With changing customer demands, new carrier surcharges, COVID, and other challenges taking a bite out of shippers’ bottom lines right now, those companies are best served by logistics partners that bring a high level of value to the table. Even better, they do this while helping shippers overcome their key pain points and achieve their organizational goals.
Technology Systems that Mirror the Carriers’ Own Systems This allows the provider to estimate cost impact and predictive modeling to the penny. Every time the carriers make a change, that change should also be made in your provider’s system.
A Strong Team of Subject Matter Experts That team should include engineers and analysts that know how to leverage the carriers’ profitability areas to gain better advantages for you (versus what a traditional account rep can manage). Our experts regularly share their insight with the marketplace.
Ongoing Analysis and Strategic “Thinkery” Look for a partner that thinks well beyond the “one and done” approach. Today’s business environment requires a partner that focuses on continued delivery optimization and cost mitigation.
A Proactive Auditing Function Rather than relying on a reactive mindset (e.g., asking for the same refunds over and over again), your provider should be working with an “identify and repair” mindset to eliminate these potential issues and mitigate ongoing costs.
Advanced Analytics and KPI Tracking As e-commerce continues to grow, you need a partner that is constantly innovating and adding functionalities like margin management, SKU-level profitability, KPI tracking, order performance management and high levels of supply chain visibility.
Possessing these key qualities, we bring our client partners ongoing value as they race to meet demands for delivery speed, service and choice. Supporting your efforts to enhance customer experience, we also implement strategies to control costs so that you can maintain awareness of how each and every product and customer is performing.
Our Parcel Experts created “You Shipped It, but … Did it Make Money?” to identify some of the emerging challenges that jeopardize your profit. It highlights our approach in the marketplace and gives you a glimpse into the level of analysis that we bring our customers.
If you are a growing company and are not already asking that question, you will soon – especially considering all the changes we’ve experienced in our economy recently.
When weighing pros and cons of this important operational decision, start with a look in the mirror. Who are you as an organization?
You examine closely potential partners for any outsourcing relationship. You should pursue the same due diligence within your own organization. Knowing where your business stands in key areas can help you decide if the time is right to insource or outsource.
Here are four things you need to know about your organization – and any of your partners – to drive your insource/outsource decision.
Do We Have the Supply Chain Talent?People are the driver behind success. This is incredibly important in today’s supply chain environment. There’s so much change happening in the marketplace you have to stay on the cutting edge.
How do you stay on the cutting edge? Experienced people with tons of drive, in terms of learning and bringing innovative ideas to your organization.
The supply chain talent gap is already big, and it is only going to get bigger. Companies are fighting for the top talent, and it is difficult competing against companies with unlimited budgets – Amazon, Apple, DHL or Transportation Insight.
Are you confident that your company has the ability and the resources to attract and retain top-tier supply chain experts? As a mid-market or small market company, it is not going to be easy to get.
And it’s not just the talent. What is your bench strength? Is your supply chain resource depth going to be able to rise to challenges and power your company’s disruption-filled environment?
The intelligence, and the experience that these people have is critical, but it also comes down to raw numbers. If you are a growing organization, maybe at one point, one person with the experience and intelligence necessary to do the job can effectively handle every step of your supply chain.
Other organizations experiencing their own growth face those same needs for people. That exacerbates the talent gap.
Do We Innovate Processes by Nature?As you continue to scale your business to meet demand, are you confident that you have the processes in place to not only support that, but also innovate within those processes over time? Is that driven through KPIs? Or through the talent that you have?
Many organizations are not set up to consistently advance innovation and measure that evolution. Companies like Amazon have process innovation inherent in their DNA, but not everyone has it at their core.
The first half of 2020 has been a stark reminder: processes that were sufficient yesterday may not position you to compete tomorrow. To respond rapidly during a global economic disruption, a dynamic shift to e-commerce, or even a simple hiccup, it is necessary to evolve.
As you do, collecting and monitoring data around process change determines whether you are heading in the right direction or toward more required adjustments.
Do We Have the In-House Technology?The speed of change in technology is nearly impossible to keep up with unless that is your primary focus. Does your current technology platform support your supply chain management now? Will it continuously evolve with you as your customers’ demands change?
You can build your technology stack, maintain it in-house, and join the race with the Joneses of the Technology World – SalesForce, Microsoft and Amazon. This generates a need for ongoing capital investment.
Unless you are a technology company, this might not be your area of expertise. One of those technology companies will sell you a base solution and customize it at added cost.
Alternately, you can realize cost effective value working with a partner built on technology to suit your specific business needs. Be mindful of the cultural effects a new partnership might create.
Change management is a huge piece of the insource versus outsource conversation, but it can also allow you to redeploy current resources toward supporting your core competency.
