UPS Announces Last Day to Ship

A later-than-usual Thanksgiving on Nov. 26 condenses the shipping season by almost a week. Meanwhile, continuing effects of COVID-19 drive more buyers online to fill holiday wish lists – and many of them will avoid the personal contact of store shopping altogether.

Combined, these factors predict a capacity crunch for the small package networks. Already experiencing service delays and disruptions, these networks will not see relief until after the New Year, even as parcel carriers bring on thousands of new workers.

Be mindful of the “last shipping days” announced by UPS and FedEx, but that may not be enough to avoid a disappointed holiday customer in 2021. That’s why the world’s largest retailers are turning the holiday shopping clock from Black Friday toward a “Black October.”

Navigating this year’s peak season during the middle of a pandemic will require companies to be more creative and flexible. Forward-thinking shippers should be prepared to adjust. 

Retailers Drive Christmas Creep, Protect Experience

Amazon’s Prime Days on Oct. 13-14 delivered $3.5 billion in sales to small- and mid-sized businesses, with a 60 percent uptick in sales over last year. The move expedites holiday shopping – and product shipping. It also adheres to latest guidance from UPS: “encourage your customers to shop earlier than ever with special offers or other incentives.” FedEx echoes the same advice for shippers preparing for the 2021 holiday season.

Promotions like Walmart’s “Big Save Days” and Target’s “Deal Days” are all designed to pull parcel volume forward and avoid a costly catastrophe caused by a lack of capacity in December. 

If your organization is focused on protecting customer experience this holiday season, keep these five things in mind: 

  1. It is more important than ever to make sure that you proactively and clearly communicate the potential for delays. Every year the national carriers suspend their on-time guarantees during the holiday period. Earlier this year they suspended the guarantees due to COVID-19 complications and disruptions.
  2. Retailers can ship-to-stores for curbside pickup.
  3. Retailers can also ship-from-stores to shorten the distance that the package travels in the carrier’s networks and thereby reduce the potential for delay.
  4. Shipments can be made to alternative delivery locations such as certain retail partners, your customer’s office, or to one of the many parcel lockers.


5. Finally, if you operate multiple DCs across the US, it will be important to have the right inventory at the right locations to speed delivery and avoid split orders.

In a time where lockdowns have driven e-commerce shipments to levels never seen before, companies will need to deploy an all-of-the-above strategy to navigate it appropriately.

Know the Last Days to Ship

Now more than ever, it is important to make every possible effort to avoid deadline shipments. If you anticipate a last-minute holiday rush, make sure your UPS shipments go out on or before these dates to give your parcel the best possible chance to arrive by Dec. 24:

  • UPS Ground: As early as Tuesday, December 15* 
  • UPS 3 Day Select®: Monday, December 21 
  • UPS 2nd Day Air®: Tuesday, December  22 
  • UPS Next Day Air®: Wednesday, December 23

*Note UPS advises that most UPS Ground shipments have a later “last recommended shipping dates.” Shippers can track their transit time and cost here

FedEx released its holiday schedule ahead of UPS, and both schedules align closely. We detailed 7 tips for holiday delivery success shortly after the FedEx announcement. 

Regardless of the service provider you trust with your shipments, through full transparency and good information, you can effectively manage customer expectations while also syncing with the carriers that will deliver the goods to their doorsteps.  

You Shipped it – Did it Make Money?

Protecting customer experience this holiday season will require timely shipments and thorough communications throughout the sales cycle. 

Protecting your organization’s profit while responding to these customer expectations requires additional awareness and proactive measures.

  • Be aware of the Peak Season Surcharges and more importantly the differences for UPS, FedEx, Regional carriers and now the USPS.
  • Perform a detailed analysis to estimate the surcharges financial impact and to mitigate any negative effects on profitability.
  • Identify specific SKUs that will be negatively impacted and make decisions regarding those items to protect profit margins.  
  • Raise the cost of the item.
  • Increase the free shipping threshold.
  • Pass some or all of the additional cost to the customer.
  • Ensure carriers agreements are best in class and that invoices are audited for compliance to them.
  • Make sure you have the right box sizes so that the packaging is only la
    rge enough to adequately protect items during transit.
  • Work to eliminate operational errors that create avoidable costs such as incorrect addresses, unnecessary declared value and unauthorized packages.

