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OTIF

Walmart’s OTIF Policy Gets Harder 

On Time In Full is a policy that Walmart created back in 2016 and implemented in August of 2017. In an attempt to drive their proficiency up and costs down, the mega retail chain started targeting their supply chain. Under this policy, suppliers that failed to deliver the total amount of promised goods, to designated stores at the prescribed time are penalized; fined up to three percent of the total shipment value.  

The shipment has to arrive exactly when it’s expected. Not before, and certainly not after.  

It’s not just trying to curb late deliveries, either. The OTIF policy also cracks down on trucks arriving too early, as it can create excess traffic and delays for loading and unloading. For suppliers and trucking companies, this means there’s no leaving early to create a buffer zone. The shipment has to arrive exactly when it’s expected. Not before, and certainly not after.   

In addition to making things more challenging for suppliers to make sure their goods arrive on time, it will bring even more stress on carriers – we discussed this in more detail in our earlier post. With the Electronic Logging Device more closely monitoring hours of service, truckers will be in a tight spot when it comes to making sure that deliveries arrive exactly when they’re supposed to, all while making sure to stay compliant with their working hours.  

A Tough Policy Gets Tougher 

As of April 1st of this year, the company made the policy even harder. Prior to this month, the OTIF policy stated that full truckload shipments needed to meet a 75 percent OTIF rating and less-than-truckload shipments needed to meet 33 percent OTIF to avoid fines. Now, FTL’s are required to meet an 85 percent standard (down from the lofty 95 percent they had originally planned) while LTL requirements have increased to 36 percent.

Keeping products on the shelf is the name of the game for Walmart.

Keeping products on the shelf is the name of the game for Walmart. With increased competition from the likes of Target, Dollar General, and Amazon, the more items Walmart can keep in stock, the less likely they are to lose out to the competition.  

A Necessary Change 

While it’s easy to paint Walmart in a bad light through this policy, they aren’t the only company to enforce such a policy. Competition stores like Target, Kroger, and Walgreens also have similar OTIF policies. If retailers don’t hold the supplier accountable and they don’t make them try to comply, then suppliers can cause backlogs.

With the 90 percent failure rate for full and timely deliveries, Walmart has found a rather convenient way to turn a problem into profit.

According to a Bloomberg report, Walmart had a OTIF success rate hovering around a dismal 10 percent. With the 90 percent failure rate for full and timely deliveries, Walmart has found a rather convenient way to turn a problem into profit. This new policy doesn’t cost the company a dime. In addition to generating money from the fines, increased product availability will also mean increased in-store sales.  

Given that Walmart is such a heavy hitter for suppliers, suppliers will have little choice but to either comply or lose out on some considerable business. With the extra revenue generation, Walmart can take that money and reinvest in its e-commerce business.  

A Hard Place for Small Suppliers 

While larger companies have no problem meeting delivery quotas, it’s the LTL deliveries that are going to take the brunt of the OTIF policy. Considering the strained nature of supply chain as it is, especially in the trucking sector. ELD and HoS mandates are pitting truckers against the clock as it stands. Couple that with the driver shortage and rising demand for LTL, and capacity becomes even more limited.   

Couple that with the driver shortage and rising demand for LTL, and capacity becomes even more limited.   

At least in that regard, the company has cut smaller suppliers a little slack, which is the reason that LTL shipments have less than half the requirements of their FTL counterparts. An LTL doesn’t schedule a delivery to a Walmart [distribution center] until the freight arrives at the terminal.

In order to avoid hefty fines being levied by Walmart and other retailers such as Kroger and Walgreens, suppliers are going to have to tighten and fine tune their logistics and supply chain considerably, especially given the current tight capacity environment.  

Do You Need Help With OTIF Issues?

A 3PL, such as BlueGrace, can help your business overcome the challenges of OTIF and other supply chain issues. If you have questions about OTIF or just how to simplify your current transportation program, feel free to contact us via phone at 800.MY.SHIPPING or using the form below and we will be happy to assist.

Is WalMart’s OTIF Initiative Placing Impossible Pressure On Carriers?

Carriers already face many challenges in the transportation industry. It includes a multitude of rules and regulations that they must follow or else they could be fined. Or, even worse, drivers could lose their CDLs.

Now on top of all of their rules and regulations, WalMart is making it even tougher for carriers by imposing their OTIF program on them. Carriers can expect, heavy financial penalties for making late deliveries, for having missing freight, and for even delivering freight early.

OTIF – On Time In Full

WalMart is known for trying to squeeze profits in every area they can, even when it comes to receiving freight and their ‘OTIF’ or On Time In Full program is their way to crack down on carriers to become more efficient at delivering loads and properly packaged freight on time. This initiative should provide WalMart with an extra $1 billion in revenue by simply getting items to the shelves faster.

WalMart has already warned retailers that disputes will not be tolerated.

WalMart’s logistic center that includes over 150 distribution centers will greatly be impacted by their aggressive program that not only fines drivers for being late, but for being early and improperly packaged as well. If the carriers want to dispute a fine, that won’t work. WalMart has already warned retailers that disputes will not be tolerated. This unforgiving campaign already began in August with a previous goal with a 4-day delivery window and hitting OTIF regulations 90 percent of the time. Now by February  Wal-Mart wants to see deliveries on time and in full 95% of the time or carriers can face the penalties.

Since this program began in August, some carriers have already been invoiced for penalties. For example, if items arrived late or missing carriers receive a fine of 3% of their value. Items that arrive early are fined because they create overstocks. WalMart expects this initiative help them compete with major retailers like Amazon because let’s be honest, people are happier with stocked shelves and when people are happier, they spend more. With more revenue flowing WalMart will continue to squeeze and pinch pennies in the freight industry regardless of the unfair pressure that it puts on them.

Let’s Talk More About the Unfair Pressure Placed By OTIF

OTIF will be expensive for carriers not only because of the fines, but to implement. Bigger carriers can add new factory processes to help with the packing and loading of freight, but smaller carriers may not be able to handle those costs. Plus, smaller carriers, who are just emerging into the market sometimes start off by trying to simply break even on deliveries until they can build a good reputation for themselves. If they incur the cost of fines they might go under.

This program will force carriers to become responsible for making deliveries on time even when they face factors that they can’t control.

What happens if a carrier realizes they will make the delivery a day early? Do they face the costs of the early delivery fee or do they face the costs of having to find somewhere to park overnight and to pay for meals not to mention the hours being out of business? Also, an extra day on the road away from families can put a lot of demoralizing stress on truckers. This program will force carriers to become responsible for making deliveries on time even when they face factors that they can’t control. For example, inclement weather could force drivers off the road, or they could get stuck in major traffic jams.

In order to make deliveries on time, some carriers may feel pressured to drive past the daily limit of 11 hours, which is extremely dangerous and illegal. Driving is exhausting and driving tired is the equivalent of driving drunk. Paper logs can easily be forged for now, but in December once the ELD mandate goes into effect records will be harder to forge, so drivers won’t even have the option to push themselves to make a delivery in time.

At the end of the day, WalMart will do whatever they can to improve their bottom line, even if it imposes impossible stress, extra operational costs and fines on carriers, who will have to completely rethink their operations in order to make deliveries on time, in full.

Do You Need Help With OTIF Issues?

A 3PL, such as BlueGrace, can help your business overcome the challenges of OTIF and other supply chain issues. If you have questions about OTIF or just how to simplify your current transportation program, feel free to contact us via phone at 800.MY.SHIPPING or using the form below and we will be happy to assist.

 

 

Walmart OTIF Policy – What are the Challenges and Concerns?

Walmart’s new addendum to their Must Arrive By Date (MABD) provision is making some suppliers more than a little nervous. OTIF (On Time In Full) rule will begin to punish suppliers for late deliveries with a 3 percent charge back if they are not made in a timely fashion. While this extension of the MABD fits with Walmart’s ever growing expectations, it could create some significant challenges for the supply chain, particularly when fresh produce is involved as it narrows the delivery window from MABD significantly.

It could create some significant challenges for the supply chain, particularly when fresh produce is involved

While MABD isn’t anything new as other major retailers such as Target and Home Depot have been using the threat of the 3 percent charge back as a means of encouraging more timely deliveries from shippers, OTIF significantly narrows the grace period a shipper would have to make the delivery.  

“Walmart is going to require its suppliers (shippers) to meet a two-day shipping window instead of its previous four-day window, as well as up its required compliance rate from 90 percent to 95 percent,” says Logistics Management.

Tightening Expectations

Under the MABD guidelines, suppliers had a four-day window to ensure that product was delivered to it’s intended destination. Under the OITF policy, that window will narrow significantly, only allowing a one day window for produce and perishables and a two-day window for other general goods. Suppliers will be hit with the 3 percent chargeback penalty if goods arrive late, incomplete, or even early. Additionally, if Walmart decides the supplier is, in any way, responsible for a variance in the delivery, they’ll receive a chargeback, end of story.

Under the OITF policy, that window will narrow significantly.

Good For The Customers But Tough For The Suppliers

Walmart’s plan does make a lot of sense when you consider they are working with JIT (Just in Time) principles. They don’t want excessive inventory sitting in stockrooms or in trailers behind the store, and they expect their suppliers to help make that a reality.

