2021 is still carrying over problems from 2020. Hours of Service regulations have been amended as of June 1st, 2020, to provide greater flexibility without compromising the original intent, which is safer driving practices for truckers. While keeping over-tired truck drivers off the road is certainly a worthwhile goal, providing an adequate amount of safe truck parking spaces still presents a problem.
Nationwide, the shortage of safe spaces for truck parking is on the rise.
Nationwide, the shortage of safe spaces for truck parking is on the rise. Despite ongoing concerns, including the tragic murder of one exhausted and sleeping Jason Rivenburg at an abandoned gas station on March 5, 2009, drivers remain wanting safe truck parking spaces. Jason’s Law Truck Parking Survey and Assessment was developed and implemented to identify driver safety problems and avoid further tragedy.
The US Department of Transportation explains: Jason’s Law requires the U.S. Department of Transportation (DOT) to conduct a survey and comparative assessment in consultation with relevant State motor carrier representatives to:
Evaluate the capability of each State to provide adequate parking and rest facilities for commercial motor vehicles engaged in interstate transportation.
Assess the volume of commercial motor vehicle traffic in each State.
Develop a system of metrics to measure the adequacy of commercial motor vehicle parking facilities in each State.
Evaluating Capability and Assessing Volume
During a meeting revealing the latest survey results, Jeff Purdy, a transportation planner with the FHWA’s Office of Freight Management & Operations, said, “Major freight corridors and large metro areas have the most acute shortages.” The problem spans the nation, with shortages peaking overnight and on weekdays. There is still no time of day where parking is consistently available.”
Despite increases in public parking spaces (6%) and private parking (11%) in the five year period preceding the 2019 survey, there were new shortages found along the entire Interstate 95 corridor, Pacific-region corridors and the entire Chicago area. These reports included a 15% hike in miles traveled between 2012 and 2017 in addition to locations that were identified as problematic in a separate survey from 2014.
Identifying Metrics and Contributing Factors to Parking Adequacy
The 2019 survey by Jason’s Law was considered more statistically valid by the measure of compliance. More drivers responded to the survey increasing the data pool by 43% (11,696 participants). Even more impressive was the response from trucking managers (increasing 205% to 760). Truckstop operators responded at a 34% increase, including 524 additional data points.
The 2019 survey grew comprehensively to include truck drayage at ports, a growing issue and gathered data from 18 port authorities.
This has an especially negative impact on scheduling pick up and delivery times.
During this briefing, U.S. Maritime Administrator Mark Buzby voiced, “ports have their own challenges on congestion due to the scope and scale of vessels discharging 10,000 to 15,000 containers at a time. The last month or two with the great flood of inbound containers has exacerbated the problem”. He said this has an especially negative impact on scheduling pick up and delivery times. State transportation departments responded that the development of new public facilities and parking are few and far between, citing ongoing challenges with funding, planning and accommodations for trucks. Despite these obstacles to improvement, truck stop operations reported:
79% do not plan to add more truck parking.
73% do not monitor parking.
78% do not offer reservations.
75% do not charge for parking.
Further identifying systematic barriers to safe parking, president of REAL Women in Trucking, Desiree Wood shared her observations during the meeting in an email to FHWA. She revealed that Rivenburg “would not have been able to pay $12, $15, $20 a night to park his truck safely. What are we doing to address the issue that most company truck drivers are not reimbursed for paid reservation truck parking? Who is paying for it?
Legislation and Projected Industry Effects
Efforts made by the Owner-Operator Independent Drivers Association (OOIDA) came up short. Although they got bipartisan truck parking legislation introduced in March incorporated into a huge infrastructure package, passed by the House of Representatives in July, neither bill will see any movement by the end of the year. Congress has awarded “$231 million in project requests were submitted to FHWA, and approximately $34 million in funds were made available to support awards made to 20 projects.”
At the end of the meeting, a voice of reason comes from Darrin Roth. As the Vice President of Highway Policy for the American Trucking Associations, he offers insight that “Billions of dollars have been added to the national freight bill due to lost productivity.” Data on congestion and highways safety provides context, “Congested conditions reduce travel speeds and increase travel times throughout the highway network, yet the physical limitations of drivers (i.e., their need for rest facilities and supporting amenities) and HOS regulations that govern their work environment are time-based, not distance-based. “
Safe parking will be necessary to keep pace with supply demands.
Safe parking will be necessary to keep pace with supply demands. As Roth suggests, these changes will benefit the industry from the bottom up resulting in more desirable work conditions for existing and prospective drivers, shorter transit times for deliveries and increased profits for trucking companies.
Consumer behavior during the global pandemic of 2020 is proving difficult to absorb for many businesses. Fraught with the risk of infection, restricted business hours, and massive unemployment, the average shopper has reallocated their purchasing power online. The virus has impacted traditional brick-and-mortar retailers in the United States particularly hard and bankruptcies are on the rise as a result.
How Will 2020 Impact Trends in 2021?
A popular theory has been that the retail world was already experiencing an overhaul based on demographics. More people reside alone. This leaves less time for shopping in person. With increasing connectivity and on-the-go attitudes, it is natural for shopping to gravitate towards handheld apps and home deliveries.
Consumers have become savvier about how they go about shopping.
Additionally, consumers have become savvier about how they go about shopping. Prices and online reviews are easily compared in a matter of minutes. This creates an opportunity for disruptors to undercut competitors in a range of categories, such as price, customer service, and speedy delivery.
According to a recent interview done by Harvard Business Review with Marc-Andre Kamel, a partner who heads the global retail practice at Bain & Co, these retail trends existed before the momentous events of 2020. Rather than creating new trends, it is reasonable to conclude that recent events merely accelerated existing trajectories.
Which Retailers Were Set Up for Success in 2020?
Naturally, online retail giants like Alibaba or Amazon entered the tumultuous year with enough resources to weather the storm. But what about smaller retailers? Many haven’t fared so well, but what about the ones that have? There are four prototypes necessary to maintain a sustainable position.
Regional Gems: These companies find their strength where their larger competitors are not prevalent. Protected by their ties to the regional consumer base and culture, their business model is thriving. Due to the relative novelty of online shopping in these areas, it is difficult to project how these companies may fare against emergent business models.
Hitchhikers: With a flair for creativity, these companies rely heavily on branding status to appeal to consumers. While these retailers could not hold their own against a company like Amazon, they can profit by riding those coattails.
Value Players: It seems simple, but keeping prices low ensures stability during a widespread financial crisis. Aldi, TJ Maxx, and Burlington are a few examples.
Scale Fighters: The final possible precursor to success in 2020 is size. Retailers like Walmart have the heft and established consumer base to fight other ecosystems.
Which Retailers Lacked Positioning?
With cash flow reduced for most shoppers and a focus on buying online, many retailers found themselves at a disadvantage while simultaneously needing to change their business model to survive. Shifting shrinking resources is a challenge for any business. Trying to do that while restructuring a business during a global crisis borders on the impossible.
Legacy Laggers: Aptly named because they are often some of the more visible household names (and they’re falling behind). Facing immense pressure from both the market and shareholders when profits plummet, many of these companies choose to consolidate. Many doomed department stores could survive as something reinvented by re-imagining ambitions and joining forces.
Unsustainable Innovators: These exciting new entities face a dead-end when it comes to profitability. They either perish during growth or gain the attention of a previously mentioned Scale Fighter who wishes to absorb their knowledge.
Is It Reasonable to Expect a Retail Rebound Post-Vaccine?
The trend from older to younger generations is a reduced emphasis on showy consumption and a shift towards sustainability and personal meaning. Data shows that COVID accelerated this trend and a percentage of older generations have adopted their children’s shopping habits. This is a sign that a retail rebound is not likely.
These profits have exceeded any business lost during the quarantine.
Meanwhile, consumer data from the East suggests that shoppers are eager to buy. China, which had a more comprehensive response to the pandemic than the United States, has emerged from lockdowns and enjoyed a surge in retail activity. While this was seen mostly online, those who browsed were more likely to take their carts to checkout. These profits have exceeded any business lost during the quarantine. China did previously outpace the US in luxury purchasing, however, so this trend may not translate to an accurate projection for the Western market.
Can the Ecosystems Fail?
According to Harvard Business Review, Amazon will invest $100 billion more than any other top 10 retailers globally. Add to that their history of successful innovation, and they’re more likely to drive consolidation than a stall in growth.
While Amazon has a robust consumer base relying on them for online purchasing, part of what made them so successful in the 2020 pandemic is the nearly doubling number of Hitchhikers that sell their products on its platform. In fact, one of the only major obstacles Amazon faces right now is keeping deliveries timely amidst such prolific demand.
