Climate change and a deteriorating environment is the most discussed subject around the world. In fact, it would not be remiss to say that issues related to environmental degradation and climate change have already begun to emerge in various parts of the world. In some places it is in the form of floods, storms, hurricanes, others it is showing up in the form of famines and long dry spells. In a few parts of the world, a distressed environment is protesting in the form of unbreathable air and shortages of clean drinking water.
It’s time to wake up and take positive action.
Irrespective of the way in which the environment is showing its displeasure, it is sending the same message everywhere – it’s time to wake up and take positive action.
While each one of us is responsible for protecting the environment and managing climate change, businesses can lead the way in creating positive change by making their supply chain environment – friendly and following sustainable business practices.
Why is it important for businesses to participate in this movement?
Given the negative impact certain business activities or accidents have on the environment, it makes sense for businesses to take preventive actions proactively. Sometimes the impact of these incidents lasts for years to come or worse, irreversible. While one doesn’t have any control over accidents, organizations can try to reduce activities such as throwing out untreated industrial waste, air pollution, noise pollution, energy wastage, and oil spillage. The other reason is that big corporations and brands tend to influence how people think and behave, this can be used to encourage people to practice sustainable living.
How can you contribute?
Overhauling an entire supply chain or changing business practices takes time. So, while all of us may not be equipped to build and operate a distribution based on renewable energy like Nike is doing or put up a fight against the ruling administration like the State of California, all of us can do little things to help the cause. Here are some ways in which you can make your business and supply chain environment friendly:
Eliminate Single Use Plastic: This should not be difficult to do. Whether it is a part of your product-straws, bottles, stirrers, and packaging or a part of things you use within the company like drinking bottles and disposable cutlery in your canteen, plastic can be replaced with other eco-friendly materials. These 22 companies are doing it, so can you.
Participate in The Community Discussion: This is a critical step to finding sustainable solutions that can help both businesses and communities live sustainably. At BlueGrace, we believe in working with the community. Our CEO, Bobby Harris joined the Northwestern University Transportation Center (NUTC) Business Advisory Council (BAC) last year. This group comprises of highly respectable senior – level business executives from the transportation industry. The group meets regularly to discuss the latest NUTC research and to consider solutions to the economic, technical and social problems facing national, local and global transportation systems. Connect and work with your local administration, research institutes, and environmental associations to find plausible and implementable solutions for the community. This will not only work for finding solutions to the environment problem but will also aid in identifying and finding solutions to other issues that impact the lives of the people who live in the community. Isn’t that what businesses are for?
Use Energy-Efficient Lighting: Save electricity. Use lighting solutions that consume less power. Encourage your employees to switch off lights that are not centrally controlled and turn off the switches to their charging points or desktop connections when not in use. If possible explore if you can install solar panels to generate electricity in the office and other facilities like your warehouses and factories.
Go Digital: One of the easiest ways to start the sustainability project is to eliminate or minimize the use of paper. Start digitizing company-wide communication, and bring all processes and systems online. While it may seem costly at the beginning, digitization will not only help you save paper but will also make your operations more efficient and easier to monitor. If you’re looking for an integrable logistics solution, connect with our team and let’s work on making your supply chain environment-friendly, effective and efficient.
Optimize Logistics: Movement of goods is essential for both businesses and consumers. So while trucking is an integral part of logistics, it also causes air pollution. However, the threats to the environment from trucking can be controlled and minimized by making better transportation plans and optimal planning of loads. And as we said earlier, transportation is our area of expertise.
If you’re looking to optimize your logistics and contribute to reducing pollution levels, then let’s talk. Contact us at 800.MY.SHIPPING or fill out the form below to speak to one of our experts today.
As Jeff Bezos, CEO of the e-commerce juggernaut once said, “When [executives of other companies] are in the shower in the morning, they’re thinking about how they’re going to get ahead of one of their top competitors. Here in the shower, we’re thinking about how we are going to invent something on behalf of a customer.”
As a CEO, the path forward will be through optimizing your supply chain while keeping an eye on the goal; your customers.
That alone shows an interesting shift in the perception and could explain why Amazon is so wildly successful. It is that customer-centric focus that is going to pave the way for success going forward. Sure, it’s still going to be good business to be ahead of the competition, but the way we do that is measured by the way we serve our customers. That’s going to be vital going forward, especially when you start to consider all of the challenges facing the supply chain today. As a CEO, the path forward will be through optimizing your supply chain while keeping an eye on the goal; your customers.
With that in mind, however, there are some very uncertain times on the horizon, as the current administration continues to press its trade war with China, ensuring tariffs could bite some manufacturers hard.
Moreover, according to a survey conducted by the National Association of Manufacturers, there are plenty of other areas of concern, including; attracting and retaining a quality workforce and increasing the cost of raw materials.
There are no shortages of concerns for the manufacturing industry and all of these issues will have some effect on the supply chain for most industries.
If that wasn’t enough to contend with, there’s also the challenge of rising transportation costs and the overall challenge of managing a smooth-running supply chain. Simply put, there are no shortages of concerns for the manufacturing industry and all of these issues will have some effect on the supply chain for most industries.
For CEO’s the big question is this, “Is your supply chain ready for the road ahead?” Supply chain optimization will be crucial for the success of any manufacturing industry as failure to do so will mean missing out on growth opportunities as well as the inability to fulfill current customer orders and expectations. A flexible and well-structured supply chain will mean the difference between addressing new challenges appropriately or being knocked off balance by unexpected disruptions in the future.
A Changing Future for the Supply Chain
It’s not all doom and gloom on the horizon, and that’s part of what is keeping the levels of optimism high in the manufacturing industry. Many positive changes and developments are driving us towards a breakthrough in the way we do business. The new levels of technology and advancements in the Internet of Things are moving us closer to Industry 4.0 which will drive the levels of visibility and efficiency across the supply chain to new heights. The applications of these new technologies and advancements will separate winners from losers, survivors from the deceased, often in just a few years.
