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!
While all facets of the modern business are important, arguably the most important to any retail, manufacturing, or goods based service is their supply chain. The supply chain serves as the backbone of these companies and has a significant impact on the company’s business strategy which directly affects its operation and operational costs. Additionally, the performance of the supply chain has a direct impact on a company’s ability to provide services to their customers and create additional value via services offered or simply through reliability. With the multitude of changes that have been occurring within the logistics, trade, and freight industries now, more than ever, is an opportune time to conduct or review the process of internal audit of your supply chain.
An internal supply chain audit is one of the most powerful methods of evaluating and possibly improving your supply chain, reduce operations costs, and increase competitive advantages.
An internal supply chain audit is one of the most powerful methods of evaluating and possibly improving your supply chain, reduce operations costs, and increase competitive advantages. The goal of the internal audit is to help you find weaknesses within your supply chain and correct pain points, bottlenecks to increase supply chain flexibility, agility, and overall efficiency.
To make the most out of your audit and its results, it’s important to understand that the supply chain isn’t a stand-alone, isolated feature of your business. In all actuality, the supply chain is suffused in every aspect of your business. As such the supply chain needs to be viewed between all participating companies and suppliers throughout the supply chain, with solutions applied from a holistic approach.
Why an Internal Audit is Necessary for Your Supply Chain
For most companies, audits are typically part of the normal routine, either for financial records or for physical inventory. The entire purpose behind an audit is to make sure things are where they should be and that everyone is playing by the same rules.
“Internal auditing is defined as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes,” as defined by The Institute of Internal Auditors (IIA).
This is especially important when trying to maintain retail compliance, for example, with increasing customer demands like On Time; In Full (OTIF) or Must Arrive By Date (MABD).
Simply put, an internal audit is a multi-step process that is a means of determining whether your current systems and operations are in compliance with your company’s predetermined operating procedures and regulations. This is especially important when trying to maintain retail compliance, for example, with increasing customer demands like On Time; In Full (OTIF) or Must Arrive By Date (MABD). Conducting an internal audit does more than just evaluates the supply chain, it also takes a necessary look at the interaction between other aspects of the organization such as the accounting and financial systems, practices, and procedures. For example, are your planners and purchasers communicating properly, not only with each other but with the production floor and shipping department? Are parts coming in with enough lead time that items can be manufactured and shipped according to customer requirements?
An internal audit is important because it allows the company executives and logistics decision makers to examine the effectiveness of their business operations and controls and applications of new policies. Over time, establishing those best practices means a more competitive and more profitable company in the future.
Things to Consider Before you Start the Audit
Performing an audit is one thing, but knowing what areas you need to be focusing on is something else entirely. While every audit should be more or less tailored to the specific needs of an individual organization, here is the basic framework for initiating an audit that needs to be included:
Audit Planning: Internal auditors should have a plan in place well before the actual auditing begins.
Examining and Evaluating Information: Internal auditors should have a standardized criterion to compare findings against.
Communicating Results: Audit should have a clear and concise method of reporting their findings.
Follow Up: Internal auditors should follow up in a timely manner to ensure that appropriate actions have been taken to correct audit findings.
This framework also serves as a support system for corporate managers and allows managers of larger production systems to delegate the oversight of the audit to the internal audit department. This is important for a few reasons:
Operating Complexity: Automated data processing has increased the levels of complexity when analyzing data, a task better suited for those who know what to look for.
Decentralization: Given that supply chains are prone to be decentralized in terms of a physical location due to globalization.
Lack of Expertise: As the adage goes, stick to what you know. Leave those auditors in charge of the audit for the best quality audit.
With the right framework in place for the audit to commence, let’s take a look at the tasks involved for the actual audit.
Supply Chain Structure and Internal Audit Tasks
Like we mentioned above, every company is different and, as a result, the needs for every individual supply chain will vary. So while there is no hard and fast or “Use audit ‘A’ for Supply chain system ‘1’ ” convenient method of doing things, there are some common focal points that are applicable for just about every organization and style of the supply chain.
The supply chain management processes identified by The Global Supply Chain Forum are:
Customer Relationship Management
Supplier Relationship Management
Customer Service Management
Manufacturing Flow Management
Product Development and Commercialization
All of these processes are hallmarks of a healthy supply chain and also indicative of the successful supply chain management. Here again, we can see all of the links that connect the supply chain to every other facet of the business. Another benefit to performing an internal audit is that offers to perfect opportunity to increase the synergy between these various departments. For CFO’s and supply chain leaders, this means that supply chain management deals with total business excellence and represents a new way of managing the business and relationships with vendors, suppliers, and partners.
An internal audit can help a company in finding answers to crucial questions about managing success factors of supply chain excellence, of which these can be divided into five main sections:
Strategy – To determine if the enterprise has a clear strategy tuned to business expectations and focused on profitably servicing customer requirements
Organization – To determine if an effective organization structure exists enabling the enterprise to work with its partners to achieve its supply chain goals
Process – To determine if the enterprise has excellent processes for implementing its strategy, embracing all plan-source-make-deliver operations
Information – To determine if the enterprise has reliable information and enabling technology to support effective supply chain planning, execution, and decision-making
Performance – To determine if the enterprise is managing supply chain performance in ways that will increase the bottom line, cash flows and shareholder returns
Supply Chain Risk Management
As much as we wish we could, the ability to see and accurately predict the future still eludes us to this day. In the end, it all comes down we can optimistically refer to as an “educated guess”. With that being said, even the most educated guesses can’t predict the weather or a broken down truck. This means that within every supply chain, there will always be an element of risk. That risk represents any number of things that can go wrong within your supply chain and halt or delay your shipments. For this very reason, risk management is incredibly important when evaluating your supply chain.
An internal audit can provide business leaders with the necessary framework to develop an appropriate supply chain risk management program.
Risk management is a huge proponent of supply chain health, especially given the instabilities in the global marketplace created by political uncertainty, trade tariffs, etc. An internal audit can provide business leaders with the necessary framework to develop an appropriate supply chain risk management program. This is how your supply chain audit can also help with risk reduction and increased security:
Reviewing and understanding supply chains, including their strengths and weaknesses, in developing markets, to validate monitoring programs
Working with the company’s supply chain specialists to help develop a monitoring process that can be repeated
Helping to identify which suppliers are critical
Assessing which suppliers may be vulnerable to threats and helping draw up a residual mitigation profile
Identifying strong risk control procedures
Helping to develop key analytic tools and techniques
Aiding with compliance monitoring
Ideally, the risk mitigation will also allow companies to increase supply chain efficiency to the point where on hand stock can be reduced. While having excessive stock might create a buffer in time where shipments are running late or capacity is tight, that excess can also eat into company profit margins. Additionally, having a well-running supply chain vastly lowers the chance for disruptions, operating costs, and other unexpected costs such as chargebacks, detention fees.
Despite the cause, however, the results are often the same, a drastic slow down of operations and a huge impact on customer satisfaction and profitability.
Supply chain management is a very complex structure of activities with cross-functional processes, and it presents one of the most important functions in the company since it is directly linked to all functions of the company. Supply chain problems can result from any number of things including natural disasters, labor disputes, supplier bankruptcy, an act of war or terrorism, systems breakdowns, procurement failures, and other causes. Despite the cause, however, the results are often the same, a drastic slow down of operations and a huge impact on customer satisfaction and profitability.
The supply chain internal audit aims to support managers in process optimization and above all in cost reduction which result from an uncertain environment by evaluating and directing management towards approaches which will prevent or reduce negative effects.
After analyzing definitions and some of the standards of internal audit, it can be concluded that this process can improve effectiveness and efficiency, and by that, the performances of many functions within the organization. High-impact supply chains are more competitive and are capable of winning market share and customer loyalty, creating shareholder value, extending the strategic capability and reach of the business. Independent research shows that excellent supply chain management can yield:
25-50% reduction in total supply chain costs
25-60% reduction in inventory holding
25-80% increase in forecast accuracy
30-50% improvement in order-fulfillment cycle time
20% increase in after-tax free cash flows
To increase supply chain strength, agility, and overall integrity, companies should develop a framework for a structured approach to ongoing risk identification and management. This will enable businesses to proactively address organizational supply chain risks on a periodic basis – a practice that affords stronger company and brand protection against supply chain risk gaps.
The more we know the more we can simplify.
The more we know the more we can simplify. When we know what your current transportation situation involves and what your pain points are, we can really help you simplify. The journey with our customers begins with the Needs Assessment process and the goal to determine transportation management solutions that increase productivity and decrease overall costs. To speak to one of our freight experts, call us at 800.MY.SHIPPING or fill out the form below to receive a FREE Supply Chain Analysis.
Supply chains are 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.
It is a well-known fact that supply chain is increasingly becoming digital. But is simply adding a digital component to the complex supply chain network enough to make it efficient? Will it provide the edge that companies need to win in the current cut-throat and ever-changing global business environment?
What more is required?
According to a study conducted by IBM and National Retail Federation (NRF), the retail and consumer goods industry is designating intelligent automation, also known as artificial intelligence, as the future of supply chain. For this, IBM and NRF surveyed 1,900 retail and consumer products company executives across 23 countries.
The survey revealed that “intelligent automation capabilities help increase the annual revenue growth by up to 10 percent”. It found that of all the respondents surveyed, around 85 percent from the retail sector and 79 percent from the consumer products sector “plan to use intelligent automation for supply chain planning by 2021”. The study also found that 79 percent of the retail industry respondents “expect to use intelligent automation for customer intelligence by 2021”.
Combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.
According to IBM, integrating supply chain with customer insight is essential for the success of the omnichannel. It further added that combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.
When the retail and consumer goods industries, who have the most complicated supply chains, are envisaging intelligent automation as the future of the supply chain, then can logistics – the core of supply chain be left behind?
Definitely not. In fact, the current logistics landscape which is highly fragmented and complex will benefit immensely by leveraging the power of intelligent automation in its day-to-day functioning.
How Intelligent Automation Will Benefit Logistics
Better planning: Intelligent automation can integrate and streamline transportation planning, route planning, warehouse network, and inventory planning. It will enable data sharing among all functions, highlight errors and outliers in the data, and speed up data analysis thus increasing efficiency, improving accuracy and lowering operating costs.
Increased Transparency: The global nature of the industry, different rules and regulations across countries and multiple stakeholders has made transparency in operations and business transactions mandatory. Intelligent automation can be used to add checks at all data entry points to make sure that only verified and correct information enters the system and is available to all stakeholders on demand. This will improve decision-making, reduce incidents of miscommunication between users (internal and external), and decrease dependency on other departments for data.
Enhanced Visibility: A system empowered with smart technology like GPS and RFID can enable users to track shipments from pick up till the final delivery location. This can improve multimodal transportation planning and also keep the customers updated with a more accurate expected time of delivery. Visibility of shipments and other aspects of the supply chain also supports the planning function, highlights possible issues before they become roadblocks, and allows better control over the process.
Improved Efficiency: Adopting artificial intelligence to empower systems and processes will greatly reduce duplication and monotonous tasks. This, in turn, will improve both human and machine efficiency and reduce the turnaround time for each task to be completed.
