In Brazil, the governmental challenges to managing transportation are substantial. DSC manages carriers, handles proof of delivery management and settlement, plans routings, handles rates and develops solutions. Sounds like routine transportation management except for the consequences of governmental activity.
First among these is the impact of ANVISA, The National System of Sanitary Surveillance Agency. In addition to controlling production and marketing of drugs, devices and services, the agency has authority over transportation infrastructure used for the movement of drugs, devices, etc. As a result, the carriers, trucks and warehouses used by DSC have to be approved by ANVISA. To comply, DSC keeps track of truck licensing, inspection and insurance and has ultimate responsibility for compliance.
In addition to the ANVISA requirements, states require individual facility licenses under the Visa program. Much more problematic for transportation management, however, is the value-added tax, ICMS. ICMS is the tax on the circulation of goods, interstate and intercity transportation and communication services, even when the operation is initiated abroad.
The ICMS rates vary on average from 7% to 19% by state in Brazil. Certain states create incentives for particular industries by reducing ICMS rates on products. For example, Goias has a special incentive for manufacturing drugs and devices. In Manaus in the Amazon region, there is a free trade zone filled with brand name manufacturers of electronic gear and motorcycles/scooters. The tax free merchandise is shipped down the river in road containers on barges (about 700 miles over three to four days). Payloads, especially for healthcare products, are often limited by insurance limits on the value of cargos.
The value of goods and tax requirements are important considerations for DSC in managing transportation. The main freight bill document, the CTRC1, includes extensive information on the value of merchandise, financial notation, the tax on freight charges and, yes, information on the shipper, consignee, weight, pieces, etc.
The transportation manager juggles it all to find the best solution. Along the way he must get government approval for the shipment and two proofs of deliveries – one on the CTRC and one for the accompanying invoice.
A wise observer will note that all of these complications are advantageous to the 3PL. Most major international shippers are not interested in taking more of these complications in house.
DSC uses a host of software solutions including i2, Roadshow, Cheetah (Mexico) and Proprietary TM software to handle the current situation. As noted above, DSC has run Oracle’s (G-Log) in Mexico since 2009 and will implement the system in Brazil by the end of 2011, making it the first 3PL to utilize an industry-leading transportation management system in the country.
In Life Science, DSC will handle over 20,000 shipments with 34,000 invoices this year. On-time deliveries run 93% to 95%. Given the complexities, that looks pretty good. Here’s a breakdown of the Risk Management part:
Transportation – Risk Management Activities
Execute the detailed Risk Management Plan, in agreement with authorities and customers:
●Provide the most security with lowest impact in the operation;
●Ensure the rules of Risk Management and the maximum limits of value (respecting Insurance and Customer limits) are followed;
●Ensure the use of escorts whenever it is necessary;
●Select, inspect and hire vehicles that have traceability equipment.
Operational Prevention:
●Check the criminal/personal record of drivers;
●Check out and test the devices and knowledge of the traceability system;
●Check general vehicle conditions, electrical conditions, conditions inside the load; and all tests of sensors and actuators (mandatory accessories required by law).
Tactical Prevention:
●Act in a proactive way to prevent and stop robberies before they occur;
●Develop solutions and actions to address any hijacking situation;
●Record and analyze all data and continually enhance the prevention plan.
Life Sciences
DSC acquired Unidock’s in 2003, making it the largest healthcare provider in Brazil. DSC operates seven pharma distribution centers in Brazil delivering 26% of the healthcare market. Single-client, dedicated operations are conducted at:
