As Jeff Bezos, CEO of the e-commerce juggernaut once said, “When [executives of other companies] are in the shower in the morning, they’re thinking about how they’re going to get ahead of one of their top competitors. Here in the shower, we’re thinking about how we are going to invent something on behalf of a customer.”
As a CEO, the path forward will be through optimizing your supply chain while keeping an eye on the goal; your customers.
That alone shows an interesting shift in the perception and could explain why Amazon is so wildly successful. It is that customer-centric focus that is going to pave the way for success going forward. Sure, it’s still going to be good business to be ahead of the competition, but the way we do that is measured by the way we serve our customers. That’s going to be vital going forward, especially when you start to consider all of the challenges facing the supply chain today. As a CEO, the path forward will be through optimizing your supply chain while keeping an eye on the goal; your customers.
With that in mind, however, there are some very uncertain times on the horizon, as the current administration continues to press its trade war with China, ensuring tariffs could bite some manufacturers hard.
Moreover, according to a survey conducted by the National Association of Manufacturers, there are plenty of other areas of concern, including; attracting and retaining a quality workforce and increasing the cost of raw materials.
There are no shortages of concerns for the manufacturing industry and all of these issues will have some effect on the supply chain for most industries.
If that wasn’t enough to contend with, there’s also the challenge of rising transportation costs and the overall challenge of managing a smooth-running supply chain. Simply put, there are no shortages of concerns for the manufacturing industry and all of these issues will have some effect on the supply chain for most industries.
For CEO’s the big question is this, “Is your supply chain ready for the road ahead?” Supply chain optimization will be crucial for the success of any manufacturing industry as failure to do so will mean missing out on growth opportunities as well as the inability to fulfill current customer orders and expectations. A flexible and well-structured supply chain will mean the difference between addressing new challenges appropriately or being knocked off balance by unexpected disruptions in the future.
A Changing Future for the Supply Chain
It’s not all doom and gloom on the horizon, and that’s part of what is keeping the levels of optimism high in the manufacturing industry. Many positive changes and developments are driving us towards a breakthrough in the way we do business. The new levels of technology and advancements in the Internet of Things are moving us closer to Industry 4.0 which will drive the levels of visibility and efficiency across the supply chain to new heights. The applications of these new technologies and advancements will separate winners from losers, survivors from the deceased, often in just a few years.
It will no longer serve to think of the supply chain as an isolated aspect of your business.
For the CEO of the Industry 4.0 company, you’ll have to keep in mind that supply chains are only going to get more complex going forward, especially when you start to consider the potential impact of tariffs. Think about manufacturing which is expected to be spread across the world as parts outbound China are hit with punitive tariffs. What kind of confusion will this cause within the industry? Within your own organization? What sort of opportunities will this create? As a leader, your approach will also have to become more sophisticated, using data-driven analytics to probe deep into your supply chain. It will no longer serve to think of the supply chain as an isolated aspect of your business. Instead, you’ll need to work on expanding your business philosophy. Who are your suppliers’ suppliers? Who are your customers’ customers? It is that total end-to-end level of thinking that will allow for the necessary insight into the supply chain to avoid potential disruptions to your business.
Is Your Supply Chain Ready?
Even at the best of times, the average supply chain is packed with pitfalls and bottlenecks, any of which could be the event that prevents an organization’s ability to maximize growth. At the worst of times, those hangups could cause a drain in cash and capital when the economy is in a downturn. This is why optimizing for growth now is important. It creates the environment and opportunity for critical improvements when times get tough. There is no mutual exclusivity in this, high performing supply chains and operations excel in either condition.
So is your supply chain ready? As a CEO, here are the three big questions you need to ask:
How will my suppliers respond to a rapid increase or decrease in demand?
How well are manufacturing and operating distribution facilities prepared to cope with an increase or decrease in demand while still maintaining quality and service with appropriate cost and cash levels?
Do our logistics capabilities have enough capacity and responsiveness to accommodate a change in demand?
If your company can’t keep pace with the change, it’s as good as leaving money on the table, as your competition will likely be more than able to pick up the slack.
The answers to those questions are critical when estimating how well your company can perform in the event of an economic shift, in either direction. If your company can’t keep pace with the change, it’s as good as leaving money on the table, as your competition will likely be more than able to pick up the slack. Responding to these opportunities goes beyond simple, and BlueGrace can help with that. To speak to one of our experts, call us at 800.MY.SHIPPING or fill out the form below:
The 24th Annual Third-Party Logistics Study for 2020 has been released and it shows a growing success between shippers and their 3PL partners.
“The majority of shippers, 93%, report that the relationships they have with their 3PLs generally have been successful. A higher number of 3PLs, 99%, agree that relationships have generally been successful,” the study says.
As 3PLs continue to offer a wider array of services, shippers have been eager to leverage what they have to offer.
The study continues to find that shippers and their 3PL partners are developing a much greater awareness and synchronicity of goals, as well as how data sharing and new technology can help them advance those goals. As 3PLs continue to offer a wider array of services, shippers have been eager to leverage what they have to offer. The result is an optimization of the supply chain, reduced costs, and the creation of overall value within the supply chain.
“This year’s study once again proves that shippers and their 3PL providers are strengthening their relationships and continually moving toward meaningful partnerships. They are collaborating to accomplish their supply chain goals and improve efficiencies. The available evidence confirms that both parties are creating reliable solutions and improving the end-user experience for the customer, which is allowing shippers to use the supply chain as a strategic, competitive advantage.”
3PLs Are Rising to the Occasion
Currently, both shippers and 3PLs have been enjoying favorable economic conditions both at home and abroad. That is not to say that it has been a perfectly smooth road as both continue to face challenges in transportation capacity and facility-based resources. However, the relationship has proven to be beneficial to both parties as they’ve worked together to overcome tight customer deadlines and raise both customer and consumer satisfaction levels.
Another advantage to the relationship between 3PLs and shippers is the ability to adapt to and overcome challenges .
Shippers, of course, have higher expectations of their service providers and third-party providers have responded by increasing not only their service offerings but also their innovations when it comes to overcoming challenges within the current market environment. Simply put, transportation and logistics companies are realizing that the focus needs to be placed on digital capabilities, cost and asset efficiencies, and a broader range of services to meet their customers’ needs.
Current Global Market Challenges
The logistics and freight industry is in a state of flux currently. New technologies, tighter regulations, and growing customer expectations are all forcing necessary changes to the supply chain. According to the 2020 study, here are some of the biggest challenges shippers and 3PLs are facing to date.
Growth of e-commerce: E-commerce and the “Amazon effect” have had a tremendous impact on brick and mortar retailers. The result is that many of them are branching out into omni-channel marketing and distribution to meet customer needs. This adds a whole new layer to existing logistics and supply chain structures.
There are both domestic and global economic changes that are putting pressure on supply chains to adapt and react.
Economic uncertainty: There are both domestic and global economic changes that are putting pressure on supply chains to adapt and react. Many of these include sourcing new suppliers and improving cross border relationships with trading partners. There are also signs of slowdowns within certain major global economies which will soften demand and create new challenges for shippers.
Driver shortage: This problem is not unique to the United States, but it’s certainly one of the most prevalent locations. With the average age of the American truck driver approaching retirement, there is a decided lack of interest in younger generations to get behind the wheel. ATA’s chief economist, Bob Costello estimates that the current 60,000 driver deficit could reach 160,000 by 2028.
