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Who is really in control of your Supply Chain?

In light of the seemingly endless reports of economic instability and companies digging their heels in with a wait and see approach to the future, many have put a emphasis on cost cuts and control.  From eliminating entire departments within an infrastructure to canceling the annual Christmas party, the impact of these changes can be felt on many different levels.  I have worked with clients during this time to drill down into the fine details of their business and help develop a solution that will prevent reducing their workforce or eliminating company functions that could inhibit the degradation of a company’s culture. 

A common area for improvement has been the inbound supply chain and routing process.  It is surprising how many companies either ignore the inbound component of their business or place all of the responsibility in the hands of their vendors.  It is common practice for vendors to utilize “shipping and handling” as a profit center to their customers.  In the most extreme cases the client felt they had a better deal than the competition in terms of the cost of the raw material, but failed to realize that the vendor was actually selling their product at a loss just to make a profit off the freight charges.

Another opportunity for additional control has been routing the inbound through a specialized team within our organization to set up checks and balances as well as follow proper routing procedures that have been set by the client.  There are many occasions where the vendor has requested expedited delivery at the expense of their customer in order to meet one of their own deadlines or contract agreements.  Would you allow any outside party to have access to your credit card or bank account without complete control over each transaction?  Freight is commonly one of the most impactful costs that most businesses must control and having a new set of eyes develop a customized solution will benefit the company, employees and culture.

– Jason Lockard, Director of Enterprise Sales
Follow me @BGJLockard

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What is EDI and how does it work?

What is EDI and how does it work?  This question is asked to me every day.  I am not an expert in the technology field, but I do understand the terminology and the basic functions of the EDI cycle since I have been involved in setting up all of our carriers/partners so that they can communicate with our BlueShip™  system via EDI.  I came across this short paragraph that will provide you with some understanding of the EDI cycle in the transportation industry.  Furthermore, I have listed the technical definitions for each of the EDI codes.  

The typical cycle for Transportation is as follows:

A vendor sends a Motor Carrier Shipping Information document (EDI 204) to the cartage firm to specify that there is a shipment to be picked up. The cartage firm sends a Response Load Tender (EDI 990) to the vendor, specifying if they will pick up the shipment. When the shipment is picked up, the cartage firm may send back the status of the shipment to either the vendor or the ultimate receiver in the form of a Motor Carrier Shipment Status Message (EDI 214). The triggering of this document being sent can be pre-arranged (the parties will make an agreement of when the status is sent) or either the shipper or the ultimate receiver can request a status by sending a Motor Carrier Shipment Status Inquiry (EDI 213). Once the shipment is completed, the cartage firm sends the Motor Carrier Freight Details and Invoice (EDI 210) to the vendor to pay.

 EDI 204 – Motor Carrier Shipping Information-EDI 204 is used to tender a shipment to a carrier and/or forward the shipment details to a carrier, consignee or third party. It provides the carrier (and/or third party) with a detailed Bill of Lading rating and scheduling information pertinent to the shipment. Its basic use is to be an initial shipment tender between shipper and carrier. It can be used as a Load Tender (telling the carrier when to pick up the goods) or a Bill of Lading (specifying to the carrier what exactly is to be picked up.  The usual procedure is to send EDI 204 to the carrier. The carrier will respond with an EDI 990 (Response to Load Tender), which specifies that the carrier will pick up the goods.

 EDI 990 – Response to Load Tender-This transaction is sent by the motor carrier in response to a shipper sending the carrier a Load Tender (EDI 204 – Motor Carrier Shipping Information document with the Load Tender option).  The document will contain the carrier’s acceptance, conditional acceptance or a decline, if they decline to accept the load tender. It can also contain the reason for the conditional acceptance or the decline of the load tender.

 EDI 213 – Motor Carrier Shipment Status Inquiry-This transaction is used to request the status of a shipment from a motor carrier on a single shipment or a set of shipments.  It may be sent to the carrier by the shipper or the ultimate receiver of the goods. This document is an ad-hoc request for the status. If the carrier and the shipper and/or receiver have a set schedule for responses (in the form of an EDI 214 Motor Carrier Shipment Status Message), then this document is never sent.

 EDI 214 – Motor Carrier Shipment Status Message-This transaction is used to pass information relating to the status of an assigned, loaded-en-route, or delivered shipment. It is sent from the carrier to either the shipper or the ultimate receiver. It may be sent as a response to an EDI 213 (Motor Carrier Shipment Status Inquiry) or at regularly scheduled intervals. The carrier may also send it if there is a change in the shipment status (e.g. the truck is delayed in customs).

 EDI 210 – Motor Carrier Freight Details and Invoice-This transaction can be used as an Invoice to request payment for services rendered or as details pertaining to freight shipment charges. An Invoice will typically be sent for each shipment.  

*information/definitions taken from http://www.logistics-edi.com/

Mike Sumnick, Director of Operations 
Follow me @msumnickBG

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Handle with Care

Handle with CareI have heard of many customers having problems with either damage to their goods or concealed damage within the packaging. We have to understand that in today’s industry, capacity is getting tighter and tighter and carriers are fitting as much freight into their trucks as they can. That being said, our customers have to understand that the products that we are shipping must be packaged sufficiently to avoid damages at all costs and be in compliance with applicable regulations. This can cost some big and others small but for certain, it can greatly reduce risks of damage.  

Notating on the Bill of Lading the phrase “handle with care” or putting the proper stickers/markings on the packaging will ensure that your freight is delivered in perfect condition. Spending the extra money on proper packaging can be well worth it in the end! Using interior packaging to protect fragile components and securing freight to pallets using plastic film and/or strapping can help ensure that your freight will get to its destination safely and without damage when subjected to the normal rigors of the environment. Nesting freight can help to increase the density of shipments, which may reduce costs if the rates are dependent upon the density of the package as tendered for shipment.  The old adage is still true in today’s freight world.

Spend now, save later!

– Dustin Snipes, Account Manager
Follow me @DSnipesNole_BG

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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

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Holidays Impact on Transportation

transportationEver heard of the “Holiday Rush”?  Sure you have but have you ever considered the impact it has on transportation providers?  Ever asked why you shop on cyber Monday and get free shipping but if you wait a week, you will have to pay for a premium shipping service to make delivery by Christmas?

Frustrating as it is for us, it is even more challenging for the companies hired to transport those goods.  They have to increase their work force three fold, find ways to dedicate more trucks to the same routes, and manage a flow of inquiries which quadruples through this short period of time.  Then, after the holidays are over, those same shipping companies must cut back on the resources as quickly as they brought them on to remain profitable.  

Now look at the company you own or work for, could you manage such an expansion and contraction in a thirty day period?  Yeah, most likely none of us could manage this type of activity.  What those transportation companies perform every year at this time is truly amazing.  So the next time you procrastinate and have to select an “Expedited” service to get that special someone their gift delivered by Christmas, remember even though it cost more, it is well worth it!  

Eric Chambers, Sr. Vice President of Sales and Marketing
Follow me @ebluegrace

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Thinking Lean

Last week I attended a webinar on Lean Supply Chain. One concept they discussed was Lead Time. In manufacturing this is generally thought of as the time between placing an order and receiving the product. But at BlueGrace this could take many forms. Lead time could be the time a quote comes in until it has been quoted. It could be any request from a customer or employee. It could be a request from management down the chain of command. It can be just about anything.

The lecturer used the following math formula:
LEAD TIME = VALUE + WASTE

Pretty simple stuff. Lead time equals the value placed on the object by the customer plus wasted time/movement etc. Waste has no value to the customer. Like any mathematical equation if lead time is constant and you increase waste what happens to value? It goes down. Conversely how do you increase value? By lowering waste.

Per the lecture the Ultimate Business Model looks like this:
Supply Lead Time + Manufacturing Lead Time + Outbound Logistics Lead Time  needs to be < Customers Lead Time (this is Built to Order)

Most companies fail at lead times and have to forecast (guess). Their model looks like this:
Supply Lead Time + Manufacturing Lead Time + Outbound Logistics Lead Time  > Customers Lead Time (This is called Inventory)

How does all of this apply to us? Honestly, I haven’t totally put my finger on that but my gut tells me this is important. Lets look at our process when handling a request from Bobby. For example, he told me to manage a particular area of the business.

The optimum design would be:
The time it takes for me to complete (This is Lead Time) = Value (this is the value Bobby places on the request) + Waste (this is me asking someone to get me a list, go through the list, wait for responses, meet to make decisions).

Nothing in the waste category adds ANY value to the customer (Bobby), he just wants it done. In this equation, if we reduce waste (remember, for this equation Bobby’s value is a constant) what happens to lead time? It goes down! The very cool thing about this type of equation is reducing waste does two very big things.

  1. It reduces lead time.
  2. It increases value!

I am about to start a course in Lean Six Sigma. Hopefully,  I will learn more about lean concepts and how it can apply to us but for now please consider this blog and think about the simple equation
LEAD TIME = VALUE + WASTE
This article is worth reading, A Lean Office Eliminates Waste and Saves Time.

Randy Collack, COO
Follow me @schmengieBG

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.22 Caliber Mind in a .357 World

Surely the title grabbed your attention! I am sure you asked what can this blog be about. I decided to write this blog about being flat out better than the next guy. In any business you can’t simply be better than the competition, you have to know them and what they do and be innovative enough to do it better. Businesses are reluctant to change because what they are doing is comfortable and they don’t know that there is a better option that allows their businesses to run smoother. My company prides ourselves in staying out in front of the competition and not being just another 3PL. In the freight and logistics world, you can’t simply offer better rates than your competition and expect to stay afloat.  This is the age of technology, efficiency and innovation. We are the first 3PL in the industry to release a Mobile Freight Optimizer app for the iPhone. We are one of the first to roll out Dock to Doc, software that allows businesses to see their Proof of Deliveries and weight inspections for all carriers in one system. This is one of the many things we do that allows businesses to run more efficiently. It helps accounting see that the freight delivered for all carriers so they can bill their customers faster. If there was a problem with a re-weigh it allows them to see that inspection with a click of a button rather than calling and e-mailing carriers and waiting on a response.

Many businesses in many industries are still taking knifes to gun fights. Many franchises are still arming themselves with .22 caliber business plans instead of using .357 innovation. This is the business era dependent upon lightning fast internet, cell phones, text messages, webex demonstrations and yes, state of the art Transportation Management Systems (TMS). People are learning to do more with less. Web-based applications allow businesses to be fluid and mobile. Businesses are learning to become more process driven and less labor dependent. To be competitive, to be successful, the trick is no longer to outgun your competition but rather to use a more effective weapon

– Dustin Snipes, Account Manager
Follow me @DSnipesNole_BG

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Go Green or Go Home!

green company | green initiativesAs we wade through the aftermath of the disaster in the Gulf, there is resurgence in discussions about how to protect the environment and whose responsibility it is to do so. Big businesses, once regarded as corporate giants with no identities, have long since taken on personas and play an integral role in our daily lives. Companies like McDonald’s, GE and FedEx spend a great deal of time, energy and money on how their image is perceived. People expect businesses to act as socially and environmentally responsible citizens. Going green sets a positive example for employees and prospective customers, and increases morale with a cleaner and healthier work environment. Leaders are coming to understand that being good to the environment can be good for the bottom line.

Many large corporations are doing their part to reduce their carbon footprint:

  • GE and Wal-Mart understand that people want more efficient, cleaner products.
  • FedEx Airport Operations in Oakland, California is almost entirely supported by solar power.
  • Bank of America is developing green technology (such as an eco-friendly credit card) and electronic banking
  • Other green companies include McDonald’s, Anheuser-Busch, Continental Airlines and DuPont.

The supply chain, an integral part of most businesses, is where going green can offer the most long-term benefits. By cutting down on consumption, going green allows increased efficiency, improved service, and lower operating costs. Businesses can cut down on packaging materials and condense their orders to have more concentrated shipments. The greatest impact going green in one’s supply chain will have is the overall reduction in waste.

A business who manufacturers and distributes goods could use 9 or more pieces of paper per order:

  • The purchase order
  • 3 printed copies of competitive quotes from freight carriers
  • 2 printed copies of the Bill of Lading (BOL)
  • Proof of Delivery (POD)
  • The customer invoice
  • The invoice from the freight carrier
  • A daily log of all outbound shipments

This list can get longer if they report inbound or third party “drop shipments” or if management requires other reporting or visibility. A recent article from Information Week discusses how although the financial outlay of a more efficient data system can be overwhelming to small business, there are a number of ways to green a company’s data center easily and cheaply, and the financial rewards can be significant.

By utilizing a non-asset based 3PL such as BlueGrace Logistics, a company can reap the benefits of a Transportation Management System (TMS) without any significant upfront cost. A leading edge TMS can be an effective data warehousing system and significantly reduce a company’s output of waste.

 A TMS can:

  • Produce and store quotes from multiple freight carriers
  • Produce and store copies of BOL’s
  • Store electronically uploaded POD’s
  • Store addresses and product information
  • Produce a daily log or other required reports.