To help shippers protect profit on every customer and every order, we created “You Shipped it … But Did You Make any Money.” Open it today for more guidance on making sure your peak season ends in the black.

Last Days to Ship? 7 Tips to Meet Holiday Deadlines

According to MarketWatch, Deloitte is forecasting a 1% to 1.5% year-over-year sales increase for the upcoming holiday season, during which time total retail sales will be about $1.15 billion (between November 2020 and January 2021). Meeting holiday shipping deadlines will be more important than ever.

“E-commerce sales, which have been strong throughout the coronavirus pandemic, are expected to climb 25% to 35%, reaching $182 billion and $196 billion,” Deloitte predicts. “Regardless of the scenario, however, consumers’ focus on health, financial concerns, and safety will result in a shift in the way they spend their holiday budget.”  

Here are seven tips for making sure your holiday packages get to their destinations on time.

7 Tips for Holiday Delivery Success 

The new realities of the current shipping environment have created ongoing service delays and disruptions, both of which have compounded into an overall capacity crunch for small parcel carriers. Working through this issue will require forward-thinking companies to adjust accordingly.

For example, shippers will need to be more creative and flexible to cope with the combination of COVID and the normal peak season. FedEx, UPS, and other carriers are hiring a lot more workers for the season, but we still expect to see some capacity issues. With the uncertainty, it will be more important than ever to inform customers when to expect shipments and be extremely transparent. 

Here are seven tips that will help you get your packages to their destinations on time: 

  1. Know the cutoff dates. FedEx’s last days to ship calendar is online here and UPS publishes its holiday deadlines here. The USPS plans to release its cutoff dates for holiday shipping sometime in October. Be sure to factor in these last days to ship dates when planning your holiday shipments. 
  2. Talk to your carriers. Proactively communicate with carriers regarding any expected increase in volume and any additional equipment requirements (e.g., feeders or bulk-type pickups). This will help your carriers plan ahead and provide some assurance that there will be capacity to accommodate your volume spikes (or, allow you to make alternative arrangements). 
  3. Next, talk to your customers. Companies should proactively communicate anticipated delays and properly set customer’s expectations on their websites and in any email communications. This could be as simple as featuring the holiday cutoff shipment dates prominently on the first page of your website. 
  4. Know the limits. Shippers should clearly understand any potential volume limits or caps that may be put in place by the carriers. Because these constraints can impact your ability to deliver on time, be sure to discuss them with your carrier. 
  5. Explore your options. Shippers should also understand their carrier options and negotiate favorable agreement terms to properly leverage all national, regional, and postal carriers. Having a “Plan B” in place is always a good idea during the busiest times of the year. 

  1. Start your product promos early. Don’t wait until the last minute to kick off your holiday promotions. Starting early will help you pull volume forward to avoid peak shipping periods and allow time for expected delays. 
  2. Factor in holiday business schedules. For example, USPS is closed for all of the major federal holidays. With delivery times varying between its services, knowing the cutoff dates and hours of operation are both important. 

Maintaining Transparency  

Reflecting on how parcel carriers performed for the 2019-20 holiday shipping season, UPS’ SurePost and FedEx’s SmartPost both assured 100% delivery for holiday orders that were shipped on or before December 14 or 9 (respectively). However, we also saw that as the cutoff date approached, those commitments slipped. This is something to keep in mind as you lay out your plans for the 2020-21 season. 

Using the tips outlined in this article, you can strike a nice balance between growing your company’s holiday sales while also letting customers know that there is a risk of passing the carrier’s “suggested date” for accepting pickup for a Christmas delivery. Through full transparency and good information, you can effectively manage customer expectations while also syncing with the carriers that will deliver the goods to their doorsteps.  

Peak Season Performance Requires Visibility

To make sure holiday shippers are aware of the latest trends affecting their transportation cost management, we convened a roundtable of our parcel experts. Watch or listen to our webinar “Peak Season: Are You Ready?” to hear Todd Benge, Robyn Meyer, Toni Caputo, Bernie Reeb and myself address the unprecedented challenges emerging his year.