Refined Analytics: Logistics is a data-intensive function. A large amount of data is used as the base for making strategies and taking decisions. An intelligent automated reporting system can reduce the time taken to collate, clean, format the data and minimize errors, thus leading to better, informed and quicker decision making.
Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution.
These are just some of the benefits of using intelligent automation in logistics. Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution. In a statement by the company, Luq Niazi, global managing director of IBM Consumer, explains the care organizations working with intelligent automation need to take. He says “The entire value chain operational infrastructure of B2B and B2C commerce, there has already been an increased adoption and demand for intelligent automation. This also brings forth the need for stronger transparency, ethical practices and business prioritization to evaluate and deploy AI responsibility.”
We at BlueGrace understand the importance of an intelligent tech-enabled ecosystem. Hence we have leveraged intelligent automation to build our transportation management system. The BlueGrace TMS provides its users with high-tech tools, visibility, visual analytics, speed, reliability, and it easily integrates with other systems and technologies. Along with performing all the regular functions, it also empowers you to identify opportunities to reduce costs and optimize your supply chain. To connect with our team to know more about BlueGrace’s TMS and how it can support your business growth, contact us at 800.MYSHIPPING or fill out the form below, and one of our experts will contact you today!
We’ve all heard that turnabout is fair play but in the trucking market, that mentality could make for a vicious marketplace. Of course, no one likes to pay any more for a service than they have-to, but given the fluctuations that happen within the freight market it’s all part of the game, right?
The problem is, when you focus solely on the bottom line, working relationships, the level of the provided services, and customer care can often be shoved to the wayside.
A Fairweather Friendship
While not all shippers will use and abandon their third-party (3PL) logistics providers during an economic shift, enough have done so in the past that left a bad taste in the mouths of 3PLs.
Shippers tend to shy away from their “partners” when times are good, capacity is plenty, truckers are looking for freight. When spot rates climb, however, shippers tend to look for shelter in the contract market which makes for a volatile spot market that makes matters much worse than they need to be.
If shippers weren’t as fickle during market shifts there would be more market stability. For shippers though, the bottom line is often considered as the most important factor.
During 2017 we saw both Hurricane Harvey hit the coast as well as the introduction of the Electronic Logging Mandate. As a result, shippers skipped the middleman and dropped their 3PLs, opting to work directly with large asset-based carriers instead.
A year later, spot rates have dropped as much 12 percent, according to data from DAT solutions, which are resembling those seen back in 2017 across several markets. Conversely, contract rates have risen, on average, about 14 percent in 2018 and have increased a further 6 percent this year.
With spot rates on the rise, shippers once again turn to third-party logistics providers with relatively no hard feelings. With negotiations underway, both parties more or less walk away happy.
Creating a Vicious Cycle
The same cannot be said for that type of mentality when it’s applied to the trucking companies, however. Here the negotiations tend to carry the memory of what happened the last time rates shifted in the favor of one side or the other. To be fair, that adversarial behavior does swing both ways. When capacity gets tight, trucking companies raise their rates to support the demand. When demand is low, however, and trucking companies are scrambling for a full load, shippers will push for lower rates, a behavior that seems to be hardwired into the business.
Here is where 3PLs can bridge that gap and help to even out the “revenge” style of marketing.
It’s hard for many companies to part with that “grudge” mentality, especially when both sides are angling to take advantage of one another when the market permits it. You’d be hard pressed to find a business that is willing to say “Sure, we’ll reduce our rates in favor of a good compromise,” and instead sounds more like “You raised your prices on us. Now it’s our turn.” Here is where 3PLs can bridge that gap and help to even out the “revenge” style of marketing.
The True Value of a 3PL
One of the biggest benefits of a 3PL is that they can help a shipper to access different parts of the very fragmented trucking industry. If a shipper has access to large trucking companies, a 3PL can give them access to smaller carriers, both of which have a place in a shippers supply chain.
“It’s hard to handle relationships with tens of thousands of carriers, so if you let the broker handle that portion, and you have a relationship with your top 10-15 asset based carriers, everyone can have a piece of the pie and work more collaboratively,” said Mark Ford, Chief Operating Officer at BlueGrace Logistics.
The main objective of any business is to conquer new frontiers and markets. And, to do this, it requires a wide logistics network and a robust, flawlessly executed logistics strategy.
As we explained it in more detail in one of our previous articles, 7 BENEFITS OF OUTSOURCING LOGISTICS TO A 3PL — The main objective of any business is to conquer new frontiers and markets. And, to do this, it requires a wide logistics network and a robust, flawlessly executed logistics strategy. Your 3PL partner is expected to and can help you achieve your business goals. They may either have their own network across regions or they may have business collaborations with transporters storage facility providers in different regions or a mix of these two, their own network in some cities and collaboration in another. They are thus better placed to help you expand and grow your business. To do this, all you need to do is work with them in a collaborative manner to din the most optimum solution to reach your customers.”
However, shippers who are too focused on their bottom line have a harder time seeing that value in a 3PL partner and might even remain hard pressed to change their ways.
It’s less a matter of saving a few cents on the mile, however, and more about creating a sustainable and, more importantly, profitable supply chain.
It’s less a matter of saving a few cents on the mile, however, and more about creating a sustainable and, more importantly, profitable supply chain. For shippers who are willing to keep an open mind and maintain a good working relationship with carriers and 3PLs alike have a great opportunity to build longstanding and mutually beneficial relationships. Utilizing a 3PL as a broker can help to save money when the markets fluctuate, but using them as a supply chain consultant is where they can truly save in the long run.
There are a number of other benefits that can come from working with and outsourcing your logistics to a 3PL. Not the least of all, a better and stronger bottom line. If you would like to speak to one of our experts, call us at 800.MYSHIPPING or fill out the form below.
Trucking is a cyclical business. There are periods of intense growth followed by a lull and then there are periodic seasonalities which may vary from one industry to another. How long each period lasts depends on the internal and external factors that greatly impact the trucking industry.
International trade policies and volume, capacity, manufacturing industry’s performance, local Government policies, fuel prices, and driver availability all impact the trucking industry’s growth
International trade policies and volume, capacity, manufacturing industry’s performance, local Government policies, fuel prices, and driver availability all impact the trucking industry’s growth. For example, all of 2016 was a difficult year for trade which also affected the trucking industry. However, when business picked up at the start of 2017 and soared till September 2018, the trucking industry also benefited. From there onwards, trucking growth has been showing a declining trend, suggesting that another slump is in the offing.
What are the reasons behind this slump? Is it a short term decline or a repeat of the low experienced in 2016?
What are the reasons behind this slump? Is it a short term decline or a repeat of the low experienced in 2016? These are the two questions plaguing the trade and analysts since the start of 2019.
What Factors are Contributing to The Industry’s Concerns?
The trade war with China: The standoff between the US and China is being highlighted as one of the main factors that may impact the trucking industry in the country. There is fear of freight volume reducing due to the tariffs put up by the two countries on each other. However, according to Transport Futures Principal and Economist, Noel Perry who spoke to this article in TTNews.com on the decline in trucking growth, this fear might be unfounded. Noel Perry suggests that this problem may not be as severe as it is currently being made out to be. He feels that due to the prevailing state of the manufacturing industry in China, the Chinese may be amenable to work out a compromise with the US.
Reducing truck orders: A common factor used to judge the health of the trucking industry is the number of orders placed for new trucks. According to industry news sources, the orders for new trucks has fallen considerably in January 2019. However, while sharing the numbers, Truckinginfo.com also puts forth a plausible explanation for the reduction in new orders. According to the news in Truckinginfo.com, orders reduced by 26% in January 2019 as compared to December 2018 and were 68% less than the truck orders placed in January 2018.
Going by this forecast, it is quite possible that the transport sector may also experience a slow year.
Economic growth slowdown: 2019 began with some concerns regarding the growth of the economy. In a Wall Street Journal article published in January, leading financial institutes shared their forecast for the year. Goldman Sachs predicts a growth rate of 2% for the first 6 months of the year and a rate of 1.8% for the rest of the year. Morgan Stanley presented a slightly more pessimistic view with a forecast of 1.7% growth rate for the year which could go down to 1% for the third quarter. The article also shares a quote from Jake McRobie, Economist, Oxford Economics, “We have been looking for a gradual slowdown in manufacturing activity amid headwinds from trade uncertainty, reduced fiscal stimulus and weaker global activity, but the risks of a sharper deceleration have increased”, to provide some explanation for the low growth forecast. Going by this forecast, it is quite possible that the transport sector may also experience a slow year.
Even if one is to consider the lower number, the driver shortage is a critical issue.
Driver shortage:According to this piece in JOC.com, the American Trucking Association found a gap of 50,000 drivers and the FTR Transport Intelligence has reported a shortage of 300,000 drivers. Even if one is to consider the lower number, the driver shortage is a critical issue. The article further highlights that hiring companies are finding it difficult to get drivers onboard even after offering a pay increase. This is one aspect that can hamper the supply chain even when all other factors seem to be positive.
The Silver Lining
Even the worst of situations tend to have a silver lining, so does the trucking slowdown. While the cost of operating and maintaining trucks is not likely to come down, the slump in business and the extra capacity built over the last two years may provide the shippers with a little leverage when negotiating freight rates.
Apart from the driver shortage, all other reasons leading to fear of a trucking slump are a part and parcel of the dynamic global business environment. As FTR Vice President of Commercial Vehicles, Don Ake suggests the lull in business is felt because the industry is comparing the exceptional peak experienced in 2018 to the current scenario.
Hence to get the best results irrespective of the prevailing trade cycle, it makes business sense think strategically, collaborate and maintain relations with well-established business partnerswho can help manage volatility in the current business environment.
That said, the freight market is fickle in nature and can unexpectedly turn into a carrier-led market from a shipper-led market and vice-versa. Hence to get the best results irrespective of the prevailing trade cycle, it makes business sense to think strategically, and collaborate and maintain relations with well-established business partners, like BlueGrace, who can help manage volatility in the current business environment. If you would like to speak to one of our freight experts, call 800.MYSHIPPING or fill out the form below.
Congratulations! You made it this far – you’re a Walmart supplier. To achieve this, you’ve provided all your information, proven that your products are a good fit for Walmart’s customers and demonstrated that you are the sort of business Walmart wants to work with. You’ve filled in the forms, shared your certificates and completed the 11 step onboarding process.
It’s a fantastic achievement. According to Walmart, you’re now one of 100,000 businesses worldwide supplying products to its customers. That number demonstrates just how much Walmart is the “800 lb. gorilla” in the supply chain, and it’s also a mark of how highly regarded you are, as a CPG company, to have it agree to distribute your products.
We know that all your distributors, all the retailers you sell wholesale to, are important to you, but Walmart is possibly just that little bit more special. Whether you’ve just started, or have been supplying it for a few years, it’s a different business to the one we all grew up with. The pressure Walmart faces are the same as the rest of the retail sector. Its size is a double-edged sword – its footprint of stores and operations means there are more places to be affected by market disruptions, yet it has the resources to not only weather the storm, but profit from it too.
Just being big isn’t enough, however. What marks Walmart out is its commitment to innovation. In July 2019 it opens its first high-tech consolidation center — a 340,000-square-foot dock in Colton, California that will use automated technology to receive, sort and ship freight. According to the announcement, this ‘will enable three times more volume to flow throughout the center’.
