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OTIF

Can Advanced Analytics Put a Pin in OTIF?

According to the 2020 Third-Party Logistics Study, data analytics is not only becoming more viable in the logistics industry, but it’s also becoming a necessity and make a difference. With the growing storm that is e-commerce, brick and mortar retailers have had to step twice as fast in order to stay in the game. Especially, when you consider some of the power plays made by the internet titan, Amazon. As one of Amazon’s biggest sources of competition for domestic goods Walmart, in particular, has tightened their game up significantly.

In particular, Walmart uses some stringent policies to ensure that shelves stay stocked and goods are arriving exactly when the retail stores need them to. First is the Must Arrive By Date (MABD) provision, which means that suppliers must have deliveries to the store within a certain delivery window, typically four days, while also having a high invoice accuracy. This is a fairly standard industry practice for retail stores to ensure timely deliveries. 

Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item. 

However, Walmart as since followed that up with their heavy-handed On Time In Full (OTIF) policy. Now suppliers must have deliveries at the store within a two-day window, no later and no earlier either (even early deliveries will still be penalized.) Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item. 

As of April 1st of 2018, the company made the policy even harder. Prior to then, 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, FTLs 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. In addition to the chargebacks, too many violations could cause a shipper to fall out of favor with Walmart and lose supplier status, which would be a major financial hit for most companies.  

But what happens if demand is peaked and capacity is booked?

For shippers, OTIF can make for a tight schedule. But what happens if demand is peaked and capacity is booked? What if there’s a major weather event that has the logistics network scrambled? Shippers need better tools at their disposal to keep things running smoothly, and that’s where data analytics comes into play. 

How Analytics can Make a Difference 

There is a truly astounding amount of data that can be captured within the supply chain. As more companies begin the process of digitizing their operations and automating their systems, just about everything can be tracked, traced, quantified, and speculated. The challenge, however, is making sense of it all. There is such a surplus of data that it leads to a sort of data overload and can turn even the most avid analyst catatonic. 

Analytics turns this vast amount of information into insight, according to the 2020 Third-Party Logistics Study by Infosys Consulting, Penn State University and Penske Logistics presented at the CSCMP Edge conference in Anaheim, California. And with this insight, “you stand a much better chance of improving your operations,” says John Langley, professor of Supply Chain Management at Penn State University. 

Real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.  

To some degree, the logistics industry has already started to use real-time data and analytics. Langley sites dynamic pricing in freight for an example. Here, real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.  
 
For shippers, there is a wide array of challenges they encounter on a daily basis. Of the shippers that responded to the 3PL study, many agreed that the use of analytics would be helpful to many facets of their operations as well as overcoming the challenges they face day to day.

Type of problem % of shippers who said analytics would be helpful 
On-time and complete order fulfillment 69% 
Shipment visibility 63% 
Freight costs per shipment 60% 
Transit time 59% 
Cost to serve 58% 
Order-to-delivery cycle time 58% 


Langley says that analytics is ideal for tracking and improving a KPI like Walmart’s OTIF, because the policy itself is a compound metric. And while it might be easy to villainize Walmart from a shipper’s perspective, they aren’t the only company to use aggressive tactics like this. Target, Kroger, Costco, and others are also tightening their regulations in order to keep their shelves stocked. 

Learning From Your Mistakes 

Perhaps one of the most powerful tools of data analytics is it gives you a different perspective of your operations and allows you to drill down to pivotal details. Why was your shipment late? Why were there missing pieces? Analytics can determine the cause and effect relationships to target the root cause of the issue while sorting out coincidence and other anomalies. In other words, real-time data analysis allows you to track where things went awry and focus on improving operations so that particular issue doesn’t happen again. “If you can measure it, capture it, analyze it, you can use it to your advantage in terms of knowing more about your own processes,” Langley says.  

Getting to be a supplier for Walmart is no small matter.

Getting to be a supplier for Walmart is no small matter. For companies that already have that title, keeping it is important. However, even shippers that don’t have the best scorecards, analytics can prove to be a useful bargaining chip. If you’re able to prove yourself, and that you have the right measures in place to improve operations, it’s likely that you can demonstrate your worth as a supplier and make it to the “in” list.  

For a better understanding of how to navigate OTIF and other ways to improve your operational efficiency, check out our white paper: Walmart: the retail-supplier relationship. You can also speak with one of our experts by calling us at 800.MY.SHIPPING, or filling out the form below.

OTIF – On Time In Full

The Logistics Blog by BlueGrace is one of the nation’s most recognized freight shipping blogs and industry news sources. The blog covers the company’s latest news, industry expertise, tips, franchise information and more. Check out our latest OTIF blog posts:

Evolving Consumer Demands Prompt Continued Changes in Logistics
Twenty years ago, no one would have imagined for a second that they could order a product online in the
Read more.
Can Advanced Analytics Put a Pin in OTIF?
According to the 2020 Third-Party Logistics Study, data analytics is not only becoming more viable in the logistics industry, but
Read more.
A Step-by-Step Guide to Doing an Internal Audit of Your Supply Chain 
While all facets of the modern business are important, arguably the most important to any retail, manufacturing, or goods based
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Controlling Costs and Preventing Accessorial Loss
Want A Free Supply Chain Analysis? Controlling costs is critical for any business to be successful. When working with a
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You landed the Wal-Mart account! Now what? The Retail-Supplier Relationship
An enviable position Congratulations! You made it this far – you’re a Walmart supplier. To achieve this, you’ve provided all
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Tips for Becoming a More Strategic Shipper
Want A Free Supply Chain Analysis? While there are a lot of buzzwords in the logistics industry, it may be
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Driving Down Supply Chain Costs with Mode Optimization
Want A Free Supply Chain Analysis?   The term “optimization” is thrown around often in the logistics landscape. It’s true,
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The Importance of Retail Compliance in Today’s Market
Want A Free Supply Chain Analysis?   Logistics and supply chain management has become a very tight game, almost cutthroat
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A Growing Need for 3PLs
Want A Free Supply Chain Analysis? It’s been a rough ride for over-the-road freight transportation over the past few years.
Read more.
Supply Chain TLC
For the most part, we consider the supply chain to be a means to an end. While it’s an important
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Walmart’s OTIF Policy Gets Harder 
Want A Free Supply Chain Analysis? On Time In Full is a policy that Walmart created back in 2016 and
Read more.
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
Read more.

Walmart’s OTIF Policy Gets Harder 

Want A Free Supply Chain Analysis?

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 Rise of the 3PL for Managed Transportation Services

Managed transportation services have widely become an integral function of modern supply-chain. As reported by Steve Baker of Forbes, the outsourcing of managed transportation services to other entities has different terminology depending on location. For example, managed transportation or transportation management might be the ideal terms to use in the US. Meanwhile, Europe will refer to the effective outsourcing of transportation management as “fourth-party logistics services (4PL).”

Outsourcing transportation management has the added benefit of taking advantage of external resources and physical assets.

In addition, outsourcing transportation management has the added benefit of taking advantage of external resources and physical assets. However, the aspects of managing transportation are much more profound when looking at the topic from a software standpoint. To understand the rise of the 3PL for managed transportation services, shippers need to understand how managed transportation services became a global power, why 3PLs in managed services work well together, and how 3PLs enable better management of transportation.

Why Managed Transportation Services Grew to Permeate the Global Supply Chain

Take a moment to define managed transportation. According to Chris Cunnane of Logistics Viewpoints, “in a managed transportation services arrangement, a shipper contracts with a third party to plan and execute their moves for them. In other words, instead of having internal planners plan and execute moves, those planners are employed by the MTS supplier, but work on the shipper’s behalf.”

As shippers face the need to ship more and keep costs under control, managed services through a 3PL is the easiest path forward. 

Unlike traditionally maintaining independent transportation management programs in-house, outsourcing the process allows companies to reap a stronger return on investment. In a 2014 survey of supply chain professionals, 9% of respondents saved more than 12% on freight costs through managed transportation services. That number rose to 32% by 2016, and preliminary reports indicate the continued growth of savings. That’s the distinction and primary driving force. As shippers face the need to ship more and keep costs under control, managed services through a 3PL is the easiest path forward. 

3PLs and Managed Services Go Well Together

Part of the rationale for the increased use of 3PLs for managed transportation services surrounds technology and capabilities. In a traditional logistics management approach, an individual shipper must contact carriers, request quotes, understand billing practices, validate invoice details, submit payments, share information from the carrier to this customer and so on.