It will no longer serve to think of the supply chain as an isolated aspect of your business.
For the CEO of the Industry 4.0 company, you’ll have to keep in mind that supply chains are only going to get more complex going forward, especially when you start to consider the potential impact of tariffs. Think about manufacturing which is expected to be spread across the world as parts outbound China are hit with punitive tariffs. What kind of confusion will this cause within the industry? Within your own organization? What sort of opportunities will this create? As a leader, your approach will also have to become more sophisticated, using data-driven analytics to probe deep into your supply chain. It will no longer serve to think of the supply chain as an isolated aspect of your business. Instead, you’ll need to work on expanding your business philosophy. Who are your suppliers’ suppliers? Who are your customers’ customers? It is that total end-to-end level of thinking that will allow for the necessary insight into the supply chain to avoid potential disruptions to your business.
Is Your Supply Chain Ready?
Even at the best of times, the average supply chain is packed with pitfalls and bottlenecks, any of which could be the event that prevents an organization’s ability to maximize growth. At the worst of times, those hangups could cause a drain in cash and capital when the economy is in a downturn. This is why optimizing for growth now is important. It creates the environment and opportunity for critical improvements when times get tough. There is no mutual exclusivity in this, high performing supply chains and operations excel in either condition.
So is your supply chain ready? As a CEO, here are the three big questions you need to ask:
How will my suppliers respond to a rapid increase or decrease in demand?
How well are manufacturing and operating distribution facilities prepared to cope with an increase or decrease in demand while still maintaining quality and service with appropriate cost and cash levels?
Do our logistics capabilities have enough capacity and responsiveness to accommodate a change in demand?
If your company can’t keep pace with the change, it’s as good as leaving money on the table, as your competition will likely be more than able to pick up the slack.
The answers to those questions are critical when estimating how well your company can perform in the event of an economic shift, in either direction. If your company can’t keep pace with the change, it’s as good as leaving money on the table, as your competition will likely be more than able to pick up the slack. Responding to these opportunities goes beyond simple, and BlueGrace can help with that. To speak to one of our experts, call us at 800.MY.SHIPPING or fill out the form below:
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.
As companies mature and the market changes, our understanding of crucial operating components of any industry has also grown. Supply chain transparency, in particular, has come a long way over the past twenty years. Transparency within the supply chain has gone from an unrecognized concept to a focus item for the C-Suite across a vast number of companies and industries. Given the current state of the market, it’s no small surprise either.
So in order to begin understanding transparency in the supply chain, we first need to define it.
Many, if not all, companies are facing increasing pressure from governments, consumers, non-profit / activist groups, and stakeholders to provide more information about their supply chain. Failure to do so could mean some serious damage to the company’s reputation. Slave or forced labor conditions, health and safety violations, animal exploitation, and child labor are all becoming hot button topics of the growing consumer conscience. While the reasons for explaining a higher need for transparency are clear, what is less clear is how to get there. Some companies are struggling to make a meaningful change to their operations to provide the much-needed levels of transparency.
As it is with most problems there is a lack of a clear and concise definition, according to an MIT study which conducted a survey of the apparel industry only to find wildly different results. So in order to begin understanding transparency in the supply chain, we first need to define it.
Understanding the Need Transparency
At its core, supply chain transparency is understanding what’s happening within the supply chain and being able to communicate that knowledge both within and outside the organization.
As we mentioned earlier, there is an increase in customer demand for insight into the supply chain, but it’s not without benefit. The researchers at the MIT Sloan School of Management found that consumers are willing to pay between 2 and 10 percent more for products produced by companies that have better supply chain visibility. The study showed that consumers place a higher value in a company that can prove the ethical treatment of their workers. What’s more is that this growing consumer base is seeking more information about product ingredients and materials, where the product is coming from, and the conditions in which it was produced.
As the demand for visibility continues to increase, so too will the potential fallout for companies that fail to provide it.
As the demand for visibility continues to increase, so too will the potential fallout for companies that fail to provide it. Over the last decade, there have been a number of scandals that have had a significant detrimental impact on company image and reputation. Slave labor in the Thai seafood industry and deforestation in Malaysia and Indonesia are ample examples of this.
The backlash created from these scandals has forced the creation of new transparency laws around the world. Australia the UK have created new regulations to combat forced labor. The state of California has also created supply chain transparency laws (California Transparency in Supply Chains Act.) The U.S. Food Safety Modernization Act is targeting food safety and ingredient fraud. There are also further regulations to come from the Netherlands and Switzerland, with other countries to follow suit.
What this means for companies is that a lack of supply chain transparency can stop operations dead in their tracks.
What this means for companies is that a lack of supply chain transparency can stop operations dead in their tracks. Something as simple as missing origin documents could cause a shipment to be either held up or even turned away at ports which can result in a costly delay throughout the entire supply chain.
So Why Aren’t All Companies on Board?
You would think that with the new levels of consumer consciousness and the growing global regulations that all companies would be scrambling to build transparency into their supply chains. Yet, there are many companies that are either slow to act or not act at all.
One reason for the delay is that the supply chain itself was never designed to allow for transparency. Manufacturers and suppliers alike fear to expose their sources as they might lose the edge against their competition. Another explanation for being slow to act is inaccurate data coming from upstream, assuming there is data to be had at all. Lastly, there’s also considerable concern about the ROI for investing in supply chain transparency.
Despite the challenges, there are plenty of reasons to get on board with supply chain transparency.
The Benefits of Supply Chain Transparency
The returns gained from efforts made on improving supply chain transparency will vary by business model and industry but overall there are a number of benefits that are applicable to most companies.
One of the most straightforward benefits is that increased transparency means keeping in compliance with the new regulations that are being enforced. Operational risks drop as a result as companies no longer have to worry about being able to get freight through customs.
