Preparing to grow
BCR’s ongoing management of inbound shipping and warehousing as a 4PL for KBA keeps the leader in infant and kid’s accessories agile.
Kid Brands, Inc. (NYSE: KID) and its worldwide subsidiaries are leaders in the design, manufacturing and wholesaling of branded children’s products, including infant linens and accessories. The company’s product lines, which include the CoCaLo® brand and licensed Disney® products, are sold throughout Australia and New Zealand at department and specialty stores as well as online retailers by Kid Brands Australia (KBA), a wholly-owned subsidiary.
BCR has provided freight forwarding, customs brokerage and consulting services for Sydney-based KBA since its launch in 2003. “BCR has done a great job of managing the inbound side of our business here for 10 years, overseeing inbound shipments through the ports and customs clearance,” says Michael Barnes, managing director of KBA.
Starting with freight forwarding
Working with a corporate account management team at BCR, early on KBA realised cost savings and efficiencies for the shipping of finished products to the Port of Sydney from several points in China as well as Hong Kong and the United States.
“To gain visibility on orders and cost control, we immediately coordinated with our agents in the BCR global network and to change orders out of factories in China from prepaid (CFR) to collect (FOB) purchase terms,” says Renee Barnhill, Corporate Account Manager with BCR. “We’re constantly monitoring the market to ensure KBA receives the most competitive rate available.”
Adds Rob Hunter, Director of Sales with BCR: “Kid Brands entrusts BCR to make the recommendation on the best, most economical service on the volumes they move.”
While KBA ships relatively small volumes at about 73 TEUs annually, it receives the same proactive advice, personalised service and attention to detail from dedicated BCR staff as a large-volume shipper. One case in point is BCR’s ability to consolidate orders from various KBA suppliers in Shanghai and Ningbo, China.
In addition to management of a Customs EFT account for making duty payments, BCR performed considerable upfront work to determine the correct customs classification codes and establish Nature 10 Formal Import Declarations (FID) required for goods imported for home consumption. “We continue to stay abreast of changes in classifications and tariff concessions on imports and classify new SKUs by KBA as they add products,” Barnhill says.
A better warehousing solution
In 2003, KBA began Australian fulfillment with its own warehouse operation before switching to a global market leader for contract warehousing. But that outcome was so poor that KBA broke its five-year contract with the 3PL without penalty. “The company made frequent mistakes including sending the wrong items to customers or forgetting to send them entirely,” Barnes says, noting woefully high order inaccuracies and stock take errors. “Communications were a big problem.”
So in 2012, KBA turned to BCR to oversee the transition and management of all KBA warehousing and outbound shipping to retailers in Australia and New Zealand as a 4PL. “BCR really listened to our requirements and designed a solution to specifically accommodate our needs given our labor-intensive picking process across 1,400 to 2,000 pallet positions and 750 to 1,000 SKUs in any given period,” Barnes says.
Innovation in the warehouse and beyond
KBA knew it needed a better technology solution in the warehouse than the prior provider offered. BCR helped KBA select a warehouse in Kings Park, about 47 km from the Port of Sydney, featuring a gravity-fed Carton Live System (CLS) Barnes says: “Our orders have a very labor-intensive picking process and the CLS system makes efficient use of labor and floor space. A typical customer order may have about 400 SKUs with only one or two of each item.”
BCR negotiated contract warehouse pick-and-pack services on behalf of KBA, including labor, storage and handling fees. “We are involved in the contract side of the solution to ensure the safety of Kid Brands,” Hunter says. BCR also oversaw the implementation of IT solutions—which were weak with the prior provider—to include an FTP interface between the warehouse and KBA which allows the manufacturer to confirm its next-day orders with the warehouse by 3 p.m. the previous day.
The BCR team attends regular meetings with KBA staff and the warehouse provider. “We act as an intermediary between the two parties to ensure any problems are elevated to the right level and that processes are in place to correct them,” Barnhill of BCR says.
The result of the new warehouse solution? Improved customer service and response times which include dramatic improvements in order accuracy and stock takes over the prior provider.
BCR continues to meet its key performance indicators (KPIs) with KBA. “A critical KPI is estimated arrival times against actual arrival times on the inbound. We make sure shipments are on board the vessel, on time and address any delays along the way,” Hunter says. “By staying on top of everything, including container detention (demurrage charges), cost avoidance is probably our greatest success with KBA to preempt any problems. We’re able to strategically put KBA in a better position by cost avoidance.”
KBA’s partnership with BCR as a logistics outsource partner allows KBA to focus on its core competencies. KBA has gone on to capture 70 percent share of the infant linens and accessories market in Australasia and plans to add another 300 SKUs this year. “Trust is certainly a key element of the logistics provider relationship. We rely on and trust BCR as our freight forwarder and 4PL provider and to work with us as an ally, a partner who helps us advance our business,” Barnes of KBA concludes.
KBA, a unit of global children’s products maker Kid Brands, Inc., sells to retailers in Australia, New Zealand and Fiji. BCR streamlined transportation and logistics out of KBA’s supplier factories in Asia. BCR also found a superior warehousing solution to manage proliferating SKUs with fast, accurate re-stocking. Joined with BCR simplified billing and savings on Customs tariffs, KBA is set to grow.
|Company:||Kid Brands Australia|
|Industry:||Consumer & Retail|
|Situation:||Improve warehousing, distribution and deliveries to retail customers in Australasia|
|Services provided:||Customs clearance/brokerage & consulting
Origin cargo consolidation, inbound transportation management
Warehouse management oversight
|Result:||Significant reduction of transport and logistics costs, plus 6-figure Customs clearance-related savings
On-time retail deliveries and enhanced customer service
|Key innovation:||Integrated logistics, including warehouse management|