In some ways, the 1999 Best Practice Survey raises more questions than it answers, but in most ways, it offers some solid insights into the overall operations of our readers who responded. Note in some cases, the percentage totals do not equal 100% due to cumulative rounding errors.
 
Respondent company size and industry
The first thing to look at is who our respondents are. What�s surprising was the range of those companies responding. They were divided neatly into small, medium and large, if we consider �small� to be less than $10 million in annual sales and �large� as more than $100 million. The middle third is also almost equally divided. If anything, the larger companies are slightly better represented, as shown in Figure 1.
 
 Company Sales
            % of Respondents        Sales (in millions)
            30%     $10 or less
            9%       $11-$25
            12%     $26-$50
            10%     $51-$100
            39%     $100 or more
 
Respondents also cover the spectrum in industry representation although manufacturing is the largest, single identified group. We intend to look closely in the near future at the �Other� group to see if there�s a trend emerging (Figure 2).
 
Type of Industry
            % of Respondents        Industry
            37.5%  Manufacturing
            18.3%  Wholesale
            9.6%    Retail
            2.9%    Printing/Publishing
            1.9%    Electronics
            29.8%  Other
 
Warehouse space
Warehouse space was perhaps one of the biggest surprises. Although there was generally a fairly good correlation between sales volume and warehouse space, some of the largest companies reported some of the smaller warehouse areas.
 
A full 25% of the respondents with sales of $100 million or more had warehouse space only in the 30,000-square-foot to 74,999-square-foot range. This disparity between size and warehouse space in a significant portion of the largest companies could be attributed to one of four reasons � and this is one of the areas where we have more questions than answers. First, these companies could be outsourcing a portion of their warehousing and therefore don�t count it. Second, they could be in a just-in-time environment where warehousing is intentionally kept to a minimum. This might include e-businesses that do not warehouse the majority of their stock. Third, they could have small, high-value merchandise. Fourth, they could simply be running extremely efficient operations.
 
Size of Warehouse
            % of Respondents        Size of Warehouse (square feet)
            39.0%  30,000 or less
            23.5%  30,000 � 74,999
            14.0%  75,000 � 199,9999
            23.5%  200,000 or more
 
Reporting relationship
Reporting structure is divided between �Operations� and �Other.� There was no apparent correlation between company size or industry and the reporting structure. A change in the reporting structure over the past five years was reported by 39% of respondents (Figure 4).
 
Reporting Structure
            % of Respondents        Reports to
            23.5%  Director of Operations
            25.5%  VP of Operations
            2.0%    VP of Manufacturing
            49.0%  Other
 
FTEs in logistics function
The number of full-time-equivalent employees (FTEs) involved in logistics functions also provided some surprises. Although there is an overall correlation between sales volume and number of FTEs, 10 is somehow the �magic number.� However, there are some small companies with upwards of 10 people and some large with as few as 10, so there is not always a clear correlation between size and number of employees (Figure 5).  There is also a significant disparity at both the high- and low-end of the surveys, with one company having less than $10 million in sales reporting 100 FTEs in logistics and one company with more than $100 million reporting only one (FTE), which could possibly be a mistake.
 
Number of FTEs Involved in Logistics
            % of Respondents        Number of FTEs
            52%     1-10
            14%     11-20
            14%     21-50
            7%       51-100
            5%       101-200
            6%       >200
 
The actual numbers between one and 10 may bear further examination because the number of respondents who reported are on this level. Figure 6 shows this breakout.
 
Number of FTEs Involved in Logistics up to 10
            % of Respondents        Breakout: number of FTEs
            14.3%    1
            16.3%    2
            22.4%    3
            8.2%      4
            8.2%      5
            16.3%    6
            0.0%      7
            6.1%      8
            2.0%      9
            6.1%    10
 
Express shipments
It seems as if the majority of our respondents generally don�t make heavy use of express services with the majority shipping less than 10% of its volume this way (Figure 7). It�s quite possible some of them have listened to the advice of several of our authors who point out that many ground shipments have nearly the same delivery times as express shipments. Or it may be that customers are calling the shots and don�t want to pay the extra cost. Still, 11% ship the vast majority of their parcels via express. There is no clear correlation between company size and percent of parcels shipped express.
 
