June 29 2009 10:01 AM

For many of us, this economic downturn seems almost unprecedented. Many employees within an organization, whether they're manning the shipping dock or overseeing the company as a CEO, are wondering, "What do we do now?•bCrLf PARCEL has asked CEOs from some of the top companies in the logistics industry to give us their insight. We hope you enjoy these practical suggestions about how to mitigate this economic downturn.

Eric Anderson
CEO, Loftware

Best industry practices for shipping, receiving and processing anything are even more important now than during the recently vanished global boom. In these hard global economic times, companies that are at the top of the game — regardless of location or markets they do business in — will survive and thrive while others will perish. In our specific segment, we have found our big brand name customers, all well-known pillars of excellence in practice and management, are actually buying additional solutions and services. They are reinvesting in time-critical supply chain upgrades while they have a little time to do so. They are taking advantage of downtime by ramping up their ability to support their business in the future. In other words, they are investing in their future by taking advantage of the slowdown in the present.

Why would this be the best path in uncertain times? It's simple. Compliance with the myriad of global markets and individual country shipping requirements haven't been loosened in any country because of the current economic crisis. GS1 and other global label standards continue to become legal and mandated requirements in both developed countries and the emergent market countries. All of these require investment in IT infrastructure (that in some cases can impact business) and, frankly, what better time than now, when business is slow?

David Vannoy

In tough economic times, you may be inclined to freeze or cut IT spending to lower expenses. For logistics-intensive companies, however, this response can produce the opposite effect. Current research shows that businesses slow to adopt transportation management technology spend more on freight, relative to revenues, than businesses that continually invest in improving their supply chain performance. In addition, logistics-intensive companies that invest see dramatic improvements in service levels to their customers. In both cases, if your business is committed to getting the right item to the right customer, at the time and place they need it, and at the right cost, then it's critical to continue to grow and invest in cost-saving technology. The good news is that it is now possible to do so without having to increase your budget, and even, in some cases, at less than your current cost.

A fiscally responsible approach to acquiring technology in a down economy is to do so in small steps. Focus on evaluating technology that is modular, targeted, and quick-to-implement; eliminating the need for complicated and lengthy enterprise-wide initiatives with extensive upfront costs. Small, targeted solutions provide faster returns and less risk. We recommend you consider applications which offer an Invest-as-you-Grow model to licensing their applications and services. 

Unlike pay-per-use or SaaS (Software as a Service) models, an Invest-as-you Grow subscription approach allows businesses to acquire transportation technology at a lower cost, while still aligning with traditional IT implementation practices, such as server-based installations and secure integration with front-line business operations. At a lower cost of entry, businesses are more easily able to justify acquiring technology using traditional and simple methods of analysis. 
So how do you cost justify implementing new transportation technology? Much of the information you need is easily obtained free from your carriers, such as outbound shipping, in-transit, and billing data. With this information, simple analytical tools isolate excessive transportation expenses resulting from inefficient carrier/service level selection, unnecessary carrier assessorial charges, late package deliveries, and returns caused by outbound shipping errors. If you don't have access to one of these tools, you can begin your analysis by spending a few minutes with your weekly carrier invoices.

Un-recoverable billing adjustments or assessorial charges are easily identifiable, such as: 1) address correction Fees; 2) residential and dimensional weight adjustments; and 3) return fees. Shipping errors, assessorial charges, late package deliveries, and returns are not costs of doing business. Most shipping errors can be prevented, even with minimal application of cost-effective subscription-based technology. When it comes to expensive shipping errors in a tight economy, the old adage, "an ounce of prevention is worth a pound of cure•bCrLf, has never been more relevant.

Bill Razzouk
President & CEO, Newgistics, Inc.

For merchants to thrive, service providers must focus on helping their clients reduce costs and streamline operations. The current economic downturn is unlike any we have faced. To survive, companies have to concentrate on business fundamentals. Unfortunately, a business often fails in assessing how well it truly understands its customers. This failure makes it impossible to successfully align business strategies with customer satisfaction. No single individual or department has the ability to address the concerns of the entire business. The assessment of the company's goals rests squarely on the shoulders of the organization as a whole.

Today, many companies are struggling to survive while others continue to improve their immediate and long-term success by scrutinizing vendor relationships. The relationship between a client and its shipping provider is the perfect example. It is a company's responsibility to make sure its shipper provides services that meet their needs.

Companies must ask the following questions when evaluating customer relations and retention: 

-- Are customers price-sensitive when it comes to shipping costs? Do the service options being offered meet the customers' expectations?
-- Are most deliveries going to the home? If so, what kinds of incremental costs are being passed on to customers?
-- Are the company's delivery and returns options convenient for its customers?
-- What internal resources are being invested to manage an unnecessarily complicated carrier contract or shipping program?
-- Does the business have a true understanding of what the costs of service are, how they are allocated, and how this impacts the customer? The company's own operational budget?

If a company cannot answer these basic questions, or feels the customer is not satisfied, it may be time to reevaluate its partnerships. There are opportunities for significant cost savings and improved customer experience. Every box represents a customer who has made an emotional and financial investment in a business, its brand, and product. A positive customer experience is essential for every business; this is why companies must remain vigilant and proactive in managing their business, from strategy to execution..