Disruptive technologies: While disruptive technology breeds innovation within the industry the difficulty of adapting and integrating these new technologies also increases. Some of the disruptive technologies impacting supply chains include the use of drones, autonomous vehicles, cloud-based capabilities, artificial intelligence (AI), internet-of-things (IoT), blockchain.
While dealing with all the above challenges, there’s also the challenge of keeping pace with the competition.
Competitive challenges: While dealing with all the above challenges, there’s also the challenge of keeping pace with the competition. Especially as there is a new start-up for every day that is poised to disrupt businesses, business models, or even entire industries. This applies to all, trading and manufacturing companies, as well as logistics providers, who are attempting to differentiate themselves from a growing number of startups backed with millions of dollars worth of venture capital investments.
The take away from the survey is that shippers and third party providers are growing and prospering together.
The take away from the survey is that shippers and third party providers are growing and prospering together. As new challenges arise, shippers are looking to 3PLs for answers, innovations, and solutions. Conversely, 3PLs are looking to build long term and steady relationships with shippers as the number of providers continues to grow.
With growing uncertainty in the geo-policitical arena, new technologies, and the explosive growth of e-commerce, it’s likely that we will continue to see growth in the relationships between shippers and 3PLs. For more information on how BlueGrace can be the partner to help strengthen and bring visibility to your supply chain, call us at 800.MY.SHIPPING or fill out the form below to speak to one of our experts.
According to the 2020 Third-Party Logistics Study, data analytics is not only becoming more viable in the logistics industry, but it’s also becoming a necessity and make a difference. With the growing storm that is e-commerce, brick and mortar retailers have had to step twice as fast in order to stay in the game. Especially, when you consider some of the power plays made by the internet titan, Amazon. As one of Amazon’s biggest sources of competition for domestic goods Walmart, in particular, has tightened their game up significantly.
In particular, Walmart uses some stringent policies to ensure that shelves stay stocked and goods are arriving exactly when the retail stores need them to. First is the Must Arrive By Date (MABD) provision, which means that suppliers must have deliveries to the store within a certain delivery window, typically four days, while also having a high invoice accuracy. This is a fairly standard industry practice for retail stores to ensure timely deliveries.
Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item.
However, Walmart as since followed that up with their heavy-handed On Time In Full (OTIF) policy. Now suppliers must have deliveries at the store within a two-day window, no later and no earlier either (even early deliveries will still be penalized.) Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item.
As of April 1st of 2018, the company made the policy even harder. Prior to then, the OTIF policy stated that full truckload shipments needed to meet a 75 percent OTIF rating and less-than-truckload shipments needed to meet 33 percent OTIF to avoid fines. Now, FTLs are required to meet an 85 percent standard (down from the lofty 95 percent they had originally planned) while LTL requirements have increased to 36 percent. In addition to the chargebacks, too many violations could cause a shipper to fall out of favor with Walmart and lose supplier status, which would be a major financial hit for most companies.
But what happens if demand is peaked and capacity is booked?
For shippers, OTIF can make for a tight schedule. But what happens if demand is peaked and capacity is booked? What if there’s a major weather event that has the logistics network scrambled? Shippers need better tools at their disposal to keep things running smoothly, and that’s where data analytics comes into play.
How Analytics can Make a Difference
There is a truly astounding amount of data that can be captured within the supply chain. As more companies begin the process of digitizing their operations and automating their systems, just about everything can be tracked, traced, quantified, and speculated. The challenge, however, is making sense of it all. There is such a surplus of data that it leads to a sort of data overload and can turn even the most avid analyst catatonic.
Analytics turns this vast amount of information into insight, according to the 2020 Third-Party Logistics Study by Infosys Consulting, Penn State University and Penske Logistics presented at the CSCMP Edge conference in Anaheim, California. And with this insight, “you stand a much better chance of improving your operations,” says John Langley, professor of Supply Chain Management at Penn State University.
Real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.
To some degree, the logistics industry has already started to use real-time data and analytics. Langley sites dynamic pricing in freight for an example. Here, real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.
For shippers, there is a wide array of challenges they encounter on a daily basis. Of the shippers that responded to the 3PL study, many agreed that the use of analytics would be helpful to many facets of their operations as well as overcoming the challenges they face day to day.
Type of problem
% of shippers who said analytics would be helpful
On-time and complete order fulfillment
Freight costs per shipment
Cost to serve
Order-to-delivery cycle time
Langley says that analytics is ideal for tracking and improving a KPI like Walmart’s OTIF, because the policy itself is a compound metric. And while it might be easy to villainize Walmart from a shipper’s perspective, they aren’t the only company to use aggressive tactics like this. Target, Kroger, Costco, and others are also tightening their regulations in order to keep their shelves stocked.
Learning From Your Mistakes
Perhaps one of the most powerful tools of data analytics is it gives you a different perspective of your operations and allows you to drill down to pivotal details. Why was your shipment late? Why were there missing pieces? Analytics can determine the cause and effect relationships to target the root cause of the issue while sorting out coincidence and other anomalies. In other words, real-time data analysis allows you to track where things went awry and focus on improving operations so that particular issue doesn’t happen again. “If you can measure it, capture it, analyze it, you can use it to your advantage in terms of knowing more about your own processes,” Langley says.
Getting to be a supplier for Walmart is no small matter.
Getting to be a supplier for Walmart is no small matter. For companies that already have that title, keeping it is important. However, even shippers that don’t have the best scorecards, analytics can prove to be a useful bargaining chip. If you’re able to prove yourself, and that you have the right measures in place to improve operations, it’s likely that you can demonstrate your worth as a supplier and make it to the “in” list.
For a better understanding of how to navigate OTIF and other ways to improve your operational efficiency, check out our white paper: Walmart: the retail-supplier relationship. You can also speak with one of our experts by calling us at 800.MY.SHIPPING, or filling out the form below.
As companies mature and the market changes, our understanding of crucial operating components of any industry has also grown. Supply chain transparency, in particular, has come a long way over the past twenty years. Transparency within the supply chain has gone from an unrecognized concept to a focus item for the C-Suite across a vast number of companies and industries. Given the current state of the market, it’s no small surprise either.
So in order to begin understanding transparency in the supply chain, we first need to define it.
Many, if not all, companies are facing increasing pressure from governments, consumers, non-profit / activist groups, and stakeholders to provide more information about their supply chain. Failure to do so could mean some serious damage to the company’s reputation. Slave or forced labor conditions, health and safety violations, animal exploitation, and child labor are all becoming hot button topics of the growing consumer conscience. While the reasons for explaining a higher need for transparency are clear, what is less clear is how to get there. Some companies are struggling to make a meaningful change to their operations to provide the much-needed levels of transparency.
As it is with most problems there is a lack of a clear and concise definition, according to an MIT study which conducted a survey of the apparel industry only to find wildly different results. So in order to begin understanding transparency in the supply chain, we first need to define it.
Understanding the Need Transparency
At its core, supply chain transparency is understanding what’s happening within the supply chain and being able to communicate that knowledge both within and outside the organization.