For smaller retailers, keeping pace with e-commerce giants will be a difficult task, but it is possible through innovation, creativity, and a weather eye on consumer trends.
Retailers are not the only ones struggling with the new economy. If you are a shipper trying to overcome the impending obstacles of COVID-19, our team of experts are available and ready to help. Contact us today!
Winter is rough on freight for many reasons. Snowstorms and ice can create dangerous travel conditions that delay trucks in the best case scenarios and can bring the supply chain to a screeching halt in the worst.
However, while most people are worried about the tractor-trailer jackknifing in the middle of the highway, most people aren’t considering the condition of the freight itself. Winter weather conditions can damage even the hardiest of freight. However, as most shippers are moving raw materials around, it raises the question: What are my options to keep my freight from freezing?
Know Your Product
Did you know that freeze-dried goods like coffee and flour are vulnerable to spoilage due to low temperatures? Before you do anything else, it is vitally important to understand what temperature ranges are okay for your freight. Different goods require different temperatures, so what is perfect for one item might be too cold for another.
After all, it doesn’t make sense to spend the extra on specialized equipment for your freight if only certain items will survive the trip.
If you haven’t done so before, now is the time to take stock of your products and get a better understanding of what temperature is safe for your items to travel at. Not every product is rated for the same temperature, and some goods might need to be kept warmer than others. It’s important to make sure that you’re not mixing these types of items on your pallets. After all, it doesn’t make sense to spend the extra on specialized equipment for your freight if only certain items will survive the trip.
Plan Your Route And Keep An Eye On The Weather
As the cold season runs from December to March, it’s important to plan accordingly. Understanding where your freight is going and what route it will take to get there is important. While California might be fairly warm when the rest of the country is freezing, the Midwest and Upper Northwest states can see temperatures fall to double digits, below zero.
Keep an eye out for any impending weather events that not only can that affect the temperature, but it can also delay your shipment.
Keep an eye out for any impending weather events that not only can that affect the temperature, but it can also delay your shipment. Both of which we are looking to avoid.
Finding the Right Equipment
The best method to protect your freight from freezing is to utilize the right equipment for the job. Load it onto a temperature-controlled unit, such as a reefer truck or in a heated dry van trailer. A reefer unit is a trailer equipped with a refrigeration unit that controls the trailers’ internal temperature. While these units are typically used to keep goods cold during the summer months, they can also work in reverse, keeping freight at the right temperature even when it’s freezing outside.
Some drivers have the option of parking their trailers in a heated warehouse. This is a great option to take advantage of, especially if the shipment will arrive over the weekend when the loading dock might not be manned until the following business day.
Another option is for the driver to idle their truck. The engine’s small vibrations can actually prevent freight from freezing and can be useful in shorter hauls. This option can also be augmented by using thermal blankets and pallet covers, which can help keep most of the chill off freight during transit. The level of protection necessary will depend on what type of freight is being transported.
Detail the Bill of Lading
If you’re shipping temperature-sensitive goods, it’s important to document that on your bill of lading. Many carriers offer a protect from freeze (PFF) option, which can be agreed upon once a carrier accepts a load. If the shipper decides how they want their goods to be protected from the cold, this should be detailed in the BOL. A good rule to follow is the more detail provided, the fewer chances there are of damage to the product.
Additionally, issuing a PFF means that a claim can be filed when the freight arrives at its destination frozen. Otherwise, the shipper is liable to pay the damages to the freight.
Don’t let your freight give you the cold shoulder this winter. Take time to consider how you’re shipping it, where it’s going, and what kind of protection you’ll need to keep it in proper condition.
Most of us are happy to have put 2020 behind us. A new year means a new start and for most people, that means setting goals of making it out to the gym, cutting back on the indulgences and maybe paying a little more attention to the checkbook. With everything the past year has thrown at us, a fresh start sounds like just the thing the doctor ordered.
If 2020 has taught businesses anything, it’s that our supply chains are not nearly as secure as we might have once thought.
However, resolutions need not only apply to individuals. A new calendar year is a perfect time to set some goals for your organization and start planning new business strategies. If 2020 has taught businesses anything, it’s that our supply chains are not nearly as secure as we might have once thought. COVID-19 has exposed quite a few vulnerabilities in both the procurement and distribution process of goods and materials and the overall transportation process. As many organizations have scrambled to find alternative suppliers and quick solutions to the myriad of problems that cropped up from the pandemic, now is the time to reflect on what we’ve learned and begin to implement a more robust system to be better prepared for when such disruptions happen again in the future.
So what should the number one resolution be for every organization that is responsible for managing a supply chain? As you might have guessed from the title, it’s time to start collecting more data.
The Big Benefits of Big Data
Over the past two decades, information technology has grown by leaps and bounds, which, considering how outdated most practices are in the freight industry, it’s a welcome change.
For starters, the process of digitalization means that companies are moving away from paper logs and forms, countless emails and phone calls, and are automating their processes. Not only does this result in fewer human errors (a missing form here and a mis-click there), but it expedites the entire process of booking and shipping freight, allowing organizations to operate more smoothly and efficiently.
However, the benefits of this process don’t stop there. Digitalization also creates the opportunity to collect data that would otherwise fall into the unknown. That data is what creates the necessary visibility into your supply chain and day-to-day operations to truly understand what’s happening behind the scenes.
In the past, companies have simply operated blindly. A carrier was booked, the cargo was moved, it arrived where it needed to go, maybe late, maybe on-time. Job done. However, in today’s marketplace, that’s not enough as the “Amazon Effect” has pushed customer expectations to new heights. Consumers aren’t content to order their package and wait. They want real-time updates as to where their goods are; they want ultra-fast delivery times; they want it for free (or as close to free as possible), and they want it now.
Simply put, good data drives better service.
In the B2B world, shipments must be on time, in full, or shippers run the risk of getting hit with fines, penalties, and chargebacks. Not to mention the risk of losing preferred supplier status, which is a major hit when dealing with big retailers like Wal-Mart. With competition tighter than ever for just about any industry, providing that insight isn’t just a nicety, it’s a necessity. Simply put, good data drives better service.
How Do I Collect More Data?
This is one of the most important questions every company needs to be asking themselves. The supply chain is capable of generating vast amounts of data, in some cases, too much. There are a few problems with this. First problem is that the data either gets overlooked, or siloed away where it doesn’t serve any other purpose than consuming bandwidth. Companies that ignore their data miss out on some significant opportunities to improve their operations and reduce their overall operating costs.
Without a focal point and clear goal, too much data is just as bad as not enough data.
The second issue is that even if companies begin collecting the data, they end up getting lost. This is known as “analysis paralysis” a state in which so much data comes flooding in and there is no conceivable means of separating what’s good from what’s not. Without a focal point and clear goal, too much data is just as bad as not enough data.
This brings us to the third point, oftentimes there is no clear goal or direction to go with the data. Data analytics is a powerful tool that can push shippers to new levels of operational efficiency if they know which direction to go with it.
A TMS is key in helping you mine valuable data from your supply chain, which increases your operational visibility and offers insights into areas where your company can improve. But it also goes beyond that. A TMS can also reduce your operational costs, which, given what we’ve seen from 2020, will be an essential survival strategy for every company going forward into the new year.
The good news is, implementing a TMS into your organization doesn’t have to be a costly or disruptive endeavor, and the benefits that can be realized from both the supply chain optimization and the cost reduction are significant. Moreover, the data collected from utilizing a transportation management system can create an insight into your organization that you might not have had otherwise. That insight is both powerful and necessary should you decide to take your resolution a step further and perform an internal audit of your operations.
The New Year is just around the corner, so it’s time to start making your resolutions and more importantly, planning to make them a reality. Request your FREE Supply Chain Analysis today!
Before the e-commerce segment rose to mainstream relevance, the retail industry’s logistics part had seen little disruption over decades preceding it, sandwiched between opaque workflows and stifling inefficiencies. That said, the consequential impact that e-commerce has on the workings of the supply chain today would not have been possible without the online retail behemoth Amazon and the ‘Amazon effect’ that lies in its wake.
In essence, Amazon obsessed over its customers.
Put simply, the Amazon effect is the evolution of supply chains from looking at end consumers as ‘yet another’ part of the value chain to putting them at the center of their operations. In essence, Amazon obsessed over its customers, aligning its product offerings and services to ensure the highest standards in parcel delivery experiences.
