Every company has contingency plans for when things don’t go as expected. Whether it’s a backup supplier in the case of a material shortage; or a different carrier for when capacity gets tight. However, when the weather picks up, is your supply chain ready to weather the storm?
Major weather events pose a significant disruption for supply chains, and hurricanes are no exception.
Major weather events pose a significant disruption for supply chains, and hurricanes are no exception. High winds and torrential rains can make travel all but impossible. Flash flooding and road damage can make typical routes impassible. After the more severe storms, much of the carrier capacity is consumed by rebuilding and relief efforts. All in all, if you don’t have a solid plan, you could find your supply chain washed out.
To that end, we want to make sure that your supply chain is prepared. We believe that there is no such thing as being over-prepared, especially when it comes to hurricane season. We’ve created our 2020 Hurricane Preparedness Guide to help you make sure your supply chain is protected. But first, take a look at what’s expected this hurricane season.
2020 is set to be a Record-Breaking Year for Hurricanes
With the way the year has gone so far, is it really any surprise that 2020 is already breaking records for hurricanes? So far, the Atlantic Hurricane season is already in full swing, well ahead of the peak month which is typically September. Hurricane Isaias which caused significant damage on the east coast was the earliest ninth named storm on record. Now, the National Oceanic and Atmospheric Administration (NOAA) is predicting that even more records might be broken in the upcoming months with at least 10 more named storms.
The updated outlook released Thursday calls for a total of 19 to 25 named storms
“Theupdated outlook released Thursday calls for a total of 19 to 25 named storms (winds of 39 mph or greater), of which 7 to 11 are expected to become hurricanes (winds of 74 mph or greater), including three to six that could become major hurricanes (winds of 111 mph or greater). This update covers the entire hurricane season, which ends Nov. 30, and therefore includes the nine named storms to date,” reads a recent Washington Post article.
According to the National Weather Service Director, Louis Uccellini, 95 percent of hurricanes and major hurricanes, form between August and October. “In over two decades of issuing storm warnings and forecasts, NOAA has never predicted that as many as 25 named storms would form in a single season,” says the Post.
The Long List isn’t Quite Long Enough
Interestingly enough, the list of names that are assigned to storms is predetermined ahead of time by the World Meteorological Organization. As it stands, there are only 21 names left on the Atlantic list. Afterward, forecasters will have to resort to using characters from the Greek alphabet. This has happened only one other time, back in 2005, which was the most active hurricane season on record.
NOAA’s Initial Predictions Might have been Too Optimistic
The initial prediction from NOAA, which was released in May, called for a 60 percent likelihood for an above-average level of hurricane activity. The prediction called for a 70 percent chance for 13 to 19 named storms, with six to 10 having the potential to become hurricanes. Of the predicted hurricanes, three to six could become major hurricanes with a Category 3 rating or higher.
The updated forecast now places the chance for an above-average season at 85 percent, 24 named storms, which include 12 total hurricanes, five of which will be major.
The season has the potential to be one of the busiest on record, NOAA said.
Battening Down the Hatches
A busy hurricane season in of itself has the potential to be devastating to businesses along the coast. Supply chains can very easily become disrupted as carriers are pulled away to haul for humanitarian aid for the places most heavily affected. Couple in the fact that storms will continue to hit in quick succession, leaving little time for roadways and other necessary infrastructure to be repaired and you have the perfect recipe for disaster.
For companies that manage extensive supply chains along the Atlantic coast, now is the time to begin preparing for the rough season ahead. Fortunately, we here at BlueGrace have a lot of first-hand experiences with Hurricanes, being based out of Tampa Florida. Working with shippers and carriers alike, we have our 2020 Hurricane Preparedness Guide down to a science. Don’t get caught unprepared, download our white paper today!
Investors are turning to AgTech in recent years, and it’s no mystery why. While much of the tech boom of the past couple decades has focused on saving time or money and entertainment, AgTech embodies higher ideals. The global population is predicted to grow to 9.8 billion by the year 2050, an increase that exceeds today’s food production capacity, so this technology is critical not only to moving humanity forward and reducing emissions, but to our survival.
On that dire note, let’s talk about what’s new in AgTech this year.
Tech-Savvy Farm Equipment
Farm equipment today isn’t your grandpa’s tractor, and it’s getting cooler by the day.
Drones are being developed to collect crop data, spread pesticides, selectively irrigate dry sections of fields to conserve water while improving yields, and even plant crops with utmost precision. Autonomous robots like the TerraSentia are being used to track plant health and field conditions. Custom farming is being carried out by autonomous vehicles (driverless tractors), as developed by up-and-coming AgTech company Sabanto. Wearable devices for animals are being developed and refined to monitor health, potentially heading off illness or other issues.
Data-Driven Farming and Land Management
As is the case in other industries, data and analytics are playing a big role in AgTech. Some data collection is being facilitated by specially developed devices as are mentioned above, but other data is gathered through networking.
Great data makes way for great analytics, helping to drive the ag industry
Great data makes way for great analytics, helping to drive the ag industry, from the fields to the boardroom, towards smarter, leaner, more productive operations.
Supply Chain Improvements
To get in line with recent years’ connectivity improvements in other industries, much of the agriculture industry is moving to more connected format. IoT sensors are being used to help track food through the supply chain, creating better accountability and understanding from fields to retail shelves. Companies like Intelliconn, with their VeriGrain data management program, are creating food supply chain game-changers.
Through networking, farmers and other supply chain players in the agriculture business are finding ways to communicate faster and better
Through networking, farmers and other supply chain players in the agriculture business are finding ways to communicate faster and better. When pricing, product information, and other pertinent data becomes readily available, everyone involved can make better decisions.
AgTech isn’t necessarily a new revelation. Farmers and ranchers have been looking to new tech to improve their operations for centuries, but the food supply chain is evolving faster than ever.
AgTech isn’t necessarily a new revelation. Farmers and ranchers have been looking to new tech to improve their operations for centuries, but the food supply chain is evolving faster than ever. Wondering how you can keep up? Call us at 800.MYSHIPPING or fill out the form below to set up a consultation with one of our supply chain experts who can help you springboard your agricultural logistics operation into 2020 and beyond.
To a large extent, Supply Chain and uncertainty go hand in hand. Driver delays, transportation failure, strikes, hike in fuel prices, carrier capacity shortage, vendor hold-ups, thefts, and fires at warehouses are all common issues in the supply chain ecosystem. Most supply chain leaders are not only aware of them but also have alternate plans or solutions ready to tackle these issues as and when they arise.
However as supply chains become increasingly global in nature, businesses not only have to contend with minor uncertainties but also have to manage larger global disruptions that may threaten their very existence. These disruptions are like black swan events which no one can forecast or plan for in advance. They arrive on the horizon suddenly and upset the status quo, often requiring a rearrangement of how the business functions and manages its supply chain in the future.
What Global Disruptions does the Supply Chain need to be aware of?
Globalization has added a layer of complexity to business operations. Now businesses have to keep an eye on what’s happening around the world and be able to identify possible threats to their business in all the countries that they operate in or source raw materials from.
Natural disasters are the most common global disruptors. Wildfires, earthquakes, hurricanes, storms, and floods can interrupt regular operations for a long time in the country that they happen in. It can take years to rebuild factories and get them operating at optimum capacity. For example, according to reports, the 2011 earthquake and Tsunami in Japan had caused grave damage to infrastructure and manufacturing facilities in the country. Given the wide scope of Japanese companies’ operations, the impact of the earthquake and Tsunami was felt by their business partners around the world.
Political and Trade Relations:
Cordial political and trade relations amongst the governments of the originating country and the nations that the organization wants to do business are a must for smooth operations. If there’s any change in the relationship either political or trade, it can become difficult for the business to carry out its business activities without disruptions. A recent case in point is the ongoing trade war between China and the US. This has not only soured relations between the two nations but has also created a tumultuous situation for other nations involved in international trade with the two countries.
Similarly, an unfavorable change in foreign trade policies – without the threat of a trade war – due to political fallout or change in the growth strategy can make it hard for foreign businesses to sustain long term in the country.
Another factor that can derail supply chains across the globe is an economic recession. If any of the major economies of the world like the US, China, Germany, India, France, and the UK experience an economic downturn it is bound to impact the nations that it does business with. A major economic failure can also lead to a global recession like the 2008 global recession which led to many businesses closing shop or limiting their reach to certain geographies only.
Since digitalization and technology have become an integral part of the supply chain, another threat that can cause great damage to not only the business but also customers are cyber attacks. These attacks on technology and systems can impact a business’s reliability, trustworthiness, and endanger the trade and even personal data.
Unlike the regular supply chain disturbances, these threats are unforeseeable and due to their unpredictable nature, not easily manageable. Each event – even if it is of the same kind – requires a specialized and unique response.