As we mentioned earlier, there is an increase in customer demand for insight into the supply chain, but it’s not without benefit. The researchers at the MIT Sloan School of Management found that consumers are willing to pay between 2 and 10 percent more for products produced by companies that have better supply chain visibility. The study showed that consumers place a higher value in a company that can prove the ethical treatment of their workers. What’s more is that this growing consumer base is seeking more information about product ingredients and materials, where the product is coming from, and the conditions in which it was produced.
As the demand for visibility continues to increase, so too will the potential fallout for companies that fail to provide it.
As the demand for visibility continues to increase, so too will the potential fallout for companies that fail to provide it. Over the last decade, there have been a number of scandals that have had a significant detrimental impact on company image and reputation. Slave labor in the Thai seafood industry and deforestation in Malaysia and Indonesia are ample examples of this.
The backlash created from these scandals has forced the creation of new transparency laws around the world. Australia the UK have created new regulations to combat forced labor. The state of California has also created supply chain transparency laws (California Transparency in Supply Chains Act.) The U.S. Food Safety Modernization Act is targeting food safety and ingredient fraud. There are also further regulations to come from the Netherlands and Switzerland, with other countries to follow suit.
What this means for companies is that a lack of supply chain transparency can stop operations dead in their tracks.
What this means for companies is that a lack of supply chain transparency can stop operations dead in their tracks. Something as simple as missing origin documents could cause a shipment to be either held up or even turned away at ports which can result in a costly delay throughout the entire supply chain.
So Why Aren’t All Companies on Board?
You would think that with the new levels of consumer consciousness and the growing global regulations that all companies would be scrambling to build transparency into their supply chains. Yet, there are many companies that are either slow to act or not act at all.
One reason for the delay is that the supply chain itself was never designed to allow for transparency. Manufacturers and suppliers alike fear to expose their sources as they might lose the edge against their competition. Another explanation for being slow to act is inaccurate data coming from upstream, assuming there is data to be had at all. Lastly, there’s also considerable concern about the ROI for investing in supply chain transparency.
Despite the challenges, there are plenty of reasons to get on board with supply chain transparency.
The Benefits of Supply Chain Transparency
The returns gained from efforts made on improving supply chain transparency will vary by business model and industry but overall there are a number of benefits that are applicable to most companies.
One of the most straightforward benefits is that increased transparency means keeping in compliance with the new regulations that are being enforced. Operational risks drop as a result as companies no longer have to worry about being able to get freight through customs.
There are also considerable benefits to a company image that come with higher levels of visibility. Consumer conscience is a huge market factor right now. Customers are happy knowing that their products are made with care and concern towards the environment and the people working to make their products. As a result, they’re willing to pay more, which can help offset potential higher supply chain costs. Additionally, consumer trust and satisfaction also rise, which creates stronger brand loyalty and a larger customer base.
Better visibility means better, more actionable data, which in turn can help drive a company’s growth and profitability.
Of course, there are also operational benefits to be had by utilizing a highly visible supply chain. Better visibility means better, more actionable data, which in turn can help drive a company’s growth and profitability. That data also highlights areas of improvement, meaning a company can run leaner, cleaner, and a whole lot greener.
This isn’t a trend in the sense that we’ll see it fall out of fashion any time soon. Supply chain transparency is becoming an industry standard and will continue to flourish. If your company isn’t working towards transparency, it might be time to get started. For more information on how BlueGrace can help give you the visibility you need to gain efficiency, feel free to contact us at 800.MY.SHIPPING or fill out the form below:
Why are some supply chains operating at an optimum level, while others are struggling to perform day to day operations? How are some supply chains able to respond quickly to market demands, while others miss opportunities? Why are some supply chain managers able to reduce costs without compromising product and service quality, while others are dealing with rising costs?
There is only one answer to all these questions.
An organizational culture of continuous improvement is the secret of a healthy, cost-effective, responsive and efficient supply chain.
What is the Culture of Continuous Improvement?
As the name suggests, Culture of Continuous Improvement means – having a culture where process, system, service, and product improvement is an ongoing and continuous activity. This culture is embedded in the organization’s foundation. It involves, encourages and motivates all the employees, management, vendors, and suppliers to seek out avenues and means to improve how the organization functions at every level.
How do Supply Chains benefit from Culture of Continuous Improvement?
The supply chain is one of the biggest cost centers in an organization. It is the function responsible for manufacturing, storing, and distributing the product. It makes the product available to the end customer. To be able to keep up with industry trends and market demands it is necessary for supply chains to constantly innovate. And, innovation can’t happen without continuous improvement. In fact, both are interdependent.
When supply chains improve and innovate, they are able to do the following:
Improve service and product offerings
Decrease go to market time
Reduce response time to market and customer demands
Helps integrate the different functions within the organization
All these things help the organization improve revenues and remain competitive.
How to Create a Culture of Continuous Improvement in the Supply Chain
Creating a culture of continuous improvement requires the involvement of the entire organization. It can’t be done in silos. For example, if you plan to continuously improve your supply chain, you will by default have to roll out the continuous improvement plan in all the other departments as well.
Here’s how you can create a culture of continuous improvement in your supply chain and all the other functions of the organization:
Align the C-Suite: Any process or strategy change in the organization can’t succeed without the involvement of the C-suite and function leaders of the organization. Once the leaders and the management is aligned and agrees to make continuous improvement a part of the organization culture, it becomes comparatively easier to implement changes.
Set clear objectives and goals: Any change or activity undertaken without a goal or objective is not only difficult to achieve but also challenging to “sell” to the employees. So, when you decide to make continuous improvement a part of your organizational culture, define what you aim to achieve from it. For example, the supply chain’s objective can be improved inventory management, better machine utilization, or lower transportation costs.
Define how you will measure it: Along with setting objectives and goals, it is also necessary to define how you will monitor and measure their performance. Unless there are proper metrics in place to measure the outcome, you will not understand if your plan is working in accordance with your goals. Apart from knowing how your plan is performing, results also help keep employees engaged. If they are achieving the said goal, it motivates them to do better and take initiatives to find other ways to further improve their performance. If it is not providing the said results, it helps find new solutions and opens doors for innovation. Either way, it keeps up the spirit of continuous improvement.
Seek input from employees: Your employees are responsible for implementing the strategies for continuous improvement. They also have first-hand knowledge of the pain points of the process they handle and have insights regarding how it can be improved. If they are also involved at the planning and strategizing stage, they will be motivated to take ownership for its success.
Allow room for failure: Condemning failures is one of the biggest hurdles in embedding a culture of continuous improvement in the organization. If employees feel they will be penalized for failure, they will neither suggest new ideas nor be enthusiastic about implementing anything new. On the other hand, when they have the assurance that they will not be punished for failure, they will not only be motivated to find new ways and means to improve the processes and systems but will also put in their best efforts to make them a success.
Introduce technology: Technology is one of the tools to improve systems and processes within the organization. Any strategy to create a culture of continuous improvement in the organization can’t overlook the contribution of technology. By using the right technology, you can eliminate redundant and duplicate processes, reduce manual work, and integrate different processes. Technology also helps connect the end customers to the business, thus improving your service offerings. For example, if your logistics department uses a transport management system, you can connect with transporters and customers on the same platform. Track your shipment real-time and offer the feature to your customer as well. Additionally, a TMS will also help you monitor and track your logistics department’s performance. Thus, aiding you in your efforts to build a culture of continuous improvement.