They don’t want excessive inventory sitting in stockrooms or in trailers behind the store

“The impetus for these types of changes over the years, according to Walmart, is part of an effort to ‘streamline its supply chain and cut costs,’ adding that ‘stores are no longer acting as warehouses, with too much inventory in back stock rooms or in trailers behind stores. Walmart wants merchandise to arrive in stores just in time to restock shelves and serve customers,’ ” Logistics Management adds.  

Compliance for shippers and suppliers is a going to be much tougher

While this is a sound decision from the retailer standpoint, compliance for shippers and suppliers is going to be much tougher, especially when you consider the nature of the produce industry.

“We predict in advance when the crop is going to come off, but weather can change that. Are we going to be held accountable for that? That’s going to cause a problem,” says one Walmart produce supplier.

Walmart produce executive, Bruce Peterson of Peterson Insights Inc says “The fresh produce industry is different and there should be ‘at least some degree of tolerance.’ From his more than 20 years of experience as the top produce executive at Walmart, he noted that almost all of the violations of the OTIF policy are at the beginning or the end of a season when weather and timing do play an out-sized role.”

The fresh produce industry is different and there should be ‘at least some degree of tolerance.’

The Blame Game

Obviously, no one wants to take the financial hit for falling out of grounds on compliance. So the question being asked is if there is a violation, who’s at fault, the supplier or the carrier?

Who’s at fault, the supplier or the carrier?

Take a look at the industry wide issue of assessing a fee or a fine on someone involved in the logistics of the supply chain. Holding the supplier of the transportation financially responsible is problematic when factoring in the risk-reward nature of the total transaction.

For example — A supplier could have a load of product with a value of tens of thousands of dollars. A trucker may only be getting $3,000 for the delivery of that load. Assessing the trucker a fee, which could easily be 30 percent of his take, for a delivery out of compliance seems unreasonable.

It doesn’t seem right to punish a good shipper in the off chance that they’ve had a late delivery due to weather or some other unforeseen circumstance. Rather, if there’s a serious problem with the shippers, then it’s time to find a better shipper.

The Solution

Proper lead time is crucial for suppliers and manufacturers that work with larger retailers like Walmart. One way to increase your chances of success is to partner with a third party logistics provider (3PL).

The new OITF mandate is going to have an impact on supplier ratings,

The new OITF mandate is going to have an impact on supplier ratings, so finding a 3PL who is both consistent and reliable is critical for navigating these new changes successfully. A good 3PL partner can examine your supply chain from start to finish and help to strengthen weak spots that might create issues in the future, reducing the chances of chargebacks and other issues that might be caused by OITF.

A good 3PL partner can examine your supply chain from start to finish and help to strengthen weak spots

BlueGrace can work with suppliers on freight consolidation, chargeback auditing, and management as well as load planning and optimization. We look at every aspect of the shipment and find the appropriate fix for the shipments to reach the shelves on time and in-full. Combine this with our proprietary technology BlueShip™ and your chances for success during these mandates/compliance regulation changes will undoubtedly increase!

 

OTIF – The New MABD for Walmart Suppliers

Walmart and other big box retailers introduced us to the “Must Arrive By Date” or MABD several years ago, which held suppliers to tighter compliance regulations. These regulations raised quite the concern over suppliers getting the right products to the right stores or distribution centers by a certain time or they would pay a fee.

Fast forward to now and we are having a similar discussion with suppliers and shipping companies about the new “On-Time In-Full” OTIF, policy. Although this mandate has been in the introductory phase since January of this year, the short pays will begin now and suppliers will most likely see their first chargebacks from Walmart in September! This program mandates that if any shipment arrives early, late, or on-time but is not packaged properly, the shipper will be charged 3 percent of the total items’ value. (i.e. a supplier has a purchase order of $10,000 but their product didn’t meet the OTIF guidelines so Walmart will only pay $9700 for the merchandise.)

The short pays will begin now and suppliers will most likely see their first chargebacks in September!

OTIF > MABD

The OTIF is still very much a part of the MABD, but with much more focus on the “in-full”. In the past, if less than 90% of merchandise cases were received within the MABD delivery window, the supplier would pay 3% of the cost of goods. Now, full-truckload suppliers of fast-turning items must arrive by the specified date 75% of the time, 100 in-full.

The OTIF is still very much a part of the MABD, but with much more focus on the “in-full”

Any items claimed late or missing during a one-month period will be fined 3 percent of their value. Starting in February 2018, OTIF will go into full effect, requiring deliveries to be on-time and in-full 95 percent of the time.

The MABD Window vs. OTIF Window

The MABD Window was a three-day grace period for perishables and a four-day grace period for food, consumables and general merchandise. The OTIF window is much tighter with a one-day for perishables and a two-day for general merchandise.

“Variability is the No. 1 killer of the supply chain,’’ Kendall Trainor, a Wal-Mart senior director of operations support and supplier collaboration.

Variability is the No. 1 killer of the supply chain

In some cases, a problem will be Wal-Mart’s fault, so the retailer has developed a scoring system that breaks down reasons for non-compliant deliveries and will fine suppliers only if they’re responsible. If suppliers don’t agree with the fine, too bad: Disputes “will not be tolerated,’’ Wal-Mart says.

This change is expected to add $1 billion in revenue.

Arriving early, arriving late, not arriving in full will be the issue in a shipper’s supply chain. This change is expected to add $1 billion in revenue. Walmart had to find efficiencies wherever it could and they feel a sense of urgency as the rival between them and Amazon amplifies.

FTL and LTL Guideline Breakdown

Here are the latest OTIF guidelines for full truckload (FTL):

  • Starting August 2017, FTL suppliers must deliver orders 100% in full, on the must arrive by date, at least 75% of the time.
  • By February 2018, FTL suppliers must deliver orders 100% in full, on the must arrive by date, 95% of the time.
  • Non-compliance will result in a fine of 3% of the “missing case” value; early deliveries will also be penalized, to eliminate overstock situations. (Penalties will be short paid monthly.)

For less-than-full truckload (LTL):

  • Starting August 2017, LTL suppliers must deliver orders 100% in full, on the must arrive by date 33% of the time.
  • By February 2018, LTL suppliers must deliver orders 100% in full, on the must arrive by date, at least 36% of the time.
  • If OTIF was 36% or better in August 2017, then the supplier must demonstrate a 20% improvement.
  • Non-compliance penalties (3% of non-compliance COGS) will be short paid monthly.

What does this mean for YOU?

Manufacturers and suppliers that work with large retailers like Walmart are more successful in getting their merchandise on the shelves with the proper lead time due to partnering with a third party logistics provider (3PL).

Suppliers scorecards will inevitably be affected

Suppliers scorecards will inevitably be affected, so it is imperative for a supplier to find a 3PL they can count on for navigating these changes. A 3PL, is an expert in transportation management and supply chain optimization and has the ability to help estimate from start to finish where the OTIF will impact the suppliers products.

We look at every aspect of your shipment and find the appropriate fix

BlueGrace has the ability to work with suppliers on freight consolidation, chargeback auditing and management as well as load planning and optimization. We look at every aspect of the shipment and find the appropriate fix for the shipments to reach the shelves on-time and in-full. Combine this with our proprietary technology BlueShip™ and your chances for success during these mandates/compliance regulation changes will undoubtedly increase!

 

 

 

The Importance of Retail Compliance in Today’s Market

Logistics and supply chain management has become a very tight game, almost cutthroat in its harsh severity. Consumers want their product today, that means that retailers want it delivered, checked in, and on the shelf yesterday. With the ability to order just about anything a consumer could possibly want from the vast online marketplace, brick and mortar retailers have to run an even tighter ship than they have before if they have any hopes of competing. To that end, some retailers are upping the ante and doling out punishment for shippers who aren’t in compliance.

So what can you do to maintain retail compliance? What about improving your operations to make your company more efficient? We covered these and many more topics in a recent webinar including:

  • Weekly Product Planning
  • Proactively Managing Appointments
  • Planning Optimal Shipping Dates
  • Eliminate Reactive Shipping
  • Creating an Internal Scorecard
  • Learning to identify Real Issues and Actionable Items
  • Improving Communication and Cooperation among Multiple Departments
  • Daily Tracking Updates
  • Full Visibility on Actual Deliveries
  • Learning to Identify Preferred Carriers
  • Utilize Upgraded Carrier Service Levels

Here are some of the key highlights from our webinar that can really have an impact on your business. While this doesn’t cover everything, these elements are vital to running a successful business in today’s marketplace.

Visibility is a Must

One of the key points that the webinar focuses on is visibility. Keeping up with retail compliance is more than just making delivery deadlines. The amount of disruptive technologies and customer expectations hitting the field requires a level of visibility that was, until recently, unheard of.

Customers want to know where their product is during transit. They want to be able to track its progress, start to finish until the product is in their control. More than that, they want to know the status of the product itself during transit. While this might not matter quite so much for clothing and other domestic goods, it plays a huge role for sensitive goods such as electronics and food items.

Being caught out of compliance could result in more than just heavy fines, it could result in a total shutdown of business and operations, which is ruinous for smaller companies.