Leveraging the technology of the 3PL to automate logistics management and effectively outsource the whole process of managing transportation is the gold mine.

While the process works great when the entire supply chain resided in a small town, it becomes grossly ineffective in the modern, e-commerce driven world. With more customers and volume than ever before, shippers need real-time visibility, advanced shipping notifications, increased responsiveness, and faster ways to handle logistics. Working with a 3PL for its basic premise of securing more capacity and lower rates is great. However, leveraging the technology of the 3PL to automate logistics management and effectively outsource the whole process of managing transportation is the gold mine.

Ways 3PLs Excel in Managed Service and Value

Using a 3PL for managed transportation services also allows third-party entities to effectively manage more freight, connect with more carriers, improve supply chain responsiveness, and work together without sacrificing the proprietary information of individual shippers. The various ways 3PLs excel in managed service and value is nothing short of remarkable. In fact, some of the largest managed service providers tend to rely on a unified transportation management system (TMS) that enables continuous growth and power. For those 3PLs that have lagged behind in offering a TMS, recent acquisitions around the industry indicate all larger 3PLs are now looking to deploy better, more reliable TMS capabilities to give all shippers an equal opportunity to leveraged managed services, such as the BlueGrace TMS combined with managed services.

Of course, the real value of managed services lies in the value-added services, such as auditing, accounting management, billing, compliance record keeping, load matching, big data analytics-driven insights, and more. It’s an endless pool of improvement, and 3PLs will continue to maximize service and value without adding to the costs of individual shippers. 

Tap the Value of Managed Freight Transportation Through BlueGrace

BlueGrace is a 3PL that understands the value of managed transportation services. With a strong history of working hand-in-hand with shippers to create customized solutions, and using our BlueShip™ TMS to transform logistics management into a turnkey, automated process. As the value of using a 3PL for managed services increases, BlueGrace will see an influx of more shippers and carriers that are willing to look beyond the company walls and realize stark benefits of using a TMS. Find out more about how to take advantage of BlueGrace’s managed transportation services by calling 800.MY.SHIPPING or completing the form below.

Evolving Consumer Demands Prompt Continued Changes in Logistics

Twenty years ago, no one would have imagined for a second that they could order a product online in the morning and have it on their porch before they got home from work. Today, it’s all but expected that delivery occur within very small timeframes, even the same day.

The battle amongst large players in the e-commerce segment like Amazon and WalMart for fastest delivery times appears to only be escalating, meaning consumers are becoming more and more used to getting their packages within a couple days. This means changes in logistics operations must continue to evolve in order to support these demands. Note: Download our whitepaper, Walmart: The Retail-Supplier Relationship for even more details.

In order to keep up with consumer demand, logistics must evolve.

Today’s consumer demand means that buyers expect more from suppliers. They need the right merchandise delivered at the right time in precisely the way they need it delivered. When these expectations aren’t meant, suppliers may be faced with penalties that can be crippling. The drive for on-time delivery can also lead to unexpected accessorial fees. In order to keep up with consumer demand, logistics must evolve.

Logistics Technology Evolves to Meet Demands

Many logistics divisions are turning to technology to help meet evolving demands. Without the technology, keeping up is a pipe dream for many operations. Here are some of the technologies logistics operations are falling back on in order to serve their customers better:

  • Demand Planning– It’s critical to stay ahead of the game when delivery timeframes are so short. Demand planning software is changing to make sure suppliers are ready to meet demands.
  • Smarter Analytics– Top notch analytics are being implemented across logistics operations, from warehouses to transportation, to give logistics providers a leg up. Analytics are used to support many arms of the logistics operation, as well as keeping stakeholders informed.
  • TMS– Comprehensive transportation management systems are critical to getting loads out the door and ensuring on-time delivery. Improved routing, load tracking, cost control, and reporting are critical to helping companies meet consumer demands while working within their operational budget.
  • IoT– The Internet of Things has major potential to help suppliers meet stringent demands. Load tracking (i.e., real-time GPS tracking) and monitoring (i.e., atmospheric conditions, handling sensors to detect impact to parcels) are two major IoT applications being implemented by cutting-edge suppliers to improve delivery.
  • Blockchain– Blockchain is a technology being implemented to improve traceability and accountability in supply chains by recording data in a way it can’t be tampered with or changed. 

Demands for Faster Delivery Mean Demand for Better Visibility

A transparent supply chain is one of the most important factors in meeting deadlines. Consumers and retailers alike insist on knowing where their merchandise is, when they’ll get it, and how they’ll get it. 

Supply chain visibility is a top priority at most companies, but only 6% of companies say they’ve achieved full visibility. While supply chain visibility ranks behind OTIF and delivery issues in a 2017 Geodis survey, it may hold the key to solving those problems.

Staying one step ahead is critical to supplier success, and stagnation simply won’t do in the current logistics

Consumer and retailer demand will inevitably continue to evolve and put more pressure on the logistics industry. Staying one step ahead is critical to supplier success, and stagnation simply won’t do in the current logistics market. Wondering how your logistics operations can keep up with ever-hastening delivery expectations? Contact one of our representatives at 800.MY.SHIPPING or fill out the form below to get a free supply chain analysis from one of our experts!

What you can do to help “Weather-proof” Your Supply Chain?

Weather events can put a drastic slow down on your operations and unfortunately, it’s practically impossible to predict exactly when these events will happen. Sure, there are seasonal weather events like snow and hurricanes, which gives us a reasonable timeframe in which to expect these types of events. But even then, it still becomes a matter of “wait and see” as to whether or not the event will come to pass. And what about the events that we don’t expect such as nor’easters, polar vortex, or wildfires? There are certain catalysts that can create a potential for these events, such as an extended drought, but there’s no way of knowing for sure until the event is actually happening.  

In the event of something truly catastrophic, such as a hurricane, there’s even more pressure for the trucking industry to keep rolling on schedule.  

For most businesses, bad weather simply means staying home for the day and waiting for the weather to pass. Trucking companies, on the other hand, don’t have that luxury. Drivers are still expected to maintain their routes and delivery schedules, in spite of bad weather conditions. In the event of something truly catastrophic, such as a hurricane, there’s even more pressure for the trucking industry to keep rolling on schedule.  

Severe weather events can disrupt the supply chain causing lag and bottlenecks, especially during a true black swan event in which trucks are rerouted for emergency relief.  

For shippers and manufacturers, weather events can wreak havoc on delivery schedules, even when the weather event is thousands of miles away from you. Severe weather events can disrupt the supply chain causing lag and bottlenecks, especially during a true black swan event in which trucks are rerouted for emergency relief.  

So what can you do to prepare your supply chain against such events? 

A Reason for the Season 

Winter or summer, springtime floods or tropical storms in the fall, Mother Nature has predictably unpredictable conditions to throw at us. Plan in advance for alternate routes and parking locations if the regular road is closed and the usual truck parking is filled. Know in advance where road construction is planned. Always carry emergency gear appropriate to the season. Have a reliable response ready when faced with unreliable weather conditions. 

Part of preparing that reliable response is having good resources to turn to for accurate information. Every truck driver and every motor carrier dispatcher should have a list of phone numbers and websites for up-to-date reports on local weather, road closures, road construction and emergency notifications, such as during floods and storms. There are, of course, excellent commercial websites, products and services available. 

Here is a guide to begin building your own list of resources:

Always pull off the road and park in a safe location before checking websites or placing a phone call. Predictable responses and resources will help you meet the unpredictability of Mother Nature. 

Dealing with Sudden Spot Rate Hikes

One of the major aspects to keep in mind when you’re planning for weather events is how truckload rates can be affected by the weather. Since supply chains have become a global engine, a disruption in one location can cause problems in another. For shippers, that disruption can mean unexpectedly higher rates for shipping.

Here are a few best practices to dealing with a sudden surge in spot rates.  