The better prepared a supply chain is to respond to a sudden event, the more likelihood of it overcoming the challenge and sustaining its operations. Hence, now more than ever it has become critical for supply chains across the globe to assess themselves against invisible threats and prepare to deal with black swan events as and when they occur.
What can you do to make your supply chain ready to weather disruptions?
While there is no fixed roadmap on how to deal with these kinds of threats, there are a few steps that businesses can take to safeguard their interests and bounce back with minimum possible damage.
Imagine the unimaginable: Organizations now need to think ahead and plan for events that may or may not happen. It is critical to simulate scenarios that can disrupt your business and find solutions to overcome them before these scenarios play out in the real world. Create a contingency plan for what-ifs: for example – what would you do if an earthquake struck your manufacturing facility or if one of your vendors had to temporarily close down business because his unit was in the eye of the storm? Do you have an alternative option? If not, then that’s where you start your planning.
Find substitute suppliers: We have often highlighted the importance of having multiple trusted vendors on board. There’s no better time than now to reiterate this point. Find vendors in different regions when the business and the world is functioning in normal conditions. Try out a few transactions with them and work on building a relationship with them. Access to vendors in different regions can help keep the business running even if there’s some disturbance in one region or country. This will enable you to keep your supply chain functioning.
Build alternative service providers and business partners: It’s not just the suppliers that you need to keep your supply chain up and running. Along with a roaster of trusted suppliers you also need to build a repository of other service providers and business partners such as transporters, shipping lines, warehousing facilities in all the regions where your business operates. This is critical because if you have to shift your business from one sector to another due to some contingency, you will know who to hire and partner with.
Identify the pain points of your supply chain: No business or supply chain is perfect. Some have a strong inventory management system but a poor relation with transporters. Others have a rigorous forecasting procedure in place but struggle with people management or may have customer issues. Any of these weak points have the capability to be further aggravated during an emergency. Hence, it is critical to know the pain points of your supply chain and work on finding viable solutions.
Make data security a priority: In the current scenario where technology is a part of every function and system within an organization, data security has become critical. It’s not just your business data that is at risk, but also the information that your customers and vendors share while doing business with you that is in danger. Even a small breach of data can put your and your customers or business partners at risk. So make technology and systems audit an integral part of your organization.
Learn from past disruptions: Maybe the earthquake in Japan did not impact your business or the hurricane Katrina did not affect your region, but it did cause damage to other businesses and regions. Observe what they did to get their business and supply chain up and running. Find out what were the difficulties they faced, learn from them, and find solutions for such situations that are viable for your business.
Analyze, Analyse, and Analyse: We can’t emphasize the importance of carrying on an ongoing analysis of your supply chain. This is the only way where you can not only find out the risk to your business, but also identify threats and challenges, and work on solutions to mitigate them before they become unmanageable.
Will the analysis help in mitigating risks from black swan events? If you keep these threats in mind while conducting analysis, then it will help build awareness among your team and urge them to work on finding viable solutions.
If you need any assistance in starting your supply chain analysis journey, then get in touch with our team of experts today!
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.
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!
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.
Amazon has already proved its mettle in the e-commerce space and in the distribution sector. Earlier in the year the company also staked its claim in the digital freight brokerage industry. Now, it has set its sight on the grocery business.
Amazon’s Grocery Connect
Unlike its other ventures, the retail giant’s foray into the food and grocery business has not been profitable — at least not yet.
For the uninitiated, Amazon is not new to the food business. It has been operating in the food and grocery sector since it acquired Whole Foods in 2017; Amazon Go stores; and its fresh grocery delivery service. However, unlike its other ventures, the retail giant’s foray into the food and grocery business has not been profitable — at least not yet. According to an article published in The Motley Fool, Amazon’s CFO Brian Olsavsk speaks about the company’s latest quarterly results saying, its sales from physical stores, which are principally Whole Foods revenue, were actually down by 1.3% from the previous year — “this is the only major segment of Amazon’s net sales that didn’t show any growth”.
This has not dissuaded the company from making further investment in the food and grocery business though. Early last month, it announced its plans to launch a new brick and mortar food and grocery store brand. The first store will be opened Woodland Hills, California in 2020. This new business will be separate from its existing food and grocery business.
With this announcement, one can say with certainty that for next year, one of Amazon’s major business goals will be to acquire a large slice of the global grocery and food retail market which is estimated to be worth USD 12.24 trillion by 2020.
What will be different in the new venture?
While Amazon has a presence in the food business, its reach has been limited. According to news reports, Amazon is aiming to reach a wider customer base. While Amazon’s Whole Foods business caters to the high-end customer, the new stores will be designed to cater to mid and low-income households. The new stores are expected to enable Amazon to offer their customers a range of products more in line with other large retailers like Walmart, Costco, and Kroger.
In an article in Forbes retail expert Neil Stern, explores in-depth what the customer can expect from Amazon’s yet to be named new grocery venture:
The new store will be omnichannel from the beginning
It will have ample space for in-store picking and holding facilities
The focus will be on mainstream products
It will be more price-competitive than the Whole Foods business
It may focus more on Amazon’s private label
Will technology be a part of the new venture?
Anything that Amazon does is powered by technology.
Anything that Amazon does is powered by technology. So it goes without saying that technology will be a large part of the newly announced grocery venture as well. In his article, Neil shares that the new store might not be as tech-savvy as the facilities available at Amazon Go stores. Further adding that technology in the new store might not be immediately scalable.
Irrespective of the level of savviness, we can safely assume that technology will play an important role in the store, if not initially, then going forth.
What’s in it for you?
Anyone associated with the business world knows, Amazon works on a large scale. The new grocery venture will sell a wide range of products. To run this operation efficiently and competitively, Amazon will need to source products from a variety of suppliers. And for this, the e-commerce behemoth will need to enlist a large number of suppliers.
While working with a large scale operator like Amazon has its perks, it also has stringent requirements. Organizations like Amazon expect high quality, regular supply of goods, and adherence to delivery timelines from their suppliers. Given the fact that the e-commerce giant is a technology-driven company, it will also look for tech-savviness in its business partners.
So, what are the qualities required to become a supplier for such a large scale venture?
You need to have a rigorous inventory management system, a strong forecasting technique, and a well-managed distribution center.
While the company will share what it would look for in a supplier, there are a few things that are usually expected from suppliers working with large scale multinational companies such as Amazon:
Quality products: There can be no compromise on this ever. The product, packaging, and delivery all have to follow a set standard. Any deviation from the standard can lead to losing the contract.
Technology: Technology is gradually taking over the retail space. Data transfer, reports, and invoicing are all done electronically, usually with the help of specialized software. Suppliers need to ensure that their organization is not only able to transfer required data in a systematic way electronically but is also connected internally through technology. This will help ensure both accuracy and speed in work and data exchange.
Strong supply chain: A robust supply chain with end-to-end visibility is an essential requirement to do business with large scale organizations such as Amazon. For this, you need to have a rigorous inventory management system, a strong forecasting technique, and a well-managed distribution center.
Reliable transporters: Another important factor in successfully servicing a large retail store chain is a reliable transporter/carrier with a well-connected network and a good track record of on-time delivery.
The food and grocery retail landscape is set to change with new technologies being adopted by the retail leaders. To cater to them and work alongside them, their suppliers will also have to deploy modern technology in their business. This is where we can work with you to make your supply chain – Amazon ready or any food and grocery retail business ready. To know how we can assist you in getting there, connect with our team at 800.MY.SHIPPING or fill out the form below.
Technology has become synonymous with supply chains. It’s not only creating new and innovative products to support global supply chains, but is also rapidly changing how the industry operates. These new technologies are being leveraged by both traditional and tech-first logistics companies in the freight and logistics space to help build digital and integrated supply chains that provide end-to-end visibility to all the stakeholders.
According to this report by Gartner, released in January 2019, the top technology trends for the year were artificial intelligence, advanced analytics, IoT, robotic process automation (RPA), autonomous things, digital supply chain twins, blockchain, and immersive experience.
Others like artificial intelligence, autonomous things, blockchain, and robotic process automation are comparatively new and yet to be explored fully.
While all the above technologies are gaining ground in the industry and are being used to solve supply chain problems, some of them like IoT and advanced analytics have been around for a while and are familiar. Others like artificial intelligence, autonomous things, blockchain, and robotic process automation are comparatively new and yet to be explored fully. However, 2019 did see some of the newer technologies making big strides and are expected to be in trend in 2020 as well. They are:
Autonomous trucks: We’ve been hearing about autonomous trucking for a while now. In 2019 autonomous trucking gained a lot of ground with a few companies in the sector ready to roll out their self-driving trucks on the road. Some companies making news in this sector are TuSimple which got funding at the beginning of 2019 and Plus.ai, a Cupertino, California-based startup, that has already tested its autonomous truck on the road. Plus.ai’s autonomous truck has made the world’s first cross-country trip to transport butter to a town in Pennsylvania. The autonomous trucking industry is expected to keep up the momentum in 2020 also. According to an article in Supply Chain Digital, Allied Market Research has forecasted that the global market for autonomous trucks is expected to cross $1 billion this year and show a growth rate of 10.4% every year up to 2025.