Subsequently, the consistent efforts of Amazon to provide impeccable delivery fulfillment to its customers snowballed to create an environment where expedited shipping became a parameter that set businesses apart from their market competitors. Eventually, this led businesses to start looking at delivering faster and keeping their customers in the loop on last-mile parcel movement.
While the need for visibility and expedited shipping have long been an expectation within the supply chain industry, they are not possible without digitalization.
While the need for visibility and expedited shipping have long been an expectation within the supply chain industry, they are not possible without digitalization. In many ways, digitalization within the freight industry can be inferred as the direct consequence of e-commerce. Data in supply chains remains frozen within siloed operations, as companies continue to cut off their data streams and not gain insights by feeding them to data-driven algorithms.
Meanwhile, consumer expectations within e-commerce have overflown from its business to consumer (B2C) segment to the business to business (B2B) segment of freight logistics, where shippers are increasingly expecting better experiences while moving freight. Shippers often rationalize their visibility requirements, contending that when Amazon could show them precision location status of individual parcels, fleets could afford to track entire containers.
Amazon effect’s impact on inventory levels
The e-commerce segment differs from the traditional retail industry in the way the former reduces the number of intermediary nodes within supply chains connecting the manufacturer with the end consumer.
Traditional retail moves products through several nodes in the supply chain, including manufacturers, distribution centers, and retail inventories, before selling to end consumers in retail outlets. E-commerce compresses this value chain, cutting out the retail inventories and storefronts, and replacing it with a multitude of last-mile delivery models.
As e-commerce bites into the physical retail market, there is a steady shift in the size of inventories and the way they are held. The depth in e-commerce offerings has translated into an increase in the variety of products stocked in inventories, inevitably showing up as an expansion in overall inventory volumes.
However, the inventory volume increase is not proportional to the expected increase. Shortening of lead times can be one of the reasons for the inventory volumes to not increase to expected levels. That apart, while logistics stakeholders look to stock products that are in demand, they also opt to stock limited quantities and not worry about overstocking due to short lead times. This way, companies also reduce the risk of stocking product lines that have become obsolete. Obsolete product lines are a real possibility as product demand is an extension of consumer interest in a said offering, which can abruptly change in a matter of days.
This is especially true of electronics, where older versions witness a rapid fall in demand as improved versions hit the market. The ease of e-commerce makes it easier for manufacturers to approach the market without intermediaries, increasing the chances of entire product lines being trashed due to a better alternative mushrooming in the market.
Last-mile delivery disrupted by the Amazon effect
Amazon’s customer obsession has ensured that the last-mile segment is one of the primary differentiators for delivery fulfillment within the e-commerce market. The last-mile is expected to be nimble, with the gravity of consumer expectations making it one of the crucial parts of freight movement.
Retailers are reevaluating their supply chains, attempting to consistently improve their customers’ delivery experiences. Technology has come to the rescue, with several additions being made to the way the last-mile is handled, including automated delivery bots and VTOL drones. Dynamic route optimization is part of a last-mile delivery company’s arsenal, with delivery vans given routing instructions based on parameters like location, parcel specification, and delivery time windows.
or logistics at large, there are two main operational costs – inventory and freight.
For logistics at large, there are two main operational costs – inventory and freight. While expenses on inventory and freight are comparable, the Amazon effect has successfully pushed scales towards freight costs – courtesy, an inordinate increase in air freight movement due to expedited shipping options. However, with the last-mile almost exclusively fulfilled over the road, the trucking industry would inevitably continue being impacted by the ubiquitous Amazon Effect.
As any shipper can tell you, it’s decidedly easier to ship domestic than it is to ship across the border. When crossing the border into Canada, you add several other variables that you have to consider when booking freight. This changes from situation to situation. For example, if you’re shipping freight cross-border from the U.S to Canada, there are different variables to consider when you’re shipping intra-Canada.
Intra-Canada freight, by definition, is the shipment of goods from one Canada address to another Canada address or, more simply put, the shipment both begins and ends in Canada. This is different from cross-border freight, which has Canada as either the origin or the destination, but not both.
Different Shipments Mean Different Taxes
The actual locomotion of freight aside, one of the most significant differences between the two is that intra-Canada shipments, ones that start and stop in Canadian provinces, are taxed differently. Each province has a different breakdown of what taxes will be applied to the shipment. Typically, a province will use one of (or a combination of) the following three tax codes:
GST – Goods and Services Tax
HST – Harmonized Sales Tax
PST – Provincial Sales Tax
Interestingly, Quebec has its own unique tax code, the QST, or Quebec Sales tax, which only applies to shipments with an origin and destination with Quebec. Aside from that, all provinces use some combination of the previously mentioned taxes for intra-Canada freight, with a slight variation in the percentages between the different provinces.
The Timing of Currency Conversion
Much the same as other countries, Canada has its own currency, and with it comes more complications for shippers. Currency conversion becomes an issue when a shipper decides to pay for their shipment in Canadian dollars. If your TMS doesn’t support currency conversion, it becomes a tedious and manual auditing process to ensure that everything is paid for and handled properly. Specifically, it’s a matter of determining when the currency needs to be converted during the shipment process because the foreign exchange rate can vary daily.
This needs to be reconciled both for the sake of customer service and to ensure that all of the appropriate taxes are being paid completely and in a timely fashion.
It also means that what a customer is quoted at the beginning of the shipping process doesn’t include the applicable sales taxes from the various processes. While that’s generally understood for Canadian customers, it can lead to discrepancies between a Customer’s invoice and a Carriers invoice. This needs to be reconciled both for the sake of customer service and to ensure that all of the appropriate taxes are being paid completely and in a timely fashion.
Bringing You a Better Option for Canadian Freight
No system is complete when it first roles out and, if it is, then it quickly becomes obsolete as time progresses. At BlueGrace, we are dedicated to making sure that we have a robust system in place to help facilitate your shipment needs. In this case, it means updating our user interface and our processes to help make your Canadian books quick, accurate, and easy.
If you’d like to learn more about the processes we’ve updated, implemented, or changed, check out our Intra-Canada Freight webinar below.
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
Manufacturing Flow Management
Product Development and Commercialization
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.
The ongoing slump that had begun in October 2018 had started to affect the Class 8 truck market in early 2019. While there were a few months during the year where orders for heavy-duty trucks peaked – although not as high as the previous two years, it was all in all a slow year for the industry.
How bad is the situation?
An article in Wolf Street shared numbers released by the FTR Transportation Intelligence for 2019. According to the report: during the year there were 179,000 orders for Class 8 trucks. This was a drastic reduction of 64% when compared to the 497,000 orders during 2018. The difference in the orders in just the span of a year is telling of the difficulties that the trucking manufacturing industry is set to face until the freight market stabilizes.
More recently, on February 19, 2020, in a write up on the issue Freight Waves shared: “The ratio of retails sales of Class 8 trucks to inventory in January 2020 ranked second-highest in the industry history, trailing only the worst month of the Great Recession a decade ago”, signaling that the heavy-duty vehicle market may continue to experience a downward trend for some more time.
What’s the cause?
The cause of the current turmoil faced by the Class 8 truck manufacturing industry can be broadly bifurcated into two parts.
The first reason stems from the slowdown in the manufacturing sector. It has a direct impact on the orders fleets place for new trucks.
The first reason stems from the slowdown in the manufacturing sector. It has a direct impact on the orders fleets place for new trucks. If the sector is doing well, there is a demand to increase the fleet size, hence more orders for new trucks. On the other hand, when it is experiencing a slowdown, trucking companies hold back on increasing their fleet size – exactly what is happening now.
The current economic and political scenario in the country has put a strain on the manufacturing industry. The US and China trade war which began in 2018 and the tariffs imposed by the two countries on each other has been detrimental for business and allied service providers, including truck manufacturers. If we are to consider the disruption that the Coronavirus is causing in global trade, we can presume that it will be a while before the freight business picks up again.
The other reason industry experts are giving for the drop in Class 8 orders is a market correction.
The other reason industry experts are giving for the drop in Class 8 orders is a market correction. Monitor Daily quotes Act Research’s President and senior analyst, Kenny Vieth explaining the downturn: “After peak sales and build in 2019, significant declines are ahead in 2020, as heavy-duty sales and build follow the net orders trend down. But if our forecast of ongoing (but slower) economic expansion holds in 2020, the drop will be a correction (along the lines of 2015 and 2016), not a devastating recession (as in 2008 and 2009).”
What’s the impact?