This digital event shares strategies to help you protect profit and enhance customer experience. Watch it today to make sure you are getting charged correctly and manage the capacity risks that threaten to derail your performance.

Lean Supply Chain Perspective Required for New Normal

Meanwhile, the pressure is on lean-focused supply chain experts expected to examine internal processes and accommodate supply chain shortfalls. Their perspective is integral not just to the continuous improvement of in-house activities, but, importantly, to the network adjustments that come with the re-shoring of supply production.

Unfortunately, just as COVID-19 disrupted manufacturing networks, it also created new challenges for keeping lean supply chain teams engaged. Workforce reductions and remote operating environments create hurdles for maintaining the close awareness required to identify wasteful activity and efficiency improvement opportunities.

As manufacturers focus on a new normal, a lean perspective supports supply chain corrections, and the timeline for turnaround does not need to be limited by social distancing and remote environments. An expert partner can help you identify and execute the most effective supply network strategy, so you can keep focus on advancing your business.

New Manufacturing Normal Begins to Emerge

Midway through a year of disruption, we are hearing common refrains among manufacturers across diverse industries. It seems that, regardless of the supply chain network, the comments are very similar:

  • Manufacturing is moving toward reshoring to reduce supply chain disruption and distance.
  • Constant supply chain focus is needed to eliminate current and future supply chain disruptions.
  • Supply chain failure is the No. 1 reason a company is having issues in start-up or restart activities.
  • Adjusting product mix and production set-up is a struggle.
  • Lean training and learning is difficult outside the facility “Gemba”

Focused on cost, some companies furloughed or laid off their lean teams. This leads to significant impact across the organization, often requiring executive attention to resolve emerging network problems. Losing the process visibility provided by these experts can lead to costly misalignment across your existing network and in any future supply chain adjustments.

Problem Solving for Inventory Management, Network Changes 

Looking deeper at these trends, some of the specific emerging problems can be resolved through the total supply network awareness your lean expert maintains. 

Inventory management drives the biggest questions manufacturers encounter as they reset to serve a new normal. Common inventory problems in our assessments of  manufacturers include:

  • Too much of it, not balanced or not accurate.
  • Too much of the wrong inventory for the manufacturing product family mix.
  • Not enough of the correct inventory to manufacture replacement parts and service clients.
  • Never adjusted parts inventories for major equipment repairs.
  • Single sourcing from Asia, Europe, etc.

Losing the visibility of your supply chain expert can quickly impact your transportation cost, especially in a volatile environment following a significant disruption.

Organizations that scaled back their lean team during COVID-19 experienced common outcomes:

  • Quickly lost awareness to inbound ocean transportation and ensuing TL freight moves
  • Unprepared for spike in air freight costs for productions and parts inventory
  • Increased costs such as detention fees resulting from misaligned lead times and production planning
  • Reduced capacity for problem solving 

In the “old” normal environment, while your lean resources maintained process awareness required to exert continuous improvement, ongoing training also offered perspective for global practices that are applicable within your organization. Losing access to those resources – usually provided on-site – impedes your ability to evolve your processes.

Leverage a Master Partner to Evolve Processes

There is no doubt that a loss of process monitoring inside the operational environment leads to reduced visibility. Lean operators need to be in the Gemba to be most effective.

In a quarantine or remote environment, it is not always possible to have that consistent on-site presence – but, you don’t always need it. Some organizations have achieved success with lean supply chain teams of two that maintain social distance and COVID-19 protocols. While this has slowed Kaizen work, there has been success, it just takes longer than planned. As a positive outcome, lean leaders have executed administrative items for each Kaizen, a process that can be carried forward.

A problem solver’s mentality supports these types of in-the-trenches adjustments, and they are vital not only to your disruption response, but to the ongoing evolution of your supply chain. We offer our clients access to that mentality on an ongoing basis, using supply chain data analysis to provide awareness of emerging improvement opportunities.

