Christmas in June

LEDgen Lighting by Design is the largest nationwide importer and distributor of LED (light emitting diode) lighting. In order to get more than 250,000 holiday light sets out to its customers, including Home Depot and the major online Christmas stores, LEDgen's Christmas season runs from June to December.

According to Renee Bywaters, national sales manager and importer for LEDgen, shipping its first container of LED lights to the United States from China was a logistical nightmare: "We had to have delivery by June in order to get it to retailers by October."

LEDgen turned its logistics, overseas and domestic shipping needs over to UPS. The company's supply chain now saves at least 20 days, and shipping is direct from the port of China to LEDgen's retail customers throughout the United States. The distribution center bypass reduces inventory ownership time and reduces time to market. "Now, I've got logistics and speed from UPS, and I can run my business and sell lights," says Bywaters.

A Helping Hand

UPS has set up offices in China with real-time tracking abilities to monitor and get notices from Chinese factories shipping to the United States. Its Trade Direct service takes LEDgen's lights from the factory to the port of China, onto an ocean liner, to the U.S. port of entry, though Customs and then directly to customers, avoiding the distribution center altogether.

"In two days at the U.S. port, they break down the containers, wrap and ship the lights to my customers. I don't even have to see it," explains Bywaters. "Before, I was constantly tracking and jumping through hoops with paperwork and brokers. You've got to make all of these people sing and dance at the same time. It just couldn't happen," she says.

Before, it took LEDgen a minimum of six to eight weeks to get a container in from China. With Trade Direct, it now takes three to four weeks, shaving at least 20 days from LEDgen's supply chain. In order to cut costs, LEDgen moves its freight across the United States from ports on the West Coast. UPS extended its supply chain solution to the West Coast three years ago.

"We save $10,000 to $12,000 by avoiding the Panama Canal. Lights are more durable than computers, so we can send them by rail or road," Bywaters explains.

The biggest cost savings are in freight, where LEDgen saves around 12 percent by using UPS Trade Direct.

"The customer gets lower costs, and I save on freight. If a customer is on the West Coast, they also save on freight, because it costs around $800 to ship direct from the West Coast port, instead of $4,000 to ship it out from our DC and headquarters in Marion, Ind.," says Bywaters.

Language Barriers

Many consumer goods manufacturers and importers have become impatient with the cultural and language differences between the United States and China. "U.S. businesses have a service orientation, much more than in China. China wants its money up front. I think direct shipping from Chinese factories to U.S. retailers is 15 to 20 years down the road," Bywaters explains. "Even Wal-Mart wants its vendors back after trying to trade with China. There are big language issues. Last year, I had a container labeled 'mini lice' instead of 'mini lights.' My boxes from China would arrive marked with UPC codes instead of product numbers," says Bywaters.

HindSight is 20/20

Previously, LEDgen's shipments would often arrive in November, which is far too late in the Christmas season, so it would have to store them until the following year. In January, the logistics nightmare would begin again for the following year.

"What UPS has done with logistics has opened up all my time, saved money and I don't have to hire a bunch of people," says Bywaters. "My manpower costs have become UPS costs. I get a number associated with the bill of lading, and I use it for real-time tracking over the Internet. My only regret is that I would've done this sooner, not later."

Bywaters sees some changes already in the new supply chain model: "Small companies are starting to offer logistics services, and FedEx is too. I've also been talking to some incredibly large corporations -- Sam's Club, CompUSA -- and they don't want to handle their own containers. They want to use UPS or FedEx to lower their costs too. In the future, we'll have real-time tracking information coming directly to our handhelds, cell phones, Palm or Bluetooth-enabled devices."

When asked what keeps her awake at night, Bywaters says, "It's still somewhat the logistics -- at this end. There are still time issues like delivery deadlines and getting adequate supplies for my customers. But everything else is a lot smoother now."