  • Consider working with a third-party logistics (3PL) provider to augment your available capacity and carrier options: Outsourcing eliminates the burden of completing work in-house, but it still relies on efficiency in operation. 3PLs holistic approach, buying, and negotiating power can help augment your operations year-round.  
  • Explore intermodal and multimodal shipping options when the first chances of a storm’s arrival become apparent: Intermodal and multimodal shipping are usually used interchangeably, but both offer unique advantages to getting around after a major weather event.  
  • Increase the shipping budget through proactive, cost-saving measures through year-round operations: Cost-saving measures, such as improved dock management and load planning will naturally lead to savings in the budget. Such savings must not be 100% logged into the company profile. Instead, a percentage should be allocated for use in handling stretches in the freight budget after a disaster. More importantly, gains in efficiency will build resiliency and agility, allowing the supply chain to flex to meet the demands after a disaster.  

Batten Down the Hatches at HQ 

Spot rates are one way to deal with weather events abroad, but what happens when the storm is on your doorstep? Trucks being diverted can slow down your supply chain but when your base of operations is out of commission, everything comes to a grinding halt. Having a robust plan in place is necessary, especially if you operate in a location where inclement weather events is a yearly risk.  

Having the right infrastructure in place should be your first step.

Having the right infrastructure in place should be your first step. Does your main office have a contingency for backup power? How about internet access? Can your employees remotely access your company’s phone and operating systems? Something so simple as backup generators and remote desktops can keep operations moving despite external factors.  

Consider your personnel as well. Flexibility and cross-training of your staff mean that everyone on your roster is capable of handling a wider array of responsibilities. This is especially crucial during situations of crisis management when your A-team for customer service might be occupied with other necessary tasks.  

The better prepared it is, the more efficient it will be when it really counts.  

Having the right infrastructure in place is only the beginning, it’s important to have a plan in place for when the weather turns awry. More importantly, your team should know and understand the procedures for when such events take place. The better prepared it is, the more efficient it will be when it really counts.  To speak to one of our freight experts, contact us at 800.MY.SHIPPING or fill out the form below

A Step-by-Step Guide to Doing an Internal Audit of Your Supply Chain 

While all facets of the modern business are important, arguably the most important to any retail, manufacturing, or goods based service is their supply chain. The supply chain serves as the backbone of these companies and has a significant impact on the company’s business strategy which directly affects its operation and operational costs. Additionally, the performance of the supply chain has a direct impact on a company’s ability to provide services to their customers and create additional value via services offered or simply through reliability. With the multitude of changes that have been occurring within the logistics, trade, and freight industries now, more than ever, is an opportune time to conduct or review the process of internal audit of your supply chain. 

An internal supply chain audit is one of the most powerful methods of evaluating and possibly improving your supply chain, reduce operations costs, and increase competitive advantages.

An internal supply chain audit is one of the most powerful methods of evaluating and possibly improving your supply chain, reduce operations costs, and increase competitive advantages. The goal of the internal audit is to help you find weaknesses within your supply chain and correct pain points, bottlenecks to increase supply chain flexibility, agility, and overall efficiency.

To make the most out of your audit and its results, it’s important to understand that the supply chain isn’t a stand-alone, isolated feature of your business. In all actuality, the supply chain is suffused in every aspect of your business. As such the supply chain needs to be viewed between all participating companies and suppliers throughout the supply chain, with solutions applied from a holistic approach.

Why an Internal Audit is Necessary for Your Supply Chain

For most companies, audits are typically part of the normal routine, either for financial records or for physical inventory. The entire purpose behind an audit is to make sure things are where they should be and that everyone is playing by the same rules.

“Internal auditing is defined as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes,” as defined by The Institute of Internal Auditors (IIA).

This is especially important when trying to maintain retail compliance, for example, with increasing customer demands like On Time; In Full (OTIF) or Must Arrive By Date (MABD).

Simply put, an internal audit is a multi-step process that is a means of determining whether your current systems and operations are in compliance with your company’s predetermined operating procedures and regulations. This is especially important when trying to maintain retail compliance, for example, with increasing customer demands like On Time; In Full (OTIF) or Must Arrive By Date (MABD). Conducting an internal audit does more than just evaluates the supply chain, it also takes a necessary look at the interaction between other aspects of the organization such as the accounting and financial systems, practices, and procedures. For example, are your planners and purchasers communicating properly, not only with each other but with the production floor and shipping department? Are parts coming in with enough lead time that items can be manufactured and shipped according to customer requirements? 

An internal audit is important because it allows the company executives and logistics decision makers to examine the effectiveness of their business operations and controls and applications of new policies. Over time, establishing those best practices means a more competitive and more profitable company in the future.

Things to Consider Before you Start the Audit

Performing an audit is one thing, but knowing what areas you need to be focusing on is something else entirely. While every audit should be more or less tailored to the specific needs of an individual organization, here is the basic framework for initiating an audit that needs to be included:

  • Audit Planning: Internal auditors should have a plan in place well before the actual auditing begins. 
  • Examining and Evaluating Information: Internal auditors should have a standardized criterion to compare findings against. 
  • Communicating Results: Audit should have a clear and concise method of reporting their findings. 
  • Follow Up: Internal auditors should follow up in a timely manner to ensure that appropriate actions have been taken to correct audit findings.

This framework also serves as a support system for corporate managers and allows managers of larger production systems to delegate the oversight of the audit to the internal audit department. This is important for a few reasons:

  • Operating Complexity: Automated data processing has increased the levels of complexity when analyzing data, a task better suited for those who know what to look for. 
  • Decentralization: Given that supply chains are prone to be decentralized in terms of a physical location due to globalization. 
  • Lack of Expertise: As the adage goes, stick to what you know. Leave those auditors in charge of the audit for the best quality audit.

With the right framework in place for the audit to commence, let’s take a look at the tasks involved for the actual audit.

Supply Chain Structure and Internal Audit Tasks

Like we mentioned above, every company is different and, as a result, the needs for every individual supply chain will vary. So while there is no hard and fast or “Use audit ‘A’ for Supply chain system ‘1’ ” convenient method of doing things, there are some common focal points that are applicable for just about every organization and style of the supply chain. 

The supply chain management processes identified by The Global Supply Chain Forum are:

  • Customer Relationship Management 
  • Supplier Relationship Management 
  • Customer Service Management 
  • Demand Management
  • Order Fulfillment 
  • Manufacturing Flow Management 
  • Product Development and Commercialization 
  • Returns Management

All of these processes are hallmarks of a healthy supply chain and also indicative of the successful supply chain management. Here again, we can see all of the links that connect the supply chain to every other facet of the business. Another benefit to performing an internal audit is that offers to perfect opportunity to increase the synergy between these various departments. For CFO’s and supply chain leaders, this means that supply chain management deals with total business excellence and represents a new way of managing the business and relationships with vendors, suppliers, and partners.

An internal audit can help a company in finding answers to crucial questions about managing success factors of supply chain excellence, of which these can be divided into five main sections: 

  • Strategy – To determine if the enterprise has a clear strategy tuned to business expectations and focused on profitably servicing customer requirements 
  • Organization – To determine if an effective organization structure exists enabling the enterprise to work with its partners to achieve its supply chain goals
  • Process – To determine if the enterprise has excellent processes for implementing its strategy, embracing all plan-source-make-deliver operations
  • Information – To determine if the enterprise has reliable information and enabling technology to support effective supply chain planning, execution, and decision-making 
  • Performance – To determine if the enterprise is managing supply chain performance in ways that will increase the bottom line, cash flows and shareholder returns

Supply Chain Risk Management

As much as we wish we could, the ability to see and accurately predict the future still eludes us to this day. In the end, it all comes down we can optimistically refer to as an “educated guess”.  With that being said, even the most educated guesses can’t predict the weather or a broken down truck. This means that within every supply chain, there will always be an element of risk. That risk represents any number of things that can go wrong within your supply chain and halt or delay your shipments. For this very reason, risk management is incredibly important when evaluating your supply chain. 

An internal audit can provide business leaders with the necessary framework to develop an appropriate supply chain risk management program.

Risk management is a huge proponent of supply chain health, especially given the instabilities in the global marketplace created by political uncertainty, trade tariffs, etc. An internal audit can provide business leaders with the necessary framework to develop an appropriate supply chain risk management program. This is how your supply chain audit can also help with risk reduction and increased security: 

  • Reviewing and understanding supply chains, including their strengths and weaknesses, in developing markets, to validate monitoring programs
  • Working with the company’s supply chain specialists to help develop a monitoring process that can be repeated
  • Helping to identify which suppliers are critical 
  • Assessing which suppliers may be vulnerable to threats and helping draw up a residual mitigation profile
  • Identifying strong risk control procedures
  • Helping to develop key analytic tools and techniques
  • Aiding with compliance monitoring

Ideally, the risk mitigation will also allow companies to increase supply chain efficiency to the point where on hand stock can be reduced. While having excessive stock might create a buffer in time where shipments are running late or capacity is tight, that excess can also eat into company profit margins. Additionally, having a well-running supply chain vastly lowers the chance for disruptions, operating costs, and other unexpected costs such as chargebacks, detention fees.