In addition to a far cleaner, far greener, and far more efficient order management process, housing your shipping data can save your business a TON of money!

Nick Klingensmith, Director of Sales Development
Follow me @theBGexperience

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Industry Spotlight – George Steinbrenner

George Steinbrenner SpotlightOn July 13, 2010, longtime New York Yankees owner George Steinbrenner died at the age of 80. What most people do not know about the man, who helped a then struggling major league baseball team become one of the most successful teams in history, is that his career began in the shipping industry. 

Following in his grandfather’s footsteps, Steinbrenner joined his family’s business, the Kinsman Marine Transit Company, shortly after graduating from Purdue University.

Steinbrenner was quite a force in his business dealings, working successfully to revitalize his family’s struggling company. One thing I believe is key when running a business is knowing which commodities are practical for the times and knowing the best way to maximize its profitability. Steinbrenner realized that Kinsman’s true potential lay in the transportation in grain over ore.

Investing in the different facets of an industry is also something I believe to be beneficial in expanding any business. After securing a gross annual income of 100 million dollars, Steinbrenner saw the potential for profit by investing in shipbuilding, acquiring the American Shipbuilding Company in the early 1960’s. In an effort to maximize cost effectiveness, Steinbrenner relocated all operations to Tampa, Florida in 1984. 

Anyone who has followed baseball for the past 40 years can attest to Steinbrenner’s knack for building success. Although some of his methods proved controversial it is undeniable that George Steinbrenner is undoubtedly someone to emulate.

– Jon Cuello, Partner Invoicing

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More Trucks Means Better Prices…Hopefully

truck | freight | truckingAs many have noted, truckload capacity is a very interesting issue right now. The full truckload market is completely one-sided in favor of the driver and carrier. The economic downturn caused most trucking companies to cut down on their drivers and equipment with many even selling their trucks overseas. For those who like numbers, there is currently an average of 3.02 loads posted on DAT360 from Transcore for every one dry van truck available at any time. For flatbeds, the numbers get much worse with a current average of 23.95 loads posted for every one flatbed truck available.

As the economy has picked up, even though slightly, companies have started producing more. While this is great, it just adds to the existing capacity issues. The numbers above confirm the effect.These factors have caused truckload rates to reach all time highs. The increased demand combined with higher rates should incent companies to grow their fleets. According to a report from ACT Research, the orders for Class 8 commercial vehicles reached its highest point in June this year. Orders are up 93 percent over last year.  “Early second quarter reports from publicly traded truckload carriers confirm the improving freight transportation environment, as revenues and profits are up significantly from 2009,” said Steve Tam, vice president with ACT. “Overall orders are still below normal replacement levels, but momentum is building as trucker profitability improves,” added Tam.

Basic economics says that increased supply will help bring prices down in the near future. This is just another step in the right direction for all those working with full truckloads.  Those who have worked with BlueGrace Logistics on full truckloads have noticed that the pricing is at an all-time high and finding trucks has been extremely difficult. We have been working hard at finding trucks and developing relationships with many strong carriers, with nearly 100,000 trucks in our network. Through those relationships, we are starting to see that the capacity in a large group of our carrier network is opening up these past few weeks. Hopefully that trend will continue for our customers and us.

– Ben Dundas, Web Analyst
Follow me @ben37dBG

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The Brutal Reality…Logistics, Capacity and where we are headed

I am a pessimist by nature. When I am in a big pot in Poker I am convinced the river will make my opponents hand. I am also not very bullish on the economy. Over the last 2 years members of both parties have thrown trillions of public dollars at the economy and it appears to have only stopped the bleeding. That doesn’t portend too well now that most people agree we are out of money to throw around. So how does this apply to our industry? The last 6 months we have all heard about capacity issues in Truckload and LTL. Freight is piling up on docks and loads are going unfilled. Rates are going up as trucking companies struggle to meet demand. But what is missing in this picture?

Well as I remember from high school when demand goes up two things are supposed to happen. First, prices go up as the Laws of Scarcity go into effect. We have all seen the prices of LTL freight going up this year. Secondly, supply is supposed to increase to meet the demand. I have not seen this happen, have you? But why is this not happening and what does it tell us about the near future?