Blockchain: While Blockchain technology has been around in the logistics and freight industry for a few years, there’s still a lot of scopes to explore this technology. Last year, TradeLens – a blockchain shipping platform developed by Maersk and IBM finally started picking up after a lackluster start. According to a news release on Maersk’s website, the platform will now be used by MSC, CMA-CGM, Hapag-Lloyd, and ONE. The success of platforms like this will help in getting more companies in freight and logistics to explore blockchain technology. More supply chain partners on a single blockchain-enabled platform will help facilitate the timely and safe exchange of data among the various stakeholders, even competitors, and enhance traceability, reliability, and transparency in the system.
Artificial intelligence: The Gartner report had listed artificial intelligence as one of the promising supply chain trends of 2019. Since all technologies that require a certain level of responsiveness and user interaction are empowered by artificial intelligence, this is one technology that will evolve with new technologies and needs of the industry. So in 2020 also one can expect AI to be an important part of the technological revolution in multiple supply chains.
Robotic process automation: Robotic process automation (RPA) is an artificial intelligence software that helps program robots to carry out standard processes without intervention. It is also useful in programming robots to collect data while they are doing their set activities. According to a 2019 Gartner press release, in 2018, the global market for robotic process automation grew 63%. The research firm expected the revenue in 2019 to reach $1.3 billion. Similar to AI, the RPA software demand will grow along with the deployment of robotics in supply chains.
Digital supply chain twin: A digital supply chain twin has been defined as a replica of the real-world supply chain function. The digital platforms that helped integrate all organizational functions and manage and monitor the processes digitally have now given way to more sophisticated systems that present a mirror image of the on-ground supply chain functions. These digital replicas are making it easier for organizations to simulate the real-time supply chain, identify plausible issues and take preemptive actions. This kind of technological representation of the supply chain is expected to be one of the top trends in 2020.
While technology forms a critical part of understanding where the logistics and freight industry is headed, it is not the only factor.
These are just some of the main technological trends of 2019 that are expected to continue getting focus in 2020 and probably even in the next few years as well. While technology forms a critical part of understanding where the logistics and freight industry is headed, it is not the only factor. There are other aspects like regulations, laws, economy, and freight rates that help determine the fate of the supply chain. To know how the industry fared on these counts on the year gone by and how these aspects are expected to impact the logistics and freight community in the new year, register for our webinar: State of the Logistics Industry here.
In addition to connecting with industry experts and gaining insight into where the industry is headed in the new year, all registered webinar attendees will also have the option to get a free supply chain analysis and optimization study based on their current data! Get in touch with our team at 800.MY.SHIPPING or fill out the form below to find out more.
There is absolutely no doubt that we have entered into a new era of technology. As computing is getting more powerful, many technologies that were once science fiction are now either on the horizon or already here. Artificial intelligence, machine learning, and automation are three of the biggest hot tech topics out there.
While there is certainly a potential for job loss as this technology reaches maturity, that’s not likely to happen any time soon.
Of course, whenever new tech starts to hit the market, there is speculation as to what it means for the already existing framework of our reality. In this case, what do automated vehicles and AI mean for the truck driving industry? Currently, truckers move over 70 percent of all U.S. freight, by weight. The speculation is that we’ll see some 2-3 million jobs fall to the wayside as a result of emerging tech over the next few years. While there is certainly a potential for job loss as this technology reaches maturity, that’s not likely to happen any time soon.
According to the study: Industrial and Labor Relations Review, there is always a measure of attrition in terms of job loss when a new technology is introduced to an industry. However, there are three key reasons why truck drivers won’t be going away any time soon.
There’s More to Trucking than Just Driving
While it might seem like a truck driver has a fairly simple job of driving the truck from point A to point B, there’s a lot more to it than just that. Truck drivers also perform a number of other tasks in their daily routine. Everything from checking the status and upkeep of their vehicle and securing cargo, maintaining logs and invoices, and perhaps most importantly, customer service. While some of these tasks such as logs and vehicle status might be automated in the future, the technology isn’t there yet and some of those tasks aren’t even close to being ready for automation. For example, a smart sensor in the truck might be able to detect an imbalanced load or a flat tire, but it falls to the driver to fix that issue before rolling on down the road.
Customer service is also an incredibly important task of the truck driver
Customer service is also an incredibly important task of the truck driver, especially when you consider that customer service is one of the key distinguishers between companies today. Service needs a face, a smile, and a friendly voice and it’s that human interaction between the driver and the company that provides those necessities.
Fully Autonomous Trucks are Still on the Horizon
Just looking at the task of driving itself we can see that there are still quite some ways to go before trucks no longer need a driver. The Society of Automotive Engineers has developed the current standard to define automated vehicles on a scale of 0 to 5 with 0 being no automation and 5 being a fully automated and capable self-driving vehicle. Obviously, the amount of necessary human interaction/control goes down the higher up you go in the scale.
In fact, there tends to be a bit of sensationalism when it comes to headlines for automated vehicles. What we end up seeing is the full level 5 tests being touted as broad-scale implementation. These tests are very rare and conducted under carefully controlled conditions. In actuality, what we will see is somewhere between levels 2 to 3 where a human driver’s capabilities are augmented by robotics and automation. For example, the autonomous drive feature could take over for highway driving but for rural or city driving, it would be under human control.
Assume for a moment that level 4 automation was target for the trucking industry, how many jobs would that actually affect?
“Most of this development is focused on automating the long-haul/interstate portion of a truck trip, not short haul or local truck moves. We estimated the proportion of trucks in the U.S. that are used for long hauls, using the Vehicle Inventory and Use Survey (VIUS), last updated in 2002,” says an article from HBR.
“According to our computations, roughly one-quarter of all heavy trucks are used in long hauls of 201 miles or more, compared to roughly half of all heavy trucks used in relatively short ranges of operation (50 miles or less). Given that truck automation is currently targeted at these longer hauls, we are looking at potential job losses for roughly one-quarter of heavy truck drivers, or about 450,000 drivers, as the technology becomes more sophisticated and reliable over time and as regulatory obstacles are overcome,” HBR adds.
That is still a fairly significant number, but it is far from the millions of jobs lost that is being predicted now.
There’s Actually Fewer Drivers than People Think
Many of the sensationalized articles that are proclaiming the untold job loss at the hands of automation are also exaggerating the actual amount of human truck drivers employed in the United States. Most of the articles put the number around 3 million drivers when, in fact, that number is quite a bit smaller, meaning there are less jobs that can be lost due to the “total automation” scenario.
The federal government’s Standard Occupational Classification (SOC) system has a category called “Drivers/Sales Workers and Truck Drivers”, which is then divided into three smaller groups: “driver/sales workers”, “light truck or delivery services drivers” and “heavy and tractor-trailer truck drivers.”
The total pool employed within the broad heading is where most of these articles are getting the 3 million driver figure from. However, many who fall under one of these employment categories aren’t actually drivers or, if they are drivers, don’t fall under the risk of job loss due to automation.
Truckers Will Stay on the Road
Even if the technology for consistent level four technology was here, there would still be a heavy amount of government regulation to get through in order for it to be fully adopted throughout the industry. As there are so many variables to consider, there would likely need to be a massive infrastructure change for trucks to reach a level of autonomy that would completely remove human drivers from the picture.
It is fair to say, however, that as the technology continues to develop, we’ll likely see the amount of human drivers start to change roles.
It is fair to say, however, that as the technology continues to develop, we’ll likely see the amount of human drivers start to change roles. Instead of being phased out entirely, we’ll likely begin to see re-skilling of drivers into a different role that will continue to support the trucking industry. In light of all the challenges the industry is already facing, this could be a turn for the better.
The 24th Annual Third-Party Logistics Study for 2020 has been released and it shows a growing success between shippers and their 3PL partners.
“The majority of shippers, 93%, report that the relationships they have with their 3PLs generally have been successful. A higher number of 3PLs, 99%, agree that relationships have generally been successful,” the study says.
As 3PLs continue to offer a wider array of services, shippers have been eager to leverage what they have to offer.
The study continues to find that shippers and their 3PL partners are developing a much greater awareness and synchronicity of goals, as well as how data sharing and new technology can help them advance those goals. As 3PLs continue to offer a wider array of services, shippers have been eager to leverage what they have to offer. The result is an optimization of the supply chain, reduced costs, and the creation of overall value within the supply chain.
“This year’s study once again proves that shippers and their 3PL providers are strengthening their relationships and continually moving toward meaningful partnerships. They are collaborating to accomplish their supply chain goals and improve efficiencies. The available evidence confirms that both parties are creating reliable solutions and improving the end-user experience for the customer, which is allowing shippers to use the supply chain as a strategic, competitive advantage.”