There are also considerable benefits to a company image that come with higher levels of visibility. Consumer conscience is a huge market factor right now. Customers are happy knowing that their products are made with care and concern towards the environment and the people working to make their products. As a result, they’re willing to pay more, which can help offset potential higher supply chain costs. Additionally, consumer trust and satisfaction also rise, which creates stronger brand loyalty and a larger customer base.
Better visibility means better, more actionable data, which in turn can help drive a company’s growth and profitability.
Of course, there are also operational benefits to be had by utilizing a highly visible supply chain. Better visibility means better, more actionable data, which in turn can help drive a company’s growth and profitability. That data also highlights areas of improvement, meaning a company can run leaner, cleaner, and a whole lot greener.
This isn’t a trend in the sense that we’ll see it fall out of fashion any time soon. Supply chain transparency is becoming an industry standard and will continue to flourish. If your company isn’t working towards transparency, it might be time to get started. For more information on how BlueGrace can help give you the visibility you need to gain efficiency, feel free to contact us at 800.MY.SHIPPING or fill out the form below:
For a logistics player to be successful, it is imperative to regularly check if every aspect of the supply chain process is working at optimum capability. The surest way to ensure this is to keep a checklist. Tom Peters, the author of In Search of Excellence, says, “Almost all quality improvement comes via simplification of design, manufacturing, layout, processes, and procedures.”
In this article, we delve into the details of making a warehouse future-ready and examine the steps required to achieve warehouse excellence.
The Bigger Picture – Before getting into the nitty-gritty and finer details, it is first important to have a macroscopic view and understanding of the warehouse as a whole. This entails mapping the warehouse, studying the building & area and checking the surfaces for damages and weak areas. All these actions ensure that before the warehouse is stocked, and equipment such as forklifts are brought in, it is capable of handling the capacity and regular operations.
Goods that are easily visible, make them easy to locate when timelines are short and add to the smooth functioning of the supply chain process.
Light, Ventilation & Drainage — A well-lit warehouse makes it easier to navigate and work in. Goods that are easily visible, make them easy to locate when timelines are short and add to the smooth functioning of the supply chain process.
Ventilation goes a long way in combating dust and fumes that may arise when moving equipment within the warehouse. A well-designed ventilation system will make a huge difference in maintaining the longevity of the warehouse.
In a similar way, a disaster-proof drainage system can make all the difference in the preservation of products during a natural disaster such as a storm or a fire or even areas that are exposed to the elements. Paying due attention to designing these crucial details improves efficiency and adds immensely to not just improving daily operations, but also, preserving the warehouse in the long term.
Cleanliness is the Key — Keeping the warehouse clean entails a number of practices that contribute to the overall hygiene of the warehouse while making it easy to maneuver on a daily basis. Ensuring that trash cans are placed at convenient locations, emptying trash cans periodically, keeping the area clean, all play a part in the overall maintenance and upkeep of the warehouse. Additionally, keeping the floors clean afford clear visibility of the exit signs and protect against accidents that could occur due to spillage and obstructions that may happen during daily operations.
Safety is the most important factor in any industry and must be prioritized above all else.
Safety is Paramount — Safety is the most important factor in any industry and must be prioritized above all else. This includes various aspects from regular fire drills and ensuring the equipment is serviced and up-to-date for any contingency to giving employees access to adequate training and gear for safe operations. Staff handling forklifts and heavy machinery must be provided with certified hard hats, gloves, and other protective gear to protect against any mishap that might happen. Labels and handling instructions on products must be visible all the time. Continuous training of staff about the correct and expected ways of protecting themselves, others, and assets is essential. In the event of an emergency, staff must have easy access to all the tools necessary to not just protect themselves but any other persons that may be in the warehouse. These competencies can be the difference between life and death in times of crisis.
Regular checks and inspections are essential for maintaining the standard of a warehouse.
Miscellaneous — Apart from taking care to examine that the above aspects are in order, regular checks and inspections are essential for maintaining the standard of a warehouse. From checking the storage racks and vehicle inspection processes at the loading dock, to inspecting elements such as the quality of the railings, uniformity of the stairs, access areas, aisles etc. on a regular basis must be taken into due consideration and set within processes that should be part of a cycle within organizations.
Apart from the above, Everything Warehouse lists a warehouse audit checklist that demonstrates what an audit should include:
Facility current and optimum capacity and throughput
Logistical layout and material flow
Safety, security, and housekeeping
Systems functional capabilities and performance
Customer service performance metrics
Storage and handling equipment
Identification of opportunities for improvement
Comprehensive warehouse audit report with recommendations
In conclusion, there are many aspects that go into making a warehouse and in turn, the whole supply chain process efficient and future-ready. If done periodically, this ensures smooth operations, regular maintenance & review and better planning.
Let’s be honest, there are few things that feel more rewarding than securing a new customer. It’s incredibly important for business growth and development and at the end of the day, more customers mean more money. With that being said, no business should ever operate on a model where the acquisition of new customers supersedes the importance of advancing old or preexisting customers. More specifically speaking, winning back profitable old customers that you might have lost.
In the business-to-business (B2B) world, reacquisition is incredibly important. Losing customers happens more often than you might expect, especially given the current market, where customers have more options than ever to evaluate and re-evaluate their suppliers, find new ones, and make changes.
Losing a customer can be a costly endeavor, and that cost is only going up.
Losing a customer can be a costly endeavor, and that cost is only going up. For some firms, long-standing customers are also their best customers. As recently as 2014, for example, “the average publicly traded manufacturing firm received over 25% of its revenue from large buyers, up from 10% in the early 1980s.”. Any company, regardless of size, would be leery at the prospect of losing a customer like that.
Former customers already have a certain expectation about your company and capabilities, and it’s almost impossible to change the first impression.