I think there are a few basic reasons supply is pretty static.  Barriers to entry are huge. New companies cannot be formed to handle excess LTL freight. Terminals are needed; trucks, trailers and people are very expensive. The timeline to form, open and staff a new trucking company is years. It is just not going to happen. And let’s not forget about government regulations. Jay Thompson of the Gerson Lehrman Group covers that in great detail here. “When it comes to regulation, it’s like a confluence of issues that results in carriers being hesitant to invest in much of anything – smartly so.”   The base of suppliers of LTL freight is not going to change any time in the near future. It might even contract with companies going out of business.

Cash is tight. LTL carriers have just suffered through a couple years of losses and are only now coming out of the doldrums. Even titans like FedEx are posting losses. YRC has seen it’s stock price fall to 15 cents. Other companies are also coming off bad years. They have retired older equipment without replacing. Drivers are let go or allowed to retire with no replacements hired. No one is buying new equipment. We have seen the unemployment numbers; no one is hiring new drivers.  No new companies plus no new equipment is not a recipe for increased supply. For these reasons, Moody’s is predicting that rail will outpace trucking in the near future. “We expect railroad sales growth to outpace growth for truckers into the second half of 2010,” the report said. “U.S. truckers were devastated by the recession, which constrained their ability to invest in new fleet and infrastructure. Consequently, their fleets may be less able to accommodate spikes in demand,” the report said. Railroads, meanwhile, maintained capital spending during the downturn and will be able to handle increased demand without the bottlenecks that accompanied previous recoveries, Moody’s said.

Lastly, (and this is where my pessimism comes in) I just do not think that LTL companies believe the hype. There are a lot of very smart people making buying decisions for LTL companies. Like me, they just do not think the economy has really turned. They are pretty sure that when the spending stops that demand is going to fall and no one wants to be left with a bloated supply chain.

Those of us in the 3PL and logistics world need to recognize how this affects us. In the short term, we will be dealing with higher prices but SO ARE OUR CUSTOMERS. Carriers are not raising rates on our segment because of any change in philosophy. Rates are going up for simple economic reasons; there is no supply. If the economy continues to grow, then trucking companies will start to expand their fleets. New companies will take a shot at the multiyear horizon and start to open. Increased supply plus new competition will of course bring the prices down again. It is simple Economics 101. But what if the economy double dips or just stays stagnant? Well all of a sudden, carriers will be cutting back again and looking for help to fill their trucks. Of course, we will be poised and ready to assist. If these times seem hectic and confusing to those of us who are considered professionals in our industry, imagine what it’s like for the customer. This is our time to shine. Anyone can keep a customer happy when saving him or her 20% on their freight needs. But the true professional can keep the customer happy when his costs are going up by 20%. We need to be explaining what is happening in the industry and why. They need to understand why a load that cost $500 in March now costs $750. They need us now more than ever.

– Randy Collack, VP of Administration
Follow me @schmengieBG

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Admitting you don’t know is better than pretending you do

In a service industry such as transportation and logistics, the three most powerful words a salesperson can say are “I don’t know.” Admitting that you don’t know everything about freight shipping is better than pretending you do.  As we grow we need to remind ourselves that although we strive to be experts in transportation, we never truly know everything.  There are several different types of customers out there. Mainly, the ones who know everything, the ones who know nothing, and the ones who think they know everything but they know nothing.

The customer who knows everything will tell you what they want, educate you, and you will earn their trust when you don’t insult them by pretending to know what you don’t. The customers who know nothing rely on you to get them the right information. They don’t want you to mislead them in attempts to earn a fast sale. And finally, the customers who think they know it all will never respect a sales rep that pretends to be something they are not. Nobody has ever had a problem with a sales rep telling them “I don’t know, but I’ll find out.”

The key to continued growth is forgetting what we think we know about our customers and continue to ask questions about their current service and their needs.  This is also true for prospects.  Once you hesitate to pick up the phone because you have already called someone ten times, you have failed.  Preconceived notions about customers as well as transportation carriers cause you to be complacent.  People, business practice, and customer’s happiness change daily. If you don’t have the determination to pick up the phone against your will, then you will miss out. 

Outside sales is no different; when you have gone through your territory ten times and think you know everything there is about each business, you have lost your edge.  You either have to have the determination to go back in to that business and treat it like you have never been there before, or have been hit in the head enough times like me that you really don’t remember being there.  Both will allow you to gain new opportunities. It is only when you can admit not only to others but to yourself that you do not know it all is when you can begin to learn it all!  