3PLs Are Rising to the Occasion
Currently, both shippers and 3PLs have been enjoying favorable economic conditions both at home and abroad. That is not to say that it has been a perfectly smooth road as both continue to face challenges in transportation capacity and facility-based resources. However, the relationship has proven to be beneficial to both parties as they’ve worked together to overcome tight customer deadlines and raise both customer and consumer satisfaction levels.
Another advantage to the relationship between 3PLs and shippers is the ability to adapt to and overcome challenges .
Shippers, of course, have higher expectations of their service providers and third-party providers have responded by increasing not only their service offerings but also their innovations when it comes to overcoming challenges within the current market environment. Simply put, transportation and logistics companies are realizing that the focus needs to be placed on digital capabilities, cost and asset efficiencies, and a broader range of services to meet their customers’ needs.
Current Global Market Challenges
The logistics and freight industry is in a state of flux currently. New technologies, tighter regulations, and growing customer expectations are all forcing necessary changes to the supply chain. According to the 2020 study, here are some of the biggest challenges shippers and 3PLs are facing to date.
Growth of e-commerce: E-commerce and the “Amazon effect” have had a tremendous impact on brick and mortar retailers. The result is that many of them are branching out into omni-channel marketing and distribution to meet customer needs. This adds a whole new layer to existing logistics and supply chain structures.
There are both domestic and global economic changes that are putting pressure on supply chains to adapt and react.
Economic uncertainty: There are both domestic and global economic changes that are putting pressure on supply chains to adapt and react. Many of these include sourcing new suppliers and improving cross border relationships with trading partners. There are also signs of slowdowns within certain major global economies which will soften demand and create new challenges for shippers.
Driver shortage: This problem is not unique to the United States, but it’s certainly one of the most prevalent locations. With the average age of the American truck driver approaching retirement, there is a decided lack of interest in younger generations to get behind the wheel. ATA’s chief economist, Bob Costello estimates that the current 60,000 driver deficit could reach 160,000 by 2028.
Disruptive technologies: While disruptive technology breeds innovation within the industry the difficulty of adapting and integrating these new technologies also increases. Some of the disruptive technologies impacting supply chains include the use of drones, autonomous vehicles, cloud-based capabilities, artificial intelligence (AI), internet-of-things (IoT), blockchain.
While dealing with all the above challenges, there’s also the challenge of keeping pace with the competition.
Competitive challenges: While dealing with all the above challenges, there’s also the challenge of keeping pace with the competition. Especially as there is a new start-up for every day that is poised to disrupt businesses, business models, or even entire industries. This applies to all, trading and manufacturing companies, as well as logistics providers, who are attempting to differentiate themselves from a growing number of startups backed with millions of dollars worth of venture capital investments.
The take away from the survey is that shippers and third party providers are growing and prospering together.
The take away from the survey is that shippers and third party providers are growing and prospering together. As new challenges arise, shippers are looking to 3PLs for answers, innovations, and solutions. Conversely, 3PLs are looking to build long term and steady relationships with shippers as the number of providers continues to grow.
With growing uncertainty in the geo-policitical arena, new technologies, and the explosive growth of e-commerce, it’s likely that we will continue to see growth in the relationships between shippers and 3PLs. For more information on how BlueGrace can be the partner to help strengthen and bring visibility to your supply chain, call us at 800.MY.SHIPPING or fill out the form below to speak to one of our experts.
According to the 2020 Third-Party Logistics Study, data analytics is not only becoming more viable in the logistics industry, but it’s also becoming a necessity and make a difference. With the growing storm that is e-commerce, brick and mortar retailers have had to step twice as fast in order to stay in the game. Especially, when you consider some of the power plays made by the internet titan, Amazon. As one of Amazon’s biggest sources of competition for domestic goods Walmart, in particular, has tightened their game up significantly.
In particular, Walmart uses some stringent policies to ensure that shelves stay stocked and goods are arriving exactly when the retail stores need them to. First is the Must Arrive By Date (MABD) provision, which means that suppliers must have deliveries to the store within a certain delivery window, typically four days, while also having a high invoice accuracy. This is a fairly standard industry practice for retail stores to ensure timely deliveries.
Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item.
However, Walmart as since followed that up with their heavy-handed On Time In Full (OTIF) policy. Now suppliers must have deliveries at the store within a two-day window, no later and no earlier either (even early deliveries will still be penalized.) Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item.
As of April 1st of 2018, the company made the policy even harder. Prior to then, the OTIF policy stated that full truckload shipments needed to meet a 75 percent OTIF rating and less-than-truckload shipments needed to meet 33 percent OTIF to avoid fines. Now, FTLs are required to meet an 85 percent standard (down from the lofty 95 percent they had originally planned) while LTL requirements have increased to 36 percent. In addition to the chargebacks, too many violations could cause a shipper to fall out of favor with Walmart and lose supplier status, which would be a major financial hit for most companies.
But what happens if demand is peaked and capacity is booked?
For shippers, OTIF can make for a tight schedule. But what happens if demand is peaked and capacity is booked? What if there’s a major weather event that has the logistics network scrambled? Shippers need better tools at their disposal to keep things running smoothly, and that’s where data analytics comes into play.
How Analytics can Make a Difference
There is a truly astounding amount of data that can be captured within the supply chain. As more companies begin the process of digitizing their operations and automating their systems, just about everything can be tracked, traced, quantified, and speculated. The challenge, however, is making sense of it all. There is such a surplus of data that it leads to a sort of data overload and can turn even the most avid analyst catatonic.
Analytics turns this vast amount of information into insight, according to the 2020 Third-Party Logistics Study by Infosys Consulting, Penn State University and Penske Logistics presented at the CSCMP Edge conference in Anaheim, California. And with this insight, “you stand a much better chance of improving your operations,” says John Langley, professor of Supply Chain Management at Penn State University.
Real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.
To some degree, the logistics industry has already started to use real-time data and analytics. Langley sites dynamic pricing in freight for an example. Here, real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.
For shippers, there is a wide array of challenges they encounter on a daily basis. Of the shippers that responded to the 3PL study, many agreed that the use of analytics would be helpful to many facets of their operations as well as overcoming the challenges they face day to day.
Type of problem
% of shippers who said analytics would be helpful
On-time and complete order fulfillment
Freight costs per shipment
Cost to serve
Order-to-delivery cycle time
Langley says that analytics is ideal for tracking and improving a KPI like Walmart’s OTIF, because the policy itself is a compound metric. And while it might be easy to villainize Walmart from a shipper’s perspective, they aren’t the only company to use aggressive tactics like this. Target, Kroger, Costco, and others are also tightening their regulations in order to keep their shelves stocked.
Learning From Your Mistakes
Perhaps one of the most powerful tools of data analytics is it gives you a different perspective of your operations and allows you to drill down to pivotal details. Why was your shipment late? Why were there missing pieces? Analytics can determine the cause and effect relationships to target the root cause of the issue while sorting out coincidence and other anomalies. In other words, real-time data analysis allows you to track where things went awry and focus on improving operations so that particular issue doesn’t happen again. “If you can measure it, capture it, analyze it, you can use it to your advantage in terms of knowing more about your own processes,” Langley says.
Getting to be a supplier for Walmart is no small matter.
Getting to be a supplier for Walmart is no small matter. For companies that already have that title, keeping it is important. However, even shippers that don’t have the best scorecards, analytics can prove to be a useful bargaining chip. If you’re able to prove yourself, and that you have the right measures in place to improve operations, it’s likely that you can demonstrate your worth as a supplier and make it to the “in” list.
For a better understanding of how to navigate OTIF and other ways to improve your operational efficiency, check out our white paper: Walmart: the retail-supplier relationship. You can also speak with one of our experts by calling us at 800.MY.SHIPPING, or filling out the form below.
Managing cash flow, planning the financial outlay, keeping the balance sheet in order, and ensuring all financial compliances are met are a CFO’s core job function. But this is not all that a CFO does. The CFO is also responsible for identifying opportunities to reduce operating costs without sacrificing the quality of the products and services offered by the company.
But is it a good strategy to wait for things to go wrong to ask the CFO to step in?
Supply chain and transportation are two of the biggest cost centers in an organization. The cost for these functions is measured as a percentage of sales and differs from industry to industry. However, according to this McKinsey study, most industries report supply chain and logistics cost in the range of 1.8% to 10%. When costs remain within the industry parameters, supply chain and logistics are usually given the leeway to make their financial decisions. The CFO steps in only when the cost rise above the set industry norms or in case any other financial abnormality is noticed. But is it a good strategy to wait for things to go wrong to ask the CFO to step in? Wouldn’t the supply chain and the organization as a whole benefit if the CFO is a part of the supply chain decision making?
What Does the Corporate World Think of CFO’s Involvement in the Supply Chain?