While these steps will help you initiate improvement, to make it a part of the culture and keep it “continuous” you will need to pursue it relentlessly and passionately.
While these steps will help you initiate improvement, to make it a part of the culture and keep it “continuous” you will need to pursue it relentlessly and passionately. It will require steadfast efforts starting from the leadership team going down to the employees at the bottom of the hierarchy.
At BlueGrace we believe the passion for our work is what enables us to constantly look for ways and means to improve our services and products and find better solutions for our customers. It is the secret of the success of our organization. Want to connect with one of our experts to see how BlueGrace can help simplify your supply chain? Call us at 800.MY.SHIPPING or fill out the form below!
While all facets of the modern business are important, arguably the most important to any retail, manufacturing, or goods based service is their supply chain. The supply chain serves as the backbone of these companies and has a significant impact on the company’s business strategy which directly affects its operation and operational costs. Additionally, the performance of the supply chain has a direct impact on a company’s ability to provide services to their customers and create additional value via services offered or simply through reliability. With the multitude of changes that have been occurring within the logistics, trade, and freight industries now, more than ever, is an opportune time to conduct or review the process of internal audit of your supply chain.
An internal supply chain audit is one of the most powerful methods of evaluating and possibly improving your supply chain, reduce operations costs, and increase competitive advantages.
An internal supply chain audit is one of the most powerful methods of evaluating and possibly improving your supply chain, reduce operations costs, and increase competitive advantages. The goal of the internal audit is to help you find weaknesses within your supply chain and correct pain points, bottlenecks to increase supply chain flexibility, agility, and overall efficiency.
To make the most out of your audit and its results, it’s important to understand that the supply chain isn’t a stand-alone, isolated feature of your business. In all actuality, the supply chain is suffused in every aspect of your business. As such the supply chain needs to be viewed between all participating companies and suppliers throughout the supply chain, with solutions applied from a holistic approach.
Why an Internal Audit is Necessary for Your Supply Chain
For most companies, audits are typically part of the normal routine, either for financial records or for physical inventory. The entire purpose behind an audit is to make sure things are where they should be and that everyone is playing by the same rules.
“Internal auditing is defined as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes,” as defined by The Institute of Internal Auditors (IIA).
This is especially important when trying to maintain retail compliance, for example, with increasing customer demands like On Time; In Full (OTIF) or Must Arrive By Date (MABD).
Simply put, an internal audit is a multi-step process that is a means of determining whether your current systems and operations are in compliance with your company’s predetermined operating procedures and regulations. This is especially important when trying to maintain retail compliance, for example, with increasing customer demands like On Time; In Full (OTIF) or Must Arrive By Date (MABD). Conducting an internal audit does more than just evaluates the supply chain, it also takes a necessary look at the interaction between other aspects of the organization such as the accounting and financial systems, practices, and procedures. For example, are your planners and purchasers communicating properly, not only with each other but with the production floor and shipping department? Are parts coming in with enough lead time that items can be manufactured and shipped according to customer requirements?
An internal audit is important because it allows the company executives and logistics decision makers to examine the effectiveness of their business operations and controls and applications of new policies. Over time, establishing those best practices means a more competitive and more profitable company in the future.
Things to Consider Before you Start the Audit
Performing an audit is one thing, but knowing what areas you need to be focusing on is something else entirely. While every audit should be more or less tailored to the specific needs of an individual organization, here is the basic framework for initiating an audit that needs to be included:
Audit Planning: Internal auditors should have a plan in place well before the actual auditing begins.
Examining and Evaluating Information: Internal auditors should have a standardized criterion to compare findings against.
Communicating Results: Audit should have a clear and concise method of reporting their findings.
Follow Up: Internal auditors should follow up in a timely manner to ensure that appropriate actions have been taken to correct audit findings.
This framework also serves as a support system for corporate managers and allows managers of larger production systems to delegate the oversight of the audit to the internal audit department. This is important for a few reasons:
Operating Complexity: Automated data processing has increased the levels of complexity when analyzing data, a task better suited for those who know what to look for.
Decentralization: Given that supply chains are prone to be decentralized in terms of a physical location due to globalization.
Lack of Expertise: As the adage goes, stick to what you know. Leave those auditors in charge of the audit for the best quality audit.
With the right framework in place for the audit to commence, let’s take a look at the tasks involved for the actual audit.
Supply Chain Structure and Internal Audit Tasks
Like we mentioned above, every company is different and, as a result, the needs for every individual supply chain will vary. So while there is no hard and fast or “Use audit ‘A’ for Supply chain system ‘1’ ” convenient method of doing things, there are some common focal points that are applicable for just about every organization and style of the supply chain.
The supply chain management processes identified by The Global Supply Chain Forum are:
Customer Relationship Management
Supplier Relationship Management
Customer Service Management
Manufacturing Flow Management
Product Development and Commercialization
All of these processes are hallmarks of a healthy supply chain and also indicative of the successful supply chain management. Here again, we can see all of the links that connect the supply chain to every other facet of the business. Another benefit to performing an internal audit is that offers to perfect opportunity to increase the synergy between these various departments. For CFO’s and supply chain leaders, this means that supply chain management deals with total business excellence and represents a new way of managing the business and relationships with vendors, suppliers, and partners.
An internal audit can help a company in finding answers to crucial questions about managing success factors of supply chain excellence, of which these can be divided into five main sections:
Strategy – To determine if the enterprise has a clear strategy tuned to business expectations and focused on profitably servicing customer requirements
Organization – To determine if an effective organization structure exists enabling the enterprise to work with its partners to achieve its supply chain goals
Process – To determine if the enterprise has excellent processes for implementing its strategy, embracing all plan-source-make-deliver operations
Information – To determine if the enterprise has reliable information and enabling technology to support effective supply chain planning, execution, and decision-making
Performance – To determine if the enterprise is managing supply chain performance in ways that will increase the bottom line, cash flows and shareholder returns
Supply Chain Risk Management
As much as we wish we could, the ability to see and accurately predict the future still eludes us to this day. In the end, it all comes down we can optimistically refer to as an “educated guess”. With that being said, even the most educated guesses can’t predict the weather or a broken down truck. This means that within every supply chain, there will always be an element of risk. That risk represents any number of things that can go wrong within your supply chain and halt or delay your shipments. For this very reason, risk management is incredibly important when evaluating your supply chain.
An internal audit can provide business leaders with the necessary framework to develop an appropriate supply chain risk management program.
Risk management is a huge proponent of supply chain health, especially given the instabilities in the global marketplace created by political uncertainty, trade tariffs, etc. An internal audit can provide business leaders with the necessary framework to develop an appropriate supply chain risk management program. This is how your supply chain audit can also help with risk reduction and increased security:
Reviewing and understanding supply chains, including their strengths and weaknesses, in developing markets, to validate monitoring programs
Working with the company’s supply chain specialists to help develop a monitoring process that can be repeated
Helping to identify which suppliers are critical
Assessing which suppliers may be vulnerable to threats and helping draw up a residual mitigation profile
Identifying strong risk control procedures
Helping to develop key analytic tools and techniques
Aiding with compliance monitoring
Ideally, the risk mitigation will also allow companies to increase supply chain efficiency to the point where on hand stock can be reduced. While having excessive stock might create a buffer in time where shipments are running late or capacity is tight, that excess can also eat into company profit margins. Additionally, having a well-running supply chain vastly lowers the chance for disruptions, operating costs, and other unexpected costs such as chargebacks, detention fees.
