Cut through the paper! (page 2)
-- Logistics Management, 1/1/2006
Page 2 of 3- "Our 'mantra' was to grab the document at the source and to develop a program to use various technologies to extract data automatically," recalls Savitha Srinivasan, director of solutions innovation at the center. "Right at the point of transaction, we grabbed an image of the invoice, shipping documents, and air waybills and stored all of this in our central depository." The result, she says, is that "everything goes into record retention and nothing is lost. This compresses the end-to-end cycle time of data acquisition."
The central document depository also made it possible for forwarders, carriers, and brokers to view shipping and customs documents online and provide feedback if necessary.
"With our shipping partners having immediate access to all documentation, they make fewer errors," notes Kohlscheen. "They love it because they don't have to use guesswork—everything is right on the screen."
Based on those results, project architect Vikas Krishna of IBM Research developed a pilot paperless import system. The pilot was launched in November 2004 for servers and workstations coming over the border from IBM locations in Mexico, on what the company calls its "Guadalajara Lane."
The results were impressive:
- Document delivery time was cut from 15 days to 25 hours.
- Customs error-resolution time declined from two days to two hours.
- Classification error-resolution time was reduced from one day to two hours.
- The missing document rate of 25 percent soon was brought down to zero.
The success of that project led IBM Global Logistics to also implement the program on its Ireland Lane. Additional trade lanes are expected to adopt the paperless system in 2006.
The document collection and storage system has been so successful, in fact, that IBM's Integrated Supply Chain business unit has announced that it will offer this program and ancillary services to external customers.
Liberty Richter, based in Saddle Brook, N.J., is a leading importer and marketer of specialty foods. The company operates as the global brand management unit for Tree of Life Inc. of St. Augustine, Fla., which boasts annual sales of $1.5 billion. Liberty imports more than 80 brands from 27 countries; among its best-known lines are Kame Oriental foods, Apollinaris mineral water, Arriba salsa, and the Knorr line of gourmet foods.
The importer's information problems mainly stemmed from two factors: new U.S. Food and Drug Administration (FDA) regulations affecting food imports, and an old software system that had never produced as expected.
Because compliance with federal regulations affecting food products is vitally important to Liberty Richter's business, the importer must act quickly to accommodate any changes in those rules. Without facilitating technology, however, timely compliance can become an unwieldy and costly exercise. "In our business, changes in FDA regulations or new requirements in the Bioterrorism Act are breaking curve balls," says Vice President of Finance John McLennan. "When the rules changed about nutritional labeling, for example, we had to spend significant time and money to work with some 40 companies overseas to get them to change their labels to be in compliance." Continued...
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