Earlier this year, the FDA passed the Food Safety Modernization (FSM) act which details the requirements for sanitation, cleanliness, and closely monitored temperature control. Being caught out of compliance could result in more than just heavy fines, it could result in a total shutdown of business and operations, which is ruinous for smaller companies. This is one of many reasons why visibility is so vital to companies in their day to day operations.

OTIF and MABD Requirements

Walmart, one of the biggest retailers in the United States, is just one of many companies that are tightening their expectations for their suppliers. Walmart’s On-Time In-Full (OTIF) policy has set a precedent that will actually fine shippers and suppliers if goods don’t arrive when they are supposed, whether that be early or late. This means that shippers and carriers need to work closely together to hit the designated delivery window.

Must Arrive By Date (MABD) and OTIF are crucial for the changing client expectations.

Must Arrive By Date (MABD) and OTIF are crucial for the changing client expectations. Given that Walmart is such a substantial customer for many suppliers in the United States, making deliveries on time and in full is the difference between making a tidy profit, or losing out on a major customer. Additionally, chargebacks could carry a heavy fine, especially for smaller companies. As it stands, Walmart will penalize shippers by 3 percent of the total PO for any late or incomplete shipments. It’s not just Walmart that’s stepping up the regulations either as more companies continue to tighten their delivery windows.

We covered the importance of having someone managing these new requirements as well as questions that need to be answered. Are shipping dates being planned into production times? If there’s a mistake resulting in a delayed shipment, will you be able to identify where the mistake happened? What plans are there in place to reduce potential chargebacks and improve vendor reliability?

Better Planning Means Better Compliance

Planning is a large part of logistics, and being able to enhance planning is another touchstone of what we covered in our Retail Compliance Webinar. For example, what do you do if a truck breaks down while en route to a delivery? Is your company able to catch it with enough time to make the deadline? What about finding carriers with an open capacity to move product? Is your company able to find space, even when capacity gets tight?

These are a few questions that logistics planners and decision makers need to be asking themselves on a regular basis. Reactive shipping, planning a shipment due to a shortcoming of the original agreement, is a risky practice. There’s a lot that can go wrong when you’re already trying to play catch up. Much like maintenance on a piece of machinery, waiting for something to break is always much worse than fixing something before the breakdown actually occurs.

While there are a considerable number of possibilities to consider when trying to be proactive rather than reactive, it’s becoming easier to be proactive with the advancements of visibility and supplemental technologies.

The supply chain is very much the same. It requires a good deal of forethought to keep it flowing smoothly. If, for example, you don’t have a dedicated carrier fleet, will you have the necessary capacity to keep freight moving in a timely fashion? While there are a considerable number of possibilities to consider when trying to be proactive rather than reactive, it’s becoming easier to be proactive with the advancements of visibility and supplemental technologies.

That level of planning is no longer a novelty or a nicety for customers. It’s becoming a requirement as well as a differentiator among suppliers. Companies who are playing it too conservatively will have a harder time meeting retail compliance than companies who are staying abreast of the changes as they occur.

Staying Compliant

Changes in transportation regulations, tightening capacity, new technology hitting the market, higher spot rates and higher levels of demand from customers and consumers. Any one of these can be hard to navigate by itself, but trying to deal with all of it at the same time can border on the impossible.

Ultimately, everything we covered in our webinar is about helping your company to stay compliant and perform better across the board. From internal operations to external executions. Everything is connected and we broke it down for you. Click HERE to watch our webinar about retail compliance and learn more about how you can be successful. Ready to speak to an expert? Fill out the form below or call us at 800.MYSHIPPING

Bricks and Mortar: 5 Real Applications of AI To Improve Bottom Line

Many applications of Artificial Intelligence (AI) for brick and mortar retail seem far off, or too futuristic. We picked 5 of the more accessible applications of AI that could help improve your bottom line this year.

1. User accounts

Brick and mortar stores have often felt disadvantaged when it comes to AI compared to e-commerce retailers. Stores simply do not have the same depth of customer behavior tracking data that Amazon does, for example. However, many AI applications for e-commerce could transfer to physical stores.

With store user accounts, retail brands better synchronize offline and online retail.

The mingling of brick and mortar with online shopping occurs in many ways – such as relying upon location-based services or the use of a universal cart that can be used whether you are shopping on a mobile, desktop or voice-powered device. Omnichannel commerce covers many forms of customer experience – the many touch points a customer has with a retailer. Brick and mortar retail can rely on online data when shoppers set up a user account at the store, or from using click and collect or delivery services. With store user accounts, retail brands better synchronize offline and online retail. This reduces the “separateness between these channels [that] poses a threat to operational efficiencies and adds friction to customers hoping to shop in a seamless and consistent fashion.”

2.Recurring billing

A shift towards recurring orders and subscription shopping services is taking place. Retailers can immediately think of ways to encourage clients to consider their habitual, recurring purchases (laundry soap for instance) and plan for them. In that way, habitual orders can be delivered “on repeat.”

Smaller companies might consider subscription programs to expand customer reach and deepen relationships.

Smaller companies might consider subscription programs to expand customer reach and deepen relationships. With subscriptions, member incentives increase visitors to physical locations (Special offers). An example of a “masterful combination of a subscription program and a sophisticated store network”, is Sephora. Cosmetics are especially suitable as sampling products. Those interested want to try out new products – plus they are small and easy to ship. “Sephora’s PLAY! program offers subscribers access to new products through home deliveries while also encouraging them to shop at their local stores to build up points they can redeem for exclusive prizes and experiences.”

3. Style assistants

AI Style assistants in stores are not too far off, as well as other forms of augmented reality, like voice-activated assistants. Expect changes in the store environment, such as is already happening at Zara. “At Zara’s new flagship store in London, shoppers can swipe garments along a floor-to-ceiling mirror to see a hologram-style image of what they’d look like as part of a full outfit. Robot arms get garments into shoppers’ hands at online-order collection points. iPad-wielding assistants also help customers in the store order their sizes online, so they can pick them up later.”

4. What’s Old is New Again

What is AI really anyway? Retail AI is simply mimicking the original experience of a country store (when an associate would help you, care about you, and talk with you) (personalization), with empathy (care for the customer) and manners.

The bulk of retail revenue continues to be derived from brick and mortar stores. The tactile nature of shoppers’ needs is one of the most important factors of this and why physical retail remains. AI can improve empathy, or sensitivity and understanding of a customers’ point of view – and needs – to scale. As observed by many, “It’s no longer about segmenting customers based on general characteristics such as gender or age. Knowing a consumer’s attitudes and sentiments towards things, favorite day of the week they like to shop, the associate they like to deal with, the price points that they buy at, etc., will help retailers better target their consumers and deliver a great experience.”

Using AI options can begin today, even in the way we remember the original needs of the customer.

5. Logistics & Inventory Management

AI addresses out of stock product head on. With AI solutions, a notification that an item is out of stock, running low or out of place in the store is sent out right away to an in-store associate. Currently, Home Depot’s website offers “a vast array of local store data, such as stock levels down to the number of SKUs carried in a store. If you need 10 items of a specific SKU, you want to know a store has that many before you go. It’s no good if we only have two,’” explains Dave Abbott, the retailer’s vice president of integrated media.

Also, data-driven insights on the logistics end, such as offered by BlueGrace, increase operational efficiency

Also, data-driven insights on the logistics end, such as offered by BlueGrace, increase operational efficiency. Using BlueGrace proprietary technology connects retailers with AI possibilities. After companies undergo a review with a BlueGrace specialist, they are presented with new opportunities for cost savings, such as opportunities to implement predictive analytic technology with certain partners that will factor in weather and inventory levels. This will help direct trucks to different stores as part of an overall supply chain improvement. BlueGrace’s enhanced shipment visibility and business intelligence pave the way for AI initiatives.

For more information on how BlueGrace can help you create visibility and operational efficiency, feel free to fill out the form below or contact us at 800-MY-SHIPPING.

A Growing Need for 3PLs

It’s been a rough ride for over-the-road freight transportation over the past few years. Higher levels of government regulations have created a strain for drivers including the Hours of Service and the Electronic Logging Device mandates. These both came at a time that trucking companies were struggling with the pre-existing issue with a severe shortage of drivers. With the median age of drivers approaching retirement age, the condition will likely get worse before it gets better. Additionally, there have been huge fluctuations in both spot rates and demand over the years which have left carriers in a rather precarious situation.  

Despite the difficulties, there is good news on the horizon. Spot market rates, according to DAT and Truckstop.com, have risen upwards of 20 to 35 percent and contract rates have climbed by an average of 8 percent, year-over-year.  

This is good news for carriers, but managing the influx of work could require some extra help from intermediaries and 3PLs. Already, the conversations are beginning about solutions for the generational workforce as well as the adaptation to the increasing levels of disruptive technology hitting the markets.  

Higher Brokerage Margins 

Last year, 3PLs made due with fairly low margins, about 10 to 15 percent for freight transactions. Mostly as a result of vying for the top spot as a low-cost option for shippers who were looking for a truck on the cheap without using a service in the first place.  

Now, in 2018, with capacity tightening, shippers are making a return to 3PLs which will cause third party margins to increase to as much as 15 to 20 percent.

