Automotive logistics, moving forward
Few industries are as complex as the importing of vehicles made in one country to sell in another. JMIE Australia (JMIE) is the importer and distributor of vehicles by premiere Chinese automaker Jiangling Motors Co., Ltd. (JMC). Preparation for bringing the new JMC Vigus utility vehicle into the Australian market for the first time is much like importing any new auto into the country: fraught with risk involving Customs, quarantine, and other importing challenges.
When preparations aren’t made properly, importers risk significant costs, including fines, penalties and delays. At its worst, an inefficient auto importing process comes at a high price that can tarnish brand reputation when consumer expectations for quality and timeliness aren’t met. Done right, literally thousands of details, processes and transactions must be established, managed and operated with precision.
Complex importing process
“When importing into Australia, the devil is in the detail,” says Andrew Crawford, National Customs Manager with BCR. “JMIE needed to establish best practice processes that could be scaled with volume and duplicated for several vehicle models and associated parts over time.”
As the distributor representing China’s sixth-largest commercial vehicle maker, JMIE required a painless and seamless debut in the Australian market and the best introduction possible to the relevant government agencies. “JMIE had no prior experience with the Australian Customs and Border Protection Services (Customs) or with the Department of Agriculture (Quarantine) and like many new distributors to the market, was unfamiliar with how Australian Design Rules work and how Vehicle Import Approvals (VIAs) regulate this process,” Crawford says.
JMIE turned to BCR in 2012. Based on the Australian 3PL provider’s experience in assisting automakers and distributors, JMIE engaged BCR to provide customs brokerage, quarantine and other regulatory and supply chain consulting for the importation of the JMC Vigus utility into Australia.
BCR began an assessment of the business processes and transactions required for JMIE to successfully import new JMC motor vehicles into Australia. “It was critical to understand the proposed business model and then work within that model to find the most cost effective and efficient way to execute it,” Crawford says.
BCR’s preparations involved setting up structures and processes across a number of regulatory agencies and businesses, including Customs-related authorities; storage, warehousing and distribution organisations, such as pre-delivery inspection (PDI) companies; financial-related and taxation organisations; technical specification firms, such as those involved in homologation, engineering, safety registration and motor vehicle registration; and transportation carriers that include car-carrying transport firms.
In addition, JMIE also engaged BCR for more traditional supply chain and distribution network design including helping to establish a robust supply chain for its parts network which entailed logistics and Customs clearance consulting.
Scaling up for vehicle and data flow
Considering the motor vehicle industry supply chain generates vast volumes of data, including multiple unique identifying characteristics for each vehicle including VIN (Vehicle Identification Number), stock codes and engine number in addition to many other vehicle-specific codes, data assimilation to create an end-to-end paperless supply chain and integration across systems and parties was vital. “When data validity is critical as it is in these high-value and complex importing situations, electronic data integration (EDI) is this only viable solution,” Crawford says.
BCR established the backbone of the data communications across the JMIE importing supply chain. BCR systems communicate electronically with government agencies, ports and terminals, distribution and shipping companies, among other entities, and are integrated to the customer’s ERP systems. These systems include JMIE’s order management, warehousing/inventory, supply chain management and financial systems that require visibility into BCR-generated data on the importing end.
“With our in-house IT programmers, we manipulate data files and information to feed into our proprietary systems and then return the processed and completed data to JMIE in their preferred formats. This is especially paramount in the automotive industry given management processes and the required landed cost analysis for large parts inventories,” Crawford says.
IT systems integration
The seamless flow of data provides a significant advantage for the JMC vehicle supply chain. For example, EDI order feeds at the time of order placement ensure that BCR is aware of new products at the time of their introduction into the customer’s systems.
“We are then able to pre-classify and investigate these products well in advance of the parts arriving in Australia,” explains David Katte, Director of IT with BCR, adding: “This ensures the customer has accurate classification from a compliance and duty exposure perspective, and mitigates possible delays at time of importation where classification may otherwise be rushed or less organised.” EDI integration also means that exceptions from Change of Destination (COD), or any number of changes in the supply chain can be managed and processed with the appropriate modification to business rules.
Such level of IT integration and data flows are also essential to managing the importing of automotive parts for JMC vehicles, all requiring Customs-related processing. “Our work with JMIE is long-term to not only support the initial importing process but the ongoing maintenance of each and every JMC model. On average, each unique vehicle contains around 3,500 individual parts that need to be identified and classified for Customs and quarantine purposes,” Crawford says.
Concept car to product launch and beyond
BCR made a thorough review of the engineering and product specifications of the JMC Vigus to prepare for the initial entry of the concept car for the testing and homologation process, working with a number of companies and agencies. One key partner is Allied Automotive Consultancy Services Pty Ltd. (AACS) which assisted JMIE through the homologation (granting of approval) process which ultimately allows for Identification Plate Approval (IPA). AACS has long worked with many foreign automakers for importing full-volume new vehicles into Australia.
Following the entry of the concept vehicle into Australia in 2014, the first vehicles for sale to the market were successfully imported in early 2015. Simon Wu, Director with JMIE in Australia says: “During our cooperation with BCR, we are impressed by their professionalism, experience and passion. The service from the BCR team is beyond our expectation.”
Into 2015, BCR’s work with JMIE continues with the regular flow of JMC cars and parts into the Australian market. BCR’s ongoing services will include Customs clearance for JMC vehicles and their respective parts, organising freight transport from major Australian ports of entry to destination distribution hubs and dealers, creating landed cost reports and processing EDI communications between all parties.
“The process has gone very much according to plan and in line with customer expectation as we achieve industry best practices and meet all KPI reporting requirements. JMIE has been with us along the way. It’s very much a collaborative process,” Crawford concludes.
JMIE Australia is a distributor of vehicles by premiere Chinese automaker Jiangling Motors Co., Ltd. (JMC). BCR provided 3PL services including customs brokerage, quarantine and other regulatory and automotive logistics consulting for the importation of the JMC Vigus utility into Australia. BCR also established the edi data communications structures and processes to integrate communications electronically with JMIE, government agencies, ports and terminals, 3PL providers and shipping companies. With BCR automotive logistics solutions from concept car through to product launch, JMIE is ready to move forward.
|Company:||JMIE Australia – importer for JMC-branded vehicles|
|Situation:||Need for 3PL automotive logistics services including consulting and ongoing services to begin importing new vehicles and parts; extensive Customs and IT-related solutions were required to support the complex process of automotive importing, homologation assistance and parts distribution|
|Services provided:||3PL services including customs brokerage and consulting including quarantine, auditing, duty, reconciliation and Change of Destination, and IT solutions including operational and fiscal reporting, EDI integration|
|Result:||Cost-effective set up of businesses processes, IT structure and operations among multiple companies, government authorities and agencies to successfully import cars and parts into Australia, Seamless importation of concept cars for testing and homologation followed by first commercial import shipments of vehicles|
|Key innovation:||Assistance in creating an importing business entity that is based on best-practice advice and understanding of government requirements (Customs)|