Audiovox Corporation is a publicly-traded company (NASDAQ: VOXX) headquartered in Hauppauge, New York. The company generated about $600 million in revenues in its last fiscal year. Audiovox started in the car radio business but its product portfolio has expanded over the years to include satellite radio, vehicle security, remote start and other mobile products. The company has made several significant acquisitions, including Thomson’s Americas consumer electronics accessories business (the RCA brand) in 2007.
Audiovox’s supply chain usually starts in the Pacific Rim where it purchases goods for sale, largely to North American customers, from overseas manufacturers. The company works directly with its suppliers to design and test the products. A large percentage of its products are sold to the automotive OEMs.
Following the acquisition of the RCA products, Audiovox recognized that it needed to streamline its global supply chain. Pat Moffett, Vice President of Global Logistics & Customs Compliance at Audiovox, helped to initiate two changes to streamline their processes. First, the company initiated nonstop, long-haul, team driving from its primary port of entry (Seattle-Tacoma) to its main distribution centers in Indianapolis and Memphis. Prior to this, the company relied primarily on rail shioments from the port to its DCs. However, because ship and rail schedules did not always sync up, lead times were often unacceptably long. This led the company to spend too much on costly air freight. Today, of the 4,000 forty-foot ocean containers Audiovox imports each year, 500-600 trailers now move by road.
Secondly, Audiovox implemented a global visibility solution called POET (Purchase Order Expediting & Tracking System) from E2E. Visibility for goods shipped by ocean (the company is not using POET for air shipments) begins with the purchase order and ends with delivery of the goods to a DC in the U.S. A foreign manufacturer notifies the freight forwarder when the goods are ready for pick up. The freight forwarder is in charge of entering the key data that drives end-to-end visibility into the system, and it also knows how long it will take to move the goods from port to port. It is the freight forwarder’s responsibility to keep track of schedule changes and enter the new data into the visibility solution. According to Pat, POET is a good solution that is reasonably priced, but having freight forwarding partners with the right “discipline” is critical to making this solution work.
POET is both a trade and visibility solution, as key information entered into POET is also used for Importer Security Filings (“10 + 2”) with customs.
Visibility from POET has given Audiovox more flexibility in how it routes goods from the port to the final destination. Planners can now make routing decisions later in the process. For example, if it looks like a ship-to-train shipment will take too long, a planner can changeover to a truck shipment as long as he notifies the ocean carrier 72 hours in advance. This process allows Audiovox to move goods from Hong Kong to Memphis in just 14 days. There are also rare instances when air freight from Asia is still necessary. Having advanced visibility allows Audiovox to marry up a 500 piece air shipment into Seattle, for example, with inbound ocean freight and then consolidate these into one truck shipment to Indianapolis. Or, if it looks like securing a timely rail shipment out of Seattle will be a problem, a planner might chose to ship to Los Angeles instead and use rail from there.
These changes have led to two main benefits: First, even though shipping by truck is more expensive than shipping by rail, the reduction in air shipments (along with other factors) was a major contributor in logistics costs dropping from 15 percent of revenues in 2002 to just 4 percent in 2009. Secondly, logistics personnel are now spending about half as much time answering the “when will this shipment arrive” question.
Audiovox has been a highly acquisitive company and its product line continues to expand. For example, the company will introduce a handheld TV in October. However, Pat is convinced that POET will scale and allow them to respond flexibly to whatever situations arise in the future.
Leave a Reply