Because of the availability of capacity in 2016 and the first half of 2017, most shippers were able to obtain reasonable rates with carriers, which means that 3PLs had to provide an array of other services to set themselves apart from the competition. Now, in 2018, with capacity tightening, shippers are making a return to 3PLs which will cause third party margins to increase to as much as 15 to 20 percent. Carriers are hoping this will result in a sustainable relationship with 3PLs.

A Spike in Demand is on the Horizon 

Freight demand was unusually high between January and February, with a slight slow down through March. Given that these volumes are much higher than they were over the same period from last year, it’s another sign pointing towards the growing health of the transportation industry.  

If shippers want to keep up with demand, they’re going to have to change the way they do business.  

While this is undoubtedly a good start to the year, produce season, April through July, has kicked off, which means an even bigger spike in demand as produce season will give way to other peak consumer seasons including the Holiday season. Considering that all of this is outside the continual rapid growth of eCommerce markets, 2018 is going to be a busy year, to say the least. If shippers want to keep up with demand, they’re going to have to change the way they do business.  

Sensing the growing demand, many trucking companies are beginning to double up on their orders for new trucks. “Trucking companies ordered 35,600 trucks in May, more than double the orders from the same month a year ago, according to preliminary figures by ACT Research. That leaves manufacturers with an order backlog of more than 200,000 trucks, or 8.4 months of production,” according to an article from WSJ.  

“This is an astonishing rate of order placement,” said Kenny Vieth, president of the Columbus, Ind.-based ACT. “What’s facilitating it is that truckers are absolutely crushing it on freight rates and profitability right now.”  

Shippers might Start Looking to 3PLs for Visibility 

According to a report released by TIA working with Project44 and 10-4 Systems, 3PLs can, in fact, offer the level of visibility that shippers are looking for despite contrary beliefs.  

“Significant advances in visibility technologies have created a wide range of perceptions and expectations among shippers, including some that are inaccurate. 3PLs in this report identified a complicated web of factors that affect those perceptions and expectations, such as the demands of data aggregation, the need for more education, and the accelerated pace of change that affects 3PL and shipper alike,” the report says.  

Over the past year, the importance and need for visibility have only increased as suppliers are dealing with ever-increasing customer expectations and delivery standards

The TIA hopes that their report will highlight 3PLs that have a product or service offering that will provide the necessary information to shippers regarding their freight. With each passing year, the number of shippers that use 3PL services to keep them updated on their freight during the transportation cycle is increasing. Over the past year, the importance and need for visibility have only increased as suppliers are dealing with ever-increasing customer expectations and delivery standards. Walmarts OTIF (On Time: In Full) policy is a perfect example of this, which can punish shippers for not adhering to a strict delivery schedule.  

Data and Tech will Pave the Way 

It’s more than just the growth of demand that is making 3PLs a tempting partner for shippers. With the influx of big data, analytics, blockchain technologies, and so many more innovations, attempting to keep pace can be difficult. As demand grows and capacity tightens, shippers and carriers alike need to be smarter about how they operate if they want to stay competitive in today’s marketplace. 

As the industry continues to change, it’s likely that we’ll only see 3PLs continue to grow in popularity.

A Better Way of Doing Business

At BlueGrace, we take your current freight data and get an inside look at what your team may be missing. Our carrier procurement strategists will help you meet tight deadlines, optimize your freight expense, and ultimately, find peace of mind. Fill out the form below to find out more about how partnering with BlueGrace can create more visibility and opportunities to simplify, overall helping you find a better way to do business.

Supply Chain TLC

For the most part, we consider the supply chain to be a means to an end. While it’s an important means, it’s simply the process required to transition raw materials to finish product and take that product from the production floor to its end user.

While the supply chain is a rather complex system that utilizes a company’s logistics capabilities to the utmost, there are some companies that put decidedly more effort, energy, and even love into making it operate at its peak. Some companies will go the extra mile, quite literally, to make sure that they are producing the best possible product for their consumers and bringing some true innovation to the industry.

Some LUSH Sources  

Consumer consciousness has been on the rise lately as end users are becoming more aware of what goes into their products. There have been a number of reports about big companies catching flak and negative press because of their willingness to cut corners when it comes to bringing in their raw materials. It’s companies like Lush that really bring ethical sourcing to light, and have changed our understanding of a truly visible supply chain.  

Sandalwood, for example, has some incredible value for the cosmetics industry both for its scent as well as it’s therapeutic values. The tree itself takes over 10 years to grow to harvestable maturation and is predominantly found in India and Australia. Given the high levels of global demand, it’s become illegal to cut, harvest, and sell sandalwood out of India without permission from the state forest department, making it a perfect enterprise for criminal entrepreneurs.   

It strengthened my understanding of what we wanted and what we didn’t want,’ Gendry-Hearn says. In short, they weren’t going to get sustainable sandalwood from India.” 

“Gendry-Hearn and Constantine (buyers for Lush) were in India to investigate the dark underworld of sandalwood smuggling. The trip ended after a meeting in a hotel with a smartly dressed man she described as ‘the big boss.’ He entered with several bodyguards, sat across from them and put his gun on the table. Gendry-Hearn wasn’t scared. ‘My thought was: this is brilliant, this was exactly what we wanted,’ she explains. The big boss boasted that the price of sandalwood oil would never go down as he was sitting on massive reserves of wood and would restrict what was coming through. ‘It strengthened my understanding of what we wanted and what we didn’t want,’ Gendry-Hearn says. In short, they weren’t going to get sustainable sandalwood from India.”  

This is just one example of the lengths Lush undertakes to ensure their true to their word on ethically sourced materials. More than that, Lush builds on their relationships with their suppliers and promotes various initiatives (and funding) to increase awareness of corporate social responsibility.  

ADIDAS Kicks it Up a Notch 

When you consider the sheer amount of consumer goods that are made, transported, and purchased on a daily basis, it almost comes as a shock to realize that footwear is actually one of the most time-intensive products on the market today. The supply chain for shoes more closely resembles that of automobiles, parts and components are made in one location, shipped to another factory for the next assembly step, then shipped to the final factory location to be stitched, glued, and packaged as a finished product. This is a product that hasn’t changed much over the past 30 years.  

Now, however, with the rapid change in consumer expectation towards instant gratification and same day delivery, months-long process to assemble a pair of kicks simply won’t do anymore.

That’s what prompted ADIDAS to come up with the concept of the “speed factory.” “A couple of years ago, the top minds at Adidas decided this clunky, inefficient model was too limiting. “That’s why we looked into the technologies available and decided, ‘Hey, if we want to be faster and more flexible in doing what our athletes want and need, then we have to rethink the way we make products,’” says Gerd Manz, the head of technology innovation within Adidas’ Future team, which looks ahead three to seven years to set the company’s course.” 

Turning the average lead time from a few months down to a few weeks or even days is pretty astounding in its own, but when you consider the other ramifications of cutting out much of the supply chain it becomes even more impressive. The reduction of transportation costs and CO2 emissions alone will go a long way towards improving the companies standing and compliance with global green initiatives.  

Walmart’s Blockchain for Food Safety  

Walmart and blockchain alike have been garnering a good deal of headline attention in the recent past. Walmart, in particular, has launched a tough initiative for carriers and suppliers alike with their On Time: In Full (OTIF) policy which will penalize deliveries that are early, late, or incomplete.  

More than simply seeing the data, blockchain technology offers a total view of a product through its entire delivery through the supply chain.   

Blockchain, on the other hand, is an innovative new technology that will maximize the amount of accessible data within the supply chain. More than simply seeing the data, blockchain technology offers a total view of a product through its entire delivery through the supply chain.   

And Walmart’s plan with this new technology? To increase food safety.  

“One of Walmart’s grandest projects is an attempt to graft a blockchain, that immutable cryptographic ledger first used by bitcoin, onto the world’s complex food supply chains. Walmart has roped in some of the industry’s biggest players, among them fruit producer Dole, consumer goods giant Unilever, and Swiss water and food conglomerate Nestle, to form a consortium of 10 food producers and retailers to make it a reality,” according to Joon Ian Wong of Quartz 

“They’re building the technology with IBM, which has been among the most active technology firms pushing blockchain solutions to corporate technology departments. If Walmart is successful, the project could fundamentally alter the way information is secured, stored, and shared across the food and retail industry, ushering in an era where an item of produce can be tracked in real-time from farm to table, by producers and consumers,” he adds. 

Visibility is a Must

Again, consumer consciousness is on the rise. People want to know where their food and products are coming from. They want to know that it’s all being made and sourced responsibly and ethically. We’re living in an age where consumers want to know what’s going on behind the scenes of big companies and visibility is simply a must. BlueGrace Logistics offers complete, customized transportation management solutions that provide clients with the bandwidth to create transparency, operate efficiently, and drive direct cost reductions. For more information on how we can help give you the visibility you need, feel free to contact us using the form below: 

The End of NAFTA Could Be a Nightmare for Truckers 

Recent actions from the U.S. President, Donald Trump, have truckers more than a little concerned. During his time on the campaign trail Trump has made his opinion on foreign industries, Mexico in particular, very clear. Touting his “America First” slogan, Trump promised the American people that he would focus on bringing jobs back to the United States and would renegotiate trade agreements to put the U.S. in a better position.  