At the same time, we offer organizations the ability to develop their own internal lean expertise. While protocols of a contact-conscious environment can limit on-site activity, the power of modern technology not only supports classroom-like digital learning, it also grants virtual visibility on par with physical presence.

For more information about invigorating your organization’s supply chain capabilities to support reshoring or other new practices for a new normal, schedule your lean supply chain consultation today. Whether you want to bolster the expertise of your internal resources or plan and design a supply chain network suitable for serving your customers tomorrow, we apply our mastery to help you establish efficient processes that control cost and improve service.

Indirect: Expert Insight Helps Manage Fluctuating Supply Costs

With economic volatility expected to continue through the remainder of 2020, understanding how these added costs affect your indirect spend management can support your efforts to control line item expenses that don’t often receive close scrutiny until budget season.

Although corrugated linerboard prices are holding steady, anticipated cost increases in polyethylene products create new profitability challenges. In this environment, a partner with group purchasing power and expert industry insight delivers quantifiable value through strong contract pricing and keen awareness of the alternative solutions that improve cost management compared to traditional buying habits.

Here’s a look at some of the manufacturing trends that are affecting the availability and cost of supplies you require to operate your business efficiently and effectively.

Manufacturing Activity Grew in June

Economic activity in the manufacturing sector grew in June, according to the Institute of Supply Management. The Purchasing Managers Index (PMI) increased 9.5 percent to 52.6, reflecting an expansion in the overall economy for the second straight month after April contraction ended 133 straight months of growth.

The New Orders Index jumped significantly to 56.4, up 26.4 percent from May. The Production Index registered 57.3 in June, an increase of 24.1 percent from May. 

Of the 18 industries that participated in the ISM monthly survey, 13 reported growth. 

With that growth has come increases in the ISM Price Index which rose to 51.3 in June, an increase of 10 percent over prior month.

  • Caustic soda, copper, crude oil, personal protection equipment supplies and steel all reported increases in price.
  • Methanol, packaging materials and plastic products all reported price declines.
  • Of 18 industries surveyed, three reported higher prices, 12 reported no price change, and only three reported lower prices.

Looking more broadly at the economic impacts of COVID-19 in the first half of 2020, the U.S. Real Gross Domestic Product decreased at an annual rate of 5 percent for the first quarter. That decrease reflects negative contributions from:

  • Personal consumption expenditures
  • Private inventory investment
  • Non-residential fixed investment
  • Exports

Those negative GDP contributions were partially offset by contributions from:

  • Residential fixed investment
  • Government spending
  • Imports

Meanwhile, U.S. unemployment dropped to 11.1 percent in June, reflecting an improvement of 3.2 million people removed from the jobless count. For manufacturing, ISM’s Employment Index registered 42.1, an improvement of 10 percent compared to May.

Linerboard Pricing Steady, Other Packaging Costs Volatile

Containerboard production continues to increase, supporting steady pricing throughout the first half of the year. In May, that increase was just 1 percent, month over month, but the uptick in production reflects a 6 percent increase year over year. 

Corrugated pricing for June is at $715 per ton. Industry analysts predict any anticipated cost reductions will fall short as demand has remained stronger than expected. Additional capacity of containerboard grades has been delayed. This means a previously projected decrease of $30 per ton is not expected to be realized in the market. 

Meanwhile, Old Corrugated Containers (OCC) pricing jumped dramatically during the global pandemic, up 196 percent in April compared to January 2020 levels.

Sales for both Linear Low Density Polyethylene (LLDPE) and Low Density Polyethylene (LDPE) are up through April compared to prior year. Domestic sales for LLDPE are up 2.3 percent, while LDPE sales are up 6.7 percent.

In response, producers have cut production to control inventory levels, as indicated by LDPE operating rates at 89.3 percent in April and LLDPE operating rates at 92 percent.

LLDPE large buyer contract prices bounced around during the first half of 2020, but have settled approximately 5 percent below the levels we saw at the end of 2019. Expect those contract prices to average 55 cents per pound in the third quarter of 2020.

At the same time, expect an increase of about 4 cents per pound for all grades of polyethylene resins. These increases are driven largely by efforts to control inventory levels, improvements in domestic demand and higher oil prices.

