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The Future is Almost Here

By Tom French

Tom FrenchIn the July 2014 edition of Wired there is an insightful article about the futuristic, seemingly “robot-based” reality of ecommerce logistics, as presented by the ever-growing Amazon. The article is titled “Ground War” and it gives the reader a basic overview of how ecommerce titan Amazon is threatening to wipe out the old fashioned convenience store by providing over 500,000 items for same-day delivery versus the average 150,000 stocked items in a brick & mortar competitor.

What this and all the other articles around this subject are not addressing is that the cost to service the ecommerce orders is still the responsibility of the manufacture of those products. Amazon may have the tech savvy that feels like something out of the future, but it can only go so far.  It will be interesting to see what major software company (Google?) will set up the technologies to manage all orders from the various manufactures and consolidate at each of the large cities in the United States.  Who accomplishes this will have the lowest cost to service.

This will require each manufacture to setup their warehouses to handle not only one full pallet of one item, multiple items on a pallet and each pick that will be sent as a small parcel shipment.  I observed a recent start up CodeShelf whose cloud based low cost “pick to light” solution can optimize the process needed for each manufacture.  It is time for manufacture to take on this challenge and start the process of changing their warehouse operations.

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Steps to Deal with the Trucking Rate Increases

 

By Tom French

Tom FrenchIt is rare that I read an article and decide to send it to our customers and friends.  But the cover story for The Journal of Commerce (April 28, 2014) edition talked about the high need for trucking, resulting in unprecedented rate increases in logistics. The article was titled “Trucking Hits a Reset Button” and it addressed the 3-5% increase in ground transportation costs.

Retailers are feeling the financial crunch this Spring as the trucking industry, which has taken a hard hit in the last several years through several smaller companies going bankrupt (335 to be exact), is turning away business because they are in such high demand. Trucking companies are in the rare position of making rate increases by lane as high as 10-20% depending on the industry and urgency for these shipments. And customers are being forced to pay these prices or run the risk of not getting their consumer goods out.

The article goes into detail about how the industry got to this point and why it is not going to get better any time soon. The clear takeaway – You need to have a Game Plan.

If you are currently using brokers of any size, they will be the first to be impacted by two issues:

  • Capacity
  • Rate increases

In this highly competitive market, asset carriers want to deal with shippers directly, cutting out the middlemen. They want easy to process and fill orders. If you are managing your transportation using a software solution, examine the origin locations. If you need to go with a Broker, make sure you have one or two asset companies as backup. The exception to this is if your 3PL or broker has an origin – destination contract with carriers locking in capacity and rates.

Now more than ever it is crucial to have awareness surrounding your supply chain.

 

 

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Reducing Your Company’s Carbon Footprint through Transportation

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By Jennifer Liccardi

Transportation is a key factor in a company’s carbon footprint. A carbon footprint is the greenhouse gases that a company emits into the environment through manufacturing and transportation. Companies of the future are looking for ways to reduce their carbon footprint; this can be done through optimization of shipments. Optimization of the shipments could be consolidating a lot of small shipments through a consolidation point, consolidating multiple shipments from a single vendor or consolidating multiple shipments from multiple vendors.

A consolidation point in Chicago, IL was implemented for one of our customers.   After analyzing a year’s worth of shipments the direct mileage would have been 1,019,873 miles but by going through the consolidation point, the miles decreased to 322,241. This resulted in the reduction of Co2 gases by 68% and 76,814 gallons of fuel saved! A big key to this solution is that trucks were not being sent partially filled. Maximizing the space of the truck will allow for greater decreases in a company’s carbon footprint.

Consolidation is a great way to reduce Co2 gas emissions but mode conversion is another option. Switching from truckload to intermodal will also provide a decreased carbon footprint as a train does not emit as much greenhouse gases.

There are many options to help reduce a company’s carbon footprint. It can be through warehousing, transportation or greener vehicles. But consolidating shipments or utilizing consolidation points is a quick way to decrease the carbon footprint and help our planet.

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Which Comes First, RFP or Freight Service Agreement?

By Tamra Helton

On behalf of our clients, I often assist with annual Request for Proposals (RFPs) by mode (LTL, Truckload, & Intermodal) and this question always comes up. Is it advantageous to wait until the RFP process is completed to begin the discussion on a Freight Service Agreement (FSA), or discuss the Freight Service Agreement with potential carriers prior to the RFP being sent out?  Having observed both approaches over many years, I can recommend that the latter approach be taken.

Why?  Because when an annual RFP’s potential recipients are selected, it is common practice to select a mixture of carriers consisting of Incumbent Carriers and New Carriers.  So it is important to ensure that all carriers understand the shipper’s expectations and reach a sound agreement (FSA) that specifies potential legal ramifications if expectations are not met.