While that sounds all well and good, the actual ramifications of Trump’s trade tinkering could be disastrous.

While that sounds all well and good, the actual ramifications of Trump’s trade tinkering could be disastrous. He’s already threatened higher tariffs on trade with Mexico and now the president has his sights set on another target, solar energy. His most recent legislative move would place a 30 percent tariff on any solar equipment that is manufactured outside the United States.  

According to Bloomberg, the 28 billion dollar solar industry is heavily reliant on these outsourced parts. In fact, 80 percent of its supply chain is centered around the acquisition of them. Bloomberg also says that this doesn’t just affect the renewable energy industry, driving it to the point of being cost prohibitive, but it could also cause 23,000 Americans to lose their jobs. The tariff would not only target solar panels, but a number of consumer electronics and the steel industry. It’s highly likely that these tariffs could create restriction on US-made goods in other countries.

Truckers Fear of NAFTA Ending 

The North American Free Trade Agreement has been a crucial element for the U.S. economy since its implementation back in 1994. The agreement was aimed at reducing or eliminating tariffs and other trade restrictions between partnering countries; Mexico, Canada, and the United States. As partner countries are attempting to work together to renegotiate the deal, the process is being dragged down with “contentious negotiations” and threats of an all-out withdrawal by the United States.  

While many in the industry will agree that the trade agreement is due for some updates and renegotiating, it is Trump’s critical attitude toward these trade agreements that have the freight transportation industry concerned.  

“NAFTA has been a major point of contention since it was first implemented over two decades ago. Critics have argued the trade deal has benefited large corporations or foreign workers at the expense of domestic workers. But to industry groups, the trade deal has been vastly more beneficial than not,” says an article from Transport Topics 

The trade agreement has been very helpful in opening up the markets between the three participating countries and has been a driving force in the success of the trucking industry. With over $6.5 billion in annual revenue for the industry, NAFTA is responsible for creating jobs for over 46,000 people; 31,000 of which are U.S. truck drivers.  

Restricting foreign trade in certain circumstances could hurt both domestic companies and consumers by limiting the flow of goods they might rely on

“President Trump hopes to use trade and other reforms to encourage domestic production – which could result in more jobs. But some domestic production faces barriers that other countries don’t have. Restricting foreign trade in certain circumstances could hurt both domestic companies and consumers by limiting the flow of goods they might rely on,” Transport Topics adds.  

The Fallout from the Death of NAFTA  

So what would happen if the United States were to withdraw completely from the free trade agreement? Most agree that the results would be disastrous.  

The disagreements and heated rhetoric have fueled concern throughout the economy. Many businesses rely on the massive trade deal, which could make them vulnerable depending on how the negotiations end and create uncertainty in the process. Alliance of Automobile Manufacturers Federal Affairs Vice President Jennifer Thomas notes that there are two bad outcomes that could potentially come from these talks. The first of these scenarios is that NAFTA becomes unworkable and useless due to unrealistic expectations. The second, and potentially most frightening, is we simply lose NAFTA altogether because the U.S. has pulled out entirely.  

The trucking industry could stand to suffer the most, as transportation from the U.S. to either Canada or Mexico is predominantly done by trucking.  

It’s more than just the threat of higher tariffs that would hurt American consumers, who would end up taking the brunt of the increased costs. There are a significant amount of jobs at stake, all of which are heavily reliant on NAFTA. The trucking industry could stand to suffer the most, as transportation from the U.S. to either Canada or Mexico is predominantly done by trucking.  

According to a report released last December by The American Action Forum, a center-right nonprofit, pulling out of NAFTA would increase consumer costs by at least $7 billion and businesses would be hit with $15.5 billion in new tariffs.  

As NAFTA negotiations are still ongoing there is hope that the trade agreement will make it through. However, with the Trump administration avidly arguing against it, there’s really no telling what form the trade agreement will take in the end.

How Can A 3PL Help?  

While we can’t control national policy, we can help our customers navigate through it. When retail stores added ‘Must Arrive By’ Dates, we were able to offer solutions. When Walmart went a step further and tightened their delivery rules with OTIF (On Time In Full), we successfully assisted many of our retail customers. With the ELD mandate in full effect, we’re actively helping our customers navigate issues that cause capacity and expensive penalty problems. No matter the situation, we are the experts here to simplify your freight needs. If you have any questions about how a 3PL like BlueGrace can assist, feel free to fill out the form below:

 

Retailers Say Don’t Let Your Freight Be Early Or Late

The transportation industry is perhaps one of the most daunting when it comes to rules and regulations. Hours of Service and Electronic Logging Devices are just a few of the most recent roadblocks to come up recently. Merely staying in compliance with these new regulations can be a costly endeavor. What’s worse is that being caught out of compliance could mean penalties, fines, or even a trucker losing their job.

As if all that wasn’t bad enough, truckers and freight forwarders have to balance all of that on top of growing customer expectations. WalMart, in particular, is starting to crack down on deliveries with their OTIF program. Kroger, another heavy-hitting retailer, is also beginning to levy penalties on tardy shipments. Missing the delivery window could mean hefty fines for carriers. However in this case, missing the delivery window doesn’t just mean being late, but even arriving early could prove costly for carriers.

Tardy Carriers Will Pay the Price

Retailers are warning retailers that disputes simply won’t be tolerated. On Time. In Full. Or Else.

WalMart can be rather ruthless when it comes to their profit margins, but other retailers are starting to rally to the call, creating an unforgiving environment for errant carriers. Retailers expect their loads to be packaged properly, delivered in full, at the designated time. To that end, retailers are taking a very defensive stance over their new initiative, warning retailers that disputes simply won’t be tolerated. On Time. In Full. Or Else.

Wal-Mart has signaled it could do more than levy fines if problems persist. Charles Redfield, executive vice president of food for Wal-Mart U.S., told suppliers they could also lose shelf space if they don’t solve their delivery issues, according to people in attendance at a supplier meeting earlier this year. “Retailers can threaten suppliers with loss of promotional space in stores”, analysts said, according to the Wall Street Journal.

In the few short months that the program was unleashed upon carriers, WalMart has already been dishing out the penalties. For example, late or missing freight could cost a carrier up to 3 percent of its value. Early arrivals are no less forgiving due to the fact that they create an overstock. This overstated Just In Time philosophy keeps the shelves full and the WalMart customers spending, which is all well and good for WalMart as it means they can run with the big dogs like Amazon.

it’s likely only a matter of time before more retailers jump on the no-nonsense bandwagon.

“Wal-Mart executives say a more-precise delivery window keeps shelves stocked and the flow of products more predictable, while reducing inventory—all of which are increasingly important to the retailer as it invests heavily to compete online. The change could create $1 billion in additional sales over time, they said. “We hope we don’t have to collect any fees from suppliers. We would much rather have all the product we ordered on time,” said Wal-Mart spokesman Kory Lundberg,” the WSJ adds. While Kroger is seemingly more lenient, simply charging a flat $500 for late shipments, it’s likely only a matter of time before more retailers jump on the no-nonsense bandwagon.

Carriers Feeling the Pressure

These new policies will be costly for carriers for more reasons than just the fines.

These new policies will be costly for carriers for more reasons than just the fines. Simply implementing the procedures and equipment necessary to hit that 95 percent compliance mark could prove to be too much for smaller carriers. While bigger carriers can just add some new factory processes to help with packing and loading, smaller carriers don’t always have that luxury. Many new carriers are just hoping to break even for their first few years of operation until they can build both a steady reputation as well as a customer base.

Furthermore, WalMart and Kroger’s steadfast approach to “no excuses” will mean that carriers can be slapped with a fine for circumstances that are beyond their control. Anything from heavy traffic and construction work that causes serious delays to severe weather events that makes travel all but impossible will all have a negative impact on carriers. Conversely, what happens if a carrier does happen to show up early? Is it better to take the financial hit for the early delivery or shell out for extra meals and more time on the road for the driver?

There’s also the concern that drivers might take it upon themselves to exceed the daily drive limit to ensure their delivery is on time. Not only is this dangerous, not to mention illegal, but soon driver’s won’t even have that as an option when the ELD mandate goes into effect this December.

The Bitter Citrus Industry

A growing concern over these new on-time delivery policies is what it will mean for Florida’s citrus growers. As both Walmart and Kroger are considerable retailers of foodstuffs and produce, that makes them some of the biggest customers for such items. As Florida citrus groves have not only been ravaged by HLB for several years, but hurricane Irma caused some considerable damage.

“Andrew Meadows, a spokesman for Florida Citrus Mutual, a trade organization for growers, predicts growers statewide will end up losing more than half of this year’s crop to Hurricane Irma. The Florida Commissioner of Agriculture has estimated the cost of Irma to Florida’s farm sector at $2.5 billion, with projected losses to citrus producers the worst of any sector, at $760 million,”according to an article from Marketplace.

Suffice it to say, this policy might create better profit margins for retailers, but it’s not going to make them any friends among the carrier community.