Walmart innovates to maintain its position. Why does it need to do that?
The Situation Today
Walmart needs to continually innovate because it faces a very real threat.
Amazon has been at the forefront of the consumer shopping experience revolution. One-click payments, same-day delivery in certain geographies, multiple delivery and collection options, dash buttons – all features that are shaping customer expectations. Its dominance of the retail landscape is such that it has gone from driving 15 percent of core US personal consumption expenditure (PCE) growth in 2013 to 69 percent in 2017, according to Morgan Stanley Research.
This has forced many retailers, including Walmart, to revise how they serve customers. For Walmart, that means a switch from building stores to focusing more on e-commerce to drive growth. In September 2016, it acquired e-tailer Jet.com, accelerating its online sales and helping it to outperform the retail sector within a year. It consolidated its e-commerce position with the purchase of Indian online retailer Flipkart in 2018.
In much the same way that Amazon purchased Whole Foods to acquire physical presence, Walmart acquired Jet.com to give it a credible e-commerce function.
That does not mean that Walmart is abandoning its bricks and mortar business. Those stores mean that it is closer to more people in the US than any other retailer, with 90 percent market penetration, versus Amazon/Whole Foods’ combined 74 percent.
So, Walmart is closer to you, but Amazon can offer a great experience. This is where Walmart’s innovation switches from automation technology in vast consolidation centers to delivering efficiencies in its extended supply chain. A customer can find anything in Amazon and get it the next day. With a Walmart down the street, if a product is in stock, that same customer can walk away with it on the day.
It is here that suppliers come in. Products have to be in stock. As Steve Bratspies, the chief merchandising officer for Walmart US, told the Wall Street Journal, “When we receive the product that we ordered, we see better sales.”
In other words, if a customer can not find what they want, they will go somewhere else. Not only does the retailer lose that sale, it also loses the opportunity to sell complementary products, or perhaps something that simply catches the shopper’s eye on the way to checkout. According to Greg Foran, Walmart US CEO, five percent out of stock at Walmart’s scale translates to 5,000 orders.
So, Walmart will do everything to make sure that its shelves stay full, that customers can find what they want, when they want it. If insufficient stock is ordered, that’s a retailer issue. If insufficient stock is delivered at the right time, that’s a supplier issue.
At the same time, as Walmart and other bricks and mortar retailers look to economize, they’re looking at where they hold stock. They want stores to sell, not to act as warehouses – the price of retail square footage simply does not allow that in the current market. That’s why Walmart is introducing these consolidation centers – to collate from hundreds if not thousands of suppliers, before using their own distribution networks to get the stock to stores.
That’s the retail landscape suppliers are entering into when they become part of the Walmart supply chain. Alongside this are rising fuel and transport costs – the US Energy Information Administration (EIA) May 2019 update forecasts that regular gasoline retail prices will average $2.92 per gallon (gal), up from an average of $2.85/gal last summer.
It’s an additional cost that both suppliers delivering to Walmart and the retailer itself, through shifting products from consolidation centers all the way to stores, are going to have to take on board. This ultimately impacts margin across the supply chain.
Ramifications: they say jump, you say how high
An environment of ruthlessly seeking efficiency, with fluctuating transportation costs, dominated by 800 lb gorillas.
What that means for suppliers is that they have to deliver when Walmart wants, not when the suppliers feel like it. It’s where OTIF comes in – on the actual due date, exactly the right amount. There is no grace period, limited leeway. That’s because flexibility eats into the margin.
Struggle to comply and chargebacks kick in – currently three percent on all shipments below the threshold. Amazon, with MABD, may appear slightly more lenient, but it has a similar level of chargeback on both late and early deliveries. On top of that, purchase order (PO) and advanced ship notice (ASN) violations (such as failing to confirm a PO or not sending an ASN in good time) levy a two percent charge
It’s just got stricter, as well. From May 2019, suppliers that ship full trucks must hit a specified window 87 percent of the time, up from the previous 85 percent previous target. For less than truckload (LTL) shippers, the jump is that much higher – up to 70 percent in that window, from 50 percent before.
It gets trickier. Historically, suppliers were judged on how consistent deliveries were on time and how complete they were. Now, those two parts will be evaluated separately. It’s all about having data that can be fed back into a stringent evaluation process to identify further efficiency opportunities.
Then there’s the challenge of Walmart as an international operation. As you grow within Walmart, there may become opportunities to supply its Canadian subsidiaries, or even further overseas. That brings its own challenges as you will need to comply with local regulations and legislation, both in terms of your products and your business practices.
What you need to think about if you are
So far, what we’ve discussed applies to all shippers. Yet every business is different, and there will always be specifics that only certain types of suppliers need to focus on. In this section, we’ll take a brief look at three types in particular: newer CPG companies, LTL shippers and those dealing in perishables (such as fresh food).
…a newer CPG shipper
With the introduction of consolidation centers, and the end of stores holding inventory, the onus of predicting consumer demand is passed on to CPG companies. That means knowing who your end customers are, how they shop and when there might be spikes in demand, even if you do not sell direct. This is a challenge for all CPG shippers, but whereas more established brands may have the resources to store spare stock, for newer businesses that capacity may not be available. This is where really clear insights into customers, coupled with efficient internal processes and a lean supply chain of your own, come into play. Falling foul of chargebacks will quickly eat into profits, making it vital that shippers can accurately predict consumer demand.
If you’re LTL, the positives are savings in not paying for half-empty trucks, but the drawback is less control over how the carrier gets to your distributor than if you were a full-truck shipper. The carrier may pick up your pallets, then go to another shipper for their products. It might head to a regional dock to unload your pallets to go on another truck heading somewhere else, before being cross-shipped on to a third truck with everyone else heading to Walmart. That means you have to build in additional time to your shipment planning to ensure that you comply with OTIF, which will have ramifications for your own production processes and supply chain.
…dealing in perishables
While targets may be tight for long-life or non-perishable goods, for suppliers that deal in products that have a limited shelf life, OTIF goals are even stricter. That two-day window becomes one, which puts the emphasis on the shipper to be absolutely accurate with their deliveries. All retailers that stock food and drink, particular that which needs to be kept in controlled, refrigerated environments, need it to be able to stay on the shelf for as long as possible, in order for it to be as attractive as possible to customers. Get closer to use by or best before dates, and consumers are less likely to buy, leading to last-day discounting and wastage.
It might seem like becoming a Walmart supplier is nothing but hardship and the constant threat of chargebacks. Yet it is challenging because Walmart is such a golden opportunity to get your products into the hands of millions of consumers, both in the US and further afield.
It isn’t all about the sales opportunity, however. With retailers like Walmart looking for efficiencies, it forces their suppliers to either follow suit or fall off. By aligning your own systems and processes with the demands of OTIF, you will end up a leaner, meaner machine. This means less wastage in your operations, resulting in less outgoings and more profit.
At a time when all sectors are undergoing huge disruption, this streamlining sets you up to thrive rather than simply survive. While it is demanding, the practices and processes you onboard will unlock long term gains for your business.
The question is, what do you need to consider when aligning your business with the demands of Walmart?
Top tips on being a star supplier for Walmart
Here’s what we’ve learned turns a good shipper into a great Walmart supplier from working with businesses just like yours:
It’s all about data: Walmart wants its supply chain to be as efficient as possible, so it’s willing to share the data it has to help you shape your operations. If you don’t sell direct, getting tangible customer intelligence can be a challenge, but Walmart will share information, such as on-shelf availability and point of sale insights, more often.
Work from the customer backward: On time doesn’t mean in-time to Walmart. If you don’t want to suffer chargebacks, you need to think about your timings from the customer backward. The customer buys your product after it’s been on the shelf X days, so how long prior to that do you need to be delivering it to the distribution or consolidation center? How long does it take to get from your warehouse to that point?
Chargebacks hurt, so make sure it’s justified: Walmart may be huge, but it isn’t infallible. There’s a lot of automation, which means sometimes chargebacks can be applied due to mistakes in their processes rather than your failed compliance. For instance, a carrier may have delivered your shipment OTIF, but the DC did not unload that day. The only way you can contest, however, is to have full and complete records showing how you delivered OTIF against the buyer requirements. Having a trusted logistics partner that can audit your scorecard and compare it to carrier manifests is critical, and it could be the difference between receiving a chargeback or being able to challenge it successfully.
Load planning: If you supply multiple products to Walmart, think about how they are loaded on the pallet or in the truck. It’s no good having the back half of the truck full of products for distribution centers further down the line, or shorter life products nearer the bottom of the pallet.
Think like a Roman: The Romans crisscrossed their empire with straight lines, because that’s the most efficient way from point A to B. You want to do the same, but build in factors such as weather forecasts, traffic patterns, fuel levels, and load points. You’re looking for the most optimized route because it will save you time, which in turn saves money.
Packaging tips: People need to know what’s in the box. That means distribution center employees, yes, but it also means customers. How will it look on the shelves? At Walmart’s Supplier Summit 2019, Foran said “packaging should be designed for impact and efficiency with large fonts that are easy to read, easy to find and bar codes which also are prominent on the packaging.”
Cut down on travel time: Fuel and transport costs are the great unknown, tied to everything from crude production levels to the political situation in the Middle East and South America. You want to control as much as possible, so limit how far you need to move your inventory by positioning it closer to warehouse locations. If Walmart is selling your product predominantly in California, why not get as close as possible to the new consolidation center? Limit the variables and you have a more efficient machine.
Appointment scheduling: Be aware that your mode of transport will dictate when your products can be delivered. Most LTL carriers will not allow you to pre-schedule appointments, preferring to wait until your freight has arrived at the consolidation terminal. It will then be co-loaded with other Walmart-bound deliveries, with appointments based on the trailer the carrier has allocated for that day. It’s therefore vital that you, or more likely your logistics partner, can work closely with both the carrier and scheduling system to make sure this is being done. By doing so, you will be better placed to identify exceptions, such as where the carrier cannot accommodate the delivery, to adjust OTIF without penalty. Most suppliers don’t realize this and miss the opportunity. It is important to note, however, that this must not be abused and is for exceptions only. Your lead logistics service provider is expected to have the right connections and expertise to manage it professionally.
Speaking of carriers, reliable ones are worth their weight in gold: We hear of horror stories where carriers and shippers fall out because neither can clearly understand what the other is actually trying to achieve. The number one mistake people make is to think that being efficient equals going for the cheapest option, when it’s actually about having every part of your chain operating reliably. There are carriers that will drop prices to get business on board, but if you’re then simply more low-paying cattle, is your OTIF compliance going to be top of the carrier’s agenda? You want a good price, certainly, but you need a partner that’s aligned with your objectives more.
The right foundations: You can’t operate a 21st-century business using 20th-century tools. To compete in today’s market needs having the right technology underpinning your operations, foundations which give you visibility and control and allow you to have sight of, and optimize, every aspect of your business.
Embrace digital: Walmart is investing billions in its technology – that means manual processes and paper documents are disappearing. Digital tools like electronic bills of lading are becoming the norm. Do you really want to be the only shipper the trucker has a paper docket for, with the rest on his mobile device the dock or DC are simply scanning?