All major manufacturers have already sent increase notifications. Among these, stretch film producers announced a 6 percent increase in costs.

Control Indirect Supply Costs with an Expert Partner

Indirect supply management is a tool available to your team to find the essential items you need at reasonable prices. By working with a partner in this space, your company can consolidate its overall supply space and form strategic partnerships on items you regularly need.

Our partnerships are unique because we can put all your indirect supply needs together in a group purchasing model, which allows us to drive savings for you.

No matter how you are sourcing your products today, it can be improved through consolidation and smart partnerships. As you set your plans for the rest of 2020 and into 2021, now is the time to look at your accounts payable data and get a spend analysis to map out how you can get even greater efficiency around your indirect materials operation.

Transportation Insight is your partner in driving success now and into the future. Let’s start a conversation today about how we can drive savings for your company together.

Plan, Adjust, Communicate with Data Visibility

Shippers with good visibility into all aspects of their supply chain – including suppliers for multiple tiers – can build resilience and agility to lessen the impact of disruptions like global pandemic, natural disaster or political upheaval.

Data visibility, however, is just one piece of the puzzle. Your ability to act on that visibility is the key.

Drive Network Improvement with Data Visibility

Supply chain leaders around the globe are basing immediate action on real-time supply chain information – often captured through emerging supply chain technologies.

According to a recent Oxford Economics survey of 1,000 supply chain leaders, 49 percent – the top 12 percent of respondents – can capture real-time data insights and act on them immediately. Of those surveyed, 51 percent use Artificial Intelligence and predictive analytics to capture information. Although more than 75 percent of respondents recognize the importance of visibility into sustainability practices of their organization and suppliers, few have visibility into either.

While those leaders may realize new efficiencies in tactical execution, truly developing a strategic plan for procuring services and serving customers, requires more than a customized transportation management system.

Visibility End in Mind: Plan, Adjust, Communicate

You can know where to find the load, the inventory or the vendor, but you need technology, tools and talent to execute three steps integral to monetizing that information into cost savings or enterprise growth:

  1. Supply chain visibility is vital to initial network design, as well as contingency planning that may be required during an era of disruption.
  2. Supported by a contingency plan or evidence-based analysis, visibility empowers tactical operators and executive leadership to adjust their strategy to mitigate risk or seize an opportunity.
  3. Close the loop by communicating those adjustments to customers and supply chain partners, and enhance experiences while controlling costs across your supply chain.

Ultimately, visibility into your end-to-end supply chain helps you understand how to pull different levers across your network and increase the return on investment of the whole supply chain.

Real-Time Data vs. Real-Time Access

There’s a big difference in real-time data and real-time access, the latter can be far more valuable because allowing data to solidify can increase accuracy. The most important real-time data is track and trace. Although from the standpoint of being actionable, there is likely limited actions that can be taken to impact it other than communication.

There’s a balancing act between the information you have and the amount of lag time required for the information to be validated and integrated across the reporting. The length of time the data needs to “soak” depends how you intend to use it. You want to be able to correct performance before it gets out of hand, but at the same time you don’t want to make decisions based on incomplete data.

For instance, bidding on an LTL shipment in the TMS, you don’t want your financial reporting to reflect cost until the carrier has invoiced with any additional accessorials applied. Real-time access to your latest data gives you the power to identify trends so you can validate or eliminate services for improved cost control.

Mastering Data Visibility

Deep, multi-layered visibility is a fundamental ingredient in elevating your supply chain to its optimal performance. Solutions for achieving that visibility are widely available, but none deliver greater supply chain mastery than Transportation Insight.

We build personalized solutions that give you visibility to rate savings, optimization opportunities and behavioral changes across the organization that reduce cost and can fund your initial start-up in the process. Executing in those areas, our team leverages transportation technology tools to improve the flow of data to drive ongoing process improvement that generates waste reduction, improves equipment utilization and protects profit margins.

Master visibility across your supply chain with our free resource “Mastering Your Supply Chain: Layers of Visibility.”  Download it today to access the information you need to improve service and achieve monetary savings.

