Finding the right strategy
A cross-docking strategy for multi-country shipping enabled us to transform a problem into a profit.
Our customer, a major US retailer, has been growing exponentially in Central America in the last few years. But the supply chain management they had in place could not support the sharp growth. This made it extremely challenging for them to meet their market demands.
Initially, their imported cargo arrived from Asia to two main destinations - Costa Rica and Guatemala. From there the cargo would then be distributed to other countries in Central America. While this plan was suitable for those two countries, re-exporting to other countries was cost prohibitive.
The need of the hour was to optimise their supply chain with a solution that helped reduce their export costs, and at the same time make it flexible enough to match the supply & demand across all the stores.
After months of data gathering and analysis, and extended discussions, the decision was to use a cross-docking strategy through a tax-free warehouse in Panama.
From Panama, a multi-destination container was used, where the cargos were sorted and directly delivered to their intended countries.
A dedicated development team was created to implement various solutions that aligned with our customer’s best practices. In the first year of implementation, we ensured continuous improvements to find the right balance. The solutions include:
- Consolidated reporting using the visibility tool myMaersk
- Dedicated development teams around the DC solution
- Key Performance Indicators (KPI)
- Detailed standard operations procedures (SOP) from origin to the final destination
- Cargo tracking using the visibility tool myMaersk
Although this was a major structural change in our customer’s supply chain, they recognised the possibilities in our solution. After several months of operations, the materialised benefits from our customer’s perspective were:
- A major decrease in the cost of re-export
- The lead time was reduced by 8 days
- Better container utilisation especially for Nicaragua, Honduras and El Salvador
- Increase in single country containers arriving in Costa Rica and Guatemala