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Are You Tapping into the Upstream Supply Chain?

February 26, 2013
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It’s now possible for companies that ship more than 50 containers a year to get the same advantage WalMart does on distribution. That breakthrough comes when you make use of the upstream supply chain.

By pushing labor upstream and moving distribution offshore – close to where their manufacturing is done – companies can realize dramatic savings. WalMart does it. Apple, too. Even the Mormon Church packages The Book of Mormon, which is printed in China, and ships directly to customers in the U.S.

A company that sells custom-made store fixtures like display stands and end-caps to Fortune 500 businesses, one of ICAT Logistics’ customers, utilizes the upstream very efficiently.

Parts for the customized fixtures are made offshore. In the past, they shipped to the U.S. West Coast, where the fixtures were assembled to meet clients’ specifications. Using the upstream supply chain concept, the “made to order” part of this process has been moved closer to the factory where the units are being manufactured.

Now, when the container arrives in the U.S., it is immediately forwarded on to its destination.

Among the benefits for this business, and others using the upstream supply chain:

  • Lower labor costs
  • Greater efficiencies after delivery
  • Less pilferage
  • Reduced damage
  • A ‘greener’ solution
  • A tax advantage

The tax savings occur because the customer is not carrying inventory, since the unit arrives in the U.S. pre-packaged for shipment. Since the unit comes out of the container ready to be sent directly to the customer, no inventory tax is assessed.

The upstream supply chain is worth considering if you ship more than 50 to 100 containers a year, particularly if your transactions are direct to a consumer base or a retail end user.

Why not make like a salmon and see the benefits of swimming upstream? Are you tapping into the upstream supply chain?

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