– Steve Hicks, Account Executive
Follow me @BG_Steve

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Industry Spotlight – Fred Smith

fred smith | fedexHave you ever wondered what it takes to turn a business plan into a global success? I turn to Fred Smith, founder, president and CEO of FedEx.

It is well understood that FedEx is a leading name in logistics. I attribute its phenomenal growth over the past four decades to what Smith values as some of the most important fundamentals in building a business. Those are constant innovation, development of crucial business strategies and ensuring mutual respect between management and employees. These are fundamentals that I consider to the building blocks of any successful organization, including the one in which I work.

It was as an undergraduate at Yale University where Smith first proposed his business plan for FedEx in the form of a term paper, outlining his strategy to develop an overnight delivery service in a computer age. Ironically, he received a grade of C and was told it would not work. His professor clearly did not see the greater potential of the intangibles. 

Smith did not let this deter his plans for his future. Upon graduating with a Bachelor’s Degree in Economics, he joined the United States Marine Corps in 1966. It was here where he studied military logistics, observing procurement and delivery procedures. Additionally, his relationship with Lieutenant Colonel William V. Cowan would eventually assist Smith in FedEx’s Middle East expansion. 

Smith founded FedEx in 1971 with an initial investment of 4 million dollars. Over the next forty years, he would turn his dream into a global transportation powerhouse, commanding over 30 billion dollars a year in revenue, employing 280,000 people worldwide, serving over 200 countries and dispatching more than 8 million shipments a day. 

Perhaps most important to Smith is his relationship with his employees and how he views them as an integral part of FedEx’s success. Ensuring loyalty to the business by fostering strong relationships amongst personnel at all levels is something he considers critical to a successful business and something that all businesses should hope to achieve. These are the intangibles his Yale professor seemed to have missed. People are the single greatest asset in any organization. With one as successful as FedEx, it is clear that Fred Smith has always subscribed to that philosophy. That is what it takes to turn a business plan into a global success.

– Jon Cuello, Partner Invoicing

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Old School Style

With a certain ring of Ma Bell, or Grandpa telling you how back in his day things were made with the quality of blood, sweat, and tears, Old Dominion Freight Lines has been spotlighted numerous times for “Holding the line” on pricing, and relying on their quality of service. While rumors circulated of a domestic economic downturn, coupled with accordion like freight capacity, Old Dominion chose to focus on outperforming their competitors in service quality, rather than cost aggressiveness. “By maintaining price discipline and focusing on a best in class service, which saw 99.6% of shipments arrived undamaged, Old Dominion has maintained margins at a level that continues to outperform its peers.” (Transport Thoughts)

Markets shift. Capacity tightens and expands.  Profits rise and fall. Companies who separate themselves by providing best-in-class service during good economic times should trust that those same service levels will continue to allow them succeed. Filtering vendors by price is a simple and convenient decision-making strategy, but far too often businesses cut prices to remain competitive and at what cost to their quality of service? The real question that no one is asking is what is the greater impact of these cost reductions to the end user?

A reduced LTL or truckload price may help a struggling manufacturer in the interim, but what is the financial impact of that increased transit time? Or increased claim ratio? What is the impact to the integrity of that customer when their LTL carrier’s customer service is now failing them? As tides rise and fall, it’s imperative that any business who provides a superior service continue to provide that service without sacrificing margins, market share, or most importantly, quality.

This is a sales issue. A good transportation provider focuses on providing a myriad of services designed to help companies make more profit, rather than simply cut cost. A 3PL can offer what any one freight carrier cannot. For example, BlueGrace provides access to a free state-of-the-art Transportation Management System (TMS); specializes in LTL and can also provide Air Freight and Expedited Services when the need outweighs the cost. Does your low cost shipping company provide you with a free App for the iPhone so that you can run your quotes on the go? A good logistics provider analyzes customer needs and provides services to help them streamline their current processes. The ripple effect of such process improvements is exponential for a business. While everyone strives to provide the most cost aggressive rates, I’d rather be known as the most cost effective rather than the cheapest.

Nick Klingensmith, Director of Sales Development
Follow me @theBGexperience

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Excellence and Perfection

Very few hours go by at BlueGrace without someone using a sports analogy or sports quote to make a point. It’s remarkable how often that what works in sports also works in business. Vince Lombardi is probably quoted more than anyone else in sports. Everyone knows the standard quotes; “Winning is not everything – but making the effort to win is.” and “Winning is not a sometime thing, it is an all the time thing.”  But my favorite is “Perfection is not attainable. But if we chase perfection, we can catch excellence.”