Engineering and Analyzing the Supply Web

As an example, sourcing from multiple producers across your web can add inbound shipping costs on all modes: ocean freight, multi-modal inbound delivery and outbound shipping. If your company decides to offer direct fulfillment as a service, can you identify how much additional shipping and handling costs affect your bottom line?

Moving to a supply web model is not an overnight experience. Rather, it is a process that involves understanding how all the pieces work together, how they can drive improved revenue and how to best share information and work hand-in-hand with your partners.

Becoming the Conductor of the Supply Web

When you consider managing the supply web, think of the work an orchestra conductor must do before a symphony performance. At the center, the conductor leads multiple parts that must work together to create art. Although each individual section can create beautiful music on its own, one slip from the brass, strings or percussion and the sound of the entire symphony is broken. Only by building up each part’s strengths as a collective whole can the conductor get everything performing in harmony.

In the context of the supply web, logistics leaders are the conductors, bringing multiple pieces together to create symbiosis across each part. This requires analysis on multiple metrics, including profitability by SKU category, customer types and service levels.

Without a knowledge of how granular cost components affect the supply web, you can’t achieve cost savings in both order and promotion management. Good shippers put multiple pieces together to get their supply webs operating in line, including linking order data with carrier billing data, and tracking SKU-level and order-dimensional profitability. Understanding each metric can help your supply web perform on cost targets and with more efficiency – exactly like a well-tuned orchestra ready to perform.

Engineering for Data-Forward Supply Webs

The transformation from a single-source, lowest-cost supply chain into a supply web presents the prime opportunity to start gathering previously inaccessible data from your supply network. By building in the capability to accurately determine production, storage and shipping costs at granular levels that support cause and effect analysis, your company is prepared to identify cost factors that ultimately affect performance.

This is a two-step procedure, requiring deep insights on both shipment sizes, as well as carrier analysis.

Regular investigation of network costs can help you recognize where increases are occurring, and why they are cutting into SKU-category profit. Gaining visibility and taking a deep look into each cost category gives you a deep understanding of where your costs are, and how to control them.

Furthermore, understanding costs today can help you navigate around operational peaks and valleys. With regular research into your procurement and shipping habits, you can maintain costs and drive additional value.

Bringing the Supply Web Together

Simply put: operating in a supply web model gives you visibility into your operations like never before. Operational redundancies, a deeper understanding of SKU-level profitability, the ability to adapt with changes in consumer behavior and demand, and ultimately managing costs through continued improvement gives you the opportunity to compete at a higher level. When they all operate in harmony, the supply web offers a prime opportunity to drive your business forward and use logistics as an overall competitive advantage.

Transportation Insight can help you evolve from the supply chain into the supply web, using our logistics mapping skill sets and LEAN methodology. Contact us today to start your transformation.

Examine Indirect Spend to Drive COVID-19 Cost Savings

The spread of the COVID-19 virus disrupts transportation networks, products paths and consumer demands that drive your performance. The problems that threaten business viability merit priority response.

In the current Coronavirus climate, the supplies for your everyday functions also need attention. An expert partner who can take over management of complex indirect spend areas can provide critical cost savings, which you can rapidly deploy in other areas of your business.

A reliable sourcing resource can also leverage long-term relationships and collective buying power to help make sure you have the Maintenance, Repair and Operation (MRO) items, office products, and packaging materials required to support your operations.

Here’s some of the latest marketplace activities that could affect costs in your indirect spend categories and challenge your ability to secure vital supplies.

MRO Items for Health, Safety in Short Supply

Most organizations that support MRO procurement are operating distribution centers and warehouses as usual, with added attention to necessary safety precautions at these work sites. Products are still moving out facility doors. However, distributors are placing priority on serving needs for specific “essential” industries, such as healthcare providers and first responders.

That’s a good business decision for these supplier partners, particularly as they face short supplies for personal protection equipment. Protective gloves, masks, coverall suits and similar products are all in back-order status.

Although healthcare facilities get priority service for these items, if you have needs, go ahead and place orders with your supply partners to make sure you are in the queue when supplies become available.

To expedite MRO service, many suppliers are shipping products directly to production facilities. This can expedite the process of getting needed products to end users. Make sure to explore direct shipping options from your supplier partners.