The declining order book for Class 8 trucks has already started to show its impact. According to reports, quite a few truck makers including larger manufacturers like Volvo, Mack Trucks, Daimler, and Navistar have already gone through a round off layoffs or are considering cutting their workforce and reducing their production plans. For example, Cummins, the engine maker is reported to have planned laying off around 2000 workers in early 2020 and Navistar has already gone through two rounds of layoffs last year. When the bigger companies are taking such drastic measures, it will be difficult for the smaller manufacturers to tide over this recessionary phase.
The cost of maintaining and managing the excess inventory will be another issue that the truck manufacturers will have to deal with.
The cost of maintaining and managing the excess inventory will be another issue that the truck manufacturers will have to deal with. According to reports, the inventory to sales ratio was 3.9 months in January, which is much higher than the industry’s normal average of 2 to 2.5 months. Till this excess inventory is not sold off, the truck makers may have to further cut production plans and bear an additional burden of their operating funds.
This problem doesn’t end at the manufacturers. Even the dealers who may have taken additional inventory of Class 8 trucks when the market was good, will now have to either hold the inventory till there are buyers in the market or sell their inventory at a discount. Either way, it will have a negative impact on their bottom line.
Till the freight business does not pick up, it will be a rough ride for all the stakeholders in the ecosystem be it – shippers, carriers or truck manufacturers.
However, companies that have built-in diversity in their supply chain – keeping in mind the cyclical and uncertain nature of trade and keep a rigorous check on it, have a better chance of surviving such downturns. If you want to know what are the weak points of your supply and how you can strengthen it, get in touch with our team for a supply chain analysis today!
Amazon delivered a swift blow to retailers with the introduction of Amazon Prime. Walmart is fighting back.
Amazon spent years building what was to be its competitive advantage in e-commerce, its formidable distribution network. By building distribution centers across the country, investing in algorithms to optimize pick-time, and hiring operational wizards from Walmart and other competitors, Amazon gets products to customers anywhere in the United States cheaper and faster than anyone else.
Walmart went in the opposite direction, taking a ‘build it, and they will come’ approach, building stores in rural areas and locating them close enough together to allow for shared warehousing and logistical resources. Walmart plays in the low margin discount retail arena, and they do it better than anyone else. Perishables such as bread and milk are extremely low margin products, but the wide range of offerings gets customers in the door more often and buying more while they’re there. This is their secret, money-making-sauce, the strategy that allows for a wide distribution of fixed costs and lowers their break-even point.
In 2005 Amazon launched a little thing called Amazon Prime, a membership program with perks which is now enjoyed by roughly 150 million global paying members.
In 2005 Amazon launched a little thing called Amazon Prime, a membership program with perks which is now enjoyed by roughly 150 million global paying members. At the time, Walmart was the giant, its profits being larger than Amazon’s revenue. A decade and a half later, however, and Amazon reigns supreme over online sales. In 2019, Amazon accounted for almost 40 percentof the US e-commerce market. Walmart lagged far behind with slightly more than 5 percent.
An ethos of sales is to make it easy for customers to do business with you. Prime aims to do just that. For $119 a year, Amazon Prime offers services such as music and video streaming, one-day shipping on more than 10 million products, and same-day delivery from Amazon Fresh or Whole Foods. It has its loyalty base hooked and has customers shopping more often and spending about twice as much as non-prime customers.
Walmart, however, still reigns supreme in brick-and-mortar retail.
Walmart, however, still reigns supreme in brick-and-mortar retail. As reported by Recode, they’re now fighting back with an expansion to their grocery-delivery subscription service, which launched last year. Walmart will be using its 20% market share (of an $800 billion category) as a foothold to launch the introduction of Walmart+. To differentiate themselves, Walmart is looking to include perks that Amazon won’t be able to replicate and may offer discounts on fuel and prescription drugs.
Walmart’s Delivery Unlimited service currently delivers groceries from more than 1600 US stores and costs $98 per year or $12.95 monthly and offers a free 15-day trial to lure new members. It also offers a per delivery fee for non-members and is testing a service that will take the extra few steps and deliver your groceries right to your fridge.
Widening the Customer Base
As we laid out in our Walmart and Whole Foods white papers, Millennials are outpacing baby boomers as the largest living adult generation, and their buying patterns are heavily focused on eCommerce.
CEO Doug McMillon has given Chief Customer Officer Janey Whiteside the task of widening their customer base to include more upscale shoppers and create a seamless customer experience, whether shopping online or instore. Whiteside has also put together a product team, to be headed by Chief Product Officer Meng Chee and will focus on using advancements in tech to improve the customer experience.
Amazon is now also widening its target customer base to include lower-income shoppers and is hoping to lure them into Prime memberships with monthly membership rates.
Although both Walmart and Amazon deliver groceries to food stamp recipients, only Walmart currently offers a monthly membership fee option. Amazon is now also widening its target customer base to include lower-income shoppers and is hoping to lure them into Prime memberships with monthly membership rates. Customers may find more financially viable than a one lump sump yearly membership fee.
Walmart has had a bumpy road in its foray into e-commerce. In 2016 Walmart bought out Jet.com for $3.3 billion, but Jet failed to become a driver for online grocery sales and provide the boost into urban areas they were looking for. Walmart announced in June of last year that it would be folding Jet into its e-commerce operations and ended Jetblack, the AI-powered personal shopping service it rolled out in May of 2018.
Back in 2017, they tested a program called ShippingPass, a $49 per year two-day shipping membership, which was then discontinued, members were then refunded their $49 fee.
Both Amazon and Walmart are forerunners into e-commerce, struggles, and even failures are to be expected. Far from being out for the count, it seems Walmart is coming back swinging.
Do you ship to Amazon, Walmart, Target or other large retail or grocery store chain? The rules are changing and it is getting harder and harder to be able to adhere to them. This is where the logistics experts at BlueGrace Logistics can help your team! Feel free to contact us using the form below and set up a 15 minute chat to discuss how we can help you succeed!
Our highways and transit infrastructure are mainly funded through the Highway Trust Fund (HTF), which in turn is primarily funded by the federal motor fuel tax. Since 2001 the HTF has consistently spent more than it generates through highway and transit programs. The shortfall has been covered mainly by the $144 billion it’s received from the Treasury’s general fund. The Congressional Budget Office estimates that the HTF will hit bottom by 2022.
Senate Environment and Public Works Chairman John Barrasso and Finance Committee member John Cornynhave proposed the S. 2302 bill which would impose a Vehicle Miles Traveled (VMT) tax on commercial truckers. The bill is part of a three-prong approach, Barrasso and Cornyn are also looking to tax electric vehicles as well as index the motor fuels tax.
As cars increasingly become more efficient, and the use of electric cars become more prolific, fuel tax revenues decline accordingly. The tax on electric vehicles looks to regain the lost revenue, and with automakers planning to launch up to 100 new electric vehicles by 2023, it’s a good idea. But it’s a small piece of a massive puzzle.
Commercial trucks do take a heavier toll on our highways than lighter vehicles. Therefore, the VMT imposes a tax on the miles traveled. The heavier the truck, the more damage it does to our roads, which is why a scaled tax structure based on a truck’s configuration and weight. It sounds like a fair deal, those who do the most damage pay the highest bill.
However, the industry argues, that they already pay a steeper sum than other highway users through fees, an excise tax on tires, and a heavier gasoline bill, paying six cents-per-gallon more than other motorists. Then there’s the question if the industry can support the increase, given the number of trucking companies that closed its doors in 2019, it’s a fair question. And lastly, could the tax be implemented in a fair and trustworthy manner?
Using data on 2017 truck traffic, the CBO estimated that a tax of 1 cent per mile on all roads would have raised approximately $2.6 billion if imposed on all commercial trucks. However, in order to cover $14.6 billion that truck owners paid in 2017, as well as their proportional share of the $13.5 billion deficit, the tax would need to be increased to 7.5 cents per mile, which would have generated a total of $19.4 billion. The CBO warns two behavioral responses would result: a reduction in overall freight shipments and a shift in some freight traffic from trucks to rail.
Together, the gasoline and diesel taxes yielded close to 90 percent of the $40.9 billion in revenues credited to the trust fund in the fiscal year 2017. Of that amount, $25.9 billion (64 percent) came from gasoline taxes and $9.8 billion (24 percent) from diesel fuel taxes. The three taxes that apply to trucks and other large vehicles generated revenues totaling $5.2 billion.
Capital and Implementation Costs
Three methods of implementation are offered:
Electronic logging devices (ELD) installed in cars (capital costs would depend on the set of trucks included in the tax base, intermediate enforcement costs)
Collection booths or RFID readers on road gantries (significant capital costs, low enforcement costs)
Periodic odometer reporting (no capital costs, high enforcement costs)
Although costs are uncertain, capital and implementation costs would, of course, cannibalize a portion of the revenue.