Does this Fit Our Culture?Culturally, what does your organization look like? How do you make decisions? Is it a top-down, “You’re going to do what I tell you to do,” or a bottom-up, “Hey, I want ideas, bring the ideas.”
Are you seeking internal innovation or are you more focused on your core competency? Do you build or buy to solve challenges? What will our culture tolerate? What will it support? What does it really need?
You have to be honest with yourself, and your company, and your partners. Having this perspective is imperative to the success of any relationship.
You could be the best company in certain spaces, but outsource certain things that you are not good at, culturally. To do that, you have to understand your organization. Even though Amazon is extremely good at what it does, it also recognizes the areas where it is not good. That drives focused Amazon investment into supply chain improvement opportunities.
Understanding your culture will also help determine how you work with your partners, and whether your organization is in a position to realize success from an outside relationship.
Master the Logistics Dilemma: Insource vs Outsource
People, process innovation, technology and culture. Before deciding whether to insource or outsource supply chain management, develop a clear understanding of these four aspects of your own organization. Keep them in mind when considering potential partners.
For more insight that can help you determine whether your company is better suited to insource or outsource logistics activities, watch our webinar in Transportation Insight’s Supply Chain Masters Digital Event Series.
Logistics is the lifeblood of any organization. It connects suppliers, manufacturers, intermediaries, carriers and end customers with actionable data based on historical transaction patterns. Yet too often corporate leaders view logistics as a cost center instead of a competitive advantage. We find the best way to overcome that perception is to connect the dots between our deep skill set and the positive financial outcomes we can deliver for our clients.
When Transportation Insight talks about logistics as a competitive advantage, we refer to the speed to serve as much as the cost to serve. Time is money. Companies implementing strong logistics strategies typically turn their inventory faster. They need to rely less on safety stock throughout every level of the supply chain, which is itself a cash burn. They keep goods in motion so they reach consumption points faster, and turn capital quicker.
Reduce Cash-to-Cash Cycle, Free Up Operating Capital
For definition, cash-to-cash cycle time examines the number of days of working capital an organization has tied up in managing its supply chain. The faster the cash-to-cash cycle, the fewer days an organization’s cash is unavailable for other investment. According to American Productivity and Quality Center (APQC) research, the top performers have 60-day cycle times. The bottom performers clock in at about 120 days+.
Reducing cash-to-cash cycle time involves eliminating factors (such as inventory) that tie up operating capital. Effective organizations optimize inventory to free up capital while maintaining enough stock to satisfy customer orders. This can be accomplished through a well-designed demand forecasting, comprehensive company-wide inventory optimization strategy, supported by logistics that aligns roles and responsibilities in the supply chain, and identifies processes that can be streamlined.
Streamlining order-to-cash processes can also reduce cash-to-cash cycle time because faster invoice processing and receipt of customer payment decreases the amount of time that an organization’s capital is unavailable.
Make no mistake, there are some logistics people who love inventory because it covers some of the “stumps in the water,” as we like to say. But safety stock exists because businesses struggle to match their inventory needs with final demand. Safety stock is also an impediment to optimal cash flows.
But in a lean world, there is no such thing as “safety stock.” Everything turns in its own time, and on its own velocity. Thus, it is critical to identify and root out supply chain inefficiencies at the front end. Are you optimizing inbound shipping lanes, whether domestic or international? Does your inventory strategy balance your costs with meeting customer delivery expectations? Do you have the technology and expertise to effectively manage your product velocity and shrink the cash cycle?
Companies have multiple customer channels. You may have a traditional B2B channel, an e-commerce channel, or a hybrid. Each channel may have its own dedicated inventory. They also have their own cash-to-cash cycles. They are certainly going to have their own logistical challenges. A capable logistics partner like Transportation Insight can support the unique needs of each channel to achieve the most financially desirable outcomes.
Mastering Logistics to Meet Consumer Demand
There are companies that have succeeded in re-inventing the wheel. Then there are others that prospered by improving on legacy processes. Walmart wasn’t better than any other retailer. It offered the same brand of toothpaste and laundry detergent as others did. Sam Walton’s genius lied in focusing on logistics to get goods to the shelves, and in customer’s hands, faster and cheaper than anyone else.
By putting the right product, in the right place and price, when and where the consumer wanted, Walmart accelerated cash returns for manufacturers and for itself. It also turned out to be a lethal combination-for other retailers.
Mastering the competing dynamics of transportation and inventory requirements can be a complex undertaking. You need to weigh the importance of improved working capital with ensuring that goods are always available when and where your customers need them. This is our forte.
Each day, we bring our data platforms, deep understanding of carrier networks, rate negotiating and auditing expertise, and decades of accumulated industry experience to bear to solve these problems. We are quite candid with customer feedback, and what we hear most from our clients is that we take challenges like these off their hands, provide them with rich analysis, and enable effective decision-making.