Despite the cause, however, the results are often the same, a drastic slow down of operations and a huge impact on customer satisfaction and profitability.
Supply chain management is a very complex structure of activities with cross-functional processes, and it presents one of the most important functions in the company since it is directly linked to all functions of the company. Supply chain problems can result from any number of things including natural disasters, labor disputes, supplier bankruptcy, an act of war or terrorism, systems breakdowns, procurement failures, and other causes. Despite the cause, however, the results are often the same, a drastic slow down of operations and a huge impact on customer satisfaction and profitability.
The supply chain internal audit aims to support managers in process optimization and above all in cost reduction which result from an uncertain environment by evaluating and directing management towards approaches which will prevent or reduce negative effects.
After analyzing definitions and some of the standards of internal audit, it can be concluded that this process can improve effectiveness and efficiency, and by that, the performances of many functions within the organization. High-impact supply chains are more competitive and are capable of winning market share and customer loyalty, creating shareholder value, extending the strategic capability and reach of the business. Independent research shows that excellent supply chain management can yield:
25-50% reduction in total supply chain costs
25-60% reduction in inventory holding
25-80% increase in forecast accuracy
30-50% improvement in order-fulfillment cycle time
20% increase in after-tax free cash flows
To increase supply chain strength, agility, and overall integrity, companies should develop a framework for a structured approach to ongoing risk identification and management. This will enable businesses to proactively address organizational supply chain risks on a periodic basis – a practice that affords stronger company and brand protection against supply chain risk gaps.
The more we know the more we can simplify.
The more we know the more we can simplify. When we know what your current transportation situation involves and what your pain points are, we can really help you simplify. The journey with our customers begins with the Needs Assessment process and the goal to determine transportation management solutions that increase productivity and decrease overall costs. To speak to one of our freight experts, call us at 800.MY.SHIPPING or fill out the form below to receive a FREE Supply Chain Analysis.
Managing cash flow, planning the financial outlay, keeping the balance sheet in order, and ensuring all financial compliances are met are a CFO’s core job function. But this is not all that a CFO does. The CFO is also responsible for identifying opportunities to reduce operating costs without sacrificing the quality of the products and services offered by the company.
But is it a good strategy to wait for things to go wrong to ask the CFO to step in?
Supply chain and transportation are two of the biggest cost centers in an organization. The cost for these functions is measured as a percentage of sales and differs from industry to industry. However, according to this McKinsey study, most industries report supply chain and logistics cost in the range of 1.8% to 10%. When costs remain within the industry parameters, supply chain and logistics are usually given the leeway to make their financial decisions. The CFO steps in only when the cost rise above the set industry norms or in case any other financial abnormality is noticed. But is it a good strategy to wait for things to go wrong to ask the CFO to step in? Wouldn’t the supply chain and the organization as a whole benefit if the CFO is a part of the supply chain decision making?
What Does the Corporate World Think of CFO’s Involvement in the Supply Chain?
The necessity of CFOs involvement in supply chain is not a recent phenomenon. A 2013 study by Ernst & Young aptly highlighted the importance of CFO’s involvement in the supply chain. Ernst & Young surveyed 423 CFOs and heads of supply chain around the globe to understand their view of a CFO’s contribution to the supply chain.
According to the results of the survey, of all the respondents, “only 26% finance executives and 21% supply chain executives said that the CFO’s contribution to the supply chain is based around a business-partnering model”. But this trend seems to be gradually changing as “70% of CFOs and 63% of supply chain leaders responded that their relationship has become more collaborative over the past three years”.
Organizations that have a collaborative relationship between the CFO and supply chain also tend to perform better.
The survey also revealed that those organizations that have a collaborative relationship between the CFO and supply chain also tend to perform better. “Among survey respondents with an established business partner model in place, 48% report EBITDA growth increases of more than 5% in their company over the past year, compared with just 22% of those that have not yet adopted this approach.”
In the past five years, the demand for CFO’s involvement in the supply chain has only grown. Last year, an article in the European Financial Review spoke about the book What CFOs (and Future CFOs) Need to Know About Supply Chain Transactions by X. Paul Humbert, Esq. According to the article, the book showcases not only the necessity of a collaboration between the CFO and the supply chain but also demonstrates how the company’s finances and its books are impacted by the decisions taken by functions within the supply chain:
“an organization’s financial results are intertwined with the performance of the purchasing function. Purchasing and purchased inventory affect the balance sheet and capital allocation.”
Another article in Smart Industry Update published in 2018, speaks on behalf of the CFOs seeking answers to supply chain issues which the CFOs may not have first-hand knowledge of. For example, the article lists the following three critical questions that CFOs should ask of their supply chain to be able to make better decisions regarding their supply chain and create better business strategies:
How accurate is our supply-chain visibility?
How quickly can we identify and address challenges in response to disruption?
How well can we respond to changes in the industry?
The survey and the two articles leave no doubt of how crucial it is for CFOs to be involved in the supply chain function and work in collaboration with the head of supply chain. In fact, it is not only the supply chain that needs the CFO, the CFO also needs the supply chain.
How The CFO Can Be A Change Agent For The Supply Chain
An article titled How Brilliant CFOs Use the Supply Chain to Drive Business Value – Do you know the questions you should be asking in Innovation Enterprise targeted at CFOs lists down possible areas that can benefit from the CFO’s involvement.
It says “If the answer to any of these questions highlights a potential issue then it is important to engage with the head of supply chain and agree a process to address the issue. It may also indicate that there is an opportunity to partner more closely with supply chain/operations to leverage the knowledge and skills of the finance team to enable better decision making in the business.”
The transportation offered also influences customer’s buying decisions
All the above areas are crucial from the financial, product, and delivery point and can benefit from a collaborative effort from the CFO and the supply chain. For example, let’s take a look at the second, sixth and eighth question. Freight costs are pegged around 3 – 5% of supply chain costs. Freight contract negotiation is one of the most important activities of the logistics function. It has an impact on the budget, affects the cost reduction KPI given to the logistics department. In B2C businesses, to a certain extent, the transportation offered also influences customer’s buying decisions. How can the function benefit from CFOs insight?
When the CFO is involved in this decision-making from the start, it increases the possibility of improvement in contract terms and in cost reduction.
On the cost reduction and financial front, the CFO, with their fact-based view of the organization, can help the logistics team negotiate better freight contracts. The rates negotiated in these contracts are based on a multitude of factors like government policies, fuel prices, political relations between trading countries, and global business environment. Logistics may or may not have insight into these issues, but the CFO and his team will have knowledge of what is going on in the business world. So, if they know there is a possibility of fuel prices changing in the next six months or a recessionary trend is being noticed, they can advise the logistics team to negotiate a short-term contract and revisit it later. Similarly, in the case of B2C shipments (ref Q6), the CFO and the supply chain head can negotiate for contracts with different delivery options in order to serve different customers. But this can only be done if the supply chain knows the financial viability of these options and that information can be gained only from the CFO of the organization. When the CFO is involved in this decision-making from the start, it increases the possibility of improvement in contract terms and in cost reduction.
