It’s January and hopefully the holiday lights are down and the last of the vendor cookies and candies are a distant memory — at least in mind, if not the waistline.
Those cookies and candies are likely part of the reason for common post-holiday resolutions such as: I want to exercise more, eat better, etc. These are great resolutions and a great way to set additional goals for the New Year.
That said, personal resolutions might not be the place to stop, as a few resolutions in the corporate setting can also yield some fantastic results.
So raise your right hand and repeat after me -- “I resolve to…”
- Review Data Management This probably sounds as exciting as watching paint dry, but there are serious dollars wrapped up in the proper collection, measurement and analysis of small parcel data. Deep down we all know this, but FedEx and
First, it’s important that as much information as possible is gathered electronically. There is a comfort element in using paper for many people, but when paper is involved the ability to quickly manipulate information — and the ability to move that information around — is lost.
Once data is electronic, it’s time to analyze trends and characteristics of your shipping data in order to have a better understanding of your business. Based upon this type of review, and after determining what trends and characteristics are driving their costs, some organizations are able to reduce their small parcel spend by an additional 3-10%.
Further data analysis will often find erroneous charges and costs, misuse of services by employees, or other unknown avenues for cost recovery that will be lost until this type of data review is done.
There are numerous additional benefits of data management, including: being more organized, being able to pull better information for budgeting, creating forecasts and many others. However, proper gathering of data, in order to make long term changes (read: cost reductions), to your transportation agreements is one of the best returns on investment you are likely to uncover via this resolution.
- Analyze Service Standards This resolution really wraps together two disparate types of service standards — on-time performance and mode optimization.
The first item to review is the actual on-time service that you receive from your small parcel carriers. Overall numbers from UPS and FedEx are generally strong, but issues specific to certain accounts or certain lanes do crop up. By reviewing these areas, you can determine and areas of concern with your carrier, get to the root cause of the issue and improve the customer experience. There is also the ability to recapture costs for some packages not delivered on time.
The second resolution regarding service standards refers to mode optimization. This is an area that is often overlooked for cost savings. Companies should take a solid look at how much time is needed to get their goods where they are going and cross-reference that time window with the size and weight of the goods to determine the appropriate mode.
All too frequently, organizations fail to use the mode of transport best suited to the shipments. With small parcel shipments as much as 10 times more expensive than ocean moves, as a loose rule of thumb, it is important that an organization truly evaluate the spend for each mode of transport, why each set of products moves in that mode, and see if there are areas for improvement. With proper optimization, there is no loss of transit time, but the savings can be substantial.
- Review Carrier Requirements This resolution pertains to your requirements of the carriers and their requirements of you.
First consider that the carriers may have revenue and volume commitments that they require from you in exchange for the incentives and discounts they have extended. In this time of economic instability, it makes sense to take a few minutes to see where those commitments are and, if some are in danger of slipping, to address with the carrier proactively.
On the other hand, you have your own requirements of the service providers that move your parcels and pallets. Make sure that you have a strong sense of which modes you need serviced, what your corporate and departmental objectives are, and a comprehensive list of all of the key factors that are important to you. Once you have a comprehensive list, it will make your evaluation of the carriers and their services much easier. However, this is a critical area that many folks cut short, which leads us to the next point.
Break Down the Silos Co-workers in other departments are people too. Real people with real needs relating to transportation and logistics. So after you come up with the comprehensive list of your own departmental needs, please be sure to find out what is happening with Customer Service, Accounting, IT, and Sales. Each one of these groups is impacted by, and therefore has their own set of needs related to, UPS and FedEx. Some of the biggest opportunities for enhanced customer service, improved processes and better carrier relationships are lost when these groups are not consulted regularly. Also bear in mind that if a business moves its shipping from one carrier to another, the biggest reason for the failure of such a switch is typically a lack of education and communication about the change with the internal or back office users of UPS and FedEx. So embrace the chance to break down the silos. Great opportunities await.