Despite the cause, however, the results are often the same, a drastic slow down of operations and a huge impact on customer satisfaction and profitability.

Supply chain management is a very complex structure of activities with cross-functional processes, and it presents one of the most important functions in the company since it is directly linked to all functions of the company. Supply chain problems can result from any number of things including natural disasters, labor disputes, supplier bankruptcy, an act of war or terrorism, systems breakdowns, procurement failures, and other causes. Despite the cause, however, the results are often the same, a drastic slow down of operations and a huge impact on customer satisfaction and profitability.

The supply chain internal audit aims to support managers in process optimization and above all in cost reduction which result from an uncertain environment by evaluating and directing management towards approaches which will prevent or reduce negative effects. 

After analyzing definitions and some of the standards of internal audit, it can be concluded that this process can improve effectiveness and efficiency, and by that, the performances of many functions within the organization. High-impact supply chains are more competitive and are capable of winning market share and customer loyalty, creating shareholder value, extending the strategic capability and reach of the business. Independent research shows that excellent supply chain management can yield: 

  • 25-50% reduction in total supply chain costs 
  • 25-60% reduction in inventory holding 
  • 25-80% increase in forecast accuracy
  • 30-50% improvement in order-fulfillment cycle time 
  • 20% increase in after-tax free cash flows

To increase supply chain strength, agility, and overall integrity, companies should develop a framework for a structured approach to ongoing risk identification and management. This will enable businesses to proactively address organizational supply chain risks on a periodic basis – a practice that affords stronger company and brand protection against supply chain risk gaps.

The more we know the more we can simplify.

The more we know the more we can simplify. When we know what your current transportation situation involves and what your pain points are, we can really help you simplify. The journey with our customers begins with the Needs Assessment process and the goal to determine transportation management solutions that increase productivity and decrease overall costs. To speak to one of our freight experts, call us at 800.MY.SHIPPING or fill out the form below to receive a FREE Supply Chain Analysis.

Controlling Costs and Preventing Accessorial Loss

Want A Free Supply Chain Analysis?

Controlling costs is critical for any business to be successful. When working with a supply chain, the more complex it is, the more chances there are for additional costs and surcharges, any of which can cost your company a great deal of extra money.

They are any freight services that go beyond the normal scope of pickup and delivery.  

Accessorial charges are a particular type of surcharge. They are any freight services that go beyond the normal scope of pickup and delivery. This can include inside or special delivery charges, waiting or detention time, fuel surcharges, storage fees, and many others. Given the way the freight market is changing, especially due to the rise and continual growth of e-commerce, many companies are looking to a more specialized version of last mile delivery as customers want their products sooner rather than later. The “white glove” last mile service, while costly, is growing increasingly important as customer service is becoming one of the last true differentiators among the competition.  

In our webinar, we covered the basics and most common questions of accessorial charges which include:  

  • What are accessorials? 
  • How do they affect cost? 
  • How do they affect supply chain efficiency? 
  • How can we mitigate problems? 
  • How do we know if we have a problem? 

Consumers want their product today, that means that retailers want it delivered, checked in, and on the shelf yesterday.

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.  

WHAT ARE ACCESSORIALS?  

As we mentioned above, accessorials are extra charges associated with freight delivery that fall outside simple pick up and delivery. We gave a few examples above, but those are by no means the only accessorial charges that you could be stuck paying. Here are some other types of common accessorial charges.  

  • Reweigh
  • Limited Access
  • Liftgate
  • Residential delivery
  • Appointment / Notify
  • Sort & Segregate
  • Hazardous Materials

While inaccurate weighing of freight could be a result of an honest mistake, the cost of that mistake can add up quickly.

It’s important to control and monitor as many of these as possible to help control costs. Consider reweigh charges for example. When a carrier weighs freight and compares the actual weight to what’s listed on the bill of lading, the difference can be instantly tacked on to the invoice. For shipments that are 50 pounds or more over what the bill of lading states, there is a $25.00 validation fee as well as an increase to shipping costs. Additionally, all freight fees, fuel surcharge fees, and any other applicable accessorial fees will be adjusted accordingly. While inaccurate weighing of freight could be a result of an honest mistake, the cost of that mistake can add up quickly.

HOW ACCESSORIAL FEES CAN AFFECT YOUR SUPPLY CHAIN  

One way to better control accessorial charges is to have a more efficient and agile supply chain. Detention fees are a prime example of where efficiency pays off. For the LTL market, every shipment has a set amount of free time per stop before the charges start being applied. While this is based on weight, meaning that heavier shipments have more time, it can be hard to gauge just how long each stop is going to take which leaves your company exposed to detention fees.  

Another thing to consider is that the ELD mandate severely limits the amount of working time a driver has available. The longer it takes to load and unload freight can cause delivery delays and will ultimately increase the price of a shipment. Once you start adding detention fees onto the bill it can quickly become more expensive than you were initially anticipating. 

It’s critical to have your supply chain running smoothly and efficiently.

Because of this, it’s critical to have your supply chain running smoothly and efficiently. Not only does it increase the chances that you will make your delivery schedule, but having a more efficient operation makes you a more attractive customer to carriers (which increases the likelihood of getting the capacity you need) as well as helping to control shipping costs.  

LEARN MORE ABOUT HOW YOU CAN MANAGE ACCESSORIAL CHARGES   

When it comes to controlling costs, the more you understand about extra fees the better off you’ll be. Because many of these accessorial charges can compound and complicate others, it’s important to understand the full workings of your supply chain and identify any potential problems before they arise.  

The truth of the matter is that the more you understand your freight and the way your carrier works, the more accessorial fees you can either reduce or negate entirely. Many of these fees won’t even enter into the picture so long as the shipper is taking the time to make sure they’re doing things right. Doing this means preventing the issue before it even begins. On the other hand, if your freight invoice is coming as a bit of a shock, it might be time to take a closer look at the surcharges and determine what you can you do to correct the issue.  

Ultimately, everything we covered in the webinar is about helping your company to manage these fees and perform better across the board. From internal operations to external executions, everything is connected and we break it down for you. Watch the full webinar to learn more about how you can be successful!

https://www.youtube.com/watch?v=u10Is4Q0vyg

There are a number of other benefits that can come from working with and outsourcing your logistics to a 3PL. If you would like to speak to one of our experts, call us at 800.MYSHIPPING or fill out the form below.

You landed the Wal-Mart account! Now what? The Retail-Supplier Relationship

An
enviable position

Congratulations! You made it this far – you’re a Walmart supplier. To achieve this, you’ve provided all your information, proven that your products are a good fit for Walmart’s customers and demonstrated that you are the sort of business Walmart wants to work with. You’ve filled in the forms, shared your certificates and completed the 11 step onboarding process.

It’s a fantastic achievement. According to Walmart, you’re now one of 100,000 businesses worldwide supplying products to its customers. That number demonstrates just how much Walmart is the “800 lb. gorilla” in the supply chain, and it’s also a mark of how highly regarded you are, as a CPG company, to have it agree to distribute your products.

We know that all your distributors, all the retailers you sell wholesale to, are important to you, but Walmart is possibly just that little bit more special. Whether you’ve just started, or have been supplying it for a few years, it’s a different business to the one we all grew up with. The pressure Walmart faces are the same as the rest of the retail sector. Its size is a double-edged sword – its footprint of stores and operations means there are more places to be affected by market disruptions, yet it has the resources to not only weather the storm, but profit from it too.

Just being big isn’t enough, however. What marks Walmart out is its commitment to innovation. In July 2019 it opens its first high-tech consolidation center — a 340,000-square-foot dock in Colton, California that will use automated technology to receive, sort and ship freight. According to the announcement, this ‘will enable three times more volume to flow throughout the center’.

Walmart innovates to maintain its position. Why does it need to do that?

The Situation Today

Walmart needs to continually innovate because it faces a very real threat.

