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The Cloud

DreamforceThe Cloud, The Cloud, The Cloud. Last week for 4 days that was pretty much all I heard about. I had the pleasure of attending the 8th annual Salesforce conference called Dreamforce. Me and 29,000 others spent 4 days listening and learning about doing without software. Software as a Service (SaaS) is becoming a reality.  I have to admit the argument was pretty persuasive. It seems that more and more business functions are moving to a user license based system in The Cloud. 

What are the advantages to SaaS in The Cloud?

  • Sharing information is seamless.
  • Pay as you go is affordable for growing businesses.
  • Systems are instantly expandable.
  • No need for expensive networking computers.
  • No set-up or maintenance fees.
  • Data security.
  • If you can code, you can create.
  • Software updates are provided immediately.
  • Increased mobility through usage of your smart phones.

I remember the first time I heard about the World Wide Web back in the 90s. It all seemed so complex. What is a browser? What is this Netscape thing people are talking about? How can we get anything done with a 9600 Baud internet connection? 28.8k sounded like lightning, 56k was a brave new world. Only really lucky people had access to broadband. That’s what The Cloud feels like to me now. Instinctually I know this is important even if I am not yet sure how BlueGrace or our customers will best utilize it. Our Transportation Management System (TMS), BlueShip is Cloud based. No software needed, just internet access or an iPhone.

 That’s all for now, it’s off to The Cloud I go!

Randy Collack, COO
Follow me @schmengieBG

Thinking Lean

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

The lecturer used the following math formula:

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

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

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

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

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

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

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

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

Randy Collack, COO
Follow me @schmengieBG

BlueGrace Obtains their Better Business Bureau Accreditation

BBB | BBB accreditation | bbb acredited businessBlueGrace Logistics is proud to announce that we have received our Better Business Bureau Accreditation. Since 1912 the Better Business Bureau has strived to be a leader in creating an environment of trust between businesses and their consumers.

“BBB sees trust as a function of two primary factors – integrity and performance. Integrity includes respect, ethics and intent. Performance speaks to a business’s track record of delivering results in accordance with BBB standards and/or addressing customer concerns in a timely, satisfactory manner.”

This is a natural fit for BlueGrace. As a leader in the transportation industry, BlueGrace has always delivered results in an honest and ethical manner. Any company can help you move freight from point A to point B. BlueGrace is here to build relationships with our customers to help you move your company forward.

Randy Collack, COO
Follow me @schmengieBG

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

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

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

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

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

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

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

– Randy Collack, VP of Administration
Follow me @schmengieBG

Making Yes be the First Answer

How many times have you been in a customer service situation where the first person you spoke to couldn’t or wouldn’t resolve your problem? If you are like me, I am sure the answer is plenty. The usual reaction is to ask for a supervisor. Most of the time the supervisor will resolve the problem to your satisfaction, but in reality it’s now too late. Your impression of that company is already lowered, and you are less likely to continue as a customer if you have other options.

A few years ago, I decided to get Direct TV installed at my home since my current provider did not carry the NFL Network. The entire install process was a disaster requiring me to spend literally hours on the phone over two days with their customer service trying to resolve the issue. The first part of the process was me trying to fix the problem, but after an hour or so I had already completely soured on Direct TV. The rest of the time was spent getting it removed at no cost to me. Finally at the end of two days, I was connected to a conflict resolution department who listened to my tale of woe, confirmed what I was telling them, agreed with me and apologized. Of course, I told them it was too late and that I could never again be a customer of Direct TV. If only the first person I had spoken to had actually listened to me and really tried to resolve the problem, they would have had a customer instead of an enemy. Too many companies look at conflict resolution as a last resort to keeping a customer happy. That’s just silly. The solution is to solve the problem on the front lines before a conflict ever occurs.

Sun Tzu wrote in the Art of War, “A general that fights a hundred battles and wins a hundred battles in not a great general. The great general is one who finds a way to win without fighting a single battle.” A great customer service organization does not need a conflict resolution department since the battle never occurs. Why does it always seem to take escalation to resolve simple customer service issues? In my opinion, it’s a company culture issue. From the top on down, company management needs to create a culture of yes. Most people who work in customer service really want to help.  Their job is a lot more fun when they are dealing with happy customers. I think my number one job at BlueGrace is to create an atmosphere where yes is the answer from the first person a customer speaks to.

I am confused about the class of my freight. Can you help explain this to me? Yes I can, tell me a little about what you are shipping.

Can I have this shipment delivered on Saturday with a lift-gate to a residence? Yes you can, it may cost a bit more but sure we can get that done.

It is so much more fun saying yes. Why not make yes be your first answer?

Randy Collack, COO
Follow me @schmengieBG

Excellence and Perfection

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

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

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

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

Randy Collack, COO
Follow me @schmengieBG

Do what you do

Back in 2006 All Pro and future Hall of Fame linebacker Derrick Brooks of the Tampa Bay Buccaneers was asked how the Bucs handled Falcons QB Michael Vick so easily. His response was, “Everyone thinks we have this magical defense we pull out every time we play Michael Vick. We don’t. We do what we do.” These are five simple words, but stunningly succinct. 

Having been a salesman most of my life, I know the art of the sale requires convincing successful businesses that they are doing something wrong. Most sales people do not create need; they just try to convince you that something you are doing or using can be done better. In the world of 3PLs that means convincing businesses that their shipping processes are broken, or that the people who are implementing the processes are wasting time and money using antiquated systems or even worse, no system at all. It is our job to convince these businesses that with our help, they could do what they do more efficiently. You would think this is a relatively easy task. Each week during sales meetings, we ask our reps why it’s taking so long to close these deals. After all, the business owners are smart; they must see the advantage to having experts like us handle the supply chain or shipping processes. By allowing us to do what we do, they can do what they do

But over the last few weeks, I have seen why this is so difficult. At BlueGrace, we had an internal need for some technical documents. This need was unmet for a few months. Finally, I decided to outsource this to a Technical Writer at the cost of more than a few dollars. One after another, the VPs said, “Why are we outsourcing this?  We have more than enough qualified and talented people working for us, and we can do this on our own.”  My reply was,  “If that was the case, why haven’t we finished yet?” Last week the Technical Writer worked with us for a week, and we will have our document shortly. Even people like us who spend their days trying to convince others to let us do what we do couldn’t let go to allow someone else to do what they do.

Letting go is hard. It’s hard to admit that someone can do things better than you. But successful businesses know that letting go of non-primary tasks will help them stay successful.

Randy Collack, COO
Follow me @schmengieBG