It is easy to view a foreign place as one big homogeneous blob if you've never been there, but that is rarely accurate, and the USA is no exception. For those folks from places like California and Germany, largely unfamiliar with the USA, you should know that almost 2/3 of the people live to the east, between the Mississippi River and the Atlantic Ocean. In the middle are lots of farms, ranches and wide open spaces with not so many people. In the west, in between the Rocky Mountains and the Pacific Ocean are a bunch more people (Dude: that's where Huntington Beach is).
So whether you are trying to sell shoes or ATM machines, most of the action is going to be in the east. To get there from Germany you come in from the right, and to get there from China you come in from the left.
When Warren Buffet bought the Burlington Northern Railroad he probably thought the big risk was on the Chinese economy. The BN hauls a lot of Chinese stuff from the ports at Long Beach and LA to the big markets in the east. Turns out the bigger risk might have been betting on the common sense of Californians.
Skechers is building the mother of all distribution centers in the LA area – bigger than 40 football fields, 17 Walmarts, 20% bigger than the Toyota assembly plant in Texas. This $250 million behemoth is automated to the hilt, so "that human hands will hardly touch the cargo as it is unpacked, categorized, stacked and prepared for delivery." Containers of shoes from China (where Skechers employs an army of 300 people to ride herd on Chinese contract manufacturers which they use because they want to avoid "the cost of managing a large manufacturing workforce" – go figure) will all be unloaded onto racks in Tyranawarehouse Rex, then the robots and computers will get the shoes back down off the racks and get them ready to load into trucks for shipment – 2,000+ miles east.
Geography, geometry and economics are apparently not part of the curriculum in Huntington Beach schools, so I offer the following for Sketchers management:
When they make a hundred long truck shipments from LA to the east, instead of one long rail shipment and a hundred short truck shipments, Warren doesn't make any money, Skechers doesn't make any money, the shoes cost too much … it is just ugly all the way around.
Californians are the way they are so Skechers is par for the course, but the Germans from Wincor Nixdorf are harder to fathom. They make high tech ATM machines in a German town called Paderborn – a fine place that happens to be the focal point for American sports in Germany – baseball, real football. Then they ship them to Austin, Texas via the port of Houston, where they go into an inventory of thousands of machines to be customized, and then shipped – east.
Now Austin is also a fine place and a real techno-boom town. You can't swing a dead cat in Austin without hitting a nerd, so basing their US operation there is a great idea. The port of Houston is fine too. The only negative thing to be said about it is that, well, it's in Houston.
As fine as the folks in Austin are, Paderborn is a pretty geeky place in its own right – home of the world's largest computer museum, in fact. The folks there can customize the machines just fine before they ship them. Then they wouldn't have to sail past equally fine ports in New York, New Jersey, Baltimore, Virginia, South Carolina and Georgia on their way to Houston, only to turn around and head back east. The shortest distance between two points is a straight line – so is the fastest and cheapest distance between two points.
I'm sure the leadership of both companies have reams of data and 'sound' strategic reasons for these convoluted supply chains. I'm sure they believe that the likes of me just don't understand the realities and complexities of their businesses and global scope. Hogwash.
This is the essence of 'head, heart and gut management'. Don't do anything that defies common sense – no matter what the data shows. If it is patently illogical on its face, the numbers are clearly wrong, or you have collected the wrong numbers. All facetiousness aside, it is a good idea to chase all of the accountants out of the room from time to time and draw the lines of your logistics on a white board. If the geometry and geography don't make sense, then any financial data saying it does is flat wrong (and it certainly wouldn't be the first time the accountants got it wrong).