase significantly when items have to be packaged and shipped from other countries. It can take two to three times longer for outsourced items to reach stores in the US. Items damaged during shipment could take months to replace due to long lead times.
Quality Control: The US and other countries have well-established packaging guidelines, but some countries may not have adequate quality control for either products or packaging materials. This could lead to an influx of damaged items, costing the company money in returns and shipping. Companies must ensure that proper controls on quality and manufacturing are in place from the point of production through the distribution chain and up to the point where the consumer receives the goods.
Global manufacturers of protective packaging materials can provide high-quality packaging to companies on a consistent and reliable basis worldwide, thus alleviating some of the concern associated with packaging material quality. Leading global manufacturers of protective packaging materials offer numerous packaging products that can protect overseas shipments from damage during the long transport to their final destination.
Air cellular products provide secure blocking and bracing, surface protection, interleaving, cushioning and void-fill performance. Inflatable packaging systems allow users to create air-filled cushions to suit their packaging needs. Foam-in-place systems provide unique, high efficiency foams with superior cushioning properties to protect products during shipment. Interior packaging designs can be created for a variety of void fill, cushioning and blocking and bracing applications.
Suspension and retention packaging is another highly efficient protective packaging alternative. Designs are based on strong, highly resilient low-slip film that surrounds products, protecting them from shock and vibration. Suspension packaging suspends products in the airspace of the package between two layers of film, while retention packaging uses elastomeric film to safely entrap the product and hold it securely within a retention frame.
Without these considerations, benefits of shifting production can be diminished by lengthy distribution systems, insufficient infrastructure, long lead times or harder-to-manage quality control.
Bill Armstrong is currently the technical development manager for the Sealed Air Corporation, a leading global provider and manufacturer of a wide range of packaging and performance-based materials and equipment systems.