MOVING OVER IN THE SUPPLY CHAIN

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MOVING OVER IN THE SUPPLY CHAIN
By Henk Brus (September 07, 01)

Supply chains are getting more and more direct, new technologies and services are emerging, and companies are forced to adjust their marketing strategies. The result is that many tuna companies are moving over, in forward direction, in the supply chain.

Supply chain experts are projecting that new software and technology are going to make global stock keeping and distribution even more efficient in the coming decade. Recently the USA government published figures on the US inventories which might support this view. According to the report US Inventories totaled to USd 1.61 trillion dollars in the year 2000, with 40% of the associated carrying costs being actually spoiled. The researchers estimated that this 40% could be gradually disappear through shorter cycle times from production to store. They calculated that in the near future a reduction of 25% in storage costs, and a reduction of 8% of inventory levels can be reached through automation in many stages in the supply chain.

A more perfect supply chain, and less stock holding could form threats to the traditional position of many players in tuna supply chain. The position of canned tuna importers seems to be most under pressure. Already their function has been changing over the last 5 years, and many have already ceased their canned tuna activities or merged with other companies. Still they often play an important role in stockholding, handling the import process, shipment and delivery planning, financing, duty clearance and health inspections etc. But most of these services are also losing most of their added value rapidly.

One threat is coming from the shipping lines. Several shipping companies like Maersk, enable you to track the exact location of your container instantly on-line, via the internet. Also increasingly shipping lines are starting to sell fully integrated transportation solutions. Which means that you can now book with some of them door-to-door, combining, trucking, shipping, trucking again, and even with railroads and barges. This is of course nothing really new, but with these concepts becoming common practice, they are eating away part of the tuna importers function. Already some shipping lines will do it all for you, including duty clearance and health inspection.. And soon the buyer will be able to follow each container in real time via the internet, unto his warehouse door. Just like DHL is offering now for its air freight. New software applications will start to integrate the data from the shipping line directly into the systems of first large customers, and a few years later into those of smaller wholesalers. And the costs for these systems will become very attractive, even for smaller companies.

Microsoft has now focussed itself of bringing a revolution to the supply chain and paper work process management of small businesses. The software giant has a special team working on the standardization of thousands of commercial administrative processes, forms, documents and terms. The idea is to create global standards which will enable companies and computer systems using Microsoft Office to interact fully automatically and integrating many of their business transactions. Their ambition is to make use of per example the same B/L format, so all fields in the form can be connected between computers using open internet connections. When these standardized forms are build in a MS Office or Excel application, essential business processes between tuna companies can be fully integrated at minimal costs.

Another significant trend is that suppliers and also buyers are trying to work more an more on a direct basis with eachother. Some tuna buyers even do not accept any offers anymore, if the seller does not specify the name of the processor beforehand. The same goes for several tuna processors. They also have start demanding from importers to reveal the name final buyer already in the inquiry stage. Large retail buying groups have opened their own sourcing offices around the globe. And some major tuna companies have set up their own sales offices in Europe, USA and Australia.

With English having become the common language of the internet, and telecom connections costs dropping every day, language barriers and distances continue to diminish further. The world of tuna is becoming a smaller place everyday.The combination of these developments are making the international tuna supply chain less and less imperfect. Gradually many obstacles have been, and will be taking away. At the same time function of tuna importers, traders and distributors to provide solutions for an imperfect supply chain is becoming less relevant.

All this will lead to many parties moving up one place in the supply chain, in many situations canceling the position of the importers. Large tuna processors continue to sell and deliver directly to customers, and transforming themselves more to marketing and distribution orientated organizations. Part of this process also means that those tuna canners with strong international brands in USA and Europe are starting to move out of processing and concentrate more on toll-packing by others, often smaller processors. This way they are taking over the position of traditional importers. At the same time we see tuna fishing companies, moving into processing, setting up their own canneries. Also tuna brokers are now re-considering their position in this process of shifting places in the supply chain. One has already moved deeper into processing, and recently even into fishing.

Looking at this process of moving over, the only way to survive in the canned tuna business seems to be be sure that you provide real added value. To have a strong brand, with a high marketshare, combined with a strong cash position are probably the best tools for that. Those importers who are as luckily to have both, are likely to survive in this game of changing places in the tuna supply chain. However for those missing one or both of these two factors future options are limited. They will either see their canned tuna business disappear, might become a take-over target by bigger brother, or will just have to survive by continuing to speculate on the market movements. In the shifting of seats within the supply chain, canned tuna importers might end up without one, if they do not provide enough added value.

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