The reacquisition process, however, is a bit different than acquiring fresh customers. The most obvious difference is former customers already have a certain expectation about your company and capabilities, and it’s almost impossible to change the first impression. The other side of the coin, however, is you also have your own set of criteria and history, so you know if that customer is worth pursuing.
Fortunately, when it comes to winning back a lost partner, it’s less about wining and dining, although that’s certainly a part of it in some cases. Realistically it comes down to this, can your company get the job done this time better and in a most cost-effective way? The good news is that a lot of what customers are looking for, both new and old, can be found from within your supply chain.
Rebuilding Relationships in the Digital Age
Assuming you’ve done the math, you’ve come to realize that Customer ‘X’ is definitely an asset to your roster and is worth romancing back into a partnership. Where do you begin? This isn’t necessarily an easy question to answer as not only does it depend on the specific customer, but it is also prone to change due to the current state of flux in the market. Everything is shifting, getting technological upgrades, and becoming digital. Even customer expectations are starting to trend towards digital solutions. Having said that, finding the right way to move forward is like trying to find the needle in a haystack, in the back of a moving truck.
What many businesses are looking for today is visibility, flexibility, and assurance that they’ll get what they need, when they need it.
What many businesses are looking for today is visibility, flexibility, and assurance that they’ll get what they need, when they need it. The ability to provide those things to a customer not only marks you as a good business partner, but it’s also a key differentiator amongst the competition. The digital “olive branch” in today’s market is what kind of data and information you can provide your customers, and overall accountability of your services and, most importantly, the strength of your supply chain.
Managing Customer Expectations
Customer expectations are constantly growing and changing. Walmart is a prime example of this. The superstore is locked in a battle of epic proportions against Amazon. Every empty spot on a shelf means a potential missed sale. A sale that could end up going to Amazon or even a different competitor.
As a result, Walmart started stepping up their expectations from their suppliers, hitting those that don’t hold up their end of the bargain with charge-backs and other fees. However, given the size and reach of a retail giant like Walmart, business potentials for suppliers are enormous. If you make the supplier list, they tend to be the kind of customer you don’t want to lose. To that end, suppliers have little other choice but to pull up their bootstraps and live up to Walmarts expectations.
No doubt, the bar is set high, but this may also present the opportunity for those who are able to demonstrate that they have been developing and evolving their business practices. Showing your former customer that you can get the job done and done right is a sure fire way to win that customer back.
You need to be able to prove that you have a robust plan to meet their needs as well as the capability to follow through. If they have a tight delivery schedule, then you’ll need to have a plan in place to accommodate it. Those accommodations are made through shoring up your supply chain to create the flexibility and visibility necessary to handle the freight, even when capacity and other elements are against you.
Controlling costs and optimizing the supply chain also means that you can provide your customers the visibility, flexibility, and the overall assurance that they will have what they need, when they need it.
Costs are a big factor in any working relationships. A lot of partnerships have dissolved simply due to an inflating price point, which can be caused by any number of reasons. Unfortunately, it tends to be either a knee-jerk reaction to pass the buck when times get tough and for some customers, that cost is simply too much. Controlling your costs goes a long way towards repairing broken relationships, especially when it means that you can regain a former customer at the expense of your competition. Controlling costs and optimizing the supply chain also means that you can provide your customers the visibility, flexibility, and the overall assurance that they will have what they need, when they need it.
The benefit to this approach is two-fold, really. First, you’re gaining back a lost customer as well as proving that your business solutions have grown and matured from the last time you’ve worked together. This not only opens the door to regaining a lost customer but could also provide opportunities to gain new ones. The other is that controlling your costs, via your supply chain, also increases overall efficiency which extends to all of your customers and your operations as a whole. Ultimately, the bulk of costs comes from transportation and the supply chain. As freight rates are prone to fluctuate wildly, the cost of shipping goods can also vary to a great degree making it hard to manage. For manufacturers shipping goods to customers, this needs to be managed effectively to keep costs low and both parties happy.
There are a number of different factors to consider when you’re trying to evaluate your supply chain. The good news is, you don’t have to do it alone.
Making these corrections and changes on your own can be a difficult proposition at the best of times. There are a number of different factors to consider when you’re trying to evaluate your supply chain. The good news is, you don’t have to do it alone. Having a 3PL partner like BlueGrace can help get your supply chain where it needs to be, not only win back former customers, but to also help you win over future prospects. Call us at 800.MYSHIPPING or fill out the form below to see how we can help!
Why are some supply chains operating at an optimum level, while others are struggling to perform day to day operations? How are some supply chains able to respond quickly to market demands, while others miss opportunities? Why are some supply chain managers able to reduce costs without compromising product and service quality, while others are dealing with rising costs?
There is only one answer to all these questions.
An organizational culture of continuous improvement is the secret of a healthy, cost-effective, responsive and efficient supply chain.
What is the Culture of Continuous Improvement?
As the name suggests, Culture of Continuous Improvement means – having a culture where process, system, service, and product improvement is an ongoing and continuous activity. This culture is embedded in the organization’s foundation. It involves, encourages and motivates all the employees, management, vendors, and suppliers to seek out avenues and means to improve how the organization functions at every level.
How do Supply Chains benefit from Culture of Continuous Improvement?
The supply chain is one of the biggest cost centers in an organization. It is the function responsible for manufacturing, storing, and distributing the product. It makes the product available to the end customer. To be able to keep up with industry trends and market demands it is necessary for supply chains to constantly innovate. And, innovation can’t happen without continuous improvement. In fact, both are interdependent.
When supply chains improve and innovate, they are able to do the following:
Improve service and product offerings
Decrease go to market time
Reduce response time to market and customer demands
Helps integrate the different functions within the organization
All these things help the organization improve revenues and remain competitive.
How to Create a Culture of Continuous Improvement in the Supply Chain
Creating a culture of continuous improvement requires the involvement of the entire organization. It can’t be done in silos. For example, if you plan to continuously improve your supply chain, you will by default have to roll out the continuous improvement plan in all the other departments as well.
