DC Velocity - July 2010

phrase anima sana in corpore sano, which translates to “a sound mind in a sound body.” Today, the company makes athletic footwear, apparel, and accessories for a broad spectrum of sports, and its worldwide sales total around $2.4 billion. ASICS America, which serves the United States, Canada, and Mexico, is based in Irvine, Calif.

ASICS America’s shoes and clothing are made by contract manufacturers in China, Vietnam, and Indonesia. Those items are shipped in ocean containers to the ports of Los Angeles and Long Beach. On average, the company imports 2,200 40-foot-equivalent containers each year into the United States.

Back in 2008, the company’s U.S. distribution system was fairly straightforward. The logistics service provider APL Logistics (APLL) unloaded ASICS’ ocean containers at its Torrance, Calif., facility. It then reloaded most of the merchandise into 53-foot trailers for over-the-road shipment to ASICS’ 350,000-square-foot distribution center in Southaven, Miss. That facility, located near Memphis, Tenn., handled orders for most of ASICS America’s 3,000 retail customers in the United States. At that time, Southaven carried about 23,000 stock-keeping units (SKUs) and typically held about $100 million in inventory.

APLL also handled about 6 percent of the imported goods as “DC bypass shipments,” which skipped Southaven and went directly to a customer. These generally were full container loads of product destined for customers on the West Coast, Jordan says.

ASICS had anticipated and prepared for rapid growth,
spending millions of dollars in 2005 and 2006 to retrofit the
Southaven facility and boost throughput to 50,000 units per
day. Even so, the 21-percent sales growth in 2008 was
taxing the company’s distribution capacity. That
year, Southaven was shipping 70,000 or
more units daily and had seen vol-
umes as high as 110,000
units per day. “We
had reached a point where we were not going to get any
more out of [that distribution center],” Jordan says.

A two-part plan

When it became clear that the current distribution strategy was no longer adequate, an in-house team at ASICS America began an analysis of the company’s distribution network, poring over data for sales, shipments, order types, frequency of orders, and SKUs. The team recommended shifting some distribution operations to the West Coast to relieve the pressure on the Mississippi DC. But it also determined that ASICS couldn’t handle that task on its own, largely because it didn’t have the ability to provide the kind of service customers on the West Coast needed for their particular order types, Jordan says.

At that point, Jordan brought in the supply chain consulting firm Fortna Inc. of Reading, Pa., to get a second opinion on how best to solve the capacity problem. Fortna had worked with ASICS America in the past, assisting it with the upgrade of its Southaven facility a few years earlier. After reviewing the data collected by the project team, Fortna requested some additional information for analysis, including customer types and ordering profiles, inbound container and transfer costs, the 3PL’s capabilities, and

This story first appeared in the Quarter 2/2010 edition of CSCMP’s Supply Chain Quarterly, a journal of thought leadership for the supply chain management profession and a sister publication to AGiLE Business Media’s DC VELOCITY. Readers can obtain a subscription by joining the Council of Supply Chain Management Professionals (whose membership dues include the Quarterly’s subscription fee).