This puts both the growers and their carriers in a serious predicament. As much of the damage won’t be fully realized for another two years at least, making guesses on shipments is a dangerous gamble. Guessing too low means crops left unsold which is money wasted. Guessing too high, however, means that carriers won’t be able to make full deliveries which means the fines will get passed down the line back to growers. In either case, it’s a lose lose for an industry that’s already in danger. Suffice it to say, this policy might create better profit margins for retailers, but it’s not going to make them any friends among the carrier community. As the regulations begin to tighten from both retailers (who will undoubtedly add more to the list) as well as the ELD mandate, we’ll have to wait and see how carriers respond to the growing pressure.

Do You Need Help With OTIF Issues?

A 3PL, such as BlueGrace, can help your business overcome the challenges of OTIF and other supply chain issues. If you have questions about OTIF or just how to simplify your current transportation program, contact us via phone at 800.MY.SHIPPING or using the form below, we are here to help!

How does Freight and Transportation Fit into your Budget?

The 2018 budget season is heating up!

We all know how it goes. The heads of each department work on their annual budgets and turn them in to finance. Finance then returns with remarks like “the budget is too high, make it leaner.” How do you go about “trimming the fat” off of the transportation budget? Transportation is typically a 10-12% cost band on the general ledger for most manufacturers and distributors and once the 2018 budget is locked in, it doesn’t change.

MABD and OTIF Affecting 2018

There will be challenges rolling into 2018 with freight carriers and big box retailers making their Must Arrive by Date (MABD) programs or On Time In Full standards (OTIF) rules more strict.

Huge retailers have very strict rules when it comes to receiving products by a certain date to restock their shelves. If a manufacturer or distributor is not getting their product to the retailer by the (MABD) or Must Arrive By Date, the retailer can hit the business with a ‘charge-back’ for a certain percentage of the invoice value. Not only will the business have to pay a fee, but it will reflect poorly on their business scorecard as well. Now, Walmart is taking it one step further with OTIF, On Time In Full standards that can penalize businesses for being too early or not having matching amounts of product.

General Rate Increase with Less-Than-Truckload

At the beginning of every year the LTL carriers will begin to roll out general rate increases also known as GRIs.

Something to remember about LTL carrier GRI’s, is that the announced GRI isn’t necessarily indicative of the true impact to a shipper’s bottom line freight cost because the GRI is not a flat percentage rate increase across the board.

It is merely an aggregate combined average percentage increase across all lanes serviced by a carrier. Rates in some lanes may remain unchanged but some may increase by more than 4.9%.

A shipper could be seriously impacted by a general rate increase much higher than what’s announced by the carrier, so it’s imperative for shippers to check each lane for actual impact on costs.

Has your transportation and supply chain departments brought these items into consideration when rolling out transportation budgets?

Freight Cost Allocation

There is also the issue of past freight cost allocation. True freight cost allocation should show your most profitable ship to locations, customers and products. Were you able to deploy sales people, advertising and marketing budgets to the correct locations? Were customers and product lines also accurate in relation to your budgeting for 2018 as well?

Transportation cost is much more than beating up LTL Carriers on price, sending out an annual RFP and picking carriers based on cost alone.

Don’t just remove a carrier and bring in a new one if you have a spat with the driver or if a shipment gets damaged. Make the decision based on the total of the carriers activity.

Consider a 3PL When Budgeting

Transportation costs affect all aspects of your organization and should be taken very seriously. When working on the 2018 budget, consider working with a third party logistics provider (3PL), as they will take the time to learn your business and see how these costs can affect everyone in your organization.

 

 

 

BlueGrace Provides Logistics for Minnesota Tourism Campaign

 

Minnesota Tourism Thinking “inside” the Box

BlueGrace Logistics has been trusted to provide freight and logistics services for cultural and arts exhibits many times before and the recent campaign of “Minnesota in a Box”; an initiative set up through the state’s tourism department, was probably the most exciting for the truckload division at BlueGrace.

All 50 states have a tourism department that creates marketing and advertising campaigns to showcase their popular cities and landmarks. The state of Florida has beautiful beaches, the Space Coast, Miami and Disney World. Colorado has the Rocky Mountains, hiking, white water rafting and much more. If you watch any television, there is no doubt you have seen an advertisement to visit either one of these states; Minnesota just took it one step further.

Minnesota brought to YOU

Minnesota Tourism decided it would be best to capture two scenes that make Minnesota unique and create a tangible setting where people could interact and share images and video via their social media. These scenes were housed in 8x8x8 steel shipping containers. 

mnstagram-hed-2016

Tourism In a Box

The shipping containers were exhibited in Kansas City, Denver and Chicago. They visited various street fests, MLB baseball games, RibFest in Chicago and a final Stint on the Navy Pier in Chicago before returning home.

We had weekend pickups and drop offs. We had late night trips to the office to arrange storage and middle of the night pick and runs as we navigated between events. – Brian Blalock, Sales Coach at BlueGrace Logistics.

 


Minnesota in a Box: To Get You to Visit, the State Will Now Visit You First

See Colle+McVoy’s MNstagram booths

Take a vacation to Minnesota? Nah, it’s too cold and dreary with all that snow and dreary-ness. Brrr…

To combat this common misperception, Explore Minnesota Tourism tricked out a pair of steel shipping containers for an immersive campaign that invites prospective visitors to “sample” a pair of the state’s diverse attractions and share their experiences via social media.

One of the 8-by-8-by-8-foot containers—they’re dubbed MNstagram booths—sports a wilderness motif that evokes the state’s Boundary Waters region, complete with wispy cattails, a morning mist generator, lilting loon calls on the soundtrack, and best of all, a wooden canoe for faux-paddling.

The other container simulates Minneapolis’ iconic First Avenue music club, complete with a fog machine, “bouncer,” purple stage lighting (a tribute to Prince, who featured the venue in Purple Rain), and best of all, a full drum kit, allowing folks to jam along with tunes playing over the sound system.

So, what prompted this inside-the-box approach? “Committing sight unseen to a Minnesota vacation can be a tall order,” says John Neerland, group creative director at Colle+McVoy, the agency behind the effort.

Hey, maybe that’s because they’ve all read about how it snows there in July! Oh wait, that was just an ad campaign. Never mind.

Plus, “running TV is often cost-prohibitive for a state tourism agency with a finite budget,” Neerland says. “We wanted to supplement our other efforts with a more hands-on, interactive, sharable and press-worthy experience.”

The Top 7 Questions You Should Ask About Your Freight

bluegrace_top7_freight_questions
Businesses that utilize freight are often making tactical, short term, economical decisions in their transportation department. Making short term decisions can be good temporarily but may be detrimental to the department they are supposed to serve. True growth can only be achieved by making strategic, long term decisions with good business partners. All good decisions start with great questions. Your 3PL partners should be asking you the right questions about your transportation goals and needs from the very beginning of the relationship.

The Top 7 Questions You Should Be Asking About Your Freight:

  1. What is your main KPI (Key Performance Indicator) when it comes to transporting your goods?

  2. What is your damage % and how is it currently handled ?

  3. What is your general rate-increase mitigation strategy?

  4. How has the deduction in fuel cost affected your spend year over year?

  5. Have you considered integrating your ERP (Enterprise Resource Planning) system into a TMS (Transportation Management System)?

  6. What is your freight cost as a % of sales normally?

  7. What have your latest consolidation opportunities looked like as far as mode optimization?

 

All good decisions start with great questions.

Lets’ take a look at each question and why it should be important for your business transportation department:

1. What is your main KPI (Key Performance Indicator) when it comes to transporting your goods?

KPI’s help all sides of your transportation program. Deciding which indicators are most important for your particular type of freight puts your team and your 3PL on the same page so there is no questioning of the program’s success. From delivery times to damage %, KPI’s will produce real numbers that need to be met. BlueGrace is dedicated to meeting all agreed upon KPI’s.

2. What is your damage % and how is it currently handled ?

Because we track damage % as a KPI, we are up to date on what that number is at all times. How the damage is handled is another issue. BlueGrace is able to handle those claims and report on them as well, so it’s important ti ensure that is happening for your team.

3. What is your general rate-increase mitigation strategy?

Rates fluctuate and move from carrier to carrier. Staying on top of the increases can make or break the the costs of your transportation department. BlueGrace is known to have one of the best pricing teams in the logistics industry, so we are always looking for these types of increases. Our customers are notified as quickly as they are able to forecast and prepare for pricing changes.

4. How has the deduction in fuel costs affected your spend year over year?

Fuel costs can dramatically effect your transportation costs. You should be able to see variances year over year and changes in your overall costs. BlueGrace monitors fuel costs and provides reporting on any effects to your program.

5. Have you considered integrating your ERP system into a TMS (Transportation Management System)?

How many steps does your transportation department currently take to quote and schedule your shipments? If it’s becoming increasingly more difficult to manage the day to day in your transportation department, in might be time to integrate your systems. At BlueGrace we specialize in the integration of ERP systems through our BlueShip 3.0 TMS. By streamlining these manual processes, time is saved and visibility is greatly increased.

6. What is your freight cost as a % of sales normally?

This percentage should be determined and maintained through your partnership with your 3PL and fluctuations in % need to be monitored. At BlueGrace, we work with you to decrease the % of freight costs with automation, our carrier relationships, and enhanced support.