The American Trucking Associations wants to raise fuel taxes by 5 cents annually over four years, which would bring in $340 billion over ten years. Although it continues to lack Senate support, The American Road & Transportation Builders Association (ARTBA) advocates for both an increased motor fuel tax and the VMT tax.
The Owner-Operator Independent Drivers Association(OOIDA) members aren’t mincing their words. In a letter written on February 24th to Chairmen Grassley and Barrasso, the OOIDA says the ARTBAs support of the VMT tax is “shameless, and exposes the organization’s ignorance.” Chris Spear, President of the American Trucking Associations, and Sheila Foertsch of the Wyoming Trucking Association call the tax discriminatory.
Trucking-aligned farm groupswant broad-based funding mechanisms and caution the VMT would place a disproportionate share of the burden on freight transportation and would leave U.S. agriculture at a competitive disadvantage against foreign competitors.
As the ARTBA pointed out in their letter, if a controversy-free solution existed, it would have been enacted years ago. But America’s infrastructure is failing, and transportation investment is coming up short by the tune of $1.1 trillion by 2025. According to the American Society of Civil Engineers’failure to Act study, by 2025, the nation will have lost almost $800 billion in GDP and have 440,000 fewer jobs due to transportation system deficiencies. Time is of the essence.
Throughout 2020, truckload carriers felt the burn of the China-U.S. trade war, declining capacity, and low spot rates. In general, markets with lower spot rates are more beneficial to shippers, keeping carrier profitability in check. The opposite applies when contract rates are lower, allowing carriers to retake control and reap greater profits. In addition, the risk for a resurgence of higher spot rates and renewing interest in truckload freight contracts is an area, shippers should understand and keep their eye on in 2020. According to William B. Cassidy of JOC.com, he describes this chance:
“After six consecutive quarters of deflation, the market is rebounding, heading back towards an inflationary environment, the spot market will reach an inflationary environment by Q1 2020.”
To combat that prediction and also consider the influence of the coronavirus, shippers need to understand the driving forces of change in the truckload market, what is already happening with the coronavirus, and a few tips to better underscore and improve use of both truckload freight contracts and spot rate shipping.
Driving Forces of Change in Contract and Spot Rate Markets
The biggest driving force of change in the market involves available capacity and its influence on capacity. As explained by Cassidy:
“DAT noted that freight demand, in terms of total spot and contract volumes, has been increasing, with spot volumes rising 7 percent in 2019 year over year and contract volumes 4 percent. The American Trucking Associations (ATA) predicts a 1 percent increase in contract truckload volumes for 2019, down from annualized growth of 3.2 percent in 2018 and 3 percent in 2017.”
How much capacity must exit the market before supply and demand move back to a closer alignment? Some experts believe truckload capacity and freight demand already are closer to equilibrium than they’ve been since 2017 and that a surge in demand could tip the balance. Others think trucking’s supply-demand gap will take more time to close.”
Unfortunately, that prediction and driving force now hangs in the balance with a likely swing away from the prediction. That’s right. Capacity is rapidly increasing overseas, and it will likely lead to changes in the U.S. truckload freight contracts’ market.
The State of Truckload Freight Contracts Will Retract Due to the Coronavirus
Capacity is dependent on the demand in the volume of imported raw materials, finished products, and other supplies from around the world. Many electronics, automotive, and medications and medical equipment arrive in the U.S. from China. In addition, the flow of exports from the U.S. to the APAC region, including the iPhone and agricultural products, are at risk. There is a near-stop to the flow of freight in the region due to the coronavirus. So, what happens in other areas abroad and in the U.S.?
The freight that would have filled trailers and help carriers push spot rates upward vanishes. Now, carriers have too much capacity, too many drivers, and too few lanes to travel that make a profit. As a result, the spot rate market is on the verge of bottoming out, and shippers will benefit to an extent. The real problems for shippers will not become evident until their favored carriers start to close lanes and begin to exhibit signs carriers are looking to gain profitability when more reweighs and reclasses occur or accessorial fees tick up. At this point, shippers will face the uncertainty of limited carrier availability, if any, and an inability to move freight to their customers as cost-effectively.
The only way to maintain operations lies in creating a balance between the use of contract and spot rates to get the best deal to benefit everyone.
The only way to maintain operations lies in creating a balance between the use of contract and spot rates to get the best deal to benefit everyone. As carrier operations begin to suffer the effects of continued drops in the spot rate market, it will be time for shippers to start looking for more carriers and fulfillment options to fill the void.
How to Better Understand Contract and Spot Rates
Shippers that wish to create a successful balance between the use of spot rate and truckload freight contracts need to follow these steps:
Connect your supply chain assets to a centralized supply chain control tower.
Leverage the full scale and scope of the BlueGrace TMS.
Take advantage of managed services, including invoice auditing and accounting services.
Rate shipments across all modes and potential trade lanes to determine the best-case, not the cheapest, shipping option.
Always consider the “other” factors in tendering freight, including claims’ insurance and management needs.
Diversify your carrier network to include the small and local carriers that have expertise in both truckload and last-mile delivery.
Extend your TMS and order fulfillment systems across your whole supply chain, including brick-and-mortar stores.
Remember to integrate new systems with existing platforms to enable omnichannel capabilities and take advantage of all available inventory.
Gain Better OTR Rating With an Advanced, Customizable TMS at BlueGrace
The freight rate market is continuously changing to reflect the risks and opportunities in the market. As the year rolls on, shippers need to take the steps necessary to shore up their operations against the industry’s top risks, including market volatility and the coronavirus. Moreover, applying the functions and wide-ranging benefits of a dedicated TMS and 3PL’s lineup of managed services will provide a protective barrier against risk and help your organization succeed. Find out how more information and visibility can improve your use of spot rates and truckload freight contracts by calling BlueGrace at 1.800.MY.SHIPPING or filling out the contact form below.
Supply chains are evolving fast. To keep up with the fast pace of supply chain evolution it is important for supply chain planners to upgrade their skills and step up their business planning and forecasting techniques. If the planners lag behind, it will have an adverse impact on not only the supply chain but also on the organization as a whole.
The Gartner Supply Chain Planning Summit held in Denver, USA, in November 2019, emphasized this very aspect. According to Marko Pukkila, Vice President and Team Manager, Gartner, who shared his views during the summit:
“The job description of SCP leaders today looks totally different than 10 years ago. It’s no longer enough to provide copious amounts of data — planners must use the data to draw conclusions about future risks and opportunities. It’s all about supporting business objectives. Gartner calls this an outside-in mindset.”
What is the Outside-in Mindset?
As Gartner defines it, the outside-in mindset is about being
“aware of what is happening around you — be it a business objective or an upcoming recession — and use the capabilities of the planning function proactively to set up internal processes that are optimized for whatever will happen in the future.”
In simple terms, the outside-in mindset is about understanding external factors and the impact they will have on the business objectives. It is about creating a system that can not only take into consideration the impact of these outside forces but can also respond quickly to the ever-changing global economic-social-political environment. It is about creating a planning process that is agile and flexible enough to integrate future events.
What are some situations where the outside-in approach would help?
Let’s take the US-China trade war situation. This scenario has been in existence since 2018. It has impacted the trade relations between the two nations. Needless to say, it has had an impact on the supply chains of the organizations of the two countries. For example, Chinese organizations that were exporting to the US may have seen a decline in the orders due to tariffs or the US organizations would have had to reduce quantities of goods imported from their Chinese counterparts. In this situation, the US companies would have to find another source (country) to fulfill their requirements and the Chinese would have to find alternative buyers for their finished goods.
While the trade war is an anomaly, as a concept is not unheard of. In this situation, organizations that may have researched and identified alternative buyers or sellers ready to do business with them in case of a change in the trade relationship between their countries would have suffered less of a set back as compared to those who may have neglected to take this factor into consideration.
A current situation that is creating havoc on supply chains is the Coronavirus virus outbreak. An article published on February 14, 2020, in The Wall Street Journal which quotes Lars Jensen, head of Denmark-based maritime research group Sea-Intelligence, saying:
“Substantially less cargo is being moved between China and the rest of the world. Last week we had an additional 30 sailings canceled, with 23 across the Pacific and the rest to Europe.” The article further states that “Mr. Jensen said the canceled trips, which have topped 50 since late January, will delay or reduce shipments into the U.S., where retailers may see a slowdown in their traditional restocking of inventories for the spring.”