Here’s how you can create a culture of continuous improvement in your supply chain and all the other functions of the organization:
Align the C-Suite: Any process or strategy change in the organization can’t succeed without the involvement of the C-suite and function leaders of the organization. Once the leaders and the management is aligned and agrees to make continuous improvement a part of the organization culture, it becomes comparatively easier to implement changes.
Set clear objectives and goals: Any change or activity undertaken without a goal or objective is not only difficult to achieve but also challenging to “sell” to the employees. So, when you decide to make continuous improvement a part of your organizational culture, define what you aim to achieve from it. For example, the supply chain’s objective can be improved inventory management, better machine utilization, or lower transportation costs.
Define how you will measure it: Along with setting objectives and goals, it is also necessary to define how you will monitor and measure their performance. Unless there are proper metrics in place to measure the outcome, you will not understand if your plan is working in accordance with your goals. Apart from knowing how your plan is performing, results also help keep employees engaged. If they are achieving the said goal, it motivates them to do better and take initiatives to find other ways to further improve their performance. If it is not providing the said results, it helps find new solutions and opens doors for innovation. Either way, it keeps up the spirit of continuous improvement.
Seek input from employees: Your employees are responsible for implementing the strategies for continuous improvement. They also have first-hand knowledge of the pain points of the process they handle and have insights regarding how it can be improved. If they are also involved at the planning and strategizing stage, they will be motivated to take ownership for its success.
Allow room for failure: Condemning failures is one of the biggest hurdles in embedding a culture of continuous improvement in the organization. If employees feel they will be penalized for failure, they will neither suggest new ideas nor be enthusiastic about implementing anything new. On the other hand, when they have the assurance that they will not be punished for failure, they will not only be motivated to find new ways and means to improve the processes and systems but will also put in their best efforts to make them a success.
Introduce technology: Technology is one of the tools to improve systems and processes within the organization. Any strategy to create a culture of continuous improvement in the organization can’t overlook the contribution of technology. By using the right technology, you can eliminate redundant and duplicate processes, reduce manual work, and integrate different processes. Technology also helps connect the end customers to the business, thus improving your service offerings. For example, if your logistics department uses a transport management system, you can connect with transporters and customers on the same platform. Track your shipment real-time and offer the feature to your customer as well. Additionally, a TMS will also help you monitor and track your logistics department’s performance. Thus, aiding you in your efforts to build a culture of continuous improvement.
While these steps will help you initiate improvement, to make it a part of the culture and keep it “continuous” you will need to pursue it relentlessly and passionately.
While these steps will help you initiate improvement, to make it a part of the culture and keep it “continuous” you will need to pursue it relentlessly and passionately. It will require steadfast efforts starting from the leadership team going down to the employees at the bottom of the hierarchy.
At BlueGrace we believe the passion for our work is what enables us to constantly look for ways and means to improve our services and products and find better solutions for our customers. It is the secret of the success of our organization. Want to connect with one of our experts to see how BlueGrace can help simplify your supply chain? Call us at 800.MY.SHIPPING or fill out the form below!
There is a sense of uncertainty that is settling over the trade industry in the United States. With the Trump administration slamming tariffs down on Chinese goods, the market is starting to get uneasy. A similar threat levied at goods made in Mexico, which added to the tension but that has been settled, at least for the time being. For starters, the U.S. hasn’t been in a major trade war since the 1930’s, so no one really knows what will happen next. Not for sure at any rate.
The trade embargo then parallels the trade tariffs now; could create a supply shock on reliable and cheap imports.
However, history and time prove to be great teachers and we could draw conclusions from similar events that have happened more recently. In 1973, there was a trade embargo on Arab Oil. The trade embargo then parallels the trade tariffs now; could create a supply shock on reliable and cheap imports.
A History Lesson
The 1970’s embargo holds a very valuable lesson and could provide a possible insight into the current market climate. In 1979, towards the end of the embargo, American businesses, such as gas stations, began to tank as there was no affordable in-flow of new products. The remaining product then skyrocketed, reducing the purchasing power and confidence of the American Consumer.
The trade embargo was issued as a matter of retaliation when the U.S. sent armed forces into Israel as a result of an attack from Egypt and Syria. Arab oil exporters cut production and suspended further exports to the United States. The U.S. long used to the plentiful supply at $4 a barrel, was caught completely off guard when that supply jumped to $11 dollars per barrel. The bill for U.S. oil imports jumped from $28 billion in current USD up to $132 billion in a span of two years. To put that into perspective, that’s a tax increase of roughly 1.5% of GDP. The end result was the worst recession, at the time, since the 1930’s.
Costly adjustments to supply chains and business models had to be implemented which drastically slowed down growth for years.
The recession wasn’t the only impact, however. The recession ended in 1975, but there were a number of repercussions that were felt for many years to come. Costly adjustments to supply chains and business models had to be implemented which drastically slowed down growth for years. A considerable amount of companies and workers found that their skills, products, and factories which had been built on the precept of the availability of cheap oil, discovered they were no longer useful. This caused a drastic slowdown in growth and productivity after 1973 which took years to recover from.
Disrupting long-standing trade always comes with a price.
In much the same way that the United States was reliant on cheap oil imports from the Middle East in the 1970’s, they have also been reliant on cheap manufactured products from China. Now, the United States might be looking to untangle itself from Chinese production as trade and geopolitical tensions begin to rise. However, disrupting long-standing trade always comes with a price.
“Economists at Goldman Sachs estimate U.S. tariffs imposed or proposed on steel, aluminum, solar panels, washing machines and imports from China now equals an annualized $200 billion. Adding all threatened tariffs on Mexico brings that to $288 billion by the end of October. At 1.4% of GDP, that is roughly equivalent to the Arab embargo oil tax,” reads an article from the Wall Street Journal.
