The Results are in and may surprise you! In last month’s PARCEL, our readers were challenged with, “Looking for your input in order to provide information on exactly how the supply chain is working for you in today’s environment.”
To gain a more complete picture of what is occurring within the supply chain, I have teamed up with an individual that is pursuing a PhD in Marketing and Supply Chain to create a survey for shippers, carriers and logistics providers.
The results have been reported and tallied; you will find them both interesting and useful in running your business. While the numbers are not large enough to be statistically significant as indicative of the entire industry (estimated to be over $3.5 trillion globally), we do believe it provides a foundation to understand what some of the biggest issues are and where your organization may be able to utilize technological change to improve service and bottom-line. The 10 questions and your input naturally fit into four categories:
Majority of respondents disagree with these two questions:
• We use a Transportation Management Solution (TMS) for logistics cost control
Observation: TMS is the power behind third party logistics solutions and generally the mechanism used to reduce cost and justify the margins the 3PL needs to perform. Using TMS or preferably real time data to measure, negotiate, adjust and manage has proven to be an excellent path to increase quality and reduce cost-this deserves maximum consideration, especially if not using a 3PL.
• For LTL, we still utilize CzarLite rather than another negotiated price
Observation: Reading between the lines, the survey is telling us that strong shippers realize that CzarLite is not the best rate schedule and other options should be considered. A telling detail is often that 65% of LTL/TL freight documents are manually completed. Automation lets you “Manage what You Measure” – Very big opportunity here to use a singular system, based on data for trucking, to spend a lot less.
Wide spread of input from respondents on these two questions:
• We have the most upside potential for cost savings on our inbound traffic
Observation: The supply chain runs both ways, inbound and outbound, if your focus has been primarily on outbound, look at your supply chain before you receive freight. You can receive a pre-alert on the sku numbers of all freight, by carrier and delivery date. Would this let your customer service department take orders they are rejecting because “out of stock”? Probably yes. More importantly, you can control the cost of freight and do not have to pay “prepay and add,” which is beneficial to your vendors, not you.
• The new dimensional weight formula for parcel and express had a big effect on our cost
Observation: The inconsistent responses reveal that this change is not having universal application. If you are affected look into it deeply with your carrier, packaging provider, distribution center location(s) and automation. There is money being left on the table, and your customers may now buy from your competition.
Generally neutral (middle zone) answers from respondents on these two points:
• The support from our Information Technology department (IT) is sufficient to manage our supply chain
Observation: If this surprises you because you are not receiving adequate support, give this article to your head of IT to encourage a discussion. If you are receiving great support, thank them!
• Our major supply chain is being utilized to squeeze lower prices to benefit one of the partners
Observation: This does not appear to be an issue at this time.
Majority agree that they are managing their network well with these four tools:
• The dashboard we use lets us recognize and correct exceptions
• We are below our projected quarterly budget with regards to transportation spend
Observation: This one is surprising and impressive!
• Our distribution centers are managed to centralized and measurable controls
Observation: Is enough flex built in so your distribution centers can use a great regional carrier for service and cost improvements?
• In making vendor selections, system interface is an important consideration
With today’s market still exhibiting an extremely slow recovery, it is an excellent time to review where you are in terms of service and profit and make some well-targeted changes as needed. You might consider placing your bonus MBO (Management by Objectives) into the mix to demonstrate success.
Information is power; your best information is real and usable data.
Rob Shirley is President of ExpresShip a strategic technology partner in the global supply chain. Contact him at rsXPship@gmail.com.
Jared Oakley is a PhD candidate at The University of Memphis. His email is JJOak98@yahoo.com.
To gain a more complete picture of what is occurring within the supply chain, I have teamed up with an individual that is pursuing a PhD in Marketing and Supply Chain to create a survey for shippers, carriers and logistics providers.
The results have been reported and tallied; you will find them both interesting and useful in running your business. While the numbers are not large enough to be statistically significant as indicative of the entire industry (estimated to be over $3.5 trillion globally), we do believe it provides a foundation to understand what some of the biggest issues are and where your organization may be able to utilize technological change to improve service and bottom-line. The 10 questions and your input naturally fit into four categories:
Majority of respondents disagree with these two questions:
• We use a Transportation Management Solution (TMS) for logistics cost control
Observation: TMS is the power behind third party logistics solutions and generally the mechanism used to reduce cost and justify the margins the 3PL needs to perform. Using TMS or preferably real time data to measure, negotiate, adjust and manage has proven to be an excellent path to increase quality and reduce cost-this deserves maximum consideration, especially if not using a 3PL.
• For LTL, we still utilize CzarLite rather than another negotiated price
Observation: Reading between the lines, the survey is telling us that strong shippers realize that CzarLite is not the best rate schedule and other options should be considered. A telling detail is often that 65% of LTL/TL freight documents are manually completed. Automation lets you “Manage what You Measure” – Very big opportunity here to use a singular system, based on data for trucking, to spend a lot less.
Wide spread of input from respondents on these two questions:
• We have the most upside potential for cost savings on our inbound traffic
Observation: The supply chain runs both ways, inbound and outbound, if your focus has been primarily on outbound, look at your supply chain before you receive freight. You can receive a pre-alert on the sku numbers of all freight, by carrier and delivery date. Would this let your customer service department take orders they are rejecting because “out of stock”? Probably yes. More importantly, you can control the cost of freight and do not have to pay “prepay and add,” which is beneficial to your vendors, not you.
• The new dimensional weight formula for parcel and express had a big effect on our cost
Observation: The inconsistent responses reveal that this change is not having universal application. If you are affected look into it deeply with your carrier, packaging provider, distribution center location(s) and automation. There is money being left on the table, and your customers may now buy from your competition.
Generally neutral (middle zone) answers from respondents on these two points:
• The support from our Information Technology department (IT) is sufficient to manage our supply chain
Observation: If this surprises you because you are not receiving adequate support, give this article to your head of IT to encourage a discussion. If you are receiving great support, thank them!
• Our major supply chain is being utilized to squeeze lower prices to benefit one of the partners
Observation: This does not appear to be an issue at this time.
Majority agree that they are managing their network well with these four tools:
• The dashboard we use lets us recognize and correct exceptions
• We are below our projected quarterly budget with regards to transportation spend
Observation: This one is surprising and impressive!
• Our distribution centers are managed to centralized and measurable controls
Observation: Is enough flex built in so your distribution centers can use a great regional carrier for service and cost improvements?
• In making vendor selections, system interface is an important consideration
With today’s market still exhibiting an extremely slow recovery, it is an excellent time to review where you are in terms of service and profit and make some well-targeted changes as needed. You might consider placing your bonus MBO (Management by Objectives) into the mix to demonstrate success.
Information is power; your best information is real and usable data.
Rob Shirley is President of ExpresShip a strategic technology partner in the global supply chain. Contact him at rsXPship@gmail.com.
Jared Oakley is a PhD candidate at The University of Memphis. His email is JJOak98@yahoo.com.