According to the article, “Analysts reckon that the virus could lead to Apple shipping 5-10% fewer iPhones this quarter and could scupper its plans to ramp up production of its popular AirPods.”
These are just two instances that are coincidently related to one of the major economies of Asia and will have an impact on US businesses. But there are many other situations that may not have a far-reaching, global effect but can disrupt the supply chain at a local level. For example, labor strikes can impact day-to-day operations and create a backlog in the supply chain. Supply chain planners need to factor in local incidents as well while making supply chain plans.
The Gartner outside-in approach suggests that it is important for supply chain planners to be able to read the data and information available to them and identify possible outliers – roadblocks, challenges, and opportunities, in the future. They should then incorporate solutions or plans to be able to navigate their supply chain should those outliers become a reality in the future.
How to incorporate the outside-in approach in supply chain planning?
To incorporate the outside-in approach in supply chain planning, Gartner advises a 3-step process:
1. Realize that the time to transform is now: Citing the 2008 – 2010 economic recession, Gartner says that organizations that were ready with planning processes in place that provided forward-looking insights fared better during and post the recession than those who tried to streamline their supply chain after the recession hit. To put it simply, there’s no time like the present to streamline the supply chain with the evolving global business, economic, political and social scenario. While the change may seem to be in the distant future, it is wiser to prepare the supply chain for it today.
2. Refocus the planning team to business outcomes: Organizations need to understand that supply chain planning and business planning are not independent of each other. Explaining this point, Gartner says: “It’s no longer enough to just provide a forecast — planners must use the forecast to find pathways that guide the business to where it wants to go. Think of an advanced navigation system that doesn’t only plot the best route, but also foresees roadblocks and traffic jams and navigates around them.” Further adding, that the planners need to be able to convince the other stakeholders why this plan is good for the business and how it will help them succeed.
3. Become the orchestrator of success: The supply chain planners need to take the lead on creating cohesion between the different departments of the organization and their business plans. Explaining the point, Marko Pukkila, Vice President and Team Manager, Gartner, says: “The whole is more than the sum of its parts when all parts of the business go into the same direction. This is what planning should accomplish”.
Today supply chain planners have data available to them from every touchpoint of their business. This data, if used effectively can form a strong foundation for supply chain plans. But data is just the starting point. As the Gartner three-step process suggests, supply chain planners should use this data in a constructive manner to create actionable insights, solutions, and bring all the stakeholders on board to follow through the plan.
We know implementing an outside-in approach in supply chain planning is easier said than done. That is why our team of experts not only helps you analyze your supply chain with the help of advanced technology but also guides you in finding effective and efficient solutions to address the issues in your supply chain. Get in touch with our team to know more!
Digital and physical are reaching a point of total convergence, something that would have been unheard of 20 years ago. Companies like WholeFoods and Amazon are changing up their logistics goals in a big way, something that is likely to ripple through other similar industries.
Amazon Tips its Hand to Logistics
It’s unarguable at this point that Amazon has a knack for developing an in-house system and turning it into a massive profit generator down the road. We’ve seen it before with Amazon cloud computing when the company needed to boost its data handling capabilities. Now Amazon’s cloud drive, known as Amazon Drive has become a for-profit service that is used around the world.
So what happens when the e-commerce giant turns its eye towards logistics?
We’ve seen over the past few years that Amazon isn’t content to wait for packages to be delivered at someone else’s pace. With Amazon Prime, subscribers have grown accustomed to two-day delivery, a feat which has made smaller companies buckle under the weight of consumer expectation. Not content to rest on their laurels, however, Amazon is pushing the envelope again towards next or even same-day delivery. Banking on the fact that as more people realize they can get their items delivered even faster the more people will sign up for a Prime Subscription. And so far the gamble has paid off.
“Driven by Prime Free One-Day Delivery and Free Same-Day Delivery, it was another year in which Amazon was able to set shipping records. That was rewarded with a 4% surge in its stock. It now sports a market capitalization of $927 billion,” says the MotleyFool.
“For the holiday period, the tech giant set records for the number of people who tried Prime. In one week alone, Amazon said five million new customers either began a Prime membership or started a trial. The number of items delivered via Prime Free One-Day and Prime Free Same-Day Delivery nearly quadrupled compared to a year ago,” the Fool adds.
This year, Amazon’s in-house logistics delivered more than 3.5 billion packages compared to FedEx’s 6 billion. Which isn’t terrible when you consider the fact that Amazon started as an internet book store. What’s more, is 60 percent of Amazon customers opted to ship to an Amazon drop point to pick up the packages themselves, further pushing back FedEx, UPS, and the United States Postal Service.
It wants to control everything from shipping out of the warehouses to delivery to customers’ porches.
“It wants to control everything from shipping out of the warehouses to delivery to customers’ porches. That requires large upfront investments. In the second quarter of 2019 alone it spent $800 million to expand its one-day delivery for Prime Members. It’s also investing $1.5 billion to develop an air hub in Kentucky that’s slated to open in 2021 and will be home to fifty aircraft. Amazon announced its Delivery Service Partner program in May, enabling entrepreneurs to create delivery networks to handle last-mile deliveries for Amazon. The company is also investing tons of money into drone technology and, in June, debuted its Prime Air Drone design,” reads the Fool.
Building their own in-house logistics network means less reliance on the now “competition” and giving their customers little reason to shop anywhere else. Amazon is also hedging a bet that by using its own logistics network, it can eventually cut down on the cost of packing and delivery.
The Convergence of Digital and Physical and the Reimagining of the “Store”
Amazon building its own logistics network is also changing the landscape for the traditional brick and mortar retailers. Within the past two years, we’ve seen the fall of some major retailers like Toys R’ Us and Bon-Ton. These companies are among those that lacked the ability to grasp the importance of a digital presence and the shape of consumer expectations. As we enter into a new decade, many traditional retailers are beginning to change the way they do business, which might be the only thing that keeps them out of Amazon’s massive shadow.
“Shopping malls and physical outlets may have seen their best days for foot traffic. However, they have been given a new “lease” on life as fulfillment locations. Retail giant Target Corp. uses virtually all of its 1,900 stores as fulfillment locations, and about 80% of its online orders are fulfilled through a store. The new decade will see an increasing convergence of digital and physical operations as brick-and-mortar locations are positioned as hubs closer to the customer and e-commerce sites direct more package delivery to retail outlets, ABI Research said in a late December study,” reads an article from Yahoo! Finance.
As e-commerce takes an ever-larger share of total retail sales, the strategy and execution of delivery networks will become the axis of success.
“As e-commerce takes an ever-larger share of total retail sales, the strategy and execution of delivery networks will become the axis of success. Regardless of the industry, logistics will increasingly be the difference between an enterprise’s success or failure,” the article continues.
Even grocery stores are changing the way they serve their customers. 20 years ago, we never would have considered ordering our produce and perishables online, especially not for delivery, yet new startups like Misfits Market and Butcher’s Box are doing just that. Virtually every major grocery store chain now offers some form of digital grocery shopping where customers can order their items and have them delivered to their car in the parking lot.
These are just some of the changes we’ve seen in the past few years, but some grocery stores are taking it to a whole new level.
A True Change of Pace for Whole Foods
Perhaps one of the biggest changes in the grocery scene is what we’re seeing from Whole Foods. The organic food market was purchased by Amazon in August of 2017 and under the titan of commerce’s influence has become a supplier for other retailers. How have they been doing so far and what does that mean for their logistics network? Download our White Paper about the subject and learn how you can establish processes and systems that are in line with supermarkets and retailers’ requirements, such as On-Time and In-Full (OTIF) or Must Arrive By Date (MABD).
Small and mid-size businesses are finding themselves in a difficult position in today’s market, courtesy of the Amazon effect. Consumers now expect free shipping and in most cases they expect it to be either two days, one-day, or even same-day delivery. That’s all well and good when you have a massive financial engine to throw behind it (having your own in-house logistics and distribution network doesn’t hurt either) but for smaller companies, that’s not always an option. Instead, SMBs are left with the choice of eating exorbitant shipping fees to meet customer expectations or stick with standard delivery and risk losing their market share.
In 2020, SMBs are going to have to make some tough decisions on how they invest their shipping and logistics dollars,
Through 2019, this tension has been growing, complicated even more so by big-box retailers, Walmart in particular. In 2020, SMBs are going to have to make some tough decisions on how they invest their shipping and logistics dollars, when and where to invest in technology over team (or vice versa), and where they can go for reliable and affordable delivery options.