Today, to be effective in their job and to create a competitive supply chain, CFOs need to lend their expertise to the supply chain and seek their inputs in the setting the goals and objectives of the company.
Long gone are the days when the CFOs limited themselves to matters pertaining to managing company finances. Today, to be effective in their job and to create a competitive supply chain, CFOs need to lend their expertise to the supply chain and seek their inputs in the setting the goals and objectives of the company.
At BlueGrace, we have found that working with organizations where CFOs are directly involved has helped turn over a new leaf and make significant cost reductions, positively impacting the supply chain of that organization.
We provide quarterly business intelligence reports that give updates on the savings targets you give to us, key performance indicators (KPIs), and special project updates. The CFO of a company, in particular, is able to use these metrics to budget and forecast for the organization moving forward. Connect with our team at 800.MY.SHIPPING or fill out the form below to find out how we can work with your CFO to build an efficient and optimal supply chain.
Inventory is the core of any business. The right inventory, at the right time, at the right point in the supply chain is crucial for the success of the business.
For example, the shortage of raw material at the factory will affect production. If warehouses are not replenished on time, distribution will be derailed. If retail outlets run out of stock, sales and customer relationships will be adversely impacted. Each of these processes in the supply chain is dependent on the availability of inventory to carry out their function and meet business objectives.
While the unavailability of inventory results in a loss of sales, too much inventory leads to an increase in the carrying cost.
While the unavailability of inventory results in a loss of sales, too much inventory leads to an increase in the carrying cost. Carrying cost is the cost incurred to store, handle, and maintain inventory at every stage in the supply chain.
The factory, warehouse, and the retail outlet all incur the cost of storing and managing the inventory until it is required at the next stage in the cycle or sold. A high carrying cost ultimately impacts the price of the product and the profit margins of the company. Hence, neither excess nor a shortage of inventory is an ideal situation.
This is why it is essential to understand the inventory consumption pattern and arrive at an optimum level that needs to be maintained at each stage in the supply chain.
Why does the State of the Supply Chain matter?
How you operate your supply chain, how agile it is, the technology you use, the level of digitization, the extent of integration among the different stages of the supply chain. All these things affect the performance of the supply chain. The level of inventory you need to maintain at all times is dependent on the capability of these parameters.
An agile, integrated, and digital supply chain makes it easier to understand how the inventory is being consumed at each stage.
An agile, integrated, and digital supply chain makes it easier to understand how the inventory is being consumed at each stage. It enables inventory managers to calculate the optimum level of inventory more accurately. The optimum level of inventory is where minimum carrying cost is incurred and there is no loss of sale or disruption in the production or delivery process. In other words, the inventory reaches the required point just in time – not any sooner, and not later.
When organizations use this strategy to design their supply chain they inevitably improve their inventory management.
Winning Logistics Strategies in the Race to the Urban Consumer, a whitepaper by DHL and Euromonitor on last-mile transportation, explained how companies can become more competitive and improve their supply chain by adopting the F.A.D strategy. The F stands for flexible transport, A is automation, and D is data management. When organizations use this strategy to design their supply chain they inevitably improve their inventory management. They can better plan inventory inward and outward movements, improve on speed and reduce administration and handling costs, can improve inventory forecasting and planning, process data real-time, and provide shipment tracking.
For example, this article cites how Apple understood the importance of supply chain management as early as 1997 and with proper supply chain planning, the company successfully managed to beat the competition. For the Christmas of 1998, the company bested its competition by simply changing its freight mode from sea to air.
“To ensure that the company’s new, translucent blue iMacs would be widely available at Christmas the following year, Jobs paid $50 million to buy up all the available holiday air freight space, says John Martin, a logistics executive who worked with Jobs to arrange the flights.”
This one change made sure that its products were easily available during the holiday shopping season. Apple could not have done this if it had followed a rigid approach to transport planning and management.
And, if the delighted customer is also a competitor, you know you’re doing something right.
Another example in the article shows how it delighted customers with quick delivery and shipment tracking. And, if the delighted customer is also a competitor, you know you’re doing something right.
“When iPod sales took off in 2001, Apple realized it could pack so many of the diminutive music players on planes that it became economical to ship them directly from Chinese factories to consumers’ doors. When an HP staffer bought one and received it a few days later, tracking its progress around the world through Apple’s website, “It was an ‘Oh s—’ moment,” recalls [former HP supply chain chief Mike] Fawkes.”
What are the benefits of a well-managed supply chain?
A supply chain that is managed properly makes it easier to monitor stock at various touch points. It can help improve inventory forecasting and distribution. Some of the benefits that such a supply chain offers for inventory management are:
Visibility: Visibility allows inventory managers to monitor inventory levels at each stage. With a continuous and real-time view of the inventory, they can place orders or plan distribution of the inventory to reach the intended destination on time.
A strong transportation management system also enables you to store historical data, provide advanced analytic tools and trend reports, enable users to optimize freight expenses thus helping you create an efficient shipping process.
TMS: While inventory is the life of the business, transportation is the backbone. Without adequate transportation management, it will be challenging to get the inventory to the right place at the right time in the required condition. In addition to planning transportation, a strong transportation management system also enables you to store historical data, provide advanced analytic tools and trend reports, enable users to optimize freight expenses thus helping you create an efficient shipping process.
Integration: We cannot stress this enough. Integration is crucial to get complete control over inventory. For integration to be truly successful, it needs to take into account the needs of different departments and their workflow. When all the parties handling inventory are able to connect to the same system, only then will you be able to get better visibility of your inventory, improve tracking, and planning.
Analytics: The digital supply chain is a substantial resource of hard data. It provides stakeholders with the opportunity of developing and monitoring KPIs and assist them in improving their supply chains. When the data for all the functions are gathered at a single reliable source it increases accuracy in forecasting and improves execution. The reports and trends can be used for making informed decisions.
The state of your supply chain and inventory, the levels you need to maintain are directly related. If the supply chain is equipped with the latest technology and is functioning at optimal levels at each stage, it would reflect in the form of optimum inventory levels. If it is not, then you may see piles of inventory accumulated at each stage. There may be situations when you need to keep unusually high or low inventory levels. However, when inventory levels fall below or go above the optimum without a valid reason, take it as a red flag, talk with an expert. Contact us at 800.MY.SHIPPING or fill out the form below to connect with our team today for a FREE analysis of your supply chain.
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.
To outsource logistics or manage it internally is a major point of consideration for organizations. The decision is usually arrived at after extensive cost-benefit analysis of both the alternatives. While the outcome is often based on the size and nature of the business, availability of capital and manpower, geography served, operational risks involved and extent of control an organization is willing to let go of, outsourcing is increasingly becoming a favored option. Below we will highlight the top seven reasons why you should consider it too.
While your in-house team may be expert at all the functions, the complex nature of the job makes it challenging for them to do all of it by themselves.
Expertise: Logistics is a very dynamic function. A logistician is required to understand business strategy, manufacturing planning, inventory management, and the nitty gritty of different modes of transportation depending on regions served. Along with having expert knowledge of these functions, they are also expected to be good at creating strategies and implementing them. It also requires a lot of coordination and collaboration with various service providers and government regulatory agencies. While your in-house team may be expert at all the functions, the complex nature of the job makes it challenging for them to do all of it by themselves. A 3PL has expertise in all these functions, they also have a connection with external agencies. They can take over the more tedious and complex jobs, freeing your team to strategize and plan the business.