In terms of manufacturing and supply chains, that could get ugly quickly.
What that fails to include, however, is the retaliation from China, which has threatened to counter these tariffs with tariffs of their own. In terms of manufacturing and supply chains, that could get ugly quickly, especially as many manufacturers will have to determine whether or not they can take the hit to their profit margin due to increased materials costs or undertake the time consuming and costly endeavor of trying to find and vet a new supplier.
Historically speaking, tariffs were meant to boost domestic manufacturing and production by protecting companies from cheap foreign competition. However, as production is largely globalized, imports often consist of intermediate goods that are moving from one supply chain to another and the U.S. doesn’t have any ready-made substitutes.
If ever there was a time to evaluate your supply chain and suppliers, it’s now. The uncertainty in the global economy is unnerving, to be sure, but optimizing your supply chain can help you to weather the storm without dumping the increased price point on your customers.
There is more to consider about these tariffs than simply a price point.
There is more to consider about these tariffs than simply a price point. What we learned from the oil embargo is that productivity and efficiency were drastically cut down, which took several years to recover from. Increasing efficiency now, giving your company the ability to make do with less, is instrumental in staying relevant in the global market.
BlueGrace helps our customers navigate through the constant changes the industry brings. No matter the situation, we are here to simplify your freight needs. If you have any questions about how a 3PL like BlueGrace can assist, contact us at 800.MYSHIPPING or fill out the form below to speak with a representative today!
BlueGrace Logistics announced Monday morning that, in addition to the $5,000 raised in their annual “Cats vs Dogs” food drive this spring, they will make a donation of $60,000 to the Humane Society of Tampa Bay.
The $65,000 donation will not only help to feed the thousands of animals held in the shelter each year but will also get HSTB closer to their $11 million goal to cover the costs of their new shelter.
The Humane Society of Tampa Bay began construction on their
brand new, 42,000 square feet, air-conditioned shelter this year with a demolition
day in April. The new shelter will help HSTB save 2,000 more animals annually.
What I love about Bobby [Harris], his family and all of you guys is that you’ve stuck with us.
Sherry Silk, CEO of Humane Society of Tampa Bay, stopped by BlueGrace Logistics’ Tampa HQ Monday morning to accept the donation. She spoke to the employees about the ten-year partnership between the shelter and third-party logistics company. “What I love about Bobby [Harris], his family and all of you guys is that you’ve stuck with us,” Sherry explained.
The BlueGrace Logistics Training Room
In addition to accepting the donation, Sherry and Ornella Varchi, Chief Development Officer for Humane Society of Tampa Bay, announced that the training room at the new shelter will officially be named “The BlueGrace Logistics Training Room.”
Since 2010, BlueGrace Logistics has donated more than 217,000 lbs of cat and dog food to the shelter.
Founded in 2009, BlueGrace Logistics is one of the largest third-party logistics (3PL) providers in the United States. With over 500 employees and working with over 10,000 customers to provide successful shipping solutions, the company has achieved explosive growth in its nearly 10-year operating history. Backed by a $255 million investment by private equity firm Warburg Pincus, the company operates 11 locations nationwide, and its headquarters are in the sunny Tampa Bay area of Florida.
Of all the industries that American consumers have come to rely on, perhaps the most underrated, and subsequently complex, is that of the transportation industry. While the laws of supply and demand will affect every form of business it is perhaps the most volatile and fluctuating when applied to the transportation industry. Last year was a great year for trucking companies, demand was high, capacity was low, and it allowed them to more or less pick and choose the jobs they wanted to do.
With so many wild swings in one direction or another, we’re entering a period of “new” balance that no one is quite sure of.
Shippers, for their part, have accepted the higher rates as an understood cost of business, but with so many wild swings in one direction or another, we’re entering a period of “new” balance that no one is quite sure of. Shippers that turned to contracts to escape the high rates are now making a return to the spot market as there’s plenty of available capacity currently on the market.
Aptly put, this “muddy middle” for the trucking department is a rare moment when supply and demand have reached something of an equilibrium, something that hasn’t been seen for years. Spot rates for FTL have dropped upwards of 12 percent from this time last year while contract rates, on the other hand, have climbed up 14 percent in 2018 according to data from DAT Solutions and Truckstop.com. Shippers that turned to contracts to escape the high rates are now making a return to the spot market as there’s plenty of available capacity currently on the market.
Given such a high volume of transference, it might have actually created an overly strong demand on contract rates which would have caused them to increase.
It’s rather reasonable at this point to speculate that the current shift towards the muddy middle was caused by overcompensations. Beneficial cargo owners (BCOs) reacted to the rate spike mid 2017 by shifting over to contract rates. Given such a high volume of transference, it might have actually created an overly strong demand on contract rates which would have caused them to increase.
Going into 2019, carriers and 3PLs were using terms such as “balanced” and “equilibrium” to describe the current state of the market. However, that might not be entirely accurate, or, at least not strong enough of a prediction to hold fast in the days to come.
The transportation industry is precariously balanced amidst two slippery slopes and it could go one way or the other.
“With contract and spot rates currently headed in different directions, it’s unclear exactly how this will all play out. IHS Markit chief economist Nariman Behravesh put the odds of a recession in 2019 at around 30 percent but upped that chance to 50-50 for 2020. A recession would mean lower cargo volumes, which would drive down both contract and spot rates, creating a buyer’s market,” according to an article from the JOC. Hence, the muddy middle. The transportation industry is precariously balanced amidst two slippery slopes and it could go one way or the other.
Given the nature of the industry, balance doesn’t tend to last overly long. Eventually, rates will break either one way or the other to someone’s advantage (or disadvantage depending on your perspective.)