The Ever-Growing Logistics Challenge
SMBs are going to have their hands full when it comes to figuring out the best route to go for logistics, especially when trying to keep up with Big Box Influencers. Walmart has put a tight fist on logistics with its MABD and OTIF policies. In an effort to keep products on the shelves exactly where and when they need them, the retail superstore has begun punishing carriers who don’t deliver everything they are supposed to, exactly when they’re supposed to deliver it. Given that Walmart is an incredibly lucrative contract for carriers they will, of course, oblige. Ensuring that Walmart gets exactly what it needs.
SMBs don’t typically have that sort of clout, however. So what options do they have available to them? Understanding that their customers expect a new level of service that would never have been considered as possible 20 years ago, SMBs will have to look at alternative logistics strategies to ensure that their customers are happy while keeping profit margins in the black.
Knowing where to Source Carriers
Knowing where to source carriers from is among the top challenges for SMBs. Sure, there’s a UPS store down the street, but is that the most cost-effective means of shipping out goods? There’s also a USPS in every town on the map, but will they get products there on time? These are just some of the questions that SMBs will have to be able to answer.
All of these questions and variables make it incredibly difficult for smaller companies to come up with a stable plan for their logistics.
There’s also the matter of fluctuating shipping rates, and tightening capacity, which are subject to change with seemingly little or no notice. All of these questions and variables make it incredibly difficult for smaller companies to come up with a stable plan for their logistics. Most of them are resigned to the fact that they will have to increase their shipping and logistics budget and hope for the best.
Investing in Technology
Tech is another difficult consideration for SMBs. On the one hand, many companies realize that it’s important to have the right technology solution in place. On the other hand, it can be expensive to the point of being cost-prohibitive. What technology should smaller companies invest in? What is going to help them the most to stay relevant and viable in today’s market? These are questions that don’t always have an easy or straightforward answer and that tends to make smaller companies more hesitant when deciding how to invest their logistics dollars.
In addition to managing the relationship with shippers, it might also be time to involve the financial experts that are in your industry.
In addition to managing the relationship with shippers, it might also be time to involve the financial experts that are in your industry. Many businesses tend to compartmentalize their logistics and their C-Suite when ultimately, both have tools and skills that the other needs to not only survive but thrive. We’ve also got something to say about that as well.
Lastly, if you still have questions about how to compete with the big box stores or make your logistics dollars go further, let us know. The BlueGrace expert team is ready, willing, and able to answer your questions and to help turn your business into a lean, green, logistics machine it was always meant to be.
In the current economic scenario where businesses are shutting shops with alarming regularity, it has become necessary for organizations to diversify their supply chain. Given the importance of the subject, we hosted a webinar on the topic – From Chips to Dips in Service? Supply Chain Impact of Diversifying Chris Kupillas, VP Sales, at BlueGrace Logistics discussed the topic. They talked about why it was crucial for businesses to bring in variety in their supply chain, what factors were needed to be considered and the challenges that businesses might face in the process.
Below, taking reference from the article, we discuss why this is good for the business and how it can benefit them and other stakeholders in the ecosystem.
How does a diversified supply chain help the business?
As the quote from Greg Foran suggests, diversifying the supply chain helps businesses stay relevant. There are multiple ways in which businesses can do this. They can offer variants in their current product offering, introduce new products, introduce the business to different regions within their country or go global.
Variants and new products will allow businesses to retain customers by enabling them to cater to their ever-changing needs and demands. And entering new regions or countries will widen their customer base. A business with more products and/or serving multiple regions or countries tends to have a better chance at survival in times of economic recessions or downturns or political strife.
Is diversification only for the demand side of the supply chain?
No. For a business to be prepared for different cycles of the market, it is also important to introduce options on the supply side of the business. This means identifying new sources for raw materials, spare parts, and alternative manufacturers where they can outsource the manufacturing of their products if required. They also need to identify service providers like transporters, warehouse operators and 3PL service providers who can work with them when needed. Having these alternatives on standby or in a working relationship will ensure that in the event the regular service provider cannot fulfill the business requirement, the business will not suffer.
Diversification is great for other stakeholders in the ecosystem
A manufacturer is just one of the beneficiaries of a diversified supply chain. Other stakeholders in the business ecosystem also benefit from it. For example wholesalers, retailers, e-commerce websites, also benefit in the form of more saleable goods to offer their customers. For them, the wider the range of products, the higher the probability of making a sale. This means more business for them which ultimately generates more business for the manufacturer.
Similarly, it provides transporters and other logistical service providers with more business and regular work opportunities. Take, for example, a small transporter who is working with a company that produces only seasonal goods – let’s say woolen garments. The transporter will only get work from this organization until the woolen garments season lasts. After that, it may have to search for another client until the season rolls back again. Now, if the same company started to also produce summer wear, the transporter will not have to engage another client if it doesn’t need to. It will have year-round work from one source.
That’s not all. Diversification also empowers customers. It gives them multiple options to choose from. Since diversification also creates competition, it provides customers not only with quality options but also competitively priced products, making sure businesses work on creating better products within a set budget.
What are the benefits of diversification for the supply chain?
Now that we know why diversification is crucial for businesses, let’s look at why it is the lifeblood of it benefits the supply chain of your business.
Risk mitigation: As mentioned earlier, a diverse supply chain helps businesses sustain in less-than-ideal circumstances. It provides alternatives to continue the business even if the demand for a product goes down, or a supplier discontinues service or there is a disruption – political, nature-based, social, economic or cultural. For example, take the case of the coronavirus outbreak in China. If companies selling their products in China do not have a presence in other markets, it will adversely impact their business. Or if a company is only sourcing from China then it’s supply of material or products will be affected which would again create an untenable situation for their business.
More flexibility: A diverse supply chain provides opportunities to optimize available supply options with the demand side of the business. It gives the opportunity for businesses to divert their manpower, funds, and efforts to products or regions that are doing well. If the business operates in a single product or serves a single market, this flexibility is not available.
Negotiation power: Cost is an important factor in supply chain. A supply chain that can control its costs has a higher opportunity to improve its bottom line and earn profits. A supply chain that works with multiple suppliers and service providers has more room to negotiate better rates and service contracts as compared to the one that works with a single source or service provider.
Promotes out of the box thinking: To diversify one has to continuously be on the lookout for new opportunities to differentiate. It can be for a new product mix, design, packaging, supply, or go-to-market strategies. This helps employees develop curiosity, find creative solutions to operational problems and creates a culture of innovation in the organization.
In a world that is constantly evolving and adapting to the newest technology, it’s important that companies keep up with the changes. We are at a point in time where consumers are getting their packages delivered by drones and cars are driving themselves. The demand for flexible, accuracy, and transparency in your supply chain increases daily. According to On Time, by the end of 2020, 17% of companies will still not have embraced automation techniques. In a Third-Party Logistics (3PL) company, it’s important that we are using systems and processes that improve effectiveness and efficiency that enables business flow.
Through cutting supply chain complexity and improving
responsiveness, we rely on artificial intelligence (AI) and automation.
Artificial intelligence allows for supply chain planning, inventory management,
and customer order management. It takes the repetitiveness of trying different
processes and applying it every time in a much more efficient responsive time.
Access To Real Time Data
By having an effective TMS in place, your business can save money and make better shipping decisions.
When there is real time freight data and reports based on
history and trends in the system, we can learn from things that went right and
also things we could improve on when it comes to making better business decisions.
By having an effective TMS in place, your business can save money and make
better shipping decisions. In the past, manual data entry errors have been
extremely costly causing increased rates and unsatisfied customers. By
implementing an effective TMS, there will be less room for human error and
allows repetitive tasks to become simple. The data that your TMS can provide
also is asset to your customers, giving you the ability to enhance the
customers overall experience.
Better Customer Service
By having automation in place, you can reduce the time between ordering and fulfillment, keeping the customer in the loop and increasing customer satisfaction.
Not only can automation reduce the amount of manual labor and repetitiveness, but it can also improve the relationship with your customer and enhancing their overall experience. A TMS allows the customer to track freight, generate auto pick up, and see real time payments and accounting information. Your customer will be able to see what they are getting charged for and when the freight will arrive. By having automation in place, you can reduce the time between ordering and fulfillment, keeping the customer in the loop and increasing customer satisfaction.