February 14 marks the most romantic day on the calendar: Valentine’s Day. It’s certainly not a cheap endeavor: The National Retail Federation estimates Americans will spend a record $27.4 billion on their showcases of love this year, with an average spend of $196.31 per person.
While it’s not unusual to be loved by anyone, making sure every rose, heart-shaped chocolate box and sentimental card takes an unusual amount of effort. Valentine’s Day is the second busiest time of the year for shippers, behind only the Christmas season. And just like for Christmas holiday shipping, the logistics of Valentine’s Day highlights how the right supply chain network is needed to delight every end customer – no matter what product you’re providing.
We love and care for supply chains. That’s why I wanted to share some thoughts on the logistics of Valentine’s Day – so you can understand how suppliers and shipping companies ensure everything arrives on time – before the last candlelight dinner ends.
Flowers, Chocolates, and Cards: Managing Valentine’s Day From Multiple Fronts
With the shortest shelf life of all traditional Valentine’s Day gifts, fresh-cut flowers depend on the cold chain for success. Over 80% of flowers are imported, with most coming from Colombia.
The International Trade Centre estimates over 500 million tons of flowers are sent for Valentine’s Day. After the flowers are harvested, the blooming buds are cooled to 35 degrees and loaded onto both commercial and freight aircraft for transport to the United States.
At each point of entry, U.S. Customs and Border Protection officers thoroughly inspect every shipment for pests, disease and contraband. Once they clear Customs, it’s back to near-freezing temperatures for the flowers as they go to the warehouse, then the distribution center, before finally arriving at the florist.
But what if there is a problem clearing Customs? Or a network disruption impacts a climate-controlled facility? Without the proper logistics processes – and contingency plans – one problem can quickly spoil the Valentine’s Day bouquet.
Many of these bouquets are accompanied by exquisite German chocolates. According to the UN Comtrade Database, 5.6% of all the chocolate imported into the United States comes from Germany. Getting the sweet treats to the United States poses an equally daunting task.
While the chocolates can take an intermodal route into America, they have to be transported very carefully. After packaging, each load must be protected from moisture, humidity and temperature changes. The German Transport Information Service recommends all chocolates be transported in refrigerated containers to maintain the cold chain from start to finish. Doing that requires a lot of visibility to the product and its transit across the supply chain.
And what would these gifts be without the written words of love to accompany them? Hallmark estimates over 145 million Valentine’s Day cards are exchanged across the United States. The mid-February tradition is the second largest holiday for greeting cards, trailing only behind the Christmas season.
As with anything you send through post or parcel service, planning ahead is vital for mailing chocolate and gifts Based on the 2019 USPS holiday season estimates, sending gifts to APO, FPO and DPO addresses can take up to six weeks to arrive!If your loved ones are in America, you can still get away with Priority Shipping within the continental United States four days in advance. For those extreme procrastinators, a parcel carrier like UPS can guarantee delivery even if you are shipping on Feb. 13 – but it will cost you hundreds of dollars.
Understanding the characteristics of your shipment – size, weight, destination and delivery timing – can help you avoid some of those costs, while still warming a heart at the end of the love line.
Tying The Logistics Knot
In every stop, each of these gifts face unique challenges in their supply chains. Matching them all together requires an intricate dance that depends on every stage of the transportation process going nearly perfect. One mis-step in the supply chain, like exposing chocolates to moisture or keeping flowers outside a cold environment, results in a product that is unsellable.
Without proper planning and coordination of all the moving parts, your items could either arrive too early, or too late. Valentine’s Day gifts aren’t as effective on Feb. 13, and they’re completely useless on Feb. 15.
The good news is that many of these situations can be mitigated using modern technology. While all the pieces are dependent upon each other to make Valentine’s Day pass without a hitch, technology plays a critical role in avoiding broken hearts.
To maintain quality, companies use robust logistics monitoring, modelling and execution tools. This supports planning for the most effective port of entry, warehouse and distribution center locations, and network reach. Often an enterprise logistics company helps analyze all these factors to determine the best route forward. Supply chain data combined with analysis supports real-time decisions if there is disruption in the chain.
Enterprise logistics providers also offer insightful observations when there are unique breaks in the supply chain. It is important to be able to trace and track every transportation activity in the best scenarios, just in case a contingency – or official record – is needed for the worst.
In those cases, the solution for wilted flowers is not the same as the solution for ruined chocolate. Sometimes it helps to have a partner that has experienced challenges in other just-in-time supply chains. They can bring an objective viewpoint to tie everything together and determine solutions if one piece breaks in the overall supply chains.
We’ve created a map of your Valentine’s Day rose bouquet from the time it arrives in the U.S. to its last mile delivery to your door.