Put a Fingertip to the Winds of the Economy Clearly we are in a deep recession and some of the most turbulent economic times on record. The instability we are experiencing makes it difficult to plan, as evidenced by UPS ’s decision not to predict their peak volume this past December 18th — for the first time since their IPO. Even though companies as sophisticated as UPS
are uncertain about the future, we can still take the information we have and make the best possible decision based upon what we do know and capitalize on the market the best we can.
The economic softness for the carriers is an incentive for them to price aggressively in order to keep the business they have, so just as it makes sense to buy when stock prices are low, it can make sense to negotiate when volume is soft. None of us have that crystal ball which will let us know when volume will return, and with it the potential for firmer pricing from the carriers.
Also take a look at the forecast for your own organization. Even if volume is down considerably, it may make sense to address this directly with your service providers and adjust thresholds or other incentives, based upon impacts to the rolling average.
Negotiate Proactively Nothing is more important than being prepared for a negotiation. Good preparation encompasses all of the factors that we’ve discussed above, in addition to some we haven’t, like mergers or acquisitions. However, by the time you have reviewed the previous resolutions, you should be well on your way to being well prepared. Such preparation sets the stage for two things: a negotiation on your own terms and a successful outcome. In any economy, that is a competitive edge to have and to hone.
Enhance or Employ Policies & Procedures This resolution relates to two elements as well, general departmental policies and procedures, as well as U.S. Customs Compliance.
All of the great rates and good ideas in the world are meaningless unless they are applied the appropriate way, at the appropriate time. Franchises are successful because they find processes that can be finely tuned and replicated thousands and thousands of times. These processes work because they keep costs in check and deliver a predictable experience. Think of certain elements of your business as a franchise, so there are processes in place to make sure that your employees know key processes. Policies and procedures will eliminate confusion, headaches and unnecessary costs from occurring.
Another key area for policies and procedures is U.S. Customs and Compliance. While many books could be filled with appropriate procedures regarding this topic, it is important that shippers are aware of the importance of compliance and the penalties that can be incurred when proper documentation is not kept and procedures are not followed.
Having a complete set of import documents that you maintain for five years, as required by the U.S. Government, is the first step. Also be sure that the values that are on the import invoice are the values that are actually being paid by your company. Penalties for non-compliance are $10,000 for record keeping errors and double the duties due for import compliance negligence. On the export side, new penalties of $1,000 to $10,000 have been instituted for failure to transmit accurate and prompt electronic data on your exports. You must know the export classification of your merchandise and any restrictions which might apply to your exports. Also, export records, and import records alike, must be kept for five years
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These are minimal requirements, and with the new 10+2 requirements that will go into effect next January, many importers will be out of compliance because they don’t know what is required or don’t want to expend the resources to maintain compliance. The economy may be tough, but risking Customs audits and penalties can be tougher. You could easily lose more than you save by not complying, so it’s a good time to evaluate your level of compliance.
Consider Outsourcing This is a great time of year to consider outsourcing. Outsourcing can bring numerous benefits to an organization, such as a faster result, an improved result, access to deep knowledge on a particular subject and/or a decreased work load. Any one of these can be worth looking to outside resources to tackle one or more projects.
Additionally, in tough economic times, it can make sense to think out of the box when looking to bring additional dollars to the bottom line. If, for example, an organization feels they have the best contracts available, they are unlikely to spend time re-visiting those same contracts. However, there are resources available that can find additional savings and share the savings with the company that hired them. Savings such as these are then ‘free money’ that moves directly to the bottom line. This result alone can be worth the time taken to evaluate outside resources. But when the results can also come quickly, with little impact to your day to day business, it can be a winning move on multiple levels.
To be fair, this is not an exhaustive list of New Year’s resolutions for the savvy transportation and logistics professional, nor was it meant to be.
The true spirit of New Year’s resolutions is that they are sought out by the person making the resolution, because they speak to that person at a core level and are meaningful in the same way. Also, they are not meant to completely make over a person’s life, but rather to improve and enhance it to a positive degree.
And so that is how these resolutions are offered up. So that you can take the few that speak to you, make them your own and make your professional life better in your own unique way. So put down that donut, take a few deep breaths and think of how the assessment of a few key elements can make 2009 flow more smoothly, with a little less aspirin, and a lot of opportunity along the way.