Ensure everyone lives by OTIF: It’s all well and good your logistics team being held to OTIF, but when the penalties impact the rest of your business, isn’t it really a matter for everyone? It comes back to working back from the customer – the process doesn’t stop when the product leaves your dock but should carry on through to your production team. If you’ve got a lead time of two weeks to produce new stock, that’s not a just manufacturing factor, it’s a supply chain one too.
Walmart want you to win; let it help you: Walmart run a sophisticated education network designed to support suppliers. It’s in its interests that you are operating to the best of your abilities, so make full use of the classes, academy, and tools it offers to help you do just that.
OTIF is vital, but so is everything else: Walmart is taking huge strides in making its entire operation as sustainable as possible, which includes targets for suppliers. These are only going to get stricter, so it’s a good idea to know what they are and keep yourself aligned. There will come a point where being 100 percent OTIF compliant, with customers buying your products in droves, won’t save you if you have a huge carbon footprint and are unsustainable. That’s a lot to take in, so here’s a one-off tip:
How to write a great OTIF action plan: Walmart lives on data, which means evidence. Write a great OTIF action plan and you will have evidence on how you will improve standards. But how do you do that if you’ve not done one before? Googling isn’t an option here – you need qualified, experienced support. Hiring the right people is one route – but they won’t come cheap, and can you justify having them on staff as a permanent employee. Another option would be to outsource to a competent third party. One which has experience of supporting suppliers to build efficient supply chains, whether they’re supplying to Walmart, Amazon or any other big box retailer. Having a supportive partner that has done this, time and time again, for all sorts of different businesses and sectors, means you get access to the right experience and support, tailored to your unique requirements
Being a Walmart Supplier – a story from the frontline
For one Houston-based health and beauty supplier, working with Walmart was a dream come true, until the tremendous growth it propelled led to distribution challenges.
With vendor scorecards dwindling and chargebacks against purchase orders mounting the need for a better solution was apparent. From numerous carrier meetings to drive on-time compliance to costly upgrades in service levels, the trend continued to show little improvement.
Lead times were not an issue and inventory levels were manageable, yet carriers could not seem to comply with the OTIF date clearly displayed on the BOL. Purchase orders were being shipped with ample lead time and in most cases early with guaranteed service at a premium. However, even with upgraded service, the carriers would typically refuse to refund the charges since they were delivered “on time” per the standard transit.
To tackle this, the supplier analyzed the data and scorecards to determine the root cause and set a baseline for current state performance. Next, an assessment of ERP integration capabilities was performed. By linking this with a transport management system, this supplier was able to apply custom business rules to achieve the missing link of the overall issue.
What this meant was that no matter when the order was received in advance of the OTIF, the supplier could effectively route the “Best Value Carrier” and provide the most optimal ship date, relative to the selected carrier’s standard transit time. Each order, once approved within the ERP, would be rated and routed with a Walmart approved carrier delivering the lowest cost, standard service and shipped on the day that would best fit that carrier’s network, all to allow for the delivery within the specified OTIF window.
The supplier showed a 90 percent reduction in chargebacks within the first 60 days of implementing this program and realized the best scorecard performance in recent history.
Now it’s time to start work
As we said before, the hard work starts now. Remember, you aren’t alone – many CPG companies experience difficulties keeping up – back in August 2017, OTIF compliance stood at 70 percent, and it’s taken a while to get higher. Walmart wants you to do well, so listen, learn and take the opportunity that awaits. Look at your own network, your own suppliers and operations, and see how they can work together to support your business with Walmart or any other big-box retailer. Technology and nuances of logistics and supply chain operations are vital here. Working with partners who have the connections, first-hand experience, and understand both the business and technology can make the difference between success and failure.
BlueGrace is a freight and logistics services provider and one of the top 3PLs (Third-party Logistics Providers) with invaluable experience in managing complex logistics programs of leading CPG companies. The dedicated team has the first-hand experience in planning, building and delivering supply chain solutions for CPG businesses that not only help them meet the requirements of their retail partners but turn their logistics from a cost to value add.
You’ve done great work getting this far. Now it’s time to do even better. Give BlueGrace a call today at 800.MY.SHIPPING or fill out the form below and see how we can help you achieve exactly that.
Communication is a vital aspect of building a successful business. An effective communication process ensures that information flows seamlessly between departments and amongst the various teams on time and in a form which will allow them to achieve individual, departmental, and organizational goals and objectives.
While communication in varied forms and frequency is essential for all departments, it is extremely crucial for the executors of the organization’s plans and strategies – the Logistics Department.
Why is communication important for Logistics
Information interchange plays an important role in creating a cost-effective and agile logistics management process. It ensures that tasks are completed and transferred from one point to the other seamlessly and without delay.
For example, the sales department needs logistics data to analyze orders that have been shipped, customer service needs information to update shipment status, and the accounts section requires the data to cross-check transporter invoices. The procurement team needs information from logistics when new vendors are to be hired or old contracts are due for renewal. The other functions of the supply chain also have to collaborate or communicate with the logistics team to get their work done.
In addition to the internal information requirements, vendors such as carriers, warehouse operators, and 3PLs also need to exchange information with the logistics team on a daily basis to ensure that the company’s products are delivered at the right time to the right place at the right cost.
What are the features of an effective communication process for Logistics?
It should be in writing: Written communication is important as it minimizes the scope to misinterpret or forget the message. Today, written communication is the most common form of business communication. Since emails and all forms of messages across multiple platforms can easily be sent to multiple recipients situated across offices, countries, and continents, it is essential for all professionals to develop effective written communication skills and to encourage the same in all employees.
A clear, concise, and consistent message is the hallmark of effective communication.
It should follow the 3 C’s: A clear, concise, and consistent message is the hallmark of effective communication. A clear message ensures that there is no ambiguity in what needs to be conveyed. Conciseness ensures that the message is brief, but includes all important information. And, consistency in language, format, mode of delivery ensures that the receiver does not waste time in understanding the message.
In logistics, given the fact that a lot of the work is time-bound, marking the right team or person on the email is of utmost importance.
It should be sent to the right recipients: More often than not information is lost in the organizational hierarchy because it is not addressed to the right person. In logistics, given the fact that a lot of the work is time-bound, marking the right team or person on the email is of utmost importance.
It conveys urgency appropriately: Many executives are in the habit of marking all their emails as “urgent” to ensure that it gets immediate attention from the receiver. While this practice is great to ensure that important and critical communication does not get missed, however, if all communication is urgent, it becomes difficult to prioritize tasks. It also dilutes the meaning of the word. In such instances, the receivers take up the tasks in the priority that they think is correct. Hence, it is crucial to mark only communication or tasks that are the top priority as urgent and not all communication.
It should provide clear timelines: The delivery or timeline for getting a response or the task being assigned should be clearly mentioned in the communication. This will help the receiver gather information, plan, and execute the requirements mentioned in the message and avoid unnecessary delays.
It should be transparent and reliable: Interdepartmental conflicts, organizational politics, and cutthroat competition encourage employees to keep information from their counterparts or colleagues. This creates chaos, confusion, and mistrust which in turn affects the execution of tasks. It is thus important that the organizational culture promotes transparent communication and sharing of reliable information.
It should be real-time: Logistics is a fast-paced function and information exchange also needs to be equally quick. Hence, information such as a change in freight rates, loading lists, customer orders, etc. needs to be verified and relayed to the next person as soon as it is received. Apart from these things, queries asked in relation to a task or process should be addressed promptly or the receiver should at least provide a timeline by when the sender may expect an answer.
Technology Integration: In this digital age, just getting the written communication right is not enough to ensure the successful implementation of business plans. Organizations must also integrate the technologies, backend systems and processes that are used by different departments to ensure that information flows seamlessly and without manual intervention from one function to another.
For logistics which is an intensely data-oriented function, this integration is crucial.
For logistics which is an intensely data-oriented function, this integration is crucial. It will help reduce manual data entry, delays due to incorrect system entries, and speed up the process. Digital records of all the transactions or logistical activities will also make it easier to get reports, analyze performance, find outliers, and standardize the process across different geographies and vendors. When designing or buying technology or outsourcing the process to a vendor, it is essential to understand if this technology will be able to integrate with other systems that your organization uses with ease and at least cost.
An organization’s logistical communication process can be complete only when all the above elements are present and interlinked via common technology.
BlueGrace’s proprietary TMS (Transportation Management System) is designed to put the power of easy supply chain management and optimization back in your hands. BlueShip® 4.0 offers cutting-edge tools for strong reliability and quick performance. Many of our customers prefer to integrate their systems or ERPs such as SAP or NetSuite directly with our BlueShip platform. Our IT integrations team will work closely with your staff to complete the connection between systems. Not only will this simplify your freight but it will provide mountains of usable data to build measurable KPIs and continuously improve your program. To speak to a BlueGrace expert, contact us at 800.MYSHIPPING or fill out the form below.
While there are a lot of buzzwords in the logistics industry, it may be surprising to some but “business strategy” is not among them. Every company needs a strong plan of approach and a method of conducting business that will put them in a more advantageous position. Successful companies understand that good strategy isn’t about just doing better than the “other guy” but also about not hindering themselves in the process.
One of the biggest ways that shipping companies tend to shoot themselves in the foot is by looking at their carriers as a resource rather than an asset.
One of the biggest ways that shipping companies tend to shoot themselves in the foot is by looking at their carriers as a resource rather than an asset. Being a preferred or “shipper of choice” is one of the best ways to shore up your strategy to make you more profitable today, next week, next year, in five years and years after that.
With the dwindling supply of able-bodied drivers, the relationship between shipper and carrier is more important than ever before. Here are a few things to consider when it comes to attaining that status with your carriers and carrier conduct in general.
Move to an Integrated Supply Chain
One of the worst carryovers from the inception of the logistics industry is that aspect of the business is thought of as a separate entity, a cost center. By siloing these facets rather than integrating them, it’s easy to lose cohesion and efficiency.
For a shipper, every part of their business is (and should be) connected.
For a shipper, every part of their business is (and should be) connected. Your sales team is just as important as those in the warehouse or operating the dock. Even if those are all considered to be connected and are even working as a complete unit, transportation is no less a part of that. All too often, shippers look at their carriers as an afterthought and opt not to include them in the larger operations discussions as well as providing information to them at the last possible minute.
“When an order arrives, ideally the information shouldn’t only be broadcast to inventory folks and the distribution center. The information should immediately go to the transportation group so they can start to coordinate the capacity to move that freight. Too often transportation folks are only notified when the pallets are sitting on the docks,” said Brian Gibson, executive director of the Center for Supply Chain Innovation at Auburn University
While cutting down on the transportation budget might save a little cash up front, it could (and often does) have an impact on other facets of your business.
Of course, the cost is a factor in this regard. While cutting down on the transportation budget might save a little cash up front, it could (and often does) have an impact on other facets of your business. Disconnect and poor communication with a transporter tend to end up costing more in the long run with delays, detention fees, poor customer service, annoyed carriers, unsatisfied customers.
Do Unto Others
The golden rule certainly has its place in the business world and unfortunately, not all shippers and carriers have learned to get along as they should. Pricing is the perpetual thorn in the side, of course, and it’s easy for one side or the other to take advantage when the conditions are right. The “us-against-them” mentality may be useful when it comes to thinking about the competition, but it really has no place when you’re working with a carrier. Treating carriers poorly can have some serious consequences in the future.