Just earlier tonight I asked some associates a question. Are we setting up unrealistic expectations for our Customers? Huge percentages of shipments are handled without incident, but when something goes wrong it’s like the sky is falling. I hear that perhaps we are risking losing that customer because of this. But what about those previous 97 shipments that moved without a problem? Don’t they buy us enough goodwill to survive a mistake? Transportation is not an exact science. Trucks break down, traffic jams happen, and freight sometimes ends up at the wrong terminal. With so many moving parts, isn’t failure just part of the deal?

Of course I am asking the wrong questions. The questions should be: what went wrong? How can we learn from this mistake to prevent it happening again in the future? Have we explained the issue to the customer? Do we understand the full impact of the mistake to our customer? Not to sound like a previous President, but are we feeling their pain?

The fear of losing our customer is what needs to drive our pursuit of perfection. If we are perfect we will never disappoint our customers or ourselves. By striving for perfection and owning every failure we will ultimately become better. We can hope to catch excellence. Each person in the company needs to strive for perfection because, as Vince said, “The achievements of an organization are the results of the combined effort of each individual.”

Randy Collack, COO
Follow me @schmengieBG

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E-Logs, Supply Chains Beware

Recently, I received an email from Tim Higham, the CEO of Interstate Transport, pointing out the new provisions regarding the new E-Log rule. Trust me when I say that this new rule can radically change the transportation industry.

The Federal Motor Carrier Safety Administration has opted to place this new rule into effect June 1, 2012. Basically, the rule states that any carrier that fails a single compliance review will be required to use onboard recorders to track driver hours.

Warning.  The following is my personal opinion on this subject

Having been in the transportation industry during my entire working life, I believe this could be a very dangerous rule if not properly overseen. The basis for this rule is that most violators of hours of service rules have much higher incidence rates for accidents. This statistic is not arguable and has a long and proven history. The belief is that cracking down on these drivers and thus requiring onboard tracking devices will greatly reduce offenders. This may actually work, but at first glance it doesn’t seem that all points have been considered. I believe that it may enable  “cheaters” to cheat with greater ease— offenders are already breaking the rules.

And device tampering is only one concern. Another is the possibility of problems in identifying the respective drivers. I’m not convinced that those who want to will not be able to fool the system that is in place. Further, a portion of those that are compliant will be at risk of being more bound to regulations. Having a family on the road every day, I am rather concerned about highway safety. I just don’t see this rule making a positive impact.  It can only result in greater restrictions for the good guys.

Additionally, this could wreak havoc on already tight capacities. A small reduction in capacity could send rates skyrocketing and create delays and instability in supply chains. This would make big winners out of the offenders and those less likely to comply. A rule meant to crack down on chronic offenders could actually benefit them tremendously.

Keep in mind that this rule can be imposed on a single review. It is my hope and belief that strong domestic manufacturing and a strong U.S. economy will emerge by 2012.  If capacity shrinks due to a non-effective rule, everyone would suffer.

Again, I like the thinking behind greater checks and balances. I just hope these new proposed regulations do not harm the good guys.

Bobby Harris, President and CEO
Follow me @BobbyBG_CEO

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Forecast looks good while capacity issues remain

While I was looking through various news and updates in the industry, I found the new forecast for the transportation industry through 2021. The American Trucking Association produced the report and the outlook looks great for the transportation industry as a whole. Capacity however remains an issue that will escalate due to the new CSA 2010. One of the unintended consequences of the CSA 2010 is many drivers will not be able to comply with the new safety  regulations and many carriers will not be able to afford the qualified drivers.

The forecast shows projections for all modes of freight transportation. Railroads are expected to have a small drop in tonnage while Air Cargo tonnage is expected to increase. The trucking industry is expected to show steady growth over the next 11 years with tonnage moving from 68% to just under 71%. Last year trucks captured 81% of the freight revenue. While the recession has hit trucking very hard the last 2 years, this year is starting off very strong and the future looks bright. 

The ATA article, along with the link to the actual report can be found here: http://www.truckline.com/pages/article.aspx?id=718%2F%7b8E1C7279-ED27-4C03-B189-CEEEE26BBB12%7d

The information on the new Comprehensive Safety Analysis (CSA) 2010 can be found at their website: http://csa2010.fmcsa.dot.gov/

– Ben Dundas, Web Analyst
Follow me @ben37dBG

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