“A lot of shippers who started the process in the third or fourth quarter, they saw the rates [moving] in the right direction for them, so they actually held out on releasing the awards until mid-January or even into February,” said Mark Ford, our very own chief operating officer here at BlueGrace Logistics. “Shippers are trying to figure out where that bottom is, throwing out their routing guides, and going to the spot market depending on the cost differential.”
Shippers aren’t the only one that has a card or two up their sleeve.
Given that time is such a commodity, shippers have the power to drive rates in either direction, depending on what value they attribute to their time. However, shippers aren’t the only one that has a card or two up their sleeve. Given a recent downturn in the trucker pool in addition to more stringent regulations that make it harder to operate, carriers might have a little more say about carrier rates than one might expect.
A Drop In the Trucker Pool
While shippers can garner some power to affect rates, that doesn’t mean that carriers aren’t without an answer. A recent report from the Wall Street Journal states that carriers have cut payrolls by 1,200 jobs last month, owing largely to a softening of demand at the tail of a profit-boosting hot streak all through 2018. The drop in demand for new trucks is also a good indicator of a softening in the trucking sector.
“Orders for Class-8 trucks – the heavy trucks that haul consumer goods, equipment, commodities, and supplies across the US to feed the goods-based economy – plunged 52% in April compared to April last year, to 16,400 orders, according to FTR Transportation Intelligence on Friday. It was the lowest April since 2016 when the industry cycled through its last transportation recession. This comes after orders had already plunged 67% year-over-year in March, 58% in February and January, and 43% in December,” reads a recent article from Wolfstreet.
The flip-side of that particular coin is that warehousing and storage company job positions have been on the rise, up 1,700 in March alone, likely due to the continual increase on online consumer shopping. Same can be said for courier and messenger companies that make last mile deliveries.
In general, the transportation market, which has been ramping up over 2017 and 2018 is beginning to slow down, allowing them to control their overall available capacity and their spot or contract rates as a result.
Utilization seems to be the key to determining which way the rates will go. Shippers should be using this time to consider how they can vastly reduce their load times and what sort of effect that would have on the available capacity in the market. Given that there’s no clear indication of which way the market winds will blow next, focusing on optimization and utilization could be the necessary elements to not only help drive rates down, but to keep them down.
For carriers, the means of reaching a perpetual middle of the road would be to find alternative service offerings as well as increasing their focus on last mile deliveries. Doing so allows them to provide more value to their customers and increase their profit margins as a result.
Navigating Through Industry Changes
BlueGrace helps our customers navigate through the constant changes the industry brings. No matter the situation, we are here to simplify your freight needs. If you have any questions about how a 3PL like BlueGrace can assist, contact us at 800.MYSHIPPING or fill out the form below to speak with a representative today!
For the past 9 years, BlueGrace employees have joined together to compete at Corporate SportsFest on St. Pete Beach in sunny Florida. SportsFest offers competitive events that include volleyball, corn-hole, a surf ‘n turf relay race, dodgeball and tug of war. Last year, out of over 200 Tampa Bay Area companies, we took home the big trophy, winning 1st Place Overall and surf’n turf. With BlueGrace Core Value #3 being “Pursue Outrageous Goals” , the BlueGrace team did just that with the Tug of War team bringing home that 1st Place prize. Check out the 2019 video below.
Aside from the fact that we usually dominate the competition, everybody just has a blast. I can’t say enough about it.
“My favorite thing about SportsFest is getting everybody in our company, all together in one place. Whether they’re playing, or whether they’re hanging out and having fun, it’s probably one of the biggest things we do every year. Aside from the fact that we usually dominate the competition, everybody just has a blast. I can’t say enough about it.” says Bobby Harris, President & CEO at BlueGrace Logistics.
Are You Ready to Join the Winning Team?
BlueGrace is hiring and we want you!
SportsFest gives our BlueGrace family the opportunity to come together and show off the passion we have for working as a team, both in and out of the office. Want to be part of that team? BlueGrace is hiring and we want you! From Sales and I.T., to Finance and Customer Support, we have a positions for all talents! Visit http://mybluegrace.com/careers for more information.
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.
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.
Supply chains are complex and dynamic. They comprise many different variables that operate both on their own and as a part of a whole. The success of a supply chain depends on the integration of all the components without compromising their individual roles and responsibilities.
To design and operate a supply chain that is efficient and effective in both cost and service, it is important to analyze the contribution of each component in the system and how it impacts the other variables.
How Will a Supply Chain Analysis Help You?
A timely and periodic analysis will work as a preventive health check-up for your supply chain thus ensuring it continues to operate at an optimum level.
A thorough study of the processes will give you insight into the performance of the different aspects of the supply chain. It will help you identify which processes are crucial to the success of your business. An end-to-end in-depth analysis will also highlight which processes are redundant or need to be restructured. In short, a timely and periodic analysis will work as a preventive health check-up for your supply chain thus ensuring it continues to operate at an optimum level.
Apart from assisting you in understanding the different aspects of the supply chain, a study of planned against actual performance will also provide information on how you can further improve your services to match customer demand and control operating costs.
It’s safe to say that transportation is the backbone of the entire supply chain.
Transportation is one of the most crucial functions and is integral to almost all aspects of the supply chain. The manufacturing department is dependent on it to get raw materials to the factory on time. The factories need it to ship the finished goods to warehouses who in turn need it to ship the goods to the end customers. It connects the different parts of the supply chain and helps convert the final product into sales – thus generating revenue for the organization. It’s safe to say that transportation is the backbone of the entire supply chain.
A Deeper Look into Your Supply Chain
There are many factors that need to be considered when conducting a complete assessment of your supply chain. However, the health of the system can be easily ascertained by taking a look at how your transportation management system measures against the parameters given below:
Freight Costs: Transportation is a cost center. It’s considered to be operating at an optimum level if the rates are contained within a certain range of the cost per unit of shipment or net sales/purchase price of raw materials. The range of acceptable percentage varies from industry to industry.