Think about 2016 and 2017 when shippers could harangue carriers for a better rate and carriers had no option but to comply. In 2018, when demand was high enough for carriers to be more picky on what freight they carried, the worst of the antagonizers were either dropped or gouged when it came to the bill.
Trucking companies might put up with it when demand is low and they have no choice, but don’t think they won’t drop a company as soon as capacity picks back up.
Build a Good Working Relationship with Carriers
Remember, carriers, just as you as a shipper, are in the game to make money. For them, profit comes when they are more productive, so getting their drivers in, out, and on the road to the next delivery is key. However, when a driver is delayed, that puts a hurting on their productivity and ultimately their bottom line.
One of the best ways you can help to strengthen your working relationship is to ask your carriers to audit your supply chain and make suggestions and recommendations on how to make it more efficient.
One of the best ways you can help to strengthen your working relationship is to ask your carriers to audit your supply chain and make suggestions and recommendations on how to make it more efficient. While detention fees might help to recoup some of the losses from a delay, remember, carriers would much rather keep their drivers moving instead.
While we might not be able to predict the future precisely, shippers are able to put together a forecast of what they’ve got coming down the pipeline for deliveries. Communicating that information with carriers ahead of time not only helps to ensure there’s capacity available, but it also makes life considerably easier for both parties and strengthens the relationship at the same time.
Trucking companies like to know what’s coming down the line, more to the point, they like to have shipments lined up so they can keep their trucks moving. If they aren’t expecting anything from you, then they’ll look for freight elsewhere. While that’s a good move on their part, it doesn’t do a shipper any favors when they have freight that needs to get on the road.
One thing to remember is that the more communication you have with your carriers the better the relationship will be and the more reliable the service.
Small to midsize companies will typically make forecasts on a three week or monthly basis while larger companies will run a two-week forecast. Regardless of the number of days or week, though the one thing to remember is that the more communication you have with your carriers the better the relationship will be and the more reliable the service. The optimal goal is to have continuous service with the same carrier pool. This not only helps to build a more stable rapport with the carriers, but it’s mutually beneficial to both parties to have a consistent schedule that shipper and carrier alike can count on.
Make Decisions Based on Data
The technology available to the supply chain has grown up so much over the past few years that we’re able to make inductive leaps that we’ve never been able to do before. With the right technology, we can collect a seemingly endless number of data points, aggregate them and turn them into something comprehensible. From there we can take that information and use it to make informed decisions as well as highlighting opportunities for efficiencies.
Even on the most basic level, for example, this technology gives shippers the ability to track their freight in real time and proactively make decisions that could avoid delays, rather than reacting when it already happened.
Conversely, this data is also a great way to improve the communication between shippers and carriers.
Weekly communication with carriers helps to foster positive growth in relations as well as provides the ideal opportunity to discuss operational problems and pain points. Yes, the transportation budget matters, but that pales in comparison to the difference between getting exceptional service and poor service.
Why Shippers Should Consider Working with a 3PL
Third-party logistics providers (3PLs) can be instrumental in navigating this pro-trucker market. As a shipper, working with a 3PL can give you access to carriers that are not only rated and vetted but have a good working relationship with your 3PL partner. Consider it a “leg up” on building a good relationship. Additionally, a good 3PL knows what their carriers are looking for in terms of preferred or “shippers of choice.” Because of that and the changing market conditions, 3PLs are becoming more heavily relied upon to help get the job done.
“It’s more than just the growth of demand that is making 3PLs a tempting partner for shippers. With the influx of big data, analytics, blockchain technologies, and so many more innovations, attempting to keep pace can be difficult. As demand grows and capacity tightens, shippers and carriers alike need to be smarter about how they operate if they want to stay competitive in today’s marketplace.
As the industry continues to change, it’s likely that we’ll only see 3PLs continue to grow in popularity.”
Working with a partner that’s dedicated to shaping up your supply chain takes much of the guesswork out of having to do it yourself. We at BlueGrace specialize in doing just that, make your logistics work for you in the leanest and most efficient way possible.
At BlueGrace, we take your current freight data and get an inside look at what your team may be missing. Our carrier procurement strategists will help you meet tight deadlines, optimize your freight expense, and ultimately, find peace of mind. Fill out the form below to find out more about how partnering with BlueGrace can create more visibility and opportunities to simplify, overall helping you find a better way to do business.
What will 2019 bring for the trucking industry? Will there be a capacity crunch, demand – supply imbalance? Will the rates increase or will they remain steady? What would be more cost effective – booking spot rates or negotiating contract rates? How will the changes in the trucking industry impact a shipper’s business?
Knowledge of the existing trends can also provide insight into what one may expect from the trucking industry in the coming year.
As the new year begins, all these questions and many more are on the minds of shippers. While no one can accurately predict the changes in the business environment or how the trucking industry will respond to those changes, deliberation on the current year’s performance can help form a more reasonable line of thinking. Knowledge of the existing trends can also provide insight into what one may expect from the trucking industry in the coming year.
Here’s a look at some of the crucial parameters of the trucking industry that can impact shippers.
Rates: According to an article in Logistics Management, the US trucking industry showed a rate increase at 6.2 percent. Long distance full truckload rates showed a growth rate of 7.8 percent in the first half of the year. Less-than-truckload rates increased at the rate of 7.4 percent. The report forecasts a rate increase of around 3.6 percent in the coming year.
A JOC.com article stated 3 differing opinions of what one can expect from the trucking market in terms of rates. It has a bullish rate increase prediction between 5 to 8 percent, a bearish rate hike forecast between 0 to 3 percent, and a median rate increase prediction in the range of 3 to 5 percent.
While there isn’t a consensus on by how much the rates could increase, given the forecasts, shippers might fare better by building in at least the average rate increase in their trucking budgets for the coming year.
While there isn’t a consensus on by how much the rates could increase, given the forecasts, shippers might fare better by building in at least the average rate increase in their trucking budgets for the coming year. These predictions and forecasts can also help them better negotiate their rate contracts with trucking companies or 3PLs.
Capacity: This is the holy grail of the trucking industry for both the truckers and the shippers. Availability of drivers and vehicles, manufacturing industry’s performance, and legal compliances laid down for the industry all have a bearing on carrying capacity. Capacity, in turn, has a strong impact on the rates. When there’s a capacity crunch, rates increase. When it is in surplus, rates decrease.
This increase in trucking volume may lead to capacity constraints in the coming year.
For 2019, according to this article in Reuters, the American Trucking Association (ATA) predicts a 2.3 percent increase in trucking volume every year from 2019 to 2024. This increase in trucking volume may lead to capacity constraints in the coming year. A contradicting view presented by JOC.com and Freightwaves.com, says that while earlier in the year, trucks utilization was at its full capacity, it has come down to 94 – 95 percent. The trend is expected to continue at the start of 2019.
The Freightwave article also points out that the capacity might also be influenced by the availability of drivers rather than the availability of trucks. So even if the vans are available, a shortage in capacity may be experienced due to the lack of drivers.
Given the unpredictable nature of the industry, for shippers who have regular freight, it would make better business sense to work with 3PLs or professional trucking companies instead of individual truck contractors or vendors with smaller fleets to avoid getting short supplied in the event demand increases.
The Economy: How the economy performs has a huge impact on the transportation industry. According to the GDP forecast shared at the Federal Open Market Committee meeting, as reported by The Balance, the GDP is expected to be 3 percent in 2018. In 2019 and 2020 it is predicted to be slightly lower at 2.3 and 2 percent respectively. The fall is being considered an outcome of the ongoing trade war with China. The trade war has also created some skepticism in the freight market.
However, the release also forecasts a decent growth rate for the U.S manufacturing sector. It pegs production to increase at 2.8 percent in 2018. A slight decrease in momentum in growth is projected in 2019 and 2020 with rates at 2.6 and 2 percent respectively. Even if the manufacturing growth rates slow down slightly, it is not expected to have too much of a negative impact on the local freight market.
The other trend that seems to be picking up and is expected to continue is shorter distance freight movement.
Apart from these factors, the other trend that seems to be picking up and is expected to continue is shorter distance freight movement. According to this article in Freightwaves.com which quotes Bob Costello, Chief Economist, ATA, “the average length-of-haul for dry van truckloads fell to just around 500 miles for the year-to-date period, down from an average of 800 miles in 2005”. The article highlights that this trend is being attributed to shippers basing their fulfillment centers nearer the customers.
Going by the reports and views expressed by industry experts, 2019 seems to look positive for the industry vis-a-vis economic performance and rates. Shippers may fare better by factoring in a freight rate increase. For both the vendors and the shippers, there may however be some ambiguity on capacity as it is to an extent dependent on the trucking industry’s capacity to attract professional drivers to fulfill the current shortage.
For a 3PL perspective on 2018 and what to look for in 2019, join us on February 20th at 2pm for our FREE 20 minute webinar, STATE OF THE (LOGISTICS) UNION . We’ll discuss the major concerns for shippers entering 2019, and what the next frontier in transparency will be. Click HERE to sign up today!
You can also speak to one of our experts and find out more about BlueGrace by filling out the form below or contacting us at 800.MYSHIPPING
On January 10, 2019 Adam Blankenship, the Chief Commercial Officer for BlueGrace Logistics was invited to share his thoughts on logistics, leadership and what make our industry tick with host Ryan Gorman at WFLA 970 in Tampa, Florida. Adam was able to give an overview of what BlueGrace does for our customers everyday and how a 3PL helps shippers decrease their freight costs and streamline their supply chain.
Listen to the podcast below to find out more about BlueGrace, what we do, what we believe in and how we are hiring in 2019.
We are witnessing one of the most interesting times in the development of logistics. Shippers and Carriers alike are working towards creating, innovating, and performing all out (and much needed) overhaul of the way we look at delivering packages.
Online and legacy retailers both are encouraged to work with their logistics partners to not only overcome the upcoming challenges but to find bold new approaches to compete as well as survive.
While every step of the process is certainly important, shippers and carriers have been placing a greater emphasis on the last mile of the delivery. And why not? It’s projected that by 2030 more than 600 million more people will be living in urban environments where standard delivery via truck may not be an option. Couple that with the booming growth of online retail sales (e-commerce) and the last mile not only becomes a crucial element for distribution but it’s also a differentiator from the competition. Online and legacy retailers both are encouraged to work with their logistics partners to not only overcome the upcoming challenges but to find bold new approaches to compete as well as survive.
Deliveries are no longer about a simple A to B route. Urbanization has seen to that. With more people living in much more crowded areas, the complexity of deliveries is growing exponentially.
Freight movement across all modes are projected to grow by approximately 42 percent by 2040.
According to the DoT, “The surge in population and economic growth brings with it escalating freight activity. Freight movement across all modes are projected to grow by approximately 42 percent by 2040. This trend means more “everything”. More pressure on roads and transit lines by commuters, more parcels delivered, particularly with the meteoric rise of e-commerce.”
Growing Trends in Last Mile Deliveries
“Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer” was a white paper compiled by DHL and Euromonitor which has identified four growing trends that are shaping urban last mile transportation.
Flexible Delivery Networks
In addition to highlighting these trends, the paper also explains ways that companies can begin to embrace these new tactics and adapt their supply chain to the changing market while growing their competitive advantage.