The necessity of CFOs involvement in supply chain is not a recent phenomenon. A 2013 study by Ernst & Young aptly highlighted the importance of CFO’s involvement in the supply chain. Ernst & Young surveyed 423 CFOs and heads of supply chain around the globe to understand their view of a CFO’s contribution to the supply chain.
According to the results of the survey, of all the respondents, “only 26% finance executives and 21% supply chain executives said that the CFO’s contribution to the supply chain is based around a business-partnering model”. But this trend seems to be gradually changing as “70% of CFOs and 63% of supply chain leaders responded that their relationship has become more collaborative over the past three years”.
Organizations that have a collaborative relationship between the CFO and supply chain also tend to perform better.
The survey also revealed that those organizations that have a collaborative relationship between the CFO and supply chain also tend to perform better. “Among survey respondents with an established business partner model in place, 48% report EBITDA growth increases of more than 5% in their company over the past year, compared with just 22% of those that have not yet adopted this approach.”
In the past five years, the demand for CFO’s involvement in the supply chain has only grown. Last year, an article in the European Financial Review spoke about the book What CFOs (and Future CFOs) Need to Know About Supply Chain Transactions by X. Paul Humbert, Esq. According to the article, the book showcases not only the necessity of a collaboration between the CFO and the supply chain but also demonstrates how the company’s finances and its books are impacted by the decisions taken by functions within the supply chain:
“an organization’s financial results are intertwined with the performance of the purchasing function. Purchasing and purchased inventory affect the balance sheet and capital allocation.”
Another article in Smart Industry Update published in 2018, speaks on behalf of the CFOs seeking answers to supply chain issues which the CFOs may not have first-hand knowledge of. For example, the article lists the following three critical questions that CFOs should ask of their supply chain to be able to make better decisions regarding their supply chain and create better business strategies:
How accurate is our supply-chain visibility?
How quickly can we identify and address challenges in response to disruption?
How well can we respond to changes in the industry?
The survey and the two articles leave no doubt of how crucial it is for CFOs to be involved in the supply chain function and work in collaboration with the head of supply chain. In fact, it is not only the supply chain that needs the CFO, the CFO also needs the supply chain.
How The CFO Can Be A Change Agent For The Supply Chain
An article titled How Brilliant CFOs Use the Supply Chain to Drive Business Value – Do you know the questions you should be asking in Innovation Enterprise targeted at CFOs lists down possible areas that can benefit from the CFO’s involvement.
It says “If the answer to any of these questions highlights a potential issue then it is important to engage with the head of supply chain and agree a process to address the issue. It may also indicate that there is an opportunity to partner more closely with supply chain/operations to leverage the knowledge and skills of the finance team to enable better decision making in the business.”
The transportation offered also influences customer’s buying decisions
All the above areas are crucial from the financial, product, and delivery point and can benefit from a collaborative effort from the CFO and the supply chain. For example, let’s take a look at the second, sixth and eighth question. Freight costs are pegged around 3 – 5% of supply chain costs. Freight contract negotiation is one of the most important activities of the logistics function. It has an impact on the budget, affects the cost reduction KPI given to the logistics department. In B2C businesses, to a certain extent, the transportation offered also influences customer’s buying decisions. How can the function benefit from CFOs insight?
When the CFO is involved in this decision-making from the start, it increases the possibility of improvement in contract terms and in cost reduction.
On the cost reduction and financial front, the CFO, with their fact-based view of the organization, can help the logistics team negotiate better freight contracts. The rates negotiated in these contracts are based on a multitude of factors like government policies, fuel prices, political relations between trading countries, and global business environment. Logistics may or may not have insight into these issues, but the CFO and his team will have knowledge of what is going on in the business world. So, if they know there is a possibility of fuel prices changing in the next six months or a recessionary trend is being noticed, they can advise the logistics team to negotiate a short-term contract and revisit it later. Similarly, in the case of B2C shipments (ref Q6), the CFO and the supply chain head can negotiate for contracts with different delivery options in order to serve different customers. But this can only be done if the supply chain knows the financial viability of these options and that information can be gained only from the CFO of the organization. When the CFO is involved in this decision-making from the start, it increases the possibility of improvement in contract terms and in cost reduction.
Today, to be effective in their job and to create a competitive supply chain, CFOs need to lend their expertise to the supply chain and seek their inputs in the setting the goals and objectives of the company.
Long gone are the days when the CFOs limited themselves to matters pertaining to managing company finances. Today, to be effective in their job and to create a competitive supply chain, CFOs need to lend their expertise to the supply chain and seek their inputs in the setting the goals and objectives of the company.
At BlueGrace, we have found that working with organizations where CFOs are directly involved has helped turn over a new leaf and make significant cost reductions, positively impacting the supply chain of that organization.
We provide quarterly business intelligence reports that give updates on the savings targets you give to us, key performance indicators (KPIs), and special project updates. The CFO of a company, in particular, is able to use these metrics to budget and forecast for the organization moving forward. Connect with our team at 800.MY.SHIPPING or fill out the form below to find out how we can work with your CFO to build an efficient and optimal supply chain.
Inventory is the core of any business. The right inventory, at the right time, at the right point in the supply chain is crucial for the success of the business.
For example, the shortage of raw material at the factory will affect production. If warehouses are not replenished on time, distribution will be derailed. If retail outlets run out of stock, sales and customer relationships will be adversely impacted. Each of these processes in the supply chain is dependent on the availability of inventory to carry out their function and meet business objectives.
While the unavailability of inventory results in a loss of sales, too much inventory leads to an increase in the carrying cost.
While the unavailability of inventory results in a loss of sales, too much inventory leads to an increase in the carrying cost. Carrying cost is the cost incurred to store, handle, and maintain inventory at every stage in the supply chain.
The factory, warehouse, and the retail outlet all incur the cost of storing and managing the inventory until it is required at the next stage in the cycle or sold. A high carrying cost ultimately impacts the price of the product and the profit margins of the company. Hence, neither excess nor a shortage of inventory is an ideal situation.
This is why it is essential to understand the inventory consumption pattern and arrive at an optimum level that needs to be maintained at each stage in the supply chain.
Why does the State of the Supply Chain matter?
How you operate your supply chain, how agile it is, the technology you use, the level of digitization, the extent of integration among the different stages of the supply chain. All these things affect the performance of the supply chain. The level of inventory you need to maintain at all times is dependent on the capability of these parameters.
An agile, integrated, and digital supply chain makes it easier to understand how the inventory is being consumed at each stage.
An agile, integrated, and digital supply chain makes it easier to understand how the inventory is being consumed at each stage. It enables inventory managers to calculate the optimum level of inventory more accurately. The optimum level of inventory is where minimum carrying cost is incurred and there is no loss of sale or disruption in the production or delivery process. In other words, the inventory reaches the required point just in time – not any sooner, and not later.
When organizations use this strategy to design their supply chain they inevitably improve their inventory management.
Winning Logistics Strategies in the Race to the Urban Consumer, a whitepaper by DHL and Euromonitor on last-mile transportation, explained how companies can become more competitive and improve their supply chain by adopting the F.A.D strategy. The F stands for flexible transport, A is automation, and D is data management. When organizations use this strategy to design their supply chain they inevitably improve their inventory management. They can better plan inventory inward and outward movements, improve on speed and reduce administration and handling costs, can improve inventory forecasting and planning, process data real-time, and provide shipment tracking.
For example, this article cites how Apple understood the importance of supply chain management as early as 1997 and with proper supply chain planning, the company successfully managed to beat the competition. For the Christmas of 1998, the company bested its competition by simply changing its freight mode from sea to air.
“To ensure that the company’s new, translucent blue iMacs would be widely available at Christmas the following year, Jobs paid $50 million to buy up all the available holiday air freight space, says John Martin, a logistics executive who worked with Jobs to arrange the flights.”
This one change made sure that its products were easily available during the holiday shopping season. Apple could not have done this if it had followed a rigid approach to transport planning and management.
And, if the delighted customer is also a competitor, you know you’re doing something right.
Another example in the article shows how it delighted customers with quick delivery and shipment tracking. And, if the delighted customer is also a competitor, you know you’re doing something right.
“When iPod sales took off in 2001, Apple realized it could pack so many of the diminutive music players on planes that it became economical to ship them directly from Chinese factories to consumers’ doors. When an HP staffer bought one and received it a few days later, tracking its progress around the world through Apple’s website, “It was an ‘Oh s—’ moment,” recalls [former HP supply chain chief Mike] Fawkes.”
What are the benefits of a well-managed supply chain?
A supply chain that is managed properly makes it easier to monitor stock at various touch points. It can help improve inventory forecasting and distribution. Some of the benefits that such a supply chain offers for inventory management are:
Visibility: Visibility allows inventory managers to monitor inventory levels at each stage. With a continuous and real-time view of the inventory, they can place orders or plan distribution of the inventory to reach the intended destination on time.
A strong transportation management system also enables you to store historical data, provide advanced analytic tools and trend reports, enable users to optimize freight expenses thus helping you create an efficient shipping process.