7. What do your consolidation opportunities look like as far as mode optimization?

Consolidation opportunities are everywhere if you have the data to determine them. The most commonly overlooked consolidation opportunity is intermodal. Rail has become an increasingly attractive mode to full truckload shippers with the only difference being longer transit times to the shipper and consignee. Do you have volume shipments with an LTL carrier that could be shipped partial truckload? BlueGrace has experience in data analysis and we can help when it is time to optimize.

These 7 questions are the first big step to optimizing your transportation department. If you need help with your current freight, or are not seeing the results from your current 3PL, feel free to contact BlueGrace and we will be glad to discuss all 7 questions and help you succeed!

Why Have Lower Diesel Prices Not Lowered Your Freight Costs?

bluegrace_logistics_diesel_fuel
As of this week diesel prices have dropped for 3 consecutive weeks with the average price per gallon being $2.49 according to the United States Department of Energy’s Energy Information Administration (EIA).

As of this week diesel prices have dropped for 3 consecutive weeks with the average price per gallon being $2.49

This is the lowest weekly average the market has experienced since the week of September 28th when diesel was $2.47 per gallon, and represents an $1.13 decline when compared to the cost of diesel for this same week in 2014.

Your initial train of thought (freight pun intended) might be that with lower fuel costs that your LTL, truckload, flatbed and intermodal freight rates would be lower. Sadly this is often not the case, unless you’re are using the leverage of a privately owned 3PL like BlueGrace Logistics to negotiate lower rates on your behalf.

Publicly owned 3PLs see a decline in fuel costs as a negative to their revenue as the same load that may have been $2 a mile may now only be $1.75 a mile based off the cost of fuel. Instead of passing these savings on to their clients, they may maintain the same rates as if nothing has changed in the market, or even worse raise their rates to make up for the lost revenue across their company.

As a privately held technology company in the freight business, BlueGrace doesn’t have investors to satisfy. Our Executive Leadership Team, Account Executives & Operations Support Specialists are all focused on growing our company by offering the most competitive rates in the industry and backing it up with reliable service.

Our combined experience of hundreds of years in the logistics industry allows BlueGrace customers to take advantage of factors in the industry that go unnoticed by our competitors.

With our freight industry knowledge and commitment to providing your company with the most competitive rates possible, you can rest easy that your business has an edge over your competitors. Those same competitors are still going direct to carrier or working with other 3PLs who may be too large and reliant on public funds to make the best decisions for your company’s bottom line.

Contact BlueGrace Logistics today at 800-MY-SHIPPING (800-697-4477) and lets see what we can accomplish together.

The Secret Sauce: Freight Sales Success

 

What’s your secret sauce?

Do you know the most common answer I get when I ask a BlueGrace franchise owner about their performance goals?

You probably wouldn’t believe it, but we have some very competitive personalities in our channel. Almost every franchisee’s response is to “outperform the rest of the franchisees and be the #1 franchise in the company”.

We were interested to see what BlueGrace Indianapolis Central franchise owner, Pete Foradas was doing to grow his franchise with being so successful in just one year of becoming an owner.

Exactly one year ago, Pete Foradas grabbed a bull by the horns and decided he wanted to become a franchise owner. He inquired about BlueGrace Logistics, and it turned into the perfect fit. Foradas has been very successful in growing BlueGrace’s brand. He is a sales machine, and in these last few weeks he is doubling his numbers. We first asked him what is his most successful technique for selling and this is what he said:

a.         Create a game plan for every day of the week. I block out time for prospecting door to door in a specific territory. I make a goal for how many doors I want to hit, how many leads I should generate, how many appointments I should set, deals I should close, and activations I should record.

b.         Persistency is one key to success; the other is spending time in the right places. I try to focus on leads that fit “inside that box” which statistically yield a higher rate of return.

c.         Finding common ground within a meeting is imperative. Associating with clients and relating to their organization creates an environment conducive to productivity. Creating a partnership is key. Finding common ground and creating trust is crucial to long term, residual income.

“I have so much to learn from all of the talented executives and franchise owners in our system. I’ve yet to spend the time with others around the country to observe the “best practices” of some of our finest franchisees. I think it’s a fair to say that I’m one of the younger owners in our system, and one thing I need other business owners in the market place to recognize, is that I am a young professional”. – says Foradas.

Foradas loves being a franchise owner because he enjoys the freedom, and his ability to call the shots. He knows that he is in business for himself, so calling the shots and giving it all he’s got, helps him know he is getting the job done. We next asked him what his secret is to running a successful franchise:

“Consistency and Accountability. I’ve found that being predictable is a good thing. It means you’re consistent. Whether it’s consistently good or bad, just be consistent. Your customer wants to feel there’s a process in place, and so do your employees. Consistency provides a sense of control and trust. From an accountability standpoint, I hold myself responsible for everything that happens under my watch. Whether the carrier allows freight to sit on their dock for 2 weeks without notifying anyone, or I recommend a service that saves my client time and money, I hold myself accountable. I let the people around me know that I made an error, but I also make sure they know when I went above and beyond for them. I schedule 30-60-90 day business reviews. If you have BDMs (Business Development Managers), assign them to the account after 90 days. Allow your sales reps to sell and your BDMs to manage.  A BDM would be compensated on growth of existing accounts and retention” – says Foradas.

Foradas knows sales is the most important aspect of our industry and he feels there’s too much competition to rely on your current book of business to get you to retirement. He believes that he tells a pretty good story of who we are and what we do, and how we position ourselves in the market. So he believes in relating to the business of others and asking as many questions as possible. He uses handouts to illustrate our product and services during meetings. Foradas associates his success with hard work, “hard work means knocking on more doors, and knocking on more doors means more leads, more leads means that I have more phone calls to make, and more phones calls means more appointments, and more appointments means more sales, more sales means more money. It’s really that simple,” says Foradas.

“Securing the business of your customers is the key. It isn’t a daily sale for me. I secure my business in the initial meetings by setting the expectation of what it will be like to work with BGL and Pete Foradas. I remind them of the road bumps that we’ll face together as partners and I try to create value outside of the transaction” – says Foradas.

Foradas said that becoming a franchise owner has made him grow and mature in ways he never knew possible. He may not be thrilled about Indiana, but financially it’s great. He really had to learn how to act as an accountant and pay attention to his finances, which he rarely had to do, because once someone cut him a check, whatever was in the bank was what he had to spend, so overall it’s impacted the way he looks at his dollar, or how it’s spent. It’s changed the way he looks at businesses as far as liability, insurance and protecting his own assets by who he goes into business with.

“I understand jumping into business ventures is risky, I make sure I do my due diligence and make sure it is a good fit. It correlates with how I make friends, how I handle my personal relationships with my significant others and my family members. Just taking into consideration all those variables, and applying what I have learned through business into my day to day life”.

Having a strategy is everything, so Foradas looks to hire Sales and Truckload employees, and nearly double his revenue in the next year.

 

 

Are You Prepared if a Natural Disaster Disrupts Your Supply Chain?

Although the Weather Channel forecasts a below-average hurricane season in 2012 – there is still uncertainty and history says you can never be too prepared. As Senior Meteorologist Stu Ostro instructs,

“people in hurricane-prone areas should be equally prepared every year regardless of seasonal outlooks.”

So what can your business do to prepare this hurricane season? Our team has outlined a few simple procedures to integrate throughout your entire supply chain to help you be proactive and prevent potential loss.

Flooded city hurricane aftermath
Flooded street in the Soho area of Manhattan from last year’s Hurricane Irene. Source: http://bit.ly/LhejIK
  1. Team: Are you prepared if your team is short-handed? Remember that cell phones, email, land lines, etc may become unavailable, which can cause great confusion. To avoid this stress, be sure to have multiple channels to communicate important messages and announcements to your staff. Satellite telephone systems offer a reliable form of communication for your immediate staff members.
  2. Customers: If/when your business is notified of a potential storm, let your customers know immediately so that they can plan ahead and adjust their inventories. Are there any products or materials that will be high in demand before or in the aftermath? The key is to remain flexible.
  3. Supply Chain: Daily operations and supply chain processes can be complicated very easily in the presence of severe weather. An easy way to prepare is to run through best and worst case scenarios with your team so that everyone is aware of their responsibilities and how to respond quickly and effectively.
  4. Suppliers: Do you work directly with a single supplier? Is the business located in a hurricane prone area? If so, plan ahead with the supplier and ask how they have prepared to provide services or products in times of disaster. It’s also a good idea to maintain good relationships with multiple suppliers especially if you find yourself in a pinch.
  5. Freight: Be prepared to make special arrangements for your shipments. If the roads are dangerous, truck drivers will be pulled off for safety. An easy proactive measure is to schedule your freight shipments earlier or work with a logistics provider to see if there are any alternative routes. Keep in mind port availability. In the case of heavy rain and flooding, your freight may not be able to move. Consider all modes of transportation.
  6. Insurance Provider: Be sure to have a copy of your policy and get any questions answered from your provider so you’re not left wondering.
  7. Data: Backing up your data is critical. In today’s global economy, businesses function on computer systems and databases. Be sure that your business documents, records, etc are stored at an off-site location.
  8. Community: Once your business has a backup plan, reach out to others in your community and share your tips and advice on how you prepared your business for a natural disaster. Hint: You can start by sharing this information!