There must be more public and private sector coordination in freight planning.
“‘It must be recognized that economic activity in urban areas depends on the movement and delivery of goods through freight carriers. City and traffic planners must be made aware that urban settings can be inhospitable places for freight deliverers. There must be more public and private sector coordination in freight planning. Cities can shape markets to focus private sector attention and invest on the needs of cities and the people who live in them by mobilizing infrastructure, talent, and other assets to support the right kinds of AV-based solutions,” was one of the conclusions in “Taming the Autonomous Vehicle: A Primer for Cities (Bloomberg Philanthropies and the Aspen Institute)
The white paper found that major urban settings can cause a variety of challenges for distribution including cost, decreased quality of service, as well as overall organizational strain.
Seasonal growth is a good example of this. Not only are major holidays a heavy load time for logistics but many stores run various promotions throughout the year which require extra personnel. The only issue being, these short-term surges in volume aren’t nearly as easy to predict.
“Urban customers’ demands for speed and convenience are forcing retailers to overhaul their warehousing networks, replacing centralized networks with local fulfillment and distribution infrastructure, which can require a more accurate balancing of inventory,” says DHL on the matter.
The Growing F.A.D
With the importance of urban and last mile deliveries growing, how can companies best take advantage these growing trends to overcome the impending challenges as well as stand out from the rest of the competition? In order to be more competitive, efficient, and an overall more successful company the DHL study suggests applying the F.A.D strategy which they described as the following:
(F)lexible or more elastic transport networks can include the more efficient use of available transport capacity in a market, to achieve higher load factors, bring down costs, connect more quickly to end customers, and reduce environmental impact, but can also imply the ability to move shipments more easily between different modes of transport such as bicycles and vans to improve connectivity.
(A)utomation can include a higher level of automated processing at fulfillment centers, but also the deployment of autonomous vehicles and robotics to bring down labor costs, increase productivity, and enhance services.
(D)ata management enhancements allow retailers and their logistics operators to better forecast and position inventory to reduce waste within their supply chain and achieve better availability of stock. It also provides greater visibility on inventory and transport flows, allowing logistics operators to more effectively manage routing and exceptions, and providing tracking to enhance the customer experience.
There is some variance as to which sectors you’ll need to place more time and energy into.
Now there is some variance as to which sectors you’ll need to place more time and energy into. “Effectively, not all three elements need to be managed as actively or invested in as equally.
Different markets, commodities, and operating environments, as well as competitive pressures, may require prioritization of one particular focus area over the others, or a more substantial investment in certain focus areas at the expense of others. For example, if courier shortages are the most pressing issue for one company, that company would need to funnel resources into making its networks more flexible and likely consider automating some of its processes as well. However, another company may be facing increasing pressure from its customers to narrow the delivery timetables offered to them, incentivizing management to consider investing in a data system with AI capabilities to help predict the most efficient windows,” says DHL.
Not only urban consumers, but all consumers will continue to demand solutions that make life both easy and convenient.
Not only urban consumers, but all consumers will continue to demand solutions that make life both easy and convenient. When it comes to their expectations cost, convenience, and flexibility will all be important factors to both the relevance and success of e-commerce companies, as well as transportation companies who will continue to haul the growing industry along.
At BlueGrace, our proprietary technology is designed to put the power of easy supply chain management and optimization back in your hands. Many of our customers prefer to integrate their systems or ERPs such as SAP or NetSuite directly with our BlueShip platform. Not only will this simplify your freight but it also provides usable data to build measurable KPIs and continuously improve your program. To speak to one of our experts, call us at 800.MYSHIPPING or fill out the form below.
In 2018, the world is more connected than it has ever been before. With the advent and popularization of smartphones, we are able to instantaneously make connections all over the world in ways unimaginable just 20 years ago, before we knew the names Facebook, Twitter, and Amazon.
Today, these platforms not only heighten our social connections, but also our trade connections. With access to a smartphone and Wi-Fi connection, any individual almost any place in the world is able to participate in the international conversations on platforms like Twitter and receive goods purchased on e-commerce sites like Amazon within a matter of a couple days or in some cases hours.
With this increased connectivity, a new demand for trade between merchants and consumers all over the world has spiked
With this increased connectivity, a new demand for trade between merchants and consumers all over the world has spiked. Where such trade used to be dominated largely in a wholesale/business-to-business domain, now thousands of smaller merchants endeavor to connect more directly to their niche markets, utilizing platforms like Alibaba and Amazon.com to do so, increasing demand for companies, like BlueGrace, to handle the logistics.
While the digital age is exciting for many reasons, it also means that there will inevitably be growing challenges, for individuals and companies alike; for companies, as they try to re-work the supply chain to accommodate a change in the trade landscape, and for individuals, as they arm themselves with skills and information to be competitive in a digitally dominated present and future.
with an evolving market, dynamic, data-driven, third-party logistics (3PL) companies like BlueGrace are in increasingly high demand, for their ability to navigate a changing trade landscape and help shippers optimize their operations processes.
Traditional logistics companies that once facilitated movement of commerce through the supply chain with standard practices slowly formed over a long period of time to support traditional commerce, many of which are still relevant to this day. However, with an evolving market, dynamic, data-driven, third-party logistics (3PL) companies like BlueGrace are in increasingly high demand, for their ability to navigate a changing trade landscape and help shippers optimize their operations processes.
As we stand at the precipice of this modern trade revolution, the next generation of the U.S. workforce is being encouraged to be strategic about how they position themselves in order to stay competitive in the digital future
As we stand at the precipice of this modern trade revolution, the next generation of the U.S. workforce is being encouraged to be strategic about how they position themselves in order to stay competitive in the digital future – a future that will look quite different from their parents’ generation’s youth. Technology companies are constantly making advancements in innovations like Artificial Intelligence (A.I.), Internet of Things (IoT), and blockchain, which are all being applied to automate and optimize traditionally manually operated processes, making manual labor jobs, spanning across industries, obsolete. But the result will be more of a shift in demand toward different kind of jobs and skill sets.
The Light at the End of the Tunnel
Before you fall into a depression about the future of jobs for the younger generation, take a look at the data from the “2019 Third Party Logistics Study: the State of Logistics Outsourcing,” which shows that though there is an increasing prevalence of automation, there are is increasing demand for individuals that understand how to strategize by utilizing such technological advancements, especially when it comes to the supply chain management industry.
There is a new market opening up for a more creative labor force that understands data, risk management, and planning – and due to that forthcoming demand, employers are paying competitive wages in order to attract and keep star employees. According to the survey, companies’ top reasons for looking externally for employees are a need for a new employee skill set to accommodate changes in strategy, updates in technology and innovation, and lack of “bench talent” (or internal employees) to move up into larger roles.
Join us in our excitement for the digital age
Employers at logistics companies like 3PLs are at the front of the pack in serving a new generation of clients that aim to be digitally-savvy by utilizing data to optimize their operations.
BlueGrace is hiring motivated people with unique skills, stimulating goals, and bold personalities to contribute to our diverse team of industry leaders. Our truly rare culture is built upon our team members’ individual strengths and talents, which serve as a rock-solid foundation for collaborative success. Visit our career page HERE to learn more on how to join our team!
The November 1977 issue of Harvard Business Review carried an article titled “Logistics – Essential to Strategy”. Citing reasons such as “a decline in the growth rate of domestic markets, large incremental costs of energy, and an increasing emphasis on multinational markets in corporate strategies”, it foretold that logistics will become an essential part of the “corporate strategy of the future”.
There could not have been a more accurate prediction.
Today, logistics has become the game changer for both business and the nation’s economy. For businesses, it forms an essential part of the complete product and customer service offering. By enabling the movement of people and commodities from one place to another, logistics has always played a visible part in building the nation’s economy. Now, it is also a significant contributor to the GDP. In 2017 the transportation sector alone contributed 8.9 percent of the country’s GDP.
Why is logistics gaining so much importance?
Globalization and the ensuing cut-throat competition has made it necessary for organizations to focus on providing customers with an added incentive to buy from them. Customers are no longer easily pleased. While one can sustain in the business for some time by introducing new variants, it is not enough to keep the buyers coming back for more. At times, even a price difference might fail to attract customers. Then what can capture the attention of the customer?
Logistics is the new differentiator.
Now, especially with the increasing popularity of online shopping, customers look for availability of the product at the required time and place followed by quick and timely delivery of their purchases. This demand can only be fulfilled if shippers can get their logistics right. Logistics is the new differentiator.
What are the benefits of putting logistics first?
Customer demand: According to a research conducted by Retail-Week, in response to a question on what they expect in terms of delivery, 70 percent of the customers surveyed said they would like to have more flexible delivery options. Statistics from another survey revealed that 56 percent of online customers in the age group of 18-34 years look for same day delivery options. 61 percent of those surveyed said they are willing to pay an additional price if they can get same-day delivery. These statistics clearly highlight the growing importance of why shippers need to pay attention to their logistics strategy, planning, and execution.
Competition: It is no longer a seller’s market. Very few products or services enjoy a monopoly in the current market scenario. If one store or online shopping portal does not have the product in stock. There are many other options in the market for customers to buy from. So, whether you are an online store or a traditional retailer, if you fail to supply the product at the store when in demand, there’s a huge possibility of losing the customer to the competition. Regular and timely supply can be maintained only if the proper logistics program is in place.
Given the fact that customers are willing to pay for a premium delivery service, it makes business sense to procure and provide this option.
Achieving a balance in cost and service quality: Logistics is a cost. More often than not, shippers think that to remain competitive, one must negotiate and procure the lowest rates available in the market. While it is necessary to negotiate freight rates and keep the go-to-market price of the product in control, it is also equally important to understand how too low a cost can hamper the quality of the service. If shippers have insight into where and when they need to provide premium logistics services and where a regular delivery will suffice, they can hire a mix of vendors or negotiate for different service levels with the same vendor. This will help shippers offer the flexibility and choices in the delivery that the customers seek. Given the fact that customers are willing to pay for a premium delivery service, it makes business sense to procure and provide this option.
Geographical reach: A strong logistics strategy can help you reach wider markets and more customers at the right time. This is especially important if you’re an e-commerce business or a retail chain with branches in different cities. A well-planned logistics system is essential to cater to different geographies and ensure that the product reaches the distribution centers or retail stores in time to fulfill customer orders. If the logistics operation is weak, it becomes difficult and financially unviable to operate a multi-city or an international business.
If shippers do not take the required effort to understand the logistical needs of their business and plan in advance to procure the services they would need, it can have a negative impact on the business.
Logistics is the core of a business. It is what ensures that your product reaches the intended customer cost effectively and on time. This activity often involves multiple handling points and different modes of transportation. If shippers do not take the required effort to understand the logistical needs of their business and plan in advance to procure the services they would need, it can have a negative impact on the business. If you need help in understanding and building a strong transport management system, contact us at 800.MY.SHIPPING or fill out the form below to speak to one of our freight experts today!
2018 delivered some significant changes for BlueGrace Logistics. From new offices to charity events that helped others in so many communities, our amazing team made this year one to remember. We want to take some time to recap our biggest changes and our best memories of the year.