TMS: While inventory is the life of the business, transportation is the backbone. Without adequate transportation management, it will be challenging to get the inventory to the right place at the right time in the required condition. In addition to planning transportation, a strong transportation management system also enables you to store historical data, provide advanced analytic tools and trend reports, enable users to optimize freight expenses thus helping you create an efficient shipping process.
Integration: We cannot stress this enough. Integration is crucial to get complete control over inventory. For integration to be truly successful, it needs to take into account the needs of different departments and their workflow. When all the parties handling inventory are able to connect to the same system, only then will you be able to get better visibility of your inventory, improve tracking, and planning.
Analytics: The digital supply chain is a substantial resource of hard data. It provides stakeholders with the opportunity of developing and monitoring KPIs and assist them in improving their supply chains. When the data for all the functions are gathered at a single reliable source it increases accuracy in forecasting and improves execution. The reports and trends can be used for making informed decisions.
The state of your supply chain and inventory, the levels you need to maintain are directly related. If the supply chain is equipped with the latest technology and is functioning at optimal levels at each stage, it would reflect in the form of optimum inventory levels. If it is not, then you may see piles of inventory accumulated at each stage. There may be situations when you need to keep unusually high or low inventory levels. However, when inventory levels fall below or go above the optimum without a valid reason, take it as a red flag, talk with an expert. Contact us at 800.MY.SHIPPING or fill out the form below to connect with our team today for a FREE analysis of your supply chain.
The saleability of a product is not only dependent on its quality and features, but also on how it is delivered and how soon it can reach the customer. In other words, delivery has become a crucial part of a business’s success. If it’s managed effectively, it can positively impact the bottom line and help build a stellar market reputation. If not, then it can have a negative effect on both.
In our March webinar, titled Time Definite Freight and Positive ROI, Brian Blalock, Senior Manager Sourcing Strategy, and Eric Chambers, Vice President, Field Performance at BlueGrace Logistics, discuss the delivery method that is redefining the logistics landscape.
What is Time Definite Freight?
What is time-definite freight and how is it different from the normal freight delivery mechanism? How does it benefit the business and its customers? These and other such questions tend to arise when we discuss why this delivery trend is quickly becoming an integral part of an organization’s logistics strategy and customer service offering.
Time-definite freight is precision delivery. It’s not on any given day or any roundabout day. It’s on a particular day, a particular time – morning, afternoon, AM, PM. It can be any time of the 24 hour day.
To address these questions and provide context to the discussion, Eric explains “time-definite freight is precision delivery. It’s not on any given day or any roundabout day. It’s on a particular day, a particular time – morning, afternoon, AM, PM. It can be any time of the 24 hour day.”
This definition provided not only answers the “what” but it also gives an insight into “why” shippers and logistics service providers need to know about it and make it a part of their organization’s logistics strategy. It is important because it puts the customer’s requirements at the center of logistics planning, ensuring that goods are delivered according to the timelines given by the customer.
Is Time Definite a New Logistics Solution?
The life sciences industry, e-commerce, cross border express providers like UPS, FedEx; last mile solutions by truckers, Amazon Prime’s free 2-day delivery, and disaster recovery institutions like the Red Cross are all using time-definite transportation.
No, it is not. Certain industries are already leveraging this delivery mechanism to optimize their supply chain and provide better service to their customers. The automotive industry started using just-in-time (a form of time-definite delivery) years ago. The life sciences industry, e-commerce, cross border express providers like UPS, FedEx; last mile solutions by truckers, Amazon Prime’s free 2-day delivery, and disaster recovery institutions like the Red Cross are all using time-definite transportation.
What Are the Benefits of Time Definite Delivery?
“There are many many benefits of time-definite, it really depends on the individual working in a company or its customers”, says Eric. To provide an insight into how time definite can help improve the bottom line, he shares that it can help reach end customers faster and reduce handling points in a delivery.
When multiple handling points in a delivery are eliminated, the handling costs go down and it also reduces the probability of the shipment getting damaged.
Both of these things have a huge impact on the bottom line. For example, if you are able to take your product to the market faster, it not only helps improve the cash flow but also ensures that you are a step ahead of the competition. Similarly, when multiple handling points in a delivery are eliminated, the handling costs go down and it also reduces the probability of the shipment getting damaged.
Technology & Optimizing Time-Definite Freight
Given the fact that technology is being leveraged to improve and optimize different aspects of logistics, it is but natural to ask if time definite can be further improved with technology? Yes, it can.
Speaking about how technology is making time definite a complete logistics solution, Eric shares that:
Technology can be used to improve response time and on-time delivery.
Technology can provide real-time visibility of the shipment.
If the shipment requires certain transit conditions, they can be arranged with the help of technology. For example, temperature monitoring and reporting to FDA for compliance for pharmaceutical products.
Technology can improve inventory forecasting and replenishment, thus minimizing loss of sales due to stockouts.
Success factors and a Real-Life Use Case
It’s not enough to just deploy new systems and processes. It is also important to know if they are working for you and your customers and how they can be further improved.
To know the success factors of Time-Definite Delivery and how we at BlueGrace collaborated with a pharmaceutical company to handle a critical business situation with the help of technology-powered time-definite delivery watch the webinar here.
Questions regarding Time-Definite Freight, or want to explore how you can make it a part of your logistics strategy? Connect with our team by contacting us at 800.MY.SHIPPING or fill out the form below.
Insurance is an important part of risk management. It helps businesses mitigate financial loss arising from unforeseen events that may disrupt their supply chain. Transporting goods from one location to another is a crucial part of the supply chain. It is what keeps the business running. Hence, transport or cargo insurance should be an essential part of a shipper’s supply chain risk management strategy.
While most shippers understand the importance and the need for cargo insurance, there’s a debate on whether to rely on carrier liability or to get a separate insurance policy.
In the webinar titled Be Sure, Be Insured, Brian Blalock, Senior Manager Sourcing Strategy, BlueGrace, and Tyffany Gunn Kelley, Senior Manager Strategic Partnership and Channel Partner Program, UPS Capital, discuss: the difference between carrier liability and real insurance importance of insurance insuring solutions how organizations can manage risks to their supply chain
the difference between carrier liability and real insurance
importance of insurance
how organizations can manage risks to their supply chain
Here are a few important pointers from the webinar:
UPS Capital appointed Harris Poll to survey U.S professionals who supervise shipments or are key decision makers for their company to understand their views on cargo insurance and how they manage risks in their supply chain. For the study, Harris Poll surveyed more than 600 professionals.
Why do shippers need insurance?
Setting the direction for the webinar, Tyffany shared some of the findings from the survey which highlights the risks to shipments during transit and explain why shippers need insurance:
1 in 10 shipments face a glitch
92% of the respondents said they experience some delay, loss, or damage in transit each year
15% of shipments can be affected due to in-transit incidents
Approximately a loss of USD 56 Billion is reported annually due to cargo and freight movement (National Cargo Security Council)
No mode of transport is free of incidents like lost shipments, damages, or delays
Full truckload shipments report a loss of 12.8% annually
LTL shipments show an annual loss of 10.8%
Loss from ocean freight stands at 9.9% annually
Air freight reports a loss of 9.5% annually
What is the impact of lost, damaged or delayed shipments?
To provide some perspective on the kind of damage such incidents can cause, UPS Capital asked the respondents to list down the areas that they thought were adversely affected due to lost, damaged, or delayed shipments:
52% respondents said it hurt customer relationships
51% respondents said it resulted in financial loss
46% respondents said it cost them in terms of employee time and cost
36% respondents said it had a negative impact on company reputation
What is shippers’ view on carrier liability?
Do shippers, logistics professionals, decision makers understand what carrier liability is and what kind of coverage it provides to their valuable shipments? The survey provides some alarming results.
According to the results from the survey, almost 90% of the shippers rely on carrier liability to manage risks to cargo while in transit.
Approximately 39% of the respondents thought that carrier liability is the same as real insurance.
While 61% of the respondents believed that carrier liability and insurance were not the same, only a few of them were able to pinpoint the difference between carrier liability and insurance and the extent of cover each provides.
Almost 25 – 50% of the participants thought that their carrier liability provided cover for incidents or events that it actually did not.
Why is carrier liability not enough?
Since a majority of shippers rely on carrier liability, it is necessary to understand what carrier liability is and how much coverage it actually provides.
The Business Dictionary defines carrier liability as “Air and ocean carriers are normally liable for all damage, delay, and loss of cargo except those arising from the act of God, act of the shipper, and the inherent nature of the goods from acceptance of cargo through its delivery or release. Air carriers are usually liable under Warsaw convention, and ocean carriers under Hague convention.”