Amazon.

Amazon has been at the forefront of the consumer shopping experience revolution. One-click payments, same-day delivery in certain geographies, multiple delivery and collection options, dash buttons – all features that are shaping customer expectations. Its dominance of the retail landscape is such that it has gone from driving 15 percent of core US personal consumption expenditure (PCE) growth in 2013 to 69 percent in 2017, according to Morgan Stanley Research.

This has forced many retailers, including Walmart, to revise how they serve customers. For Walmart, that means a switch from building stores to focusing more on e-commerce to drive growth. In September 2016, it acquired e-tailer Jet.com, accelerating its online sales and helping it to outperform the retail sector within a year. It consolidated its e-commerce position with the purchase of Indian online retailer Flipkart in 2018.

In much the same way that Amazon purchased Whole Foods to acquire physical presence, Walmart acquired Jet.com to give it a credible e-commerce function.

That does not mean that Walmart is abandoning its bricks and mortar business. Those stores mean that it is closer to more people in the US than any other retailer, with 90 percent market penetration, versus Amazon/Whole Foods’ combined 74 percent.

So, Walmart is closer to you, but Amazon can offer a great experience. This is where Walmart’s innovation switches from automation technology in vast consolidation centers to delivering efficiencies in its extended supply chain. A customer can find anything in Amazon and get it the next day. With a Walmart down the street, if a product is in stock, that same customer can walk away with it on the day.

It is here that suppliers come in. Products have to be in stock. As Steve Bratspies, the chief merchandising officer for Walmart US, told the Wall Street Journal, “When we receive the product that we ordered, we see better sales.”

In other words, if a customer can not find what they want, they will go somewhere else. Not only does the retailer lose that sale, it also loses the opportunity to sell complementary products, or perhaps something that simply catches the shopper’s eye on the way to checkout. According to Greg Foran, Walmart US CEO, five percent out of stock at Walmart’s scale translates to 5,000 orders.

So, Walmart will do everything to make sure that its shelves stay full, that customers can find what they want, when they want it. If insufficient stock is ordered, that’s a retailer issue. If insufficient stock is delivered at the right time, that’s a supplier issue.

At the same time, as Walmart and other bricks and mortar retailers look to economize, they’re looking at where they hold stock. They want stores to sell, not to act as warehouses – the price of retail square footage simply does not allow that in the current market. That’s why Walmart is introducing these consolidation centers – to collate from hundreds if not thousands of suppliers, before using their own distribution networks to get the stock to stores.

That’s the retail landscape suppliers are entering into when they become part of the Walmart supply chain. Alongside this are rising fuel and transport costs – the US Energy Information Administration (EIA) May 2019 update forecasts that regular gasoline retail prices will average $2.92 per gallon (gal), up from an average of $2.85/gal last summer.

It’s an additional cost that both suppliers delivering to Walmart and the retailer itself, through shifting products from consolidation centers all the way to stores, are going to have to take on board. This ultimately impacts margin across the supply chain.

Ramifications: they say jump, you say how high

An environment of ruthlessly seeking efficiency, with fluctuating transportation costs, dominated by 800 lb gorillas.

What that means for suppliers is that they have to deliver when Walmart wants, not when the suppliers feel like it. It’s where OTIF comes in – on the actual due date, exactly the right amount. There is no grace period, limited leeway. That’s because flexibility eats into the margin.

Struggle to comply and chargebacks kick in – currently three percent on all shipments below the threshold. Amazon, with MABD, may appear slightly more lenient, but it has a similar level of chargeback on both late and early deliveries. On top of that, purchase order (PO) and advanced ship notice (ASN) violations (such as failing to confirm a PO or not sending an ASN in good time) levy a two percent charge

It’s just got stricter, as well. From May 2019, suppliers that ship full trucks must hit a specified window 87 percent of the time, up from the previous 85 percent previous target. For less than truckload (LTL) shippers, the jump is that much higher – up to 70 percent in that window, from 50 percent before.

It gets trickier. Historically, suppliers were judged on how consistent deliveries were on time and how complete they were. Now, those two parts will be evaluated separately. It’s all about having data that can be fed back into a stringent evaluation process to identify further efficiency opportunities.

Then there’s the challenge of Walmart as an international operation. As you grow within Walmart, there may become opportunities to supply its Canadian subsidiaries, or even further overseas. That brings its own challenges as you will need to comply with local regulations and legislation, both in terms of your products and your business practices.

What you need to think about if you are

So far, what we’ve discussed applies to all shippers. Yet every business is different, and there will always be specifics that only certain types of suppliers need to focus on. In this section, we’ll take a brief look at three types in particular: newer CPG companies, LTL shippers and those dealing in perishables (such as fresh food).

…a newer CPG shipper

With the introduction of consolidation centers, and the end of stores holding inventory, the onus of predicting consumer demand is passed on to CPG companies. That means knowing who your end customers are, how they shop and when there might be spikes in demand, even if you do not sell direct. This is a challenge for all CPG shippers, but whereas more established brands may have the resources to store spare stock, for newer businesses that capacity may not be available. This is where really clear insights into customers, coupled with efficient internal processes and a lean supply chain of your own, come into play. Falling foul of chargebacks will quickly eat into profits, making it vital that shippers can accurately predict consumer demand.

…LTL

If you’re LTL, the positives are savings in not paying for half-empty trucks, but the drawback is less control over how the carrier gets to your distributor than if you were a full-truck shipper. The carrier may pick up your pallets, then go to another shipper for their products. It might head to a regional dock to unload your pallets to go on another truck heading somewhere else, before being cross-shipped on to a third truck with everyone else heading to Walmart. That means you have to build in additional time to your shipment planning to ensure that you comply with OTIF, which will have ramifications for your own production processes and supply chain.

…dealing in perishables

While targets may be tight for long-life or non-perishable goods, for suppliers that deal in products that have a limited shelf life, OTIF goals are even stricter. That two-day window becomes one, which puts the emphasis on the shipper to be absolutely accurate with their deliveries. All retailers that stock food and drink, particular that which needs to be kept in controlled, refrigerated environments, need it to be able to stay on the shelf for as long as possible, in order for it to be as attractive as possible to customers. Get closer to use by or best before dates, and consumers are less likely to buy, leading to last-day discounting and wastage.

The upside

It might seem like becoming a Walmart supplier is nothing but hardship and the constant threat of chargebacks. Yet it is challenging because Walmart is such a golden opportunity to get your products into the hands of millions of consumers, both in the US and further afield.

It isn’t all about the sales opportunity, however. With retailers like Walmart looking for efficiencies, it forces their suppliers to either follow suit or fall off. By aligning your own systems and processes with the demands of OTIF, you will end up a leaner, meaner machine. This means less wastage in your operations, resulting in less outgoings and more profit.

At a time when all sectors are undergoing huge disruption, this streamlining sets you up to thrive rather than simply survive. While it is demanding, the practices and processes you onboard will unlock long term gains for your business.

The question is, what do you need to consider when aligning your business with the demands of Walmart?

Top tips on being a star supplier for Walmart

Here’s what we’ve learned turns a good shipper into a great Walmart supplier from working with businesses just like yours:

  1. It’s all about data: Walmart wants its supply chain to be as efficient as possible, so it’s willing to share the data it has to help you shape your operations. If you don’t sell direct, getting tangible customer intelligence can be a challenge, but Walmart will share information, such as on-shelf availability and point of sale insights, more often.
  2. Work from the customer backward: On time doesn’t mean in-time to Walmart. If you don’t want to suffer chargebacks, you need to think about your timings from the customer backward. The customer buys your product after it’s been on the shelf X days, so how long prior to that do you need to be delivering it to the distribution or consolidation center? How long does it take to get from your warehouse to that point?
  3. Chargebacks hurt, so make sure it’s justified: Walmart may be huge, but it isn’t infallible. There’s a lot of automation, which means sometimes chargebacks can be applied due to mistakes in their processes rather than your failed compliance. For instance, a carrier may have delivered your shipment OTIF, but the DC did not unload that day. The only way you can contest, however, is to have full and complete records showing how you delivered OTIF against the buyer requirements. Having a trusted logistics partner that can audit your scorecard and compare it to carrier manifests is critical, and it could be the difference between receiving a chargeback or being able to challenge it successfully.
  4. Load planning: If you supply multiple products to Walmart, think about how they are loaded on the pallet or in the truck. It’s no good having the back half of the truck full of products for distribution centers further down the line, or shorter life products nearer the bottom of the pallet.
  5. Think like a Roman: The Romans crisscrossed their empire with straight lines, because that’s the most efficient way from point A to B. You want to do the same, but build in factors such as weather forecasts, traffic patterns, fuel levels, and load points. You’re looking for the most optimized route because it will save you time, which in turn saves money.
  6. Packaging tips: People need to know what’s in the box. That means distribution center employees, yes, but it also means customers. How will it look on the shelves? At Walmart’s Supplier Summit 2019, Foran said “packaging should be designed for impact and efficiency with large fonts that are easy to read, easy to find and bar codes which also are prominent on the packaging.”
  7. Cut down on travel time: Fuel and transport costs are the great unknown, tied to everything from crude production levels to the political situation in the Middle East and South America. You want to control as much as possible, so limit how far you need to move your inventory by positioning it closer to warehouse locations. If Walmart is selling your product predominantly in California, why not get as close as possible to the new consolidation center? Limit the variables and you have a more efficient machine.
  8. Appointment scheduling: Be aware that your mode of transport will dictate when your products can be delivered. Most LTL carriers will not allow you to pre-schedule appointments, preferring to wait until your freight has arrived at the consolidation terminal. It will then be co-loaded with other Walmart-bound deliveries, with appointments based on the trailer the carrier has allocated for that day. It’s therefore vital that you, or more likely your logistics partner, can work closely with both the carrier and scheduling system to make sure this is being done. By doing so, you will be better placed to identify exceptions, such as where the carrier cannot accommodate the delivery, to adjust OTIF without penalty. Most suppliers don’t realize this and miss the opportunity. It is important to note, however, that this must not be abused and is for exceptions only. Your lead logistics service provider is expected to have the right connections and expertise to manage it professionally.
  9. Speaking of carriers, reliable ones are worth their weight in gold: We hear of horror stories where carriers and shippers fall out because neither can clearly understand what the other is actually trying to achieve. The number one mistake people make is to think that being efficient equals going for the cheapest option, when it’s actually about having every part of your chain operating reliably. There are carriers that will drop prices to get business on board, but if you’re then simply more low-paying cattle, is your OTIF compliance going to be top of the carrier’s agenda? You want a good price, certainly, but you need a partner that’s aligned with your objectives more.
  10. The right foundations: You can’t operate a 21st-century business using 20th-century tools. To compete in today’s market needs having the right technology underpinning your operations, foundations which give you visibility and control and allow you to have sight of, and optimize, every aspect of your business.
  11. Embrace digital: Walmart is investing billions in its technology – that means manual processes and paper documents are disappearing. Digital tools like electronic bills of lading are becoming the norm. Do you really want to be the only shipper the trucker has a paper docket for, with the rest on his mobile device the dock or DC are simply scanning?
  12. Ensure everyone lives by OTIF: It’s all well and good your logistics team being held to OTIF, but when the penalties impact the rest of your business, isn’t it really a matter for everyone? It comes back to working back from the customer – the process doesn’t stop when the product leaves your dock but should carry on through to your production team. If you’ve got a lead time of two weeks to produce new stock, that’s not a just manufacturing factor, it’s a supply chain one too.
  13. Walmart want you to win; let it help you: Walmart run a sophisticated education network designed to support suppliers. It’s in its interests that you are operating to the best of your abilities, so make full use of the classes, academy, and tools it offers to help you do just that.
  14. OTIF is vital, but so is everything else: Walmart is taking huge strides in making its entire operation as sustainable as possible, which includes targets for suppliers. These are only going to get stricter, so it’s a good idea to know what they are and keep yourself aligned. There will come a point where being 100 percent OTIF compliant, with customers buying your products in droves, won’t save you if you have a huge carbon footprint and are unsustainable. That’s a lot to take in, so here’s a one-off tip:
  15. How to write a great OTIF action plan: Walmart lives on data, which means evidence. Write a great OTIF action plan and you will have evidence on how you will improve standards. But how do you do that if you’ve not done one before? Googling isn’t an option here – you need qualified, experienced support. Hiring the right people is one route – but they won’t come cheap, and can you justify having them on staff as a permanent employee. Another option would be to outsource to a competent third party. One which has experience of supporting suppliers to build efficient supply chains, whether they’re supplying to Walmart, Amazon or any other big box retailer. Having a supportive partner that has done this, time and time again, for all sorts of different businesses and sectors, means you get access to the right experience and support, tailored to your unique requirements

Being a Walmart Supplier – a story from the frontline

For one Houston-based health and beauty supplier, working with Walmart was a dream come true, until the tremendous growth it propelled led to distribution challenges.

With vendor scorecards dwindling and chargebacks against purchase orders mounting the need for a better solution was apparent. From numerous carrier meetings to drive on-time compliance to costly upgrades in service levels, the trend continued to show little improvement.

Lead times were not an issue and inventory levels were manageable, yet carriers could not seem to comply with the OTIF date clearly displayed on the BOL. Purchase orders were being shipped with ample lead time and in most cases early with guaranteed service at a premium. However, even with upgraded service, the carriers would typically refuse to refund the charges since they were delivered “on time” per the standard transit.

To tackle this, the supplier analyzed the data and scorecards to determine the root cause and set a baseline for current state performance. Next, an assessment of ERP integration capabilities was performed. By linking this with a transport management system, this supplier was able to apply custom business rules to achieve the missing link of the overall issue.

What this meant was that no matter when the order was received in advance of the OTIF, the supplier could effectively route the “Best Value Carrier” and provide the most optimal ship date, relative to the selected carrier’s standard transit time. Each order, once approved within the ERP, would be rated and routed with a Walmart approved carrier delivering the lowest cost, standard service and shipped on the day that would best fit that carrier’s network, all to allow for the delivery within the specified OTIF window.

The supplier showed a 90 percent reduction in chargebacks within the first 60 days of implementing this program and realized the best scorecard performance in recent history.

Now it’s time to start work

As we said before, the hard work starts now. Remember, you aren’t alone – many CPG companies experience difficulties keeping up – back in August 2017, OTIF compliance stood at 70 percent, and it’s taken a while to get higher. Walmart wants you to do well, so listen, learn and take the opportunity that awaits. Look at your own network, your own suppliers and operations, and see how they can work together to support your business with Walmart or any other big-box retailer. Technology and nuances of logistics and supply chain operations are vital here. Working with partners who have the connections, first-hand experience, and understand both the business and technology can make the difference between success and failure.

BlueGrace is a freight and logistics services provider and one of the top 3PLs (Third-party Logistics Providers) with invaluable experience in managing complex logistics programs of leading CPG companies. The dedicated team has the first-hand experience in planning, building and delivering supply chain solutions for CPG businesses that not only help them meet the requirements of their retail partners but turn their logistics from a cost to value add.

You’ve done great work getting this far. Now it’s time to do even better. Give BlueGrace a call today at 800.MY.SHIPPING or fill out the form below and see how we can help you achieve exactly that.

Tips for Becoming a More Strategic Shipper

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While there are a lot of buzzwords in the logistics industry, it may be surprising to some but “business strategy” is not among them. Every company needs a strong plan of approach and a method of conducting business that will put them in a more advantageous position. Successful companies understand that good strategy isn’t about just doing better than the “other guy” but also about not hindering themselves in the process.

One of the biggest ways that shipping companies tend to shoot themselves in the foot is by looking at their carriers as a resource rather than an asset.

One of the biggest ways that shipping companies tend to shoot themselves in the foot is by looking at their carriers as a resource rather than an asset. Being a preferred or “shipper of choice” is one of the best ways to shore up your strategy to make you more profitable today, next week, next year, in five years and years after that.

With the dwindling supply of able-bodied drivers, the relationship between shipper and carrier is more important than ever before. Here are a few things to consider when it comes to attaining that status with your carriers and carrier conduct in general.

Move to an Integrated Supply Chain

One of the worst carryovers from the inception of the logistics industry is that aspect of the business is thought of as a separate entity, a cost center. By siloing these facets rather than integrating them, it’s easy to lose cohesion and efficiency.

For a shipper, every part of their business is (and should be) connected.