Social Distancing Affects Vendor Managed MRO Inventory Process

One of the biggest impacts of the novel Coronavirus in the MRO space is in the area of vendor managed inventory. State and federal directives are limiting contact restrict suppliers’ ability to complete on-site visits to monitor MRO supply needs.

Vendors provide an important resource in making sure you manage an optimal supply of MRO items. Too much product can consume valuable operational and storage space. Too few resources can threaten a shutdown at critical times.

To make sure their clients are able to continue monitoring their MRO needs, many suppliers are providing hand-held scanners and creating a customer-managed inventory environment. This keeps products moving, but it is important to monitor activity. Supply inventory can quickly get out of balance and create unnecessary costs.

Available Office and Facility Supplies Still Moving

Distribution of office and facility supply products continues as usual, but many of the same products in short supply on grocery store shelves are also limited in commercial and industrial settings. Paper products, disinfectant, hand sanitizer and similar products get priority delivery to healthcare operations, leaving a short supply which puts limits on available resources.

In some geographical regions, the desktop delivery option is discontinued, and the typical next day delivery guarantee is suspended. While there’s no sign of a supply crisis for the majority of these items, it may become harder to get some of the more common office and facility supply items as more states adapt to shelter-in-place environments..

When you are dealing with your supplier partners, a little bit of patience can go a long way. Like many of us, they are working in remote environments. In some cases, companies providing essential workplace supplies employ thousands of people unaccustomed to working outside of the office. As they shift remote, some systems aren’t engineered to handle additional workflow yet.

Rest assured, your supply partner is working to meet your needs. When you seek support, response may be delayed, but having patience with your trusted partner can reap benefits today and tomorrow.

If you encounter supply changes, we can leverage our power as a Group Purchasing Organization to tap additional supply resources. In the world of indirect sourcing, strategic partnerships not only support a network of options, but they also can help realize significant cost savings.

E-Commerce Drives Boom in Cardboard, Packaging

Many manufacturers and distributors of packaging are deemed essential because they are supporting medical supplies, pharmaceuticals, energy generation, and food and beverages. Increasingly, operations not supporting essential end uses are production reduction or shutdown.

Corrugate facilities are running at full capacity to meet a demand spike driven by online ordering. One key area to watch in this aspect of packaging is linerboard prices. Right now, those prices are stable after a slight decrease in January. Linerboard pricing will deserve a close eye over the next few months as old corrugated container (OCC) prices rise and forecast demand increases.

For flexible packaging products like polybags, stretch film, poly sheeting, etc., prices continue to decline due to a decrease in global oil prices. With many e-commerce shipments relying on these materials, it will still be important to monitor not just cost, but ability to access supply.

Rely on Strategic Sourcing, Relationships, Patience to Weather the Storm

When it comes to indirect materials that support operational process, many organizations make purchases on a tactical basis. Now, when uncertainty clouds the market place, a partner that deploys a strategic mindset to indirect spend can be a vital resource.

Transportation Insight has developed strategic partnerships with suppliers. In communicating with our supplier partners more and more, we’re learning that MRO, office supply and packaging providers are supporting the clients that work well with them. When you’ve built relationships over decades, as we have, achieving win-win scenarios for everyone involved becomes second nature.

Let us leverage the partnerships we’ve created to help you get indirect spend reductions, and, more importantly, access reliable supplier partners that you can depend on during times like these.

Right now, many organizations are thinking about short-term survival. As you prepare for business after the COVID-19 pandemic recedes, instead of revisiting old strategies, consider opportunities that deliver better service at improved cost.

Let us show you a more strategic way of addressing your indirect spend management. To understand how much you can start saving today, schedule an indirect spend assessment. We often achieve double-digit savings for our clients, and we may be able to help you drive cost out of your supply chain.

What Do We Do with All These Returns? E-commerce and Reverse Logistics

That’s because consumers return goods bought online more often than they return in-store purchases. The Reverse Logistics Association reports that e-commerce return rates are three to four times higher than brick-and-mortar store rates. The volume you can expect varies according to product category, but plan on an average return rate of 25 to 35 percent.