The definition of carrier liability, also explained by Tyffany, itself provides a list of instances where a carrier cannot be held liable for loss to shipment during transit. Apart from the given instances, as Tyffany shares, the law allows carriers to limit their exposure and exempt a variety of situations thus further limiting their liability. To cite a few examples from the webinar that carrier liability does not cover:
Cross-border shipments getting damaged by a customs agent or other government agency during inspection
Pirates, hijackers or other “assailing thieves” stealing ocean containers
A fire breaking out on a cargo ship that destroys cargo on board
What are the benefits of real insurance?
Along with providing a variety of policies which may be customized to suit the shipper’s requirements, real insurance also offers a host of benefits that can mitigate financial loss, help maintain the market reputation and customer relationships. Some of the benefits highlighted in the webinar include:
Claims are settled based on the real valuation of the shipment
It provides insurance coverage for all modes of transportation
It covers door-to-door, so no separate policy is needed in case of multi-modal transportation
However, getting a cargo insurance policy is not a complete solution. It is also necessary to record the information about your supply chain so that you can understand the consequences in relation to claims. One of the best ways to do it is in a transportation management system, says Brian.
To know more about why you need real insurance coverage, insurance solutions and how a transportation management system can help keep track of and manage insurance claims, make informed business decisions for your supply chain, and mitigate risks to your supply chain watch the complete webinar HERE.
Want to know more about UPS Capital’s insurance plans offered to BlueGrace customers or our transportation management system? Connect with our team today by filling out the form below, or call us at 800.MY.SHIPPING.
It is a well-known fact that supply chain is increasingly becoming digital. But is simply adding a digital component to the complex supply chain network enough to make it efficient? Will it provide the edge that companies need to win in the current cut-throat and ever-changing global business environment?
What more is required?
According to a study conducted by IBM and National Retail Federation (NRF), the retail and consumer goods industry is designating intelligent automation, also known as artificial intelligence, as the future of supply chain. For this, IBM and NRF surveyed 1,900 retail and consumer products company executives across 23 countries.
The survey revealed that “intelligent automation capabilities help increase the annual revenue growth by up to 10 percent”. It found that of all the respondents surveyed, around 85 percent from the retail sector and 79 percent from the consumer products sector “plan to use intelligent automation for supply chain planning by 2021”. The study also found that 79 percent of the retail industry respondents “expect to use intelligent automation for customer intelligence by 2021”.
Combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.
According to IBM, integrating supply chain with customer insight is essential for the success of the omnichannel. It further added that combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.
When the retail and consumer goods industries, who have the most complicated supply chains, are envisaging intelligent automation as the future of the supply chain, then can logistics – the core of supply chain be left behind?
Definitely not. In fact, the current logistics landscape which is highly fragmented and complex will benefit immensely by leveraging the power of intelligent automation in its day-to-day functioning.
How Intelligent Automation Will Benefit Logistics
Better planning: Intelligent automation can integrate and streamline transportation planning, route planning, warehouse network, and inventory planning. It will enable data sharing among all functions, highlight errors and outliers in the data, and speed up data analysis thus increasing efficiency, improving accuracy and lowering operating costs.
Increased Transparency: The global nature of the industry, different rules and regulations across countries and multiple stakeholders has made transparency in operations and business transactions mandatory. Intelligent automation can be used to add checks at all data entry points to make sure that only verified and correct information enters the system and is available to all stakeholders on demand. This will improve decision-making, reduce incidents of miscommunication between users (internal and external), and decrease dependency on other departments for data.
Enhanced Visibility: A system empowered with smart technology like GPS and RFID can enable users to track shipments from pick up till the final delivery location. This can improve multimodal transportation planning and also keep the customers updated with a more accurate expected time of delivery. Visibility of shipments and other aspects of the supply chain also supports the planning function, highlights possible issues before they become roadblocks, and allows better control over the process.
Improved Efficiency: Adopting artificial intelligence to empower systems and processes will greatly reduce duplication and monotonous tasks. This, in turn, will improve both human and machine efficiency and reduce the turnaround time for each task to be completed.
Refined Analytics: Logistics is a data-intensive function. A large amount of data is used as the base for making strategies and taking decisions. An intelligent automated reporting system can reduce the time taken to collate, clean, format the data and minimize errors, thus leading to better, informed and quicker decision making.
Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution.
These are just some of the benefits of using intelligent automation in logistics. Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution. In a statement by the company, Luq Niazi, global managing director of IBM Consumer, explains the care organizations working with intelligent automation need to take. He says “The entire value chain operational infrastructure of B2B and B2C commerce, there has already been an increased adoption and demand for intelligent automation. This also brings forth the need for stronger transparency, ethical practices and business prioritization to evaluate and deploy AI responsibility.”
We at BlueGrace understand the importance of an intelligent tech-enabled ecosystem. Hence we have leveraged intelligent automation to build our transportation management system. The BlueGrace TMS provides its users with high-tech tools, visibility, visual analytics, speed, reliability, and it easily integrates with other systems and technologies. Along with performing all the regular functions, it also empowers you to identify opportunities to reduce costs and optimize your supply chain. To connect with our team to know more about BlueGrace’s TMS and how it can support your business growth, contact us at 800.MYSHIPPING or fill out the form below, and one of our experts will contact you today!
We’ve all heard that turnabout is fair play but in the trucking market, that mentality could make for a vicious marketplace. Of course, no one likes to pay any more for a service than they have-to, but given the fluctuations that happen within the freight market it’s all part of the game, right?
The problem is, when you focus solely on the bottom line, working relationships, the level of the provided services, and customer care can often be shoved to the wayside.
A Fairweather Friendship
While not all shippers will use and abandon their third-party (3PL) logistics providers during an economic shift, enough have done so in the past that left a bad taste in the mouths of 3PLs.
Shippers tend to shy away from their “partners” when times are good, capacity is plenty, truckers are looking for freight. When spot rates climb, however, shippers tend to look for shelter in the contract market which makes for a volatile spot market that makes matters much worse than they need to be.
If shippers weren’t as fickle during market shifts there would be more market stability. For shippers though, the bottom line is often considered as the most important factor.
During 2017 we saw both Hurricane Harvey hit the coast as well as the introduction of the Electronic Logging Mandate. As a result, shippers skipped the middleman and dropped their 3PLs, opting to work directly with large asset-based carriers instead.
A year later, spot rates have dropped as much 12 percent, according to data from DAT solutions, which are resembling those seen back in 2017 across several markets. Conversely, contract rates have risen, on average, about 14 percent in 2018 and have increased a further 6 percent this year.
With spot rates on the rise, shippers once again turn to third-party logistics providers with relatively no hard feelings. With negotiations underway, both parties more or less walk away happy.
Creating a Vicious Cycle
The same cannot be said for that type of mentality when it’s applied to the trucking companies, however. Here the negotiations tend to carry the memory of what happened the last time rates shifted in the favor of one side or the other. To be fair, that adversarial behavior does swing both ways. When capacity gets tight, trucking companies raise their rates to support the demand. When demand is low, however, and trucking companies are scrambling for a full load, shippers will push for lower rates, a behavior that seems to be hardwired into the business.
Here is where 3PLs can bridge that gap and help to even out the “revenge” style of marketing.
It’s hard for many companies to part with that “grudge” mentality, especially when both sides are angling to take advantage of one another when the market permits it. You’d be hard pressed to find a business that is willing to say “Sure, we’ll reduce our rates in favor of a good compromise,” and instead sounds more like “You raised your prices on us. Now it’s our turn.” Here is where 3PLs can bridge that gap and help to even out the “revenge” style of marketing.
The True Value of a 3PL
One of the biggest benefits of a 3PL is that they can help a shipper to access different parts of the very fragmented trucking industry. If a shipper has access to large trucking companies, a 3PL can give them access to smaller carriers, both of which have a place in a shippers supply chain.
“It’s hard to handle relationships with tens of thousands of carriers, so if you let the broker handle that portion, and you have a relationship with your top 10-15 asset based carriers, everyone can have a piece of the pie and work more collaboratively,” said Mark Ford, Chief Operating Officer at BlueGrace Logistics.
The main objective of any business is to conquer new frontiers and markets. And, to do this, it requires a wide logistics network and a robust, flawlessly executed logistics strategy.
As we explained it in more detail in one of our previous articles, 7 BENEFITS OF OUTSOURCING LOGISTICS TO A 3PL — The main objective of any business is to conquer new frontiers and markets. And, to do this, it requires a wide logistics network and a robust, flawlessly executed logistics strategy. Your 3PL partner is expected to and can help you achieve your business goals. They may either have their own network across regions or they may have business collaborations with transporters storage facility providers in different regions or a mix of these two, their own network in some cities and collaboration in another. They are thus better placed to help you expand and grow your business. To do this, all you need to do is work with them in a collaborative manner to din the most optimum solution to reach your customers.”
However, shippers who are too focused on their bottom line have a harder time seeing that value in a 3PL partner and might even remain hard pressed to change their ways.
It’s less a matter of saving a few cents on the mile, however, and more about creating a sustainable and, more importantly, profitable supply chain.