From negotiating rates, booking the freight, providing storage, arranging for the transportation, getting the shipment loaded to following up on the shipment till it reaches the final destination, a 3PL can do it all.
Taking product to market: A 3PL arranges the transportation – local or international, to ensure that your product reaches the intended destination on time. From negotiating rates, booking the freight, providing storage, arranging for the transportation, getting the shipment loaded to following up on the shipment till it reaches the final destination, a 3PL can do it all. In the case you have international shipments, a 3PL has the experienced professionals to manage that as well. How much and how a 3PL contributes to the process depends on the organization that it works with.
Trained staff: A 3PL not only brings in the logistical facilities like warehouse facilities and transportation, but it also brings with it trained personnel who are equipped to handle the day-to-day logistics of the business. 3PL staff is trained to handle the exigencies of the business and deliver on the KPIs you set for them.
This is the age of digital logistics.
Technology: This is the age of digital logistics. A 3PL brings with it specifically designed, trusted, and ready-to-use systems and processes that can manage the end-to-end logistical process on a single platform. Most of the 3PL service providers are also open to customizing or integrating their digital platforms with that of the organization they work with. This flexibility offered by a 3PL not only helps the organization bridge the gaps in its systems but also helps it to do it at a comparatively lower cost.
Large network: The main objective of any business is to conquer new frontiers and markets. And, to do this, it requires a wide logistics network and a robust, flawlessly executed logistics strategy. Your 3PL partner is expected to and can help you achieve your business goals. They may either have their own network across regions or they may have business collaborations with transporters and storage facility providers in different regions or a mix of these two, their own network in some cities and collaboration in another. They are thus better placed to help you expand and grow your business. To do this, all you need to do is work with them in a collaborative manner to find the most optimum solution to reach your customers.
A 3PL not only has the means to do so, but also the technology and the trained staff to execute the process efficiently.
Dedicated customer service: Logistics is now a major part of customer service. Obtaining the right product, packed in the right manner, at the required delivery time is on every customer’s wishlist. This can only happen if the ordering process and logistics are synchronized and managed correctly. A 3PL not only has the means to do so, but also the technology and the trained staff to execute the process efficiently.
Cost Reduction: Last but not least, outsourcing logistics and allied activities to a 3PL not only provides all the above benefits and improves efficiency but also reduces operating costs and administration overheads.
When companies want superior supply chain management services and best-in-class technology, they turn to BlueGrace®. Why? Our progressive approach to transportation management helps customers of all sizes drive savings and simplicity into their supply chains.
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.
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.
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.
According to reports, the connected logistics market is set to grow at a CAGR of 30-35 percent by the year 2021. In the next 2 to 3 years, analysts predict the connected logistics industry to be worth USD 40 – 50 Billion. It is expected to change the entire landscape of the global supply chain.
Integrated, Digital, IoT, Smart Logistics, Automation, and Big Data are some of the words and phrases that we’ve come to associate with logistics. All these together give us what we call connected logistics. With even one of these aspects missing from the mix, it would be highly difficult to build a logistics network that links all the players in international trade.
Who Are Parts of The Connected Logistics Network?
But today, logistics has ceased to be just a process of storing and transporting goods.
More often than not, when we speak of logistics we tend to associate the word with storage of goods and their movement from location A to location B. But today, logistics has ceased to be just a process of storing and transporting goods. It’s no longer limited to transport and storage facilities. Apart from the road, rail, air, and sea transport and warehouse operators, the term connected logistics also includes customer service teams, manufacturing, production planners, inventory planners, and the sales team. All these teams have responsibility for processes that are necessary to deliver the final product to the end consumer. IT companies, software and hardware providers enable these teams to stay connected and support them to deliver a superior customer experience through cutting edge technology. This is how evolved logistics has become.
It is now not only a crucial part of the supply chain, but also an essential element of an organization’s product and customer service strategy.
In fact, it will not be remiss to say that logistics is often a key differentiator – a USP for certain consumer products. In addition to the businesses and technology providers, connected logistics also includes lawmakers, cybersecurity monitoring agencies, and government authorities – especially transport, IT, and infrastructure departments across the globe. This group is responsible for creating a framework that can take into account the variations in rules and regulations across the globe and ensure that trade across borders is carried out efficiently.
What are the features of a Connected Logistics Network?
Real-time data: With the use of new and advanced technology and advanced analytics, the connected logistics network provides its users real-time data and market insights. This is making it simpler for organizations to make informed business decisions.
Now shippers can track their shipments from the time it leaves their warehouse or factory till the time it reaches the final place of delivery right on the platform where they booked the transport.
Increased shipment visibility: Gone are the days when one had to follow up with customer service executives at transport companies to know the location of their shipments. Digitalization, RFID tags, and GPS trackers have immensely improved shipment visibility. Now shippers can track their shipments from the time it leaves their warehouse or factory till the time it reaches the final place of delivery right on the platform where they booked the transport. This is also facilitating better transport planning especially in the case of intermodal transportation.
Inventory management: Imagine a large warehouse with stacks of boxes of different SKUs. Earlier, warehouses would have to maintain physical records of the goods and manually manage FIFO and order picking. Even after the initial ERP systems were introduced, there were still some challenges in the order picking process. Now, with the new technology like the RFID tags and ERP systems warehousing operations have become much easier, less time consuming and more efficient.
JIT inventory: Both manufacturing and retail organizations are working on leveraging the Just in time inventory management concept to help reduce inventory holding and storing cost. This process can be better managed with the connected logistics network as an advanced system can be equipped to provide triggers for when is the optimum time to place an order for inventory – FG or raw material – so that it reaches the factory or store at just the right time.
Global compliance management: Global trade comes with different rules, regulations, and legal requirements. It is difficult to keep track of changes in the rules and adhere to all the requirements of each country one does business with. New systems that are equipped to store legal checkpoints and raise a red flag when these requirements are not being met are making it comparatively painless for companies to meet country-wise compliance requirements.
This not only reduces the organizations’ cost on systems and software, but it also ensures seamless flow of information from one process to another in a standard format which will, in turn, limit the loss of data.
Integrated systems: System integration is one of the major facets of connected logistics. Now, organizations do not need to maintain separate systems for their different departments. Transport management system, warehouse management system, sales and billing, production planning, and finance-management can all be integrated into one platform with different modules and controlled access. This not only reduces the organizations’ cost on systems and software, but it also ensures seamless flow of information from one process to another in a standard format which will, in turn, limit the loss of data.
Document management: System integration has also helped improve documentation management and storage. Now, documents pertaining to a shipment or sale can be stored in digital format on the system. There is limited need to store and maintain physical copies. Authorized personnel can easily access these documents whenever they need to. Potential benefits are: ● Easy access to delivery signatures, original BOLs, and W&I docs ● Fast PODs to verify deliveries and invoices ● Clear view of delivery receipts and customer notes ● Clean/organized shipping documentation
While the initial investment in such technology and equipment might seem huge, the returns are equally attractive.
While the initial investment in such technology and equipment might seem huge, the returns are equally attractive. Since these systems and technology have become the demand of the day, it has become imperative for organizations willing to get a share in global trade to upgrade their systems and stay connected to the global business via their logistics network. This is especially critical for 3PL and 4PL logistics service providers.