A Case Study: Invoice Automation
Recently at BlueGrace, we have adopted new software that allows for invoice automation. When a customer shipment is delivered, an invoice is sent to us by the carrier. Historically, an employee would manually take the time to search for the shipment in our TMS and match up the information to the invoice. This is a time-consuming task when verifying thousands of shipments per day. However, with automated matching in place, we reduce the amount of time it takes for a customer to get invoiced. Utilizing a third party plugin, our TMS automatically verifies the information and sends it to billing if it matches up with the shipment details. This software takes out manual, tedious and time-consuming work and allows for automation step-in to make the process faster and more efficient.
There could be hesitation when implementing automation
because of the fear of losing the human element. However, that isn’t the case
when automation is improving the workforce. Employees will only perform the
essential tasks, therefore improving productivity. This also attracts a new
workforce to reflect an innovated supply chain by integrating mobility and
collaboration with customers.
We are in a world where humans and machines are collaborating, not competing for a job.
At the end of the day, a supply chain can’t function without its people. We are in a world where humans and machines are collaborating, not competing for a job. If you have questions about how automation should be implemented to achieve the most efficient, sustainable supply chain, contact us at 800.MY.SHIPPING or fill out the form below to speak to one of our experts.
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.
Crises such as the COVID-19 outbreak and the subsequent disruption to our economy and supply chains have truly brought to light the importance of effective risk management. In a world where normally reliable trade partners are shutdown for weeks or ports are closed or workers are furloughed, companies that were one minute functional are now scrambling for solutions to move goods from manufacturing to warehouse to distribution center to retail outlets. What once seemed like a well-oiled machine is now full of chaos or emptiness.
Hiring a 3PL can help companies work their way through tough times.
Hiring a 3PL can help companies work their way through tough times. A lack of resources to maintain and improve growth, lack of experience coping with crises, a deficient organizational structure or insufficiently trained or available staff are all hurdles that can be overcome by outsourcing logistics operations.
Handing off some or all logistics operations to a Third Party Logistics (3PL) provider allows companies to focus on the product or service(s) they provide without dealing with the, well, logistics of it all. Whether a company is looking for help managing their entire logistics operations or simply needs help putting together a tech stack that serves their needs and goals, 3PLs can tackle the operations that are out of their wheelhouse.
It Can Cut Costs
Because of their industry knowledge, access to top tech, highly developed networks, and the potential for bulk discounts, 3PLs may be able to help companies cut logistics costs and manage their budgets more effectively. Outsourcing can lead to the development of smarter, more efficient processes tailored to a specific business’ needs.
Reducing logistics spend through better deals with carriers and/or improved operational efficiency opens up opportunities for growth.
Reducing logistics spend through better deals with carriers and/or improved operational efficiency opens up opportunities for growth. It leaves room in the budget for improvement, whether that be through expansion, R&D, or hiring on top talent.
3PLs Provide Scalability
When you hire a 3PL to handle logistics, you’re gaining a modicum of scalability that you simply can’t get with an internal department or positions dedicated to logistics. A 3PL can provide the staffing you need during every season. A 3PL may also allow for scalability in a new location without the upfront expense associated with opening a physical location, providing expertise and connections in new shipping lanes without a dedicated staff.
Outsourcing Isn’t Without Risk
As with just about any business endeavor, outsourcing to a 3PL isn’t risk free. When a company is spending money, it’s inevitable that things could go sideways and they won’t receive the return on investment they’d hoped for. Risks involved in outsourcing to a 3PL include unexpected costs, trouble during the transition of operations from your company to the 3PL, and reduced customer service.
Mitigating the Risks
Discussions on expectations, service requirements, budget, and other pertinent details should occur before hiring a 3PL.
There are certainly ways to reduce the risks listed above. Choosing a 3PL with extensive knowledge and experience in your industry and in the type of operation you’re hiring them to carry out is critical. Look at references and reviews of the company and speak with companies who have used the provider if possible. Discussions on expectations, service requirements, budget, and other pertinent details should occur before hiring a 3PL, plus continued effective communication is important to ensuring key players are on the same page.
When times are tough, whether due to extraordinary market conditions like the ones today, or just about any other circumstances, a 3PL can help companies work through problems without the large capital outlay often required with internal operational improvements. Wondering how a 3PL could help your company through a crisis? Contact BlueGrace today to get a free supply chain analysis from one of our experts!
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!
Recall that at the beginning of the year, industry experts expected the surface freight spot market would gradually increase to make up for its decline over the past year. Every publication on the planet was encouraging shippers and logistics service professionals to start thinking about renewing their interest in contracted freight rates that would help keep freight spend under control. In addition, the uncertainty over a global trade war between the US and China was on the brink of collapse, and all signs indicated growth in the market. Then, the coronavirus became the latest hot topic in supply chain management. Shippers that wish to stay competitive need to understand a few things about the true impact of the coronavirus on surface freight and what they need to do to prepare for it now.
What’s Happening With The Coronavirus?
The coronavirus is a major threat to the global supply chain. While its spread has been largely limited to areas of the AIPAC region and a few thousand cases outside of that region, it appears to be catching fire more quickly. The mass quarantines in Wuhan applied the metaphorical breaks to production and left the Shanghai Containerized Freight Index closed for more than three weeks. Substantial drops in ocean container rate indices occurred, losing up to $100 per $800 in the time frame. While this might not seem like an issue for surface freight, it alludes to a lowering of spot rate volatility. Meanwhile, Greg Knowler of JOC.com notes that the coronavirus has not yet led to a “rapid resumption of manufacturing almost 4 weeks after the Chinese new year, factories are struggling to restart production. An advisory from UK foreign affairs stated February 17 words that China continues to restrict the movement of people in response to the coronavirus outbreak.” As the restrictions continue and grow more common, especially in areas like the US that are trying to keep the virus from spreading at all costs, the risk to spot rate markets will increase. Restricted movements effectively open more capacity and lead to the bottom falling out from the spot rate market.
Potential Ways Coronavirus May Disrupt The Surface Freight Supply Chain
The impact of the coronavirus on surface freight in the US is not yet a primary concern, reports DAT. It’s relative containment overseas and strict containment in the US means that its disruption will be menial for the upcoming weeks. However, even that is a relative example. US supply chains depend on Chinese imports, and as the factories shudder in empty silence, technology products, auto parts, and medicines and medical equipment import levels will decline. Thus, volume in the US will drop. As the drops occur, more carriers will face the problems of too much available capacity. It’s the grand irony of 2020. There were years upon years of discussions of preventing the capacity crunch, and now, there is just too much capacity to make a difference.
The potential for disruption is severe, and companies need an alternate way to ensure a disruption-free supply chain.
Of course, additional disruption risks remain. Widespread contamination of freight or spread of the virus in people could lead to mass callouts among drivers, a flat-out refusal to accept mildly ill truckers at warehouse gates, and more. The potential for disruption is severe, and companies need an alternate way to ensure a disruption-free supply chain.
How to Lessen the Impact of the Coronavirus
Let’s be clear on one area of concern. There is not a way or step that individual shippers can take to 100% stop the coronavirus from spreading around the globe. It is a virus, and it’s up to health professionals and experts to stop it. Now, that does not mean shippers are left with empty shelves and angry customers. Instead, it just implies a need for more diversity in the supply chain. Shippers need to increase the number of working carrier relationships.
Shippers should take added steps to ensure carriers comply with all applicable health and government regulations.
Shippers should take added steps to ensure carriers comply with all applicable health and government regulations. More visibility into truck location and ETA can also provide peace of mind to ensure shippers are not on the verge of interacting with truckers or others that were recently exposed to locations with a high volume of viral activity and potential effects of coronavirus on surface freight movements.
Ensure you can always find available capacity and routes by leveraging an advanced transportation management system (TMS).
Compared to the flu, the coronavirus is more life-threatening when people fail to take basic precautions, such as hand-washing, not touching the face, and staying home when ill. With that in mind, shippers should take those basic steps and radically evolve their logistics management operations to secure more drivers, more carriers, more trade lanes, more stops (or vice versa), and more suppliers. In other words, it is time to scale the supply chain network upward to find more suppliers and available business-to-business service partners to avoid disruptions. Also, do not cut your shipping volume due to the coronavirus. Instead, ensure you can always find available capacity and routes by leveraging an advanced transportation management system (TMS).
Vaccinate Your Organization Against The Coronavirus With A BlueGrace Partnership
Using a TMS is one critical way to vaccinate your organization against the coronavirus. If it is going to spread, you cannot necessarily stop it. However, taking the step of investing in a quality relationship with a TMS vendor and third-party logistics servicer, such as BlueGrace, will have a protective effect and help keep your business in business even as the virus spreads. Find out more about how to get started by completing the form below or call us at 800.MY.SHIPPING today.