CSO, Randy Collack Announces Retirement
Randy Collack, Chief Strategy Officer, has retired this year. Mr. Collack had been with BlueGrace since its inception in 2009. He oversaw several departments as the Chief Strategy Officer, including all Freight brokerage in the Tampa headquarters. Throughout his tenure with the company, Randy was responsible for the growth of the sales and operations departments, and was a critical component of the success BlueGrace Logistics has achieved to date.
We wish him the best in his retirement!
BlueGrace Takes 1st Overall At 2018 SportsFest
WE. DID. IT. In April, our outrageous employees beat 200 other companies and 4,000 other people at SportsFest 2018 and earned the #1 Company title at Corporate SportsFest! Can we get a WOOOO!? Congratulations to all BlueGrace employees who attended and competed in SportsFest 2018. SportsFest is always a wildly successful event that embodies team building, solid competition and fun. Exhausted, but ecstatic, our team returned home victorious and more engaged with both coworkers and customers. We’re extremely proud of our team and their drive to succeed!
Opening Of Downtown Chicago Office
Mayor Rahm Emanuel joined BlueGrace Logistics to announce the company opening an office in downtown Chicago in May 2018. BlueGrace added 80 jobs at its new location in the iconic Chicago Board of Trade Building. The new office will continue to support the strong growth BlueGrace has accomplished since its launch almost 10 years ago.
“The market we’re seeing now will be around for quite some time. We need to add a lot of capacity and a lot of professionals,” Bobby Harris, president and CEO of BlueGrace Logistics, said. Chicago “is a rich source of talent and resources, whether it’s truckload capacity or sales reps.”
Cats vs Dogs Raises 64,000 Pounds Of Food for Humane Society
Each year, BlueGrace female (Team Cats) and male (Team Dogs) employees compete against each other to see who can collect the most amount of pet food in total pounds. The food is then donated to a no-kill shelter to feed homeless animals in the community and used for pet owner assistance programs that benefit homebound and elderly residents on a fixed income. This year, the employees of BlueGrace collected over 60,000 pounds of food between Tampa & Chicago – reaching a new record for the contest on a location-wide scale.
The BlueGrace Webinar Series Is Introduced
BlueGrace began our new webinar series in February of 2018. With that announcement came 10 highly attended Webinars that offered valuable information from industry experts regarding everything from capacity issues, to freight data usage and visualization. Every attendee is offered a Free Supply Chain Analysis, utilizing BlueGrace’s proprietary data analysis tool, Vision. For a list of upcoming Webinars Click Here. Thank you to all that have attended in 2018!
Harris joined an esteemed group of senior-level business executives representing all modes of transportation. They meet 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.
15,000 School Supplies
Each year, more and more children are sent to school without the materials needed to be successful. BlueGrace Logistics partners with local organizations to assist in helping that need with their “Backpacks of Hope” drive. The drive divides each office into teams who then compete to collect the most supplies. The winning team wins simply bragging rights or a fun prize of no monetary value, but the competition as well as desire to help those in need truly push the drive to success each year.
BlueGrace’s headquarters in Tampa, FL has partnered with Metropolitan Ministries for many years, and as the company has grown and added regional offices throughout the country, these offices have found local organizations and schools to partner with as well. Together everyone was able to donate a total of 15,381 supplies and 1,157 filled backpacks.
Bobby Harris Named One Of Floridas Most Influential Business Leaders
The Florida 500 list is the product of a year-long research initiative by the editors of Florida Trend resulting in a personal, engaging look at the state’s most influential business leaders across major industries. The 500 executives were selected based on extensive contacts in regional business circles, hundreds of interviews and months of research, culminating in a highly selective biographical guide to the people who really run Florida.
Bobby is one of just 18 Transportation Executives chosen on the prestigious list of top business influencers throughout the entire state of Florida.
BlueGrace Logistics Becomes 6-Time Inc. 5000 Honoree
BlueGrace Logistics joined Inc. Magazine’s “Hall of Fame” as a 6-time Inc. 5000 Honoree. In 2012, BlueGrace was #20 on the annual list that ranks the fastest growing private companies in America – with 7,378% growth in just 3 years! Seven-Time Honoree, here we come!
BlueGrace Logistics Continues Chicago Growth Trajectory
The company’s prime Chicago Loop location matches perfectly with BlueGrace’s aggressive hiring approach aimed at attracting young sales professionals.
Here’s To An Even Better 2019!
We are so proud of how BlueGrace has continued to grow, prosper and help others in 2018! Thank you to all employees, partners and vendors for another successful year, and we look forward to a bigger and better 2019.
When it comes to regulations in the trucking industry, it’s something of a mixed bag. On an economical standpoint, the Motor Carrier Act of 1980 has given the industry free reign. On the other hand, the trucking industry is perhaps one of the most heavily regulated sectors in terms of safety, environmental protection, driver standards, and others.
the Trump administration is also reconsidering some of the regulatory strangleholds the government has over trucking and is leaning in favor of the truckers.
The Trump administration has also been a mixed bag for the industry. For shippers and manufacturers who rely on goods sourced from foreign goods, the tariffs and escalating trade war have made for a bout of white-knuckled planning. However, the Trump administration is also reconsidering some of the regulatory strangleholds the government has over trucking and is leaning in favor of the truckers. “This administration is looking at the regulatory environment a bit differently,” says Mark Rourke, executive vice president and COO of Schneider, the nation’s second largest truckload (TL) carrier. “We’re not seeing a lot of activity with new regulations.”
With President Trump now beyond his midterm, it’s worth taking a closer look at the regulatory environment surrounding trucking. There’s a fine line between too much regulation and not enough. While reducing regulations might make trucking companies more efficient, they could also encourage some unsafe practices. The tradeoff to that is that with more regulations, efficiency drops and rates go up, with shippers picking up the tab, of course.
Hard Hitting Regs
Of the numerous regulations that are out there, there are some that stand out more than others. The biggest of them include the Electronic Logging Device (ELD) the Hours of Service (HoS) and the age restriction that locks out aspiring truckers under the age of 21.
Given that the mandate has also begun to tighten capacity even further, it also encourages shippers and carriers to work more closely together in order to increase operational efficiency.
The ELD mandate has been one of the hardest to deal with this year and has caused a great deal of productivity loss for shippers as enforcement went into full swing. While it was originally intended to keep truckers honest on the HoS ruling by removing paper logs it hasn’t been a smooth transition. “After months of issuing warnings, state enforcement personnel began issuing stiff fines for HOS violations last spring. The result, executives say, is between 3% and 8% lost productivity due to the elimination of cheating,” according to Logistics Management. Evening out the playing field with ELDs does have some advantages. It encourages carriers to plan routes more efficiently so as to make their deliveries on time, this is especially important when you consider that some companies are threatening penalties for tardy drivers. Given that the mandate has also begun to tighten capacity even further, it also encourages shippers and carriers to work more closely together in order to increase operational efficiency.
Fine Tuning the HoS
While it has taken some time, ELD compliance has reached almost 99 percent across the entire industry. The biggest gripe truckers have, however, isn’t with the ELD but with the Hours of Service ruling. This is especially true for agricultural, seasonal deliveries, logging, and other select commodities.
With that being said, Washington is looking to tweak some of the HoS terms in order to make it a bit more bearable. According to Logistics Management, there are four main areas, in particular, they are considering amending.
Expansion to the current 100 air-mile “short-haul” exemption from 12 hours on-duty to 14 hours on-duty in order to be consistent with the rules for long-haul truck drivers.
Extending the current 14-hour, on duty limitation by up to two hours when a truck driver encounters adverse driving conditions.
Revising the current mandatory 30-minute break for truck drivers after eight hours of continuous driving.
Reinstating the option for splitting up the required 10-hour off-duty rest break for drivers operating trucks that are equipped with a sleeper-berth compartment.
There is also an unintended side effect of the HoS and ELD mandates. Now that most of the entire trucking industry is on the same schedule, there aren’t enough safe places for truckers to park when they’ve run out of drive time. It’s actually gotten bad enough that many carriers are subsidizing their drivers to utilize paid parking at truck stops. These spots can range anywhere from $5 to $20 a night and while that’s not so bad for short trips, long-haul truckers could be shelling out a lot of extra cash to maintain compliance.
The Trucking Age for the Modern Age
The pool of truck drivers is drying up and it’s only getting shallower as more truckers hand in their keys and take to retirement. The Department of Transportation has announced that they will begin a pilot program which will allow drivers under the age of 21 to operate an 80,000 pound truck for interstate commerce.
Given that these youths would be behind the wheel of a 40-ton vehicle, there are more than a few safety advocates who believe this isn’t a good idea.
“The statistics are clear,” says Todd Spencer, president of the OOIDA. “There really isn’t any question that younger drivers are more likely to crash and be involved in serious incidents.” Given that these youths would be behind the wheel of a 40-ton vehicle, there are more than a few safety advocates who believe this isn’t a good idea.
The age restriction has been in place since 1935 and for the most part, no one has argued with the logic. However, the Trump administration is pushing hard to get this particular regulation removed and many don’t agree with it. However, there are some in the industry who think there can be some ways to ease new drivers into handling a rig, without just pushing them straight out of the nest. Handling the first and final mile of driving could give them the opportunity to experience freight handling without giving them total control of the rig from start to finish.
For better or worse, there will be some changes coming to the trucking industry. While these regulations have been put into place with safety in mind, have they reached the point where they’ve hindered operations? At what point does regulation get in the way of an enterprise?
The holidays bring three main things for the shippers – festive cheer, increased business, and high risk of cargo theft. While increased business orders and sales are the reason to rejoice for shippers, the equally high probability of having their cargo stolen during transit tends to dampen the festive spirit. But given the season and business needs, cargo theft during the holidays is unavoidable.
Tis the Season
According to LPM Insider, businesses in the U.S. lose around $15 to $30 billion dollars each year. This figure too is on the conservative side as quite a few incidents of cargo theft go unreported, it further reports.
Do we just let the robbers rob us of all the hard work that we and our teams put in to getting holiday shipments out, or is there something we can do to safeguard our business interest and our shipments?
Among the various commodities being shipped during the holiday season, products that cannot be tracked and food and beverages shipments tend to be targeted most by cargo thieves. This doesn’t mean that shippers of other commodities or bulky products can rest easy. Cargo theft is a reality for most during the holiday seasons, so much so that there are reports of gift packages being stolen from front porches. Do we just let the robbers rob us of all the hard work that we and our teams put in to getting holiday shipments out, or is there something we can do to safeguard our business interest and our shipments?
If we treat cargo theft like any other business or operational risks, we might be in a better position to deal with such incidents and mitigate their impact on our business during the holidays.
Here are some measures that the shippers, truckers, and warehouse operators can take to minimize theft during the festive season.
Pre-plan shipment deliveries: While it might not be possible to completely avoid making a shipment delivery during the holiday season, it would be helpful if shippers and their transportation providers could work out a plan to deliver high-value shipments before the festive mood kicks in. This can, to an extent, minimize the risks of cargo theft.
GPS enabled vehicles: Transportation providers should install GPS trackers in their vehicles to be able to effectively track the shipments until it reaches the final place of delivery. If the vehicle is tracked, any irregular stoppages or route that has been taken can be noted and inquiries can be made with the driver as soon as there is any deviation. Knowing that the vehicle is being tracked and that they can be held responsible, the drivers will also be more cautious while making unscheduled stoppages or leaving the vehicle unguarded for a long time.