At BlueGrace, we offer a proprietary TMS that 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, keeping you connected every step of the way. To request a BlueShip demo, call us at 800.MYSHIPPING or fill out the form below to speak to one of our experts.
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?
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 freight industry is in the middle of a revolution. We are seeing changes take place at an unprecedented speed, and showing no signs of slowing any time soon. To track these changes and how the industry is responding to them, Forbes Insights conducted a survey of 433 senior executives in the Supply Chain, Transportation and Logistics industries. Of those polled, 65 percent of the respondents acknowledge that there is a monumental shift in operations of the corresponding industries as a whole. Of those responses, a similar number, 62 percent, responded that they are experiencing those changes within their own companies.
“We’re at a point where there’s more change taking place in this instant than what I’ve seen in 25 years on the front lines,” says the president and CEO of a major transportation and logistics provider.
These changes are coming from the massive influx of new data that is being collected and collated between the industries, extracted via telematics and the Internet of Things (IoT). Conversely, the data is being driven by massive upgrades in computing power and data storage, as well as being enhanced by Artificial Intelligence and Machine Learning, which removes the tedious and often time-consuming process of human data processing. Transportation is also seeing some considerable advancements in technology, specifically in drones, driver safety technology, driverless vehicles, and blockchain data storage.
Supply Chains that are enhanced by these technologies will be the front-runners in the global market, having a competitive advantage compared to other companies.
Supply Chains that are enhanced by these technologies will be the front-runners in the global market, having a competitive advantage compared to other companies. 58 percent of the consumer base (retailers, manufacturers, etc.) recognize the importance of supply chain, transportation, and logistics for the success of their business. “Anyone whose success depends on their ability to fulfill orders of physical goods for customers is now caught up in this whirlwind of change,” says Mary Long, managing director of the Supply Chain Management Institute at the University of San Diego School of Business.
The Driving Forces
As we mentioned above, these changes are coming faster than we’ve ever seen before. We can attribute this to four driving forces behind the changes. 1. Technological Advancements
Half of the respondents say that advancing technology has a strong impact on their company’s logistics, supply chain, and transportation operations. The heavy hitters for technology are IoT/telematics, AI, Machine Learning, Blockchain, Driver technologies, and Automated Delivery Machines. According to Langley, though the transport industry has always been data-focused, today “We see all of this added computing power—IoT/telematic data collection, data mining, AI and ML—that can be focused on making better decisions, not only from an overall strategic and resource planning basis but in real-time decisions: which routes, which carriers?” says C. John Langley, a clinical professor of supply chain management as well as the director of development for the Center for Supply Chain Research at Penn State’s Smeal College of Business.
Automated delivery technology such as drones and driverless trucks are still in development before we’ll see a full release, but that implementation is certainly on the horizon. In the meantime, we’re seeing advances in driver safety technology such as lane control and safety-braking. As these technologies continue to develop we’ll see a continued evolution of the freight industries.
2. The U.S. Economy is on the Rise
According to half of the survey respondents, there is a growth in the U.S. economy which is having a strong impact on their businesses. While this might fall under the purview of disruptive, the addition of trade tariffs from the Trump administration is changing demand and long-standing transportation patterns. 44 percent of the respondents say that lower U.S. taxes and other such reforms are helping to drive demand upwards.
“This resonates with the CEO of a major trucking carrier, who says, ‘We see it daily, the economy is rolling.’ But this is both a blessing and a curse. Indeed, ‘there’s heightened demand for our services.’ At the same time, however, ‘capacity is extremely tight, so the industry doesn’t always have the trucks it needs right where and when they’re needed.’ Piling on, the industry for some time now has been experiencing a driver shortage—an issue that’s only exacerbated by a strong U.S. economy. Overall, says the CEO, “there’s more freight and more trucks than there are drivers to drive them” says the report.
Nearly half of respondents, 48%, say they are experiencing the need to reevaluate warehouse locations due to shifting trade patterns resulting from changes in the U.S. economy: taxes, tariffs and, to some degree, the return of manufacturing.
Nearly half of respondents, 48%, say they are experiencing the need to reevaluate warehouse locations due to shifting trade patterns resulting from changes in the U.S. economy: taxes, tariffs and, to some degree, the return of manufacturing. All “impact the location of hubs and warehouses,” says Langley.
3. The Amazon Effect and Changing Consumer Expectations
Changing consumer expectations are having a considerable effect on the industry, heavily impacting logistics, transportation, and the supply chain. Consumers now have the expectation of finding whatever they want, whenever they want it and having the order arrive within the next two days. Even the two-day window is beginning to shrink as Amazon rolls out with next day and same day deliveries. “The effect of Amazon is heightened expectations,” says Langley. “Next week is no longer good enough. It’s got to be on its way now and arrive at the destination within a day or two!” It’s not just consumer expectations that have changed because of the Amazon effect. Truckloads also experience a considerable delay because they require more touches before their final delivery.
“Loads used to see two, three, maybe four touches before the goods were in the hands of the end consumer,” explains an earlier-mentioned CEO. But today, getting goods to consumers faster means “seven, eight or nine touches [moving] the freight to a network of warehouses and forward positions.” In short, says the executive, “that final mile is being redefined almost every day.” Interestingly, this is spurring a veritable arms race between e-retailers like Amazon, and brick and mortar retailers by rewarding innovation and pushing advance in customer service and fulfillment.
4. Tighter Regulations
The final driving force for change is the higher level of regulation and control from the U.S. government. Approximately 46 percent of the respondents say that regulations continue to push changes in transportation. The Electronic Logging Device (ELD) mandate is just one example of those regulations. By forcing drivers away from paper logs, there is a tighter restriction on the amount of hours a driver can be on the road. With the ELD, drivers cannot be on the road for more than 11 hours in a 14 hour period, even if it’s not a logical stopping point. It doesn’t always make sense to stop right at 11 hours,” explains an executive interviewed for the report (but preferring anonymity). “What if the driver is on a bridge or stuck in traffic or is only a few minutes away from a proper rest stop?”
That lack of flexibility is increasing the delivery cost.
The paper logs provided drivers a larger degree of flexibility, allowing them to decide when to stop and when to operate. The ELD’s are decidedly rigid, and the clock starts rolling once the truck moves, even if it’s just to move the rig across the parking lot. That lack of flexibility is increasing the delivery cost. “For example, as reported in the Chicago Tribune: For Pete’s Fresh Market, a 12-store grocery chain in the Chicago area, truckloads of produce from Mexico have roughly doubled in cost since the new [ELD] devices were mandated—from about $2,400 for 40,000 pounds of produce to more than $5,000,” Forbes Insights adds.
Surviving the New Era of Transportation
There’s no mistaking the fact that the freight industry is undergoing a massive evolution, scarcely resembling the industry that has remained virtually unchanged for the past several decades. As time and technology advance, these changes are only going to continue at an even faster pace than they’re happening now. This rapid pace of evolution will leave those unprepared off balance and at risk of collapse. Staying ahead of these changes will be essential to survival for the new era of transportation. This is where a 3PL like BlueGrace, will be crucial to your supply chain. To speak to one of our freight experts, call us at 800.MYSHIPPING or fill out the form below.