Companies Shipping Via Express Services
            % of Respondents        % of Parcels Shipped                           41.0%  0% - 9%
            22.5%  10% - 19%
            12.5%  20% - 29%
            6.0%    30% - 49%
            6.0%    50% - 69%
            1.0%    70% - 89%
            11.0%  90% - 100%
 
As far as the carrier of choice, UPS has the lion�s share among smaller percentages. Not surprisingly, UPS also has the majority of the standard shipments among these same companies who tend to use standard services to ship the majority of their goods.
 
The business is business-to-business
It seems as if the majority of respondents are involved in business-to-business (B2B) much more heavily than business-to-consumer(B2C). Nearly 80% of our respondents do more than 75% of their business with businesses (Figure 8). At this point, sales outside the US are not a significant portion of any of the respondents� business.
 
Percentage of B2B Business
            % of Respondents        % of B2B Business
            10.5%    0% - 24%
            5.8%    25% - 49%
            4.7%    50% - 74%
            79.0%  75% - 100%
 
Zone skipping
The majority of those responding to our survey, nearly 75%, do not take advantage of zone skipping. Of those who do take advantage of zone skipping, 44% use UPS, 33% use the USPS and 22% use another carrier for the �final mile.�
 
Negotiation
Surprisingly, it�s not a foregone conclusion that large companies negotiate with their carriers. Of companies responding with sales in excess of $200 million, only two-thirds negotiate with their carriers, yet 80% of the companies in the $51 million to $75 million range and a full 90% of companies in the $75 million to $199 million range negotiate. It�s possible some companies that don�t negotiate rates, instead trade off possible discounts for special service consideration, such as extra-late pickup. It�s also possible they�re missing a real opportunity. Figures 9 breaks out percentages based on sales volume.
 
Percentage of Respondents of Company Size
            Company Size Do Not Negotiate         Negotiate
            (in millions)                              
            <$10    50%     50%
            $11-$25           57%     43%
            $26-$50           44%     56%
            $51-$74           20%     80%
            $75-$199         10%     90%
            $200+  34%     66%
 
Shipping cost
Shipping costs as a percentage of sales ranged from 0% to 100% although a significant proportion, close to two-thirds, were below 6% as seen in Figure 10. Here�s an area where some companies may be using shipping as a profit center rather than a cost center � particularly if costs equal 0% of sales.
 
Shipping Cost
            % of Respondents        Shipping Cost as a % of Sales
            19%     0% - 1.9%
            19%     2% - 3.9%
            21%     4% - 5.9%
            11%     6% - 7.9%
            6%       8% - 9.9%
            4%       10% - 11.9%
            2%       12% - 13.9%
            6%       14% - 24.9%
            2%       25% - 39.9%
            4%       40% - 45.9%
            0%       46% - 89.9%
            4%       90% - 100%
 
Shipment visibility
Shipment visibility seems to be more important for shippers than customers at this point, though not by much. What�s surprising is the number of companies that reports it�s not important to them or their customers (Figure 11).
 
Shipping Visibility
                        Not Important  Important
            To Company    20%     80%
            To Customer    24%     76%
 
System acquisitions
Companies are apparently becoming more technology-savvy but it seems as if there�s still a lot of room for improvement. For example, less than 60% have computerized shipping systems, less than 40% have inventory management software, less than 30% have WMS software. Interestingly, barcodes and labeling systems both come in at about 30%, clearly an acknowledgement of carrier or customer requirements (Figure 12 on page 16). Labeling systems and 2D symbols top the shopping list.
 
Shipping systems
The majority of shipping systems used by respondents are
shipper-supplied although third-party systems are well represented. Some companies hedge their bets and have both types of systems.
Shipping Systems
            % of Respondents        Shipping System Supplier
            10.7%  Carrier and Third Party
            50.7%  Carrier
            38.7%  Third Party
 
Information for general comparisons
It�s tough to draw broad conclusions from these results, but as a measure of how your company stands compared to similar ones, and 23% of you do benchmark your operations against others, it�s a useful yardstick. We�ll also use these results to gauge our own performance against your needs.
 
The article was compiled by the Parcel Shipping & Distribution staff. Be part of this year�s survey, fill out the 2000 Best Practice Survey found on the coverwrap of this issue.