Third-party service providers, such as BlueGrace, are professional and value their market reputation. They have checks and balances in place to avoid cargo theft or any other risk to the shipments while it’s in their custody.
Vetted service providers: When appointing services providers, shippers should properly vet them and do a thorough reference check. Third-party service providers, such as BlueGrace, are professional and value their market reputation. They have checks and balances in place to avoid cargo theft or any other risk to the shipments while it’s in their custody.
Hire additional manpower: This point is especially for warehouse operators. During the holiday season, staff strength tends to be low. Try to get additional workers and guards for the warehouses to cover the operations and security posts during the holidays before the season sets in.
CCTV cameras: Equip your warehouses with CCTV cameras to monitor the warehouse at all times. Be sure to place cameras in a position that all the entry and exit points are covered.
Alarms: Installing burglar alarms in vehicles and warehouses, will work as an additional security measure and assist in warding off thieves.
Locks: Even though this is one of the most basic security measures, it is necessary to reiterate it here. Check to be sure all locks on truck shutters and warehouse entry and exit points are sturdy and in working condition. Train your staff to double check the locks after the truck or the warehouse has been locked.
Train your staff: Train your truck drivers and warehouse staff to be able to detect suspicious activity and people lurking around the shipment. If the staff is trained to notice any such activity around the shipment, they can be on their guard or take measures to protect the shipment. Drivers should also be trained to avoid parking the trucks in unsupervised areas or in places where the risk of theft is high. If there’s a helper traveling with the driver, both of them can take turns to watch over the vehicle when making a stop for refreshments or rest.
While incidents of cargo theft increase during the holidays, making the safety of employees, customers, business partners and security of the shipments in your custody a company culture and a year-round process is crucial. When this becomes a business practice, preparing for the holiday shipment delivery won’t seem like such a huge task and will also ensure that your employees are well prepared to deal with any such situation.
When it comes to running your business, it can be difficult to identify points of improvement, leading you to believe that things are as good as they can get, but in a climate of rising logistics costs, making sure that your operations are running as smoothly and efficiently as possible, can mean the success or failure of your business.
Ground transportation is a cost faced by almost every shipper in every industry, and quite a significant one, yet many shippers aren’t paying enough attention to how their ground transportation spend is being allocated, or don’t realize that there are different ways to approach it. In this article, we will break down a major factor that affects transportation costs: the differences between less-than-truckload (LTL) and full-truckload (FTL) services. We will break down those terms, what they mean for your business, and give two examples of how BlueGrace helped clients that were operating with less-than-ideal business models save hundreds of thousands on their ground transportation costs.
Yes, the perceived cost savings associated with sharing a truck with five other shippers is tantalizing, and a legitimate notion, but it’s not everything.
LTL has gained a reputation of being a more efficient, cost-saving method of transporting freight. It can be thought of like carpooling for cargo; if two people are going the same place, why not double-up and go in one car, splitting the cost savings? Translating that idea into a business scenario, if you’re a small-to-medium sized business, you likely do not have enough product going to one destination to fill up a truck’s full trailer, so LTL can seem like a cost-saving no-brainer, but unfortunately, it’s not quite so cut-and-dry. Yes, the perceived cost savings associated with sharing a truck with five other shippers is tantalizing, and a legitimate notion, but it’s not everything. There are other factors to consider when deciding between LTL and FTL, and there is no, one-size-fits all approach.
Potential Downsides of Utilizing LTL
Timing: By nature of LTL, there are multiple stops along the route that means longer lead times and may cause delays in the supply chain. So, if you are aiming to minimize transportation time, which everyone is in the logistics world, then you are making a sacrifice.
If your company operates in the realm of e-commerce, it would be prudent to examine the costs associated with the loss of business that your business suffers due to potentially longer LTL delivery times, and evaluate what options would open up if you were able to reduce your transportation times by a period of days.
For some shippers, timing is absolutely critical. The obvious examples are perishable products, like fresh produce and pharmaceutical products, which cannot sit for long periods of time in untempered conditions. But now, other “non-perishable” products, like apparel, electronics, and non-perishable food products are becoming time-sensitive in the e-commerce driven world, with monoliths like Amazon now offering same- and one-day shipping options, which have set a standard in the minds of consumers to receive products quickly. If your company operates in the realm of e-commerce, it would be prudent to examine the costs associated with the loss of business that your business suffers due to potentially longer LTL delivery times, and evaluate what options would open up if you were able to reduce your transportation times by a period of days.
Damage: Another common problem associated with LTL transportation is the higher occurrence of damage to cargo. Due to the frequent stops and touch points along routes, in which cargo is being loaded and unloaded from the trucks, freight generally incurs more damage on LTL trips than on FTL trips. For hardier freight, some light damage to exterior packaging is unlikely to be of major consequence, but for shippers dealing in more delicate products, delivering damaged product could mean having to refund a customer for the full price paid for the product, the burden falling on you. If your product is not easily damaged, this may not be an important factor, but if your product is damaged frequently or even occasionally, calculate the average cost that you end up paying to make up for damages per quarter, and then comparing to how much it would cost you to instead opt for FTL, which would result in significantly less damage. Which cost is higher in the end? It will depend on your particular business.
It’s not an easy task for shippers. At BlueGrace, we work with shippers on a case-by-case basis to help determine strategies that fit business’ specific needs. Our digital platform, BlueShip®, takes all of a company’s attributes into account to identify which options result in minimized costs and maximized profits. In the case studies, for example,“Private Equity Group & Transportation Cost Reduction,” and “Manual Process Reduction & TMS Integration for Restaurant Industry,” we dive into each case, exploring how BlueGrace helped two different clients with similar needs rethink their supply chain strategies that were giving them less-than-optimum results.
The routing guide left out multiple states that certain carriers could not go to. Because of this issue, the supplier was receiving chargebacks from distribution centers on a regular basis.
In the first case, a private equity group (PEG) was using proprietary enterprise resource planning (ERP) system to allocate resources and make business decisions. After analyzing the company’s situation, it turned out that the ERP was not suited for the client. The routing guide left out multiple states that certain carriers could not go to. Because of this issue, the supplier was receiving chargebacks from distribution centers on a regular basis. Once BlueGrace helped them downsize their carrier network to a more tailored group of carriers, it saw a 12 percent reduction in transportation costs and $300,000 in annual savings.
In the second case, a restaurant supplier was having difficulties managing their current in-house ERP system. They had looked at 3PL solutions in the past, but couldn’t find a solution that suited their needs, causing them to continue to incur chargebacks frequently, dinging their bottom line significantly over time. After the implementation of BlueGrace’s systems, the supplier was able to straighten out their supply chain and avoid chargebacks, saving them 12 percent in hard costs totaling at $468,000 in one year.
Do You Understand Your Business’ Needs?
At BlueGrace, we understand that every business has specific needs.We would love to learn what matters most to you in this aspect of your business. Contact us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today, and learn how you can optimize your supply chain, minimize costs, and maximize your company’s bottom line!
The arrival of fall marks the beginning of the biggest annual influx in demand for the transportation of freight. This is caused by the flurry of demand from shoppers that crop up in anticipation of the holiday season. While increased demand means increased business opportunity, it can also mean a headache for players in the logistics industry — shippers, forwarders, carriers and retailers alike — as they gear up to deal with the season’s intensity. Retailers hire on seasonal employees, while carriers brace for capacity to be pushed to the limits.
Carriers raise their rates to compensate for increased costs in fuel, equipment, technological investment, and the cost of paying their drivers.
Peak season manifests in the costs shippers pay to carriers in the form of General Rate Increases (GRIs). Carriers raise their rates to compensate for increased costs in fuel, equipment, technological investment, and the cost of paying their drivers. Depending on the current economic climate that year, GRIs can be higher or lower, but average at around 5 percent.
Which factors will be especially affected during this year’s peak season, considering the current economic climate?
Higher demand for e-commerce
Consumers’ love affair with online shopping is not going anywhere anytime soon. E-tailer juggernaut Amazon.com had their most successful Amazon Prime Day in history. International shoppers purchased over 100 million products on the website and the company saw more sign-ups for its Prime service on July 16, the Monday before the event than any day in company history.
With the boom showing no signs of slowing down, the rising costs to secure capacity are sure to remain a theme during peak season this year.
E-commerce directly affects the demand for logistics services, as it raises the demand for more routes and last-mile services. With the boom showing no signs of slowing down, the rising costs to secure capacity are sure to remain a theme during peak season this year.
The driver shortage
With the simultaneous driver shortage caused by a retiring generation of truck drivers and the somewhat unpopular ELD mandate, carriers are paying higher than average wages in order to attract good drivers. The domino effect through the supply chain means that this is another cost reflected in the GRIs that shippers pay, and ends up detracting from your company’s bottom line.
Continuously rising fuel costs
During the spring of 2018, diesel prices increased in every region of the country with prices above $3 per gallon in many key logistics regions of the United States, and in August, diesel fuel costs 23 percent more compared to the previous year. However, there is light at the end of the tunnel. According to the Journal of Commerce, U.S. contract truckload rates will likely cool down to a more modest 5 percent on average in 2019, but will still be higher than in years past; the overall increases are another major factor that will continue to play into rising GRIs.
In the Case Study, “Manual Cost Removal and Freight Cost Reduction for Hardware,” BlueGrace explores a scenario in which a big box client grapples to deal with increases in GRIs. The client was operating with a single national carrier model, which at a time, was working sufficiently enough for the supplier. However, as demand increased and their business had grown, the old-fashioned operational system began to prevent the company from reaching its full potential. Operations were becoming time-consuming, employees were becoming overwhelmed, and profits were suffering.
Negotiating GRI costs with carriers during times of unexpected rate increases was a major emerging problem for the company.
Negotiating GRI costs with carriers during times of unexpected rate increases was a major emerging problem for the company. Its lack of digital booking meant that there was no way for them to verify if the invoiced amount of the shipment was the same as the quoted amount of the shipment. In addition, the overwhelming amount of volume being moved was creating a bottleneck in the process, due to the time required to record data manually.
The supplier contacted BlueGrace to address these issues, agreeing to integrate its in-house Enterprise Resource Planning (ERP) system with BlueShip®, BlueGrace’s Transportation Management System (TMS). In doing so, they were able to negate the time-consuming process of manually booking shipments by digitalizing the process. Digitalization also enabled the client to access its own data with better transparency, allowing it to make better-informed business decisions.
Once processes are made electronic, companies like BlueGrace are also able to help businesses save by using their pre-negotiated contracts with all of the carriers whose GRIs don’t adhere to the standard set by larger companies and working with online service providers directly to handle complex negotiations so that the client doesn’t have to.
Once processes are made electronic, companies like BlueGrace are also able to help businesses save by using their pre-negotiated contracts with all of the carriers whose GRIs don’t adhere to the standard set by larger companies and working with online service providers directly to handle complex negotiations so that the client doesn’t have to. The result is a lower cost paid by the client, and a healthier bottom line; the supplier detailed in the case study ended up saving 13 percent of their yearly freight spend, which added up to $260,000 annually.
To find out how implementing can enable your business to achieve its optimal cost reduction surrounding issues like GRIs to reach its full profit potential during the peak season rush, contact us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today.