For a shipper, every part of their business is (and should be) connected. Your sales team is just as important as those in the warehouse or operating the dock. Even if those are all considered to be connected and are even working as a complete unit, transportation is no less a part of that. All too often, shippers look at their carriers as an afterthought and opt not to include them in the larger operations discussions as well as providing information to them at the last possible minute.

“When an order arrives, ideally the information shouldn’t only be broadcast to inventory folks and the distribution center. The information should immediately go to the transportation group so they can start to coordinate the capacity to move that freight. Too often transportation folks are only notified when the pallets are sitting on the docks,” said Brian Gibson, executive director of the Center for Supply Chain Innovation at Auburn University

While cutting down on the transportation budget might save a little cash up front, it could (and often does) have an impact on other facets of your business.

Of course, the cost is a factor in this regard. While cutting down on the transportation budget might save a little cash up front, it could (and often does) have an impact on other facets of your business. Disconnect and poor communication with a transporter tend to end up costing more in the long run with delays, detention fees, poor customer service, annoyed carriers, unsatisfied customers.

Do Unto Others

The golden rule certainly has its place in the business world and unfortunately, not all shippers and carriers have learned to get along as they should. Pricing is the perpetual thorn in the side, of course, and it’s easy for one side or the other to take advantage when the conditions are right. The “us-against-them” mentality may be useful when it comes to thinking about the competition, but it really has no place when you’re working with a carrier. Treating carriers poorly can have some serious consequences in the future.

Think about 2016 and 2017 when shippers could harangue carriers for a better rate and carriers had no option but to comply. In 2018, when demand was high enough for carriers to be more picky on what freight they carried, the worst of the antagonizers were either dropped or gouged when it came to the bill.

Trucking companies might put up with it when demand is low and they have no choice, but don’t think they won’t drop a company as soon as capacity picks back up.

Build a Good Working Relationship with Carriers

Remember, carriers, just as you as a shipper, are in the game to make money. For them, profit comes when they are more productive, so getting their drivers in, out, and on the road to the next delivery is key. However, when a driver is delayed, that puts a hurting on their productivity and ultimately their bottom line.

One of the best ways you can help to strengthen your working relationship is to ask your carriers to audit your supply chain and make suggestions and recommendations on how to make it more efficient.

One of the best ways you can help to strengthen your working relationship is to ask your carriers to audit your supply chain and make suggestions and recommendations on how to make it more efficient. While detention fees might help to recoup some of the losses from a delay, remember, carriers would much rather keep their drivers moving instead.

Looking Ahead

While we might not be able to predict the future precisely, shippers are able to put together a forecast of what they’ve got coming down the pipeline for deliveries. Communicating that information with carriers ahead of time not only helps to ensure there’s capacity available, but it also makes life considerably easier for both parties and strengthens the relationship at the same time.

Trucking companies like to know what’s coming down the line, more to the point, they like to have shipments lined up so they can keep their trucks moving. If they aren’t expecting anything from you, then they’ll look for freight elsewhere. While that’s a good move on their part, it doesn’t do a shipper any favors when they have freight that needs to get on the road.

One thing to remember is that the more communication you have with your carriers the better the relationship will be and the more reliable the service.

Small to midsize companies will typically make forecasts on a three week or monthly basis while larger companies will run a two-week forecast. Regardless of the number of days or week, though the one thing to remember is that the more communication you have with your carriers the better the relationship will be and the more reliable the service. The optimal goal is to have continuous service with the same carrier pool. This not only helps to build a more stable rapport with the carriers, but it’s mutually beneficial to both parties to have a consistent schedule that shipper and carrier alike can count on.

Make Decisions Based on Data

The technology available to the supply chain has grown up so much over the past few years that we’re able to make inductive leaps that we’ve never been able to do before. With the right technology, we can collect a seemingly endless number of data points, aggregate them and turn them into something comprehensible. From there we can take that information and use it to make informed decisions as well as highlighting opportunities for efficiencies.

Even on the most basic level, for example, this technology gives shippers the ability to track their freight in real time and proactively make decisions that could avoid delays, rather than reacting when it already happened.

Conversely, this data is also a great way to improve the communication between shippers and carriers.

Weekly communication with carriers helps to foster positive growth in relations as well as provides the ideal opportunity to discuss operational problems and pain points. Yes, the transportation budget matters, but that pales in comparison to the difference between getting exceptional service and poor service.

Why Shippers Should Consider Working with a 3PL

Third-party logistics providers (3PLs) can be instrumental in navigating this pro-trucker market. As a shipper, working with a 3PL can give you access to carriers that are not only rated and vetted but have a good working relationship with your 3PL partner. Consider it a “leg up” on building a good relationship. Additionally, a good 3PL knows what their carriers are looking for in terms of preferred or “shippers of choice.” Because of that and the changing market conditions, 3PLs are becoming more heavily relied upon to help get the job done.

“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.”

Working with a partner that’s dedicated to shaping up your supply chain takes much of the guesswork out of having to do it yourself. We at BlueGrace specialize in doing just that, make your logistics work for you in the leanest and most efficient way possible.

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.

Customs Changes from Trade Tariffs

Trump’s trade talks have created a nervous atmosphere for manufacturers, suppliers, and freight companies. Unsure as to whether there will be an all-out trade war between the United States and China (not to mention other trade squabbles with long-standing trade partners such as Canada and Mexico) many in the industry are wringing their hands and wondering what’s going to happen next. Given the fact that these new tariffs could have a tremendous impact on the global supply chain, we could see a dramatic shift in business and growth in the next few years. 

With tariffs on the horizon, importers and shippers will need to increase the level of their continuous bond

One of the upcoming changes that will affect U.S. based importers is a change the importers probably aren’t even aware of. With tariffs on the horizon, importers and shippers will need to increase the level of their continuous bond. A continuous bond is set at a defined percentage (a minimum of 10 percent) of all duties, taxes, and fees that an importer is expected to pay over a 12 month period, and is required for all companies importing goods into the United States. If an importer is expecting to pay $1 million in duties, taxes, and fees over the span of a year, that importer would need to have a continuous bond of $100,000 in place to avoid detention and demurrage of freight. While the bond will self-renew so long as payment is received, failing to maintain a sufficient bond, less than the prerequisite 10 percent, can hinder an importers’ ability to retrieve their cargo from U.S. ports. This can also result in demurrage charges and fees as U.S. Customs and Border Protection (CBP) has the ability to redirect shipments that lack the sufficient bond to hold them.  

Increased Enforcement from the CBP 

Insufficient bonds can be rendered inactive by the CBP, requiring importers to apply for single transaction bonds which are more considerably more expensive as they take in the total cost of value of the shipment in addition to the duties, taxes, and fees. These are more designed for infrequent importers as they can be ruinously more expensive than a continuous bond. There is already evidence that the CBP is stepping up the watch for importers with insufficient bond levels for their shipments, having tripled the amount of notices sent out to importers during the course of June and July.  

This will likely create a hardship for small and mid-sized importers as many companies are having to reassess their exposure to duties.

Colleen Clarke, VP of Roanoke Insurance Group, which provides transportation-related surety bonds and insurance for the international trade community, also currently serves as president of the International Trade Surety Association, said that in July CBP sent 183 letters to importers notifying them they had insufficient continuous bonds, a sign that enforcement of the bond levels is rising. In the months prior, that number had been around 50 to 60, she said. “It is trending up, and certainly in the next few months it will trend higher,” Clarke said. This is especially true when considering the pending tariffs that are due to be assessed on almost $200 billion on imports from China as the next round of the Section 301 tariffs. This will likely create a hardship for small and mid-sized importers as many companies are having to reassess their exposure to duties. In many cases, an importer is having to increase their bond level by 20 to 100 times what it currently is in order to stay compliant with the CBP.  

Importers Need to be Mindful of Bond Levels 

From an assessment earlier this year, Sections 232 and 301 tariffs that apply to steel and aluminum respectively, will also apply to certain imports from China and increase the amount of duties payable. This can have a rather profound impact on importers in a myriad of ways. “On the steel tariff, we had one bond that went from $200,000 to $5 million,” Clarke says. “Another steel importer had a $200,000 bond and we have estimated they’ll now need an $11 million bond.” Higher bonds inevitably mean higher continuous bond premiums, which is a straight cost increase for importers. 