Here’s the right sequence to follow:

  • Have a meeting with each potential carrier and have an NDA signed

  • Discuss and get approval from all your potential Carriers on your FSA

  • Send RFP to carriers that can meet your expectations

  • Track carriers Intents to bid and those that Decline to bid

  • Track receipt of carriers Bids (response to the RFP)

  • Identify the Carrier with the best rates

  • Select the carriers rates to that you want to “Go Live” with

  • Notify carriers if with either a Bid Acceptance or Bid Declined Letter

  • Conclude the RFP process by sending the FSA to the Carrier, including as

  • Exhibits both the provider’s bid (their response to the RFP) (Rates, FSC Matrix, Accessorial Charges, etc.).

  • Upon signature by both the Shipper and Transportation Provider “Go Live” with rates

 

Shippers that take the other approach (RPF first, FSA later), run the possibility of selecting carriers that cannot meet their expectations, can causes budget analysis to be off, or spend more time looking for other carriers.  In short, the “FSA first” approach allows a Shipper to only consider rates from carriers that can meet their needs.  The result: man-hours saved, and a more efficient RFP process overall.

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Things to Consider for Private Fleets

By Jennifer Liccardi

0608493For many companies there are several factors to consider before committing to owning a private fleet for their transportation needs.  After the federal government’s new Compliance, Safety, Accountability enforcement, private fleets are now being held accountable in the same ways as for-hire fleets and third-party logistics.  In the April 2013 edition of Trucking Info, the article “5 Trends in Private Fleets” explores how things are now changing in this area of transportation.  Below are some of their key points:

  1. Measuring success every day – private fleets have to compete against the other for hire carriers in the market.  Businesses with private fleets need to make sure all aspects of the fleets are monitored.  Optimization with the current fleet in conjunction with other for hire fleets will help to optimize the fleet to the fullest extent.

  2. Eyeing Driver Shortage – There has been a driver shortage in the trucking industry.   The turnover for the Private Fleet drivers is lower than other for hire drivers.  Key factors that keep private fleet drivers at the same company longer are benefits, pay, and the short hauls and home more often.

  3. Upping the game on safety and compliance – safety records for private fleets tend to be excellent compared to other for hire companies.  Some companies have a designated employee to handle the safety monitoring of their fleet while others hire professional risk management companies.

  4. Leasing and buying equipment – private fleets prefer to lease than buy, which allows them to have newer technology.  Most trucks are turned in after 7 years.  Fleet trucks last longer than an OTR truck due to the fact that the trucks do not have across the country miles.

  5. Private fleets and technology – in the past, the private fleet was ahead of the market in technology such as driver performance and vehicle performance.  Both for hire and private fleet are both moving in the same direction in regards to technology.

The article also mentions how private fleets are taking an interest in looking at alternative fuel options which gives companies the option to “go green” for their customers.

Trucking Info highlights the benefits to having a private fleet but all aspects of the fleet need to be monitored.  A private fleet is a great option for clients that have a lot of vendors/customers in a 250 miles radius that a lot of stops can be made.  And although there are a lot of benefits to having a private fleet, sometimes companies need to find the perfect balance between using some combination between private, for-hire fleets and third-party logistics to provide the best service for their customers.

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Still using Spreadsheets?

By Mike Murtaugh

spreadsheetYou are NOT alone.  Why do we continue to use them, when they have so many limitations?  Well, they are familiar. They don’t crash. They are a file format that can easily be shared with others, a common language everyone speaks. We can use a spreadsheet to accomplish at least SOME of what we need. Maybe it takes a lot more time, but who has time or inclination to learn something new? And we’ve been burned before by big technology initiatives that promised to save time and money without any disruption. As the old saying goes, “if it ain’t broke, don’t fix it.”

There are plenty more reasons why manual processes continue to dominate many aspects of Supply Chain Management.  Even in larger and more sophisticated companies, we find that spreadsheets are still being used to operate critical Transportation and Warehouse operations.  We fear that migration to powerful new solutions like TMS (Transportation Management Software) and or WMS (Warehouse Management Software) will be painfully slow, and changing the old ways of doing business is taking a step into the unknown.

Here at Supply Chain Coach, we feel that it’s time for even resource-challenged organizations to take another look.  Today’s web-based solutions are robust and stable and intuitive enough to start using, right out of the box. They include features and functionality that connect all of the key stakeholders in your Supply Chain; Customers, Vendors, Carriers and internally Customer Service, Operations and Management. This high-level collaboration occurs through emails, portals, and dashboard access to the central TMS and or WMS hosted in the Cloud. Visibility and connectivity across all of these areas allows for increased productivity and reduced cost.

What we find is that companies who embrace TMS and WMS are more successful companies. These companies are better able to manage growth, as well as business challenges. And these are better places to work, because streamlining everyday tasks frees up time for higher level work: identifying savings and new kinds of optimization, delivering better performance. With these tools in hand, you can be a hero at your company.