It’s less a matter of saving a few cents on the mile, however, and more about creating a sustainable and, more importantly, profitable supply chain. For shippers who are willing to keep an open mind and maintain a good working relationship with carriers and 3PLs alike have a great opportunity to build longstanding and mutually beneficial relationships. Utilizing a 3PL as a broker can help to save money when the markets fluctuate, but using them as a supply chain consultant is where they can truly save in the long run.
There are a number of other benefits that can come from working with and outsourcing your logistics to a 3PL. Not the least of all, a better and stronger bottom line. If you would like to speak to one of our experts, call us at 800.MYSHIPPING or fill out the form below.
To outsource logistics or manage it internally is a major point of consideration for organizations. The decision is usually arrived at after extensive cost-benefit analysis of both the alternatives. While the outcome is often based on the size and nature of the business, availability of capital and manpower, geography served, operational risks involved and extent of control an organization is willing to let go of, outsourcing is increasingly becoming a favored option. Below we will highlight the top seven reasons why you should consider it too.
While your in-house team may be expert at all the functions, the complex nature of the job makes it challenging for them to do all of it by themselves.
Expertise: Logistics is a very dynamic function. A logistician is required to understand business strategy, manufacturing planning, inventory management, and the nitty gritty of different modes of transportation depending on regions served. Along with having expert knowledge of these functions, they are also expected to be good at creating strategies and implementing them. It also requires a lot of coordination and collaboration with various service providers and government regulatory agencies. While your in-house team may be expert at all the functions, the complex nature of the job makes it challenging for them to do all of it by themselves. A 3PL has expertise in all these functions, they also have a connection with external agencies. They can take over the more tedious and complex jobs, freeing your team to strategize and plan the business.
From negotiating rates, booking the freight, providing storage, arranging for the transportation, getting the shipment loaded to following up on the shipment till it reaches the final destination, a 3PL can do it all.
Taking product to market: A 3PL arranges the transportation – local or international, to ensure that your product reaches the intended destination on time. From negotiating rates, booking the freight, providing storage, arranging for the transportation, getting the shipment loaded to following up on the shipment till it reaches the final destination, a 3PL can do it all. In the case you have international shipments, a 3PL has the experienced professionals to manage that as well. How much and how a 3PL contributes to the process depends on the organization that it works with.
Trained staff: A 3PL not only brings in the logistical facilities like warehouse facilities and transportation, but it also brings with it trained personnel who are equipped to handle the day-to-day logistics of the business. 3PL staff is trained to handle the exigencies of the business and deliver on the KPIs you set for them.
This is the age of digital logistics.
Technology: This is the age of digital logistics. A 3PL brings with it specifically designed, trusted, and ready-to-use systems and processes that can manage the end-to-end logistical process on a single platform. Most of the 3PL service providers are also open to customizing or integrating their digital platforms with that of the organization they work with. This flexibility offered by a 3PL not only helps the organization bridge the gaps in its systems but also helps it to do it at a comparatively lower cost.
Large network: The main objective of any business is to conquer new frontiers and markets. And, to do this, it requires a wide logistics network and a robust, flawlessly executed logistics strategy. Your 3PL partner is expected to and can help you achieve your business goals. They may either have their own network across regions or they may have business collaborations with transporters and storage facility providers in different regions or a mix of these two, their own network in some cities and collaboration in another. They are thus better placed to help you expand and grow your business. To do this, all you need to do is work with them in a collaborative manner to find the most optimum solution to reach your customers.
A 3PL not only has the means to do so, but also the technology and the trained staff to execute the process efficiently.
Dedicated customer service: Logistics is now a major part of customer service. Obtaining the right product, packed in the right manner, at the required delivery time is on every customer’s wishlist. This can only happen if the ordering process and logistics are synchronized and managed correctly. A 3PL not only has the means to do so, but also the technology and the trained staff to execute the process efficiently.
Cost Reduction: Last but not least, outsourcing logistics and allied activities to a 3PL not only provides all the above benefits and improves efficiency but also reduces operating costs and administration overheads.
When companies want superior supply chain management services and best-in-class technology, they turn to BlueGrace®. Why? Our progressive approach to transportation management helps customers of all sizes drive savings and simplicity into their supply chains.
Communication is a vital aspect of building a successful business. An effective communication process ensures that information flows seamlessly between departments and amongst the various teams on time and in a form which will allow them to achieve individual, departmental, and organizational goals and objectives.
While communication in varied forms and frequency is essential for all departments, it is extremely crucial for the executors of the organization’s plans and strategies – the Logistics Department.
Why is communication important for Logistics
Information interchange plays an important role in creating a cost-effective and agile logistics management process. It ensures that tasks are completed and transferred from one point to the other seamlessly and without delay.
For example, the sales department needs logistics data to analyze orders that have been shipped, customer service needs information to update shipment status, and the accounts section requires the data to cross-check transporter invoices. The procurement team needs information from logistics when new vendors are to be hired or old contracts are due for renewal. The other functions of the supply chain also have to collaborate or communicate with the logistics team to get their work done.
In addition to the internal information requirements, vendors such as carriers, warehouse operators, and 3PLs also need to exchange information with the logistics team on a daily basis to ensure that the company’s products are delivered at the right time to the right place at the right cost.
What are the features of an effective communication process for Logistics?
It should be in writing: Written communication is important as it minimizes the scope to misinterpret or forget the message. Today, written communication is the most common form of business communication. Since emails and all forms of messages across multiple platforms can easily be sent to multiple recipients situated across offices, countries, and continents, it is essential for all professionals to develop effective written communication skills and to encourage the same in all employees.
A clear, concise, and consistent message is the hallmark of effective communication.
It should follow the 3 C’s: A clear, concise, and consistent message is the hallmark of effective communication. A clear message ensures that there is no ambiguity in what needs to be conveyed. Conciseness ensures that the message is brief, but includes all important information. And, consistency in language, format, mode of delivery ensures that the receiver does not waste time in understanding the message.
In logistics, given the fact that a lot of the work is time-bound, marking the right team or person on the email is of utmost importance.
It should be sent to the right recipients: More often than not information is lost in the organizational hierarchy because it is not addressed to the right person. In logistics, given the fact that a lot of the work is time-bound, marking the right team or person on the email is of utmost importance.
It conveys urgency appropriately: Many executives are in the habit of marking all their emails as “urgent” to ensure that it gets immediate attention from the receiver. While this practice is great to ensure that important and critical communication does not get missed, however, if all communication is urgent, it becomes difficult to prioritize tasks. It also dilutes the meaning of the word. In such instances, the receivers take up the tasks in the priority that they think is correct. Hence, it is crucial to mark only communication or tasks that are the top priority as urgent and not all communication.
It should provide clear timelines: The delivery or timeline for getting a response or the task being assigned should be clearly mentioned in the communication. This will help the receiver gather information, plan, and execute the requirements mentioned in the message and avoid unnecessary delays.
It should be transparent and reliable: Interdepartmental conflicts, organizational politics, and cutthroat competition encourage employees to keep information from their counterparts or colleagues. This creates chaos, confusion, and mistrust which in turn affects the execution of tasks. It is thus important that the organizational culture promotes transparent communication and sharing of reliable information.
It should be real-time: Logistics is a fast-paced function and information exchange also needs to be equally quick. Hence, information such as a change in freight rates, loading lists, customer orders, etc. needs to be verified and relayed to the next person as soon as it is received. Apart from these things, queries asked in relation to a task or process should be addressed promptly or the receiver should at least provide a timeline by when the sender may expect an answer.
Technology Integration: In this digital age, just getting the written communication right is not enough to ensure the successful implementation of business plans. Organizations must also integrate the technologies, backend systems and processes that are used by different departments to ensure that information flows seamlessly and without manual intervention from one function to another.
For logistics which is an intensely data-oriented function, this integration is crucial.
For logistics which is an intensely data-oriented function, this integration is crucial. It will help reduce manual data entry, delays due to incorrect system entries, and speed up the process. Digital records of all the transactions or logistical activities will also make it easier to get reports, analyze performance, find outliers, and standardize the process across different geographies and vendors. When designing or buying technology or outsourcing the process to a vendor, it is essential to understand if this technology will be able to integrate with other systems that your organization uses with ease and at least cost.
An organization’s logistical communication process can be complete only when all the above elements are present and interlinked via common technology.
BlueGrace’s proprietary TMS (Transportation Management System) is designed to put the power of easy supply chain management and optimization back in your hands. BlueShip® 4.0 offers cutting-edge tools for strong reliability and quick performance. Many of our customers prefer to integrate their systems or ERPs such as SAP or NetSuite directly with our BlueShip platform. Our IT integrations team will work closely with your staff to complete the connection between systems. Not only will this simplify your freight but it will provide mountains of usable data to build measurable KPIs and continuously improve your program. To speak to a BlueGrace expert, contact us at 800.MYSHIPPING or fill out the form below.