Harder Times for Smaller Companies 

The more serious consequence is that importers will need some type of collateral to stake against the bond, usually in the form of a letter of credit, when the total bond amount increases as substantially as it’s going to. Pulling a larger letter of credit can greatly cut into the finances of small and mid-sized importers. But potentially more impactful is that importers often need to provide some collateral — generally a letter of credit — when the bond amount increases so substantially. That increased bank exposure can significantly hamper the finances of a small-to-mid-sized importer. “It’s not just the bond premium, which is nominal in relation to the bond amount, it’s the underwriting and potential collateral requirements,” Clarke said. “It takes away from their available line of credit with their banks, and that might inhibit their ability to grow. That could happen.” 

Premium increases aren’t necessarily based on the increased bond requirements.

Fortunately, premium increases aren’t necessarily based on the increased bond requirements. If a bond requirement increases 20-fold, that doesn’t necessarily mean that premiums will be 20 times higher. The premium rate can fluctuate, sometimes going lower, and sometimes higher, it’s all dependent on the surety, the one honoring the bond, and the surety’s assessment of an importer’s ability to pay. That ultimately goes back to whether or not the importer has a strong enough balance sheet or the cash on hand to back an increased bond.  

Importers are Generally Unprepared or Simply Unaware

Another issue to consider is that there are many companies that trade with countries like Canada and Mexico, where there is an existing free trade agreement. In these situations, companies are maintaining the absolute minimum required a continuous bond level, $50,000. Even for companies that have their imports labeled as duty, tax, and fee free are still subject to the $50,000 minimum bond issued by the CBP.  

Where this gets more complicated is that many of these importers have been operating on the minimum bond and without duties, taxes, and customs fees are now staring down the barrel of multimillion-dollar bonds that will have to be calculated at higher duty rates every time a new tariff is added to the list. Given that the Trump administration is also putting Canada and Mexico in the mix to be tariffed, this will create considerably more expenses for these importers.  

Customs Brokers Have a Part to Play 

Customs brokers will be playing a key role during these uncertain times. As sureties are more likely to work with a broker, rather than directly with the importer, it will be the broker who alerts their clients about the potential for an insufficient bond. Proactive sureties and brokers do this preemptively, especially as many importers aren’t necessarily mindful about maintaining bonds themselves. There are other issues in which a broker will be a boon to importers. Bond requirements will start to stack for importers that bring in goods that are affected by anti-dumping or similar duty fees. These particular cases can take over a year to decide which means that multiple bonds can accumulate during this time which ties up importers assets and puts them at a great risk until the cases are settled.  

 The bond issue is undoubtedly going to get worse before it gets better.

The bond issue is undoubtedly going to get worse before it gets better, especially in the coming months as importers will have to determine whether or not the additional $200 billion round of tariffs on Chinese manufactured goods will affect their business. This is in addition to the $16 billion worth of Chinese goods that are already under tariff enforcement.  

All Hands on Deck

BlueGrace helps our customers navigate through the constant changes the industry brings. No matter the situation, we are here to simplify your freight needs. If you have any questions about how a 3PL like BlueGrace can assist, contact us at 800.MYSHIPPING or fill out the form below to speak with a representative today!

Driving Down Supply Chain Costs with Mode Optimization

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The term “optimization” is thrown around often in the logistics landscape. It’s true, optimization is an indispensable part of a well-run business model. Of course, every business owner wants their operations running as tightly and efficiently as possible, but the footwork required to determine how to optimize your business’s operations and see tangible results is often easier said than done.  

Our Webinar discusses the typical LTL network and differentiates between less than truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment.

In our Webinar “Driving Down Supply Chain Costs with Mode Optimization,” Brian Blalock, Senior Manager of Sourcing Strategy at BlueGrace, discusses the typical LTL network and differentiates between less than truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment. Both have their advantages and weaknesses, but one may suit the business better depending on the kind of freight being transported, the location or origin and destination. While the decision is sometimes considered arbitrary, in order to optimize your operation, i.e. lower cost and maximize profit, it is crucial to consider the following factors. 

LTL vs. Full Truckload

LTL shipments must be 12 linear feet or less, usually 5000 pounds or less, and are “typically consolidated with other freight from other shippers,” Blalock said, continuing that they are identified by class and that the structure, and that pricing can be very complex because it is determined by product class, distance and weight. Typically, it costs less than a full truckload, an obvious appeal to any shipper. 

Fewer claims of damage occur with truckloads than with LTLs.

Fewer claims of damage occur with truckloads than with LTLs. “Why?” One might ask. It’s simple. Blalock uses the example of witnessing luggage being boarded into the belly of an aircraft; people rarely handle a stranger’s items as gently as they would their own. In conclusion, the “less handling of freight, the less damage to the freight,” Blalock says. Since LTLs require more stops and handling, more damage is incurred to LTL freight than full truckload on average. 

When shipping a full truckload, your freight is the only thing on the trailer, so transit time is only contingent upon the required breaks for drivers and the time between pickup and delivery locations. The freight never has to leave the truck because it travels directly to its destination, so truckload shipments tend to arrive faster than LTL shipments, while at the same time, incurring less damage. 

When to Not Ship LTL?

LTL loads should be the choice for shippers dealing in smaller quantities at a time as carriers charge by weight and volume, but may not be the optimal choice at every juncture. In order to determine which mode is right for your operation, create business and shipping rules around factors like weight, volume, time constraints, and cargo sensitivity of your shipments. You need to consider the rate at which damage may occur in your LTL shipments. How much does it really end up costing you at the end of the day? In knowing this information, you will be better able to decide in which case you need to opt for a full truckload, and which you are able to go with an LTL. 

If the margins are tight on your product, the last thing you want is another cost eating away at your bottom line.

Another key is understanding how business decisions affect OTIF (on time in full). “If you ship to Walmart you can’t show up late, you can’t show up early, and you can’t show up incomplete,” Blalock said. “Any of those that you do, typically, [are] about a 3% ding to the cost of the entire invoice.” If the margins are tight on your product, the last thing you want is another cost eating away at your bottom line. “Likewise, if you continue to not hit your dates, you’ll find that you can lose valuable shelf position, and you won’t be shipping to Walmart anymore.” Blalock says to consider using different carriers for different shippers to this end: “The choices that you build into your business rules include choosing the right type of carrier every time,” he said.  

Supply Chain Engineering

“Understand that we are following the linear rules of the carriers,” Blalock says. “Build the rules of your freight around your tariffs.” Blanket rate pricing main type associated with the LTL market. Customer specific pricing is negotiated on your behalf when all of your capacity is going to a single provider, which is typically preferred for shippers with a larger freight spend. BlueGrace negotiates specifically customer-by-customer to determine which suites the customer better. “If you’re in Montana or the upper peninsula of Michigan, sometimes you may just want to pay the more expensive LTL cost,” he said, due to the fact that market is more remote, and competition between carriers is less apparent. 

Identifying consolidation opportunities is the key to the cost-reducing aspect of optimizations.

Identifying consolidation opportunities is the key to the cost-reducing aspect of optimizations. BlueGrace’s software is designed to help clients consolidate unnecessary costs in their unique supply chains. One measure that BlueGrace uses is a center of gravity study, which considers various origin points and points of destination and calculates where each region should ship from to find the fastest route at the best cost. “You want to be able to take advantage of the ability to choose the right mode every time and drive down costs. If all things are equal, an FTL is going to travel much faster … and [incur] less damage to freight,” Blalock said. “If time is no issue, if the freight is indestructible,” then LTL could be the best option for you. 

Click HERE to watch the full Webinar and learn more about tariffs and fuel surcharges associated with costs. If you would like to speak to one of our freight experts, contact us at 800.MYSHIPPING or fill out the form below.

 

The Importance of Retail Compliance in Today’s Market

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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

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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 Top 7 Questions You Should Ask About Your Freight

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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:

  • What is your main KPI (Key Performance Indicator) when it comes to transporting your goods?
  • What is your damage % and how is it currently handled ?
  • What is your general rate-increase mitigation strategy?
  • How has the deduction in fuel cost affected your spend year over year?
  • Have you considered integrating your ERP (Enterprise Resource Planning) system into a TMS (Transportation Management System)?
  • What is your freight cost as a % of sales normally?
  • What have your latest consolidation opportunities looked like as far as mode optimization?

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 us at 800.MY.SHIPPING and we will be glad to discuss all 7 questions and help you succeed!

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