No matter how many hurricanes, tropical storms, or natural disasters occur – it only takes one to impact our communities and cause major disruption. Get a plan started today and re-evaluate periodically, especially if severe weather is on the way.

We hope that these hurricane preparedness tips and reminders are helpful to your business. Of course, it is our hope that you will never have to put your plan into action. If you would like more information on how to formulate your own plan, build a kit and get involved, check out this natural disaster preparedness resource from FEMA.

 

Daily Transportation and Logistics News – Feb. 25, 2011

transportation policies | transportation industry | transportation 101“Transportation 101″ provides a primer on the federal transportation program

Transportation for America has developed a “Transportation 101” document that is hoping to inform the industry and public as to how current federal transportation policy works. It is important for industry professionals to understand many of the policies that affect us every day.

End of an Era?

If you were following news outlets over the last few weeks, you should have seen that a variety of well-known leaders in the industry have resigned or retired from their respective companies. Many of these leaders have been in their positions for a long time and helped mold the way the current industry is.

Seaport cooperation to be examined at upcoming NAFTA conference

In an upcoming North American Free Trade Agreement conference, industry professionals and government officials will work together with a group of researchers to examine how seaports are currently working together in the industry.

Alleged Terrorist Caught Using Domestic Truck Shipments

Many have seen the story about the Saudi national arrested in Texas on terror charges. What many do not know is that Con-way Freight helped in the capturing of the man, by notifying authorities of a suspicious package in their facility.

Oil Prices Appear to be Stabilizing, Diesel Up: Crude Closes at $97.28

The initial projection for how the rebellion in Libya would affect oil production seems to have been worse than current projections. This is helping to reduce oil prices for the first time in nine days.

Cargo Theft Plagues Global Supply Chain

FreightWatch International has released its Annual Global Threat Assessment, showing that cargo theft grew substantially in the western hemisphere.

– Ben Dundas, Web Analyst

The 12 Days of Christmas

  •  On the 1st day of Shipping, my 3PL suggested to me, a full list of each commodity:

Capacity in freight shipping has increased dramatically in a short amount of time and the holiday season will be no different. Shippers, consignees, and freight carriers are all running skeleton crews especially as Christmas approaches. Take the time to plan ahead! Minimize mistakes by being thorough in your packing lists and especially in listing the contents of your shipments on your BOL (Description, Dimensions, Quantity, Packaging, NMFC and Class).

  • On the 2nd day of Shipping, my 3PL suggested to me, 2 Bills of Lading:

Keep accurate records of what you’re shipping! Keep this information indefinitely by utilizing a 3PL who offers a Transportation Management System (TMS) and store this information electronically.

  • On the 3rd day of Shipping, my 3PL suggested to me, 3 Competitive Quotes:

Quote with multiple carriers for not only cost, but also availability and transit time! There will be fewer drivers and less people on the docks of freight carriers as well as your consignee. Allow for extra transit time to ensure your products get to where they need to be. Save yourself the headache of comparing multiple direct carriers by working with a 3PL who can provide a TMS, which calculates multiple quotes and transit times from multiple common LTL carriers.

  • On the 4th day of Shipping, my 3PL suggested to me, 4pm Pick-up:

Especially as Christmas approaches, there may be less drivers working and less ability to pick up freight. If you want to kick your warehouse guys early for the day, be sure to allow for a minimum 2 hour pick up window and perhaps more. If your warehouse usually closes at 5pm, schedule your pick up for an hour earlier but be prepared to wait! Delayed transit because of missed pick-ups during the holiday weeks are not abnormal!

  • On the 5th day of Shipping, my 3PL suggested to me, 5-Day Guarantee!!!

Guarantee your shipments! It costs marginally more to guarantee your delivery, whether it is a one-day point, two, three, four or five, and avoiding late deliveries easily offsets that cost. Your consignee’s are closing early, letting their warehouse employees off on vacation, and you can seriously injure your supply chain by failing to have product arrive on time. Ask your sales rep for Guaranteed, Air Freight and Expedited options!

  • On the 6th day of Shipping, my 3PL suggested to me, 6 days delayed invoicing:

Many people take vacation days this time of year, from the carriers, to your office, to your consignee. This can create for delayed invoicing and delayed payments. You don’t accept your customers A/P person being on vacation, as a reason for delayed payment, and neither does the carrier nor your 3PL. Stay ahead of the curve and don’t lose momentum in your cash flow. Use a 3PL who uploads images of shipping documents such as Proofs of Delivery (POD’s), Original BOL’s and Weight and Inspection Documents (W&I) so you can invoice faster! Ask to be invoiced electronically and pay via credit card or ACH. Expect the same from your customer!

  • On the 7th day of Shipping, my 3PL suggested to me, 7 different packages:

Are you shipping mixed packages with multiple classes? Carriers will default shipments of mixed packages that are not itemized to the highest freight class. Save yourself some of that holiday bonus by using a 3PL whose technology allows you to itemize multiple class shipments. Be sure to provide packing, count, description and weight on the BOL.

  • On the 8th day of Shipping, my 3PL suggested to me, 8 PCF:

Are you shipping density items? Save yourself from incurring re-classification charges and understand density! Understand that density is calculated “as packaged” so it does include the pallet, crate, corrugated box, etc. BlueGrace Logistics has participated in the NMFTA and is fully trained to consult in this area. Be sure your 3PL can advise you on proper packing, classing, density, etc. 

  • On the 9th day of Shipping, my 3PL suggested to me, 9 POD’s:

Ensure proper delivery of your products by viewing the Proof of Delivery (POD) as soon as it is provided. The POD will indicate that the shipment has arrived in full and good order. Utilize a 3PL whose technology can provide digitally uploaded images of all of your shipping documents to provide complete accountability to your supply chain. 

  • On the 10th day of Shipping, my 3PL suggested to me, 10 minutes to inspect your freight:

Be sure that both you and your consignees take the extra 10 minutes to inspect your freight. Increased capacity and less manpower can account for more damages. Never sign clear for a shipment without inspecting it. It is very difficult to get any transportation provider to honor a claim for freight that was signed clear, even for concealed damage.  Ask your logistics provider about minimum packaging requirements.

  • On the 11th day of Shipping, my 3PL suggested to me, 11 liftgate deliveries:

Remember that liftgates, limited access, residential deliveries and other accessorial surcharges negate guarantees and can delay transit. Carriers, aside from R&L Carriers, do not all have liftgates on every truck, and may try to deliver without a liftgate if possible, even when a liftgate is requested. Remember that Notify and Appointment deliveries are not the same as guarantees and can delay transit. Speak to your consignee and know ahead of time if they require these services upon delivery.

  • On the 12th day of Shipping, my 3PL suggested to me, 12 days vacation!

Ok, not so much a suggestion as a reminder: your employees are taking vacation, so are your competitors, so are your customers, vendors, and LTL carriers. Docks are running skeleton crews this time of year. You have less people to ship your product, carriers have less people to sort it, load it, and deliver it, and your customers have less people to receive it. Be sure to communicate with your consignees about warehouse operations time and allow yourself plenty of time for delivery especially for your time-sensitive shipments!

Nick Klingensmith, Director of Sales Development
Follow me @theBGexperience

Conference Call Do’s and Don’ts

There are many things you shouldn’t be doing while communicating with co-workers, customers or potential customers over a conference call. With the help of Eduardo Braniff, here are a few things to focus on during your next conference call.

1.  DO focus on the conversation. This biggest mistake a caller can make is getting distracted by other things going on. Focus on the call/phone as if it were someone in the room with you.

2.  DO schedule the call correctly. Make sure you have allotted the time for this call as the only project or task you need to accomplish during this time period.

3.  DO prepare your environment. For a call in a home, car, hotel room, etc., make sure you prepare an office environment, so that you can focus on the call with minimal distractions.

4.  DO notify the group of your calling situation. Calls may require you to be on a cell phone or in a noisy place. Let your fellow callers know, so that they can prepare for the extra noise or the possibility of your call getting dropped.

5.  DO listen. It is much easier to get distracted during a conference call than a standard meeting. Make sure you are not only listening, but effectively listening by keeping up with the conversation and giving valuable input on the where the conversation currently is at.

1.  DON’T multitask. When sitting in front of your computer or in your office, there is always something to do that can take your mind off the conversation. Make sure to follow DO #2, so that this time is spent for the current conversation and not the emails piling up in your inbox.

2.  DON’T interrupt. It is tough to keep a controlled conversation with people in different areas communicating with each other. Limit sidebar conversations and keep a flow of conversation rather than talking over people. Consider having a moderator to make sure it flows better.

3.  DON’T fall asleep.  I know it shouldn’t have to be said, but this can be a common occurrence for those on a call that don’t follow DO #3. If you are too comfortable during a call, and not fully involved in the conversation, it can cause you to fall asleep and ruin your credibility/reputation.

4.  DON’T forget the phone is a microphone. Most conference call devices are not the standard phone and actually contain a much better microphone in them. They are able to pick up side bar conversations, the rustling of papers or the sound of a coffee cup or soda bottle on the table.

5.  DON’T ignore the other people in the room. By focusing on the conversation over the phone, you can neglect some of the people in the room. It isn’t bad to have a conversation with other people in the room, just make sure it is one that is involving the current conversation. 

– Ben Dundas, Systems Analyst