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What Your Shipping Data Can Tell You

By Rose Tam

Rose Tam

You can learn a lot from analyzing your company’s shipping data.  And you’d be amazed how much money you can save.  Transportation is a big percentage of a company’s total spend and hidden in the shipping data are a host of ways to cut costs.  By properly analyzing their data, a company can identify trends or inconsistencies such as:

  • Is the correct transportation mode being utilized for the weight/volume of shipments?

  • Do you ship more to one region than another?

  • Are you shipping out of too many locations?

  • Are you shipping out more volumes on certain days of the week than others?

  • Can your shipments be consolidated or pooled?

The trick is to lay the groundwork for analysis so you know what to look for, and how.  Then you can ask questions like the ones above, and test “what-if” scenarios to proactively identify the cost savings from making a change.  Of course, the data needs to be clean and it needs to be good; Garbage in, means garbage out.  So it is equally important to have good data – whether you have your own data source or you are pulling from other sources. In short, the first step to analyzing your shipping data is keeping it clean and then you can start asking questions that can lead to optimization.

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Creating More Intelligent Supply Chains with BI Technology

By Sam Smith

computer guyAmong the many factors that need to be explored while creating a supply chain management strategy, Business Intelligence (BI) Technology has long reaching benefits.  As companies grow in size, manual reports using Microsoft Excel and Microsoft Access become time-consuming and impractical because of the limited amount of detailed information that can benefit the company.  A recent article found in Inbound Logistics, http://www.inboundlogistics.com/cms/article/creating-more-intelligent-supply-chains-with-bi-technology, outlined the numerous ways in which BI Technology can benefit a large or growing company.

Among some of the highlighted benefits of integrating BI tools is the amount of time that is saved generating reports and making reporting cycles much smaller. BI tools can precisely track automated order processing, production, fulfillment and other critical business procedures.  They also can present data graphically, which makes it more accessible to everyone in the company (sales, finances, operations, management), instead of limiting the data to tech-savy employees.

The article mentioned how the BI tools enabled companies to do many things such as monitor vendors and distributors.  At Supply Chain Coach, we use our BI tools to monitor carrier performance in terms of cost and on-time performance. We also can forecast demand such as seasonal changes in fuel prices, changes in carrier rates, trends with product profitability, and changes in transportation volume and costs.

BI technology has numerous benefits that all lead back to a leaner supply chain, thus a higher profit.  Determining if your company is ready for the investment depends on the missed opportunities or mistakes made due to manual data collection and reporting.  Eventually successful, growing businesses need to explore the benefits of BI Technology.

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Manufacturers Get Ready (Amazon wants to move in with you!)

By Tom French

TomFrench2Massive companies like Amazon.com have the capability to change the traditional ways in which supply chain operations trend.  In an [article posted by Supplychain247],  they discuss= a bold and possibly brilliant move the e-commerce giant made by securing space within manufacturer Procter & Gamble’s warehouse.  Now when P&G has their popular everyday household goods like diapers, toilet paper & shampoo ready to send to Amazon, they simply move it over to a fenced off area within their own warehouse for Amazon employees to package and ship directly to consumers.   By cutting additional transportation and warehousing expenses, this allows them to compete with Walmart and large discount warehouse retailers like Costco.  According to the Wall Street Journal article “Soap Opera: Amazon Move In With P&G” an Internet stock analyst, Mark Mahaney projects that if consumer packaged goods could rise to the 6% share the Internet claims of retail overall, it could generate up to $10 billion in revenue for Amazon.

Partnerships like this between Amazon and P&G is something to watch closely.  As businesses continue to attempt to figure out how to trim costs they are going to be more drawn to working with manufacturers who are not pushing their products out to distribution centers.  Because technology has vastly improved and the cost to manage small orders is easier, the manufacturers cannot afford to have two to three profits on their products and remain competitive before the product is consumed.   This is going to require the manufacturer to examine how to warehouse and process all orders, whether small and large.   And the warehouse operations will have to drastically change in order to efficiently and cost-effectively handle all products.

Not all manufacturers will have enough volume to accomplish what Amazon.com is doing with P&G.  However, with the right technology and proper operations within the staff, they could effectively manage all sizes of products from item to pallet pick.  There will be a lot of opportunities for technology and material processing companies to step up and help these manufacturers.  This will require different pick system that can easily be changed as the demand changes.  Will your companies be one that steps up to this challenge?

 

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Spotlight on Distribution Centers

By Tom French

DCmapIf you’re looking to improve your supply chain, it’s time to roll up your sleeves and dig into the details of your current distribution network. It probably evolved at a different stage in your company’s growth and is not optimized for your company’s present needs. With so many interlocking components, it may seem overwhelming to contemplate untangling or changing anything about your supply chain.  The place to start is always with the data: properly identifying and understanding the cost and value of each component.

In this report, we take a closer look at one of the components that we here at Supply Chain Coach have often found to be out of sync with current company needs: Location of Distribution Centers (DC).

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