There have been a number of trends in the supply chain that have had an impact on the major retailers in the UK, around the growth in imported goods. The retailers have always sold imported goods, but generally used to take ownership on receipt at their DC’s in the UK. However overseas sourcing has changed in a similar manner to the growth in factory gate pricing in domestic sourcing, and the increased control of the inbound supply chain by the retailer. The establishment of buying offices in the Far East and the sourcing of products direct from the manufacturers and suppliers rather than the wholesalers and middlemen has allowed the retailers to take an increasing level of control of the inbound supply chain.
As more and more products are sourced directly by the retailers themselves from overseas their existing networks of distribution centres have had to evolve to meet the demands on them. The establishment of consolidation centres in or near the ports in the Far East to receive products from the numerous suppliers and to consolidate them into containers has allowed the flow of goods to the UK to be better managed and scheduled.
The existing DC’s in the UK were primarily designed to receive palletised goods and are located to serve the stores. The growth in direct imports in containers has impacted the performance of these DC’s.
- The manual de-stuffing of containers and building of pallets takes a lot longer than unloading pallets leading to congestion on the inbound side.
- The DC’s are generally inland with the sea container having to be trucked to and from the DC.
- The scheduling of receipt and unloading has to take account of the demurrage charges
The solution to these issues taken by an increasing number of retailers such as Asda Walmart, Tesco etc. is to establish direct import centres at the container receiving ports. These import centres allow the flow of goods to the DC’s to be managed in a similar manner to that of domestically sourced product – i.e. stock is received when required to meet demand, not when it has had to be imported. The citing of import centres at ports is generally referred to as Portcentric Logistics. The advantages of this approach are :-
- The DC is within the “port boundary” with sea containers delivered direct to the DC without having to leave the port saving a container moving cost.
- Import duties are only payable when goods leave the port thus are only payable when delivered to the retailers DCs or stores.
- Demurrage charges are reduced/eliminated – it is much easier to control the container management and scheduling without the complications of offsite moves.
- The Import Centre is purpose designed to handle containers and to hold stock. The concentration of activities such as de-stuffing and stockholding allows the investment in automated equipment and high bay storage to be justified leading to lower operating costs than at a conventional DC without such investment.
- The Network Strategy can be refined to allow direct deliveries to near stores or where large loads are being delivered to big stores, rather than routing everything through the existing DC network. Properly used this approach will reduce the overall delivery mileage and some double handling.