Transit Time: Transit time is one of the main indicators of successful transportation planning. If your transport rates are low but the transit time is long, then you are saving money at the cost of service quality.
On Time Delivery: Are you delivering products within the timelines agreed with your customers or your retailers, such as Walmart or Target? Is the warehouse inventory replenished timely? Is the factory receiving goods in time? If the answer to these questions is yes, then its a plus point for your transportation planning. If the answer to any of these questions is no or most of the time, then you need to rework your transportation planning.
Damages: If you have managed to contain the transport rates and deliver within acceptable transit time, but there’s the rate of damage claims are high, then again, your transportation planning needs to be restructured.
Shipment Visibility: A good transportation system offers you and the customer visibility into the shipment’s location from the time it leaves the starting point until it reaches the intended destination.
Capacity Utilization: Are you utilizing truck capacities to the fullest extent possible when planning your deliveries or spaces on trucks are going underutilized? Unutilized space will translate into higher cost per shipment, leading to uncompetitive products and loss of profit.
If you’ve gotten a negative result or response for any of these parameters, then it is time to get a thorough inspection of all aspects of your supply chain.
At BlueGrace, we understand the importance of operating a robust supply chain. That’s why we offer a FREE Supply Chain Analysis to help you gain insight into how your supply chain is performing. Call us at 800.MY.SHIPPING, or fill out the form below to speak to one of our experts and set up your free supply chain analysis today!
Controlling costs is critical for any business to be successful. When working with a supply chain, the more complex it is, the more chances there are for additional costs and surcharges, any of which can cost your company a great deal of extra money.
They are any freight services that go beyond the normal scope of pickup and delivery.
Accessorial charges are a particular type of surcharge. They are any freight services that go beyond the normal scope of pickup and delivery. This can include inside or special delivery charges, waiting or detention time, fuel surcharges, storage fees, and many others. Given the way the freight market is changing, especially due to the rise and continual growth of e-commerce, many companies are looking to a more specialized version of last mile delivery as customers want their products sooner rather than later. The “white glove” last mile service, while costly, is growing increasingly important as customer service is becoming one of the last true differentiators among the competition.
In our webinar, we covered the basics and most common questions of accessorial charges which include:
What are accessorials?
How do they affect cost?
How do they affect supply chain efficiency?
How can we mitigate problems?
How do we know if we have a problem?
Consumers want their product today, that means that retailers want it delivered, checked in, and on the shelf yesterday.
Logistics and supply chain management has become a very tight game, almost cutthroat in its harsh severity. Consumers want their product today, that means that retailers want it delivered, checked in, and on the shelf yesterday. With the ability to order just about anything a consumer could possibly want from the vast online marketplace, brick and mortar retailers have to run an even tighter ship than they have before if they have any hopes of competing. To that end, some retailers are upping the ante and doling out punishment for shippers who aren’t in compliance.
WHAT ARE ACCESSORIALS?
As we mentioned above, accessorials are extra charges associated with freight delivery that fall outside simple pick up and delivery. We gave a few examples above, but those are by no means the only accessorial charges that you could be stuck paying. Here are some other types of common accessorial charges.
Appointment / Notify
Sort & Segregate
While inaccurate weighing of freight could be a result of an honest mistake, the cost of that mistake can add up quickly.
It’s important to control and monitor as many of these as possible to help control costs. Consider reweigh charges for example. When a carrier weighs freight and compares the actual weight to what’s listed on the bill of lading, the difference can be instantly tacked on to the invoice. For shipments that are 50 pounds or more over what the bill of lading states, there is a $25.00 validation fee as well as an increase to shipping costs. Additionally, all freight fees, fuel surcharge fees, and any other applicable accessorial fees will be adjusted accordingly. While inaccurate weighing of freight could be a result of an honest mistake, the cost of that mistake can add up quickly.
HOW ACCESSORIAL FEES CAN AFFECT YOUR SUPPLY CHAIN
One way to better control accessorial charges is to have a more efficient and agile supply chain. Detention fees are a prime example of where efficiency pays off. For the LTL market, every shipment has a set amount of free time per stop before the charges start being applied. While this is based on weight, meaning that heavier shipments have more time, it can be hard to gauge just how long each stop is going to take which leaves your company exposed to detention fees.
Another thing to consider is that the ELD mandate severely limits the amount of working time a driver has available. The longer it takes to load and unload freight can cause delivery delays and will ultimately increase the price of a shipment. Once you start adding detention fees onto the bill it can quickly become more expensive than you were initially anticipating.
It’s critical to have your supply chain running smoothly and efficiently.
Because of this, it’s critical to have your supply chain running smoothly and efficiently. Not only does it increase the chances that you will make your delivery schedule, but having a more efficient operation makes you a more attractive customer to carriers (which increases the likelihood of getting the capacity you need) as well as helping to control shipping costs.
LEARN MORE ABOUT HOW YOU CAN MANAGE ACCESSORIAL CHARGES
When it comes to controlling costs, the more you understand about extra fees the better off you’ll be. Because many of these accessorial charges can compound and complicate others, it’s important to understand the full workings of your supply chain and identify any potential problems before they arise.
The truth of the matter is that the more you understand your freight and the way your carrier works, the more accessorial fees you can either reduce or negate entirely. Many of these fees won’t even enter into the picture so long as the shipper is taking the time to make sure they’re doing things right. Doing this means preventing the issue before it even begins. On the other hand, if your freight invoice is coming as a bit of a shock, it might be time to take a closer look at the surcharges and determine what you can you do to correct the issue.
Ultimately, everything we covered in the webinar is about helping your company to manage these fees and perform better across the board. From internal operations to external executions, everything is connected and we break it down for you. Watch the full webinar to learn more about how you can be successful!
There are a number of other benefits that can come from working with and outsourcing your logistics to a 3PL. If you would like to speak to one of our experts, call us at 800.MYSHIPPING or fill out the form below.
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!