– We conclude contracts only with forwarders through a global tender. The forwarders do not have to submit to us their subcontractors or the results of their verification during the contract signing – admits Michał Ślisiński distribution center manager at Lumileds Poland S.A. – We can only find out who we really cooperate with thanks to an audit of the entire supply chain – to the most distant subcontractors. As a result, it sometimes comes to light that the loads are carried by a company without certificates or that does not have the relevant provisions in the policy. That’s risky for the shipper.
Lumileds has a plant producing sources of halogen car lights in Pabianice, Poland. However, it sells LEDs, xenon and halogen lights from its Distribution Center. As the manager of the company admits, popular products, but also very expensive. No wonder that the company wants to ensure the greatest possible security during shipment.
It introduced an access control system, strengthened the construction of the entire building, and expanded monitoring.
The warehouse itself has more than 150 cameras and many electronic devices for access control, so you can freely track the cargo from the beginning, through storage on shelves, to release to the customer” – says Ślisiński.
It seemed to be enough. But the reality shows to the contrary.
The highest security level? It is not enough
Everything we did was based on regulations of TAPA FSR certification level “A”, i.e. safety in terms of stored loads. Here we have reached the highest level. It turned out, however, that this is not enough – says Ślisiński. – We soon realized that on the basis of the Incoterms conditions (International Rules of Commerce regarding the terms of sale), we are also responsible for the entire flow in the supply chain (from quality to delivery time). So the question of loading and delivering to our client’s door is also our responsibility!
And here comes the problem. How can we be sure that the carrier can be trusted if he is not verified?
The challenge: 300 percent more goods
We obtained the ISO28000 certificate about two years ago. Thanks to understanding ISO procedures, we learned how to inspect transport processes, select carriers and how to control them, for example, through internal audits. Let’s face it – these are the key issues for the security of supply” – explains Michał Ślisiński.
There are moments during the year when the demand is higher and in connection with the lack of drivers, forwarders may have difficulties in finding a carrier. This may give rise to the temptation of finding subsequent subcontractors.
During the peak season, our transport demand is growing very strongly. Example? In the last week of the quarter, we had to ship as much as 300 percent more goods than in the first” – recalls Ślisiński.
Carriers cooperating with Lumileds know this because the company works on weekly forecasts. Usually, they are notified a few days earlier that more cars will be needed to collect parcels. “It has never been a problem until now. Maybe because they have become accustomed to such peaks. Not without significance is the fact that we are a big customer, so they cannot afford to wait. Probably if we were a small player, the situation would look completely different” – he notes.
What does this mean for freight forwarders? That they must either mobilize their subcontractors during these summits or look for additional ones.
Does this mean that there are other chains, i.e. further companies, going with my commodity? I do not know this as a shipper. Until I do the audit – adds the Lumileds manager.
Disassemble the forwarder to prime factors
Lumileds categorically assures that he has not had the situation so far that an unverified carrier lost a car with company’s goods. However, he admits that by cooperating with the auditing company TransAuditors.eu he inspected a “further subcontractor”. He found out that at one of the parking lots the tarpaulin was cut and several cartons were lost from the cargo with the goods. Although this is difficult to avoid, even with certified carriers.
However, the producer decided to conduct internal audits of companies with whom he cooperates with.
You do not necessarily have to have a reason in the form of a lost car or cargo, in order to inspect the forwarding company. It’s about preventive action, but also showing the forwarder that we, as his client, are aware of their rights and know that we can always “knock on” to him and see what the cooperation with subcontractors looks like and what companies they actually are” – he explains.
Not only policies should be verified
It happens that logistic and forwarding companies do not have the tools to track the stages of order completion. They are not able to determine what is happening to the commodity and how the work is going because they do not know where the vehicle with the commodity is at the moment. It also happens that the insurance sum of the carrier is exhausted during the insurance coverage, because the policy covers many companies, including foreign companies – warns Piotr Roczniak from TransAuditors.eu, who carried out the audit at Lumileds.
– What’s more, shippers at the stage of issuing orders to the carrier are not able to verify: the scope of insurance, the amount of the guarantee sum, clauses or exclusions. Sometimes they do not verify and do not audit subcontractors at all, or they do it once and inaccurately, because of being under time pressure. Meanwhile, it should be done cyclically – he adds.
Changes after the audit
In the case of Lumileds, there were no such problems. Nevertheless, we observed a few shortcomings. As the result, some contracts will have to be amended.
For example, an entry in the standard operating procedure has been added saying that if a company actually has to support further subcontractors, it will notify us in advance. And it will not be the entire next chain of companies, only one additional level” – emphasizes Ślisiński.
The lighting manufacturer will also require shippers to look more closely at carrier policies. For example, records informing about exclusions. Also whether the company monitors the consumption of its insurance. That’s because if the company registers many damages in a short time, it may turn out that it will not be able to pay its clients.
Shipping companies with whom we cooperate have been instructed. We also created a black list of carriers that got a red light from us. They will never be able to transport for us and forwarders we work this cannot contract them either – says Slisiński. – A poor assessment of subcontractors, lack of control over insurance and knowledge about own insurance policies. These were the key elements that determined our choices – he explains.
Photo:Trans.INFO