Navigating reverse logistics requirements is new ground for most manufacturers that don’t experience processing and filling direct-to-consumer orders. It’s important to consider what’s involved and various process options, including outsourcing, before launching an e-commerce operation. 

Efficiency is Important to Both Brands and Shoppers

Returned goods must be inspected, re-packaged if necessary, and returned to inventory as quickly as possible so they can be purchased again. Getting returns back into inventory immediately is particularly important with popular items, merchandise with a short selling season, and during the intense holiday selling season. 

An effective reverse logistics process goes beyond getting sellable merchandise back into inventory quickly. It has an impact on brand loyalty, too. According to the Narvar Consumer Report 2018, customers are more likely to buy from you again if it’s easy to return merchandise. Of the nearly 70 percent of surveyed consumers who described their recent e-commerce return experience as easy or very easy, almost all – 96 percent – said they’d shop with that retailer again because of that ease. 

A successful reverse logistics process, then, needs to work for both the e-tailer and its customers. Consumers want an easy returns process; manufacturers want and need one that’s affordable and effective. 

Reverse Logistics Requirements

To meet these requirements, companies take into account:

  • Physical requirements: The reverse 
    logistics operation needs a  separate space dedicated to receiving, inspecting, and processing returns. 
  • Product inspection: Every returned item needs to be inspected by trained staff to determine next steps. 
  • Inspection outcomes: Inspectors make next-step decisions based on product condition and consumer demand. Options include returning it to inventory immediately, replacing the packaging, repairing or refurbishing, donating, and discarding.  

Manufacturers new to e-commerce often lack the expertise needed to manage these and other aspects of an efficient reverse logistics operation. Outsourcing the function to trusted partners allows brands to master the order fulfillment processes and identify trends and patterns in returns before deciding whether to bring reverse logistics in-house. 

Managing Reverse Logistics Costs

An experienced enterprise logistics provider can also positively impact on reverse logistics expenses. When working with an omni-channel accessories company to refine its online shopping and returns experience, Transportation Insight was able to help the company reduce its overall transportation spending by 21 percent. In addition, Transportation Insight’s solution helped the company marry parcel costs with actual product costs to determine net profit on every product shipped.

Brands continue to look for ways to reduce the number of returns and the associated transportation expenses. One major online apparel retailer is working to reduce the number of returns by doing more before the purchase to help consumers feel confident that they’re ordering the right size.

In situations involving heavy home products such as furniture and appliances, companies are getting creative. To reduce the number of deliveries rejected and returned because of damage, some manufacturers unbox and inspect the merchandise in regional fulfillment centers before home delivery. In other situations, delivery personnel are empowered to negotiate with the customer during delivery to resolve potential problems in a way that reduces the return rate. 

E-commerce businesses need more than a reverse logistics process – they need one that encourages consumers to continue to buy from them, gets goods returned as cost-effectively as possible, and restores merchandise to inventory quickly. 

Ready to learn how manufacturers can create an efficient and effective e-commerce program that includes reverse logistics? Download Transportation Insight’s e-commerce guide, “Start the Cart: A Manufacturer’s Guide to Achieving E-Commerce Fulfillment Excellence.”

Improve E-Commerce Experience Without Sacrificing Profitability

With Amazon commanding 47% of U.S. e-commerce sales and on track to grow its online sales by 20.4% to $282.52 billion, pursuing this formidable opponent makes sense to a lot of companies. Unfortunately, many of them are sacrificing profits in their attempt to compete, with transportation and fulfillment costs consuming a large part of their budgets.

Opportunity or Liability?

In many cases, the risks of racing Amazon have literally turned into liabilities, effectively slowing progress and forcing companies to rethink everything from their online order interfaces, shopping cart conversions, and final-mile/same-day order fulfillment management.

The brick and mortar world has really ramped up its game, but Amazon has conditioned us, as end consumers, that those efforts just are not good enough.

4 Practices to Protect Profitability

The good news is that there are steps that companies can take to improve e-commerce strategies without sacrificing profitability. Here are four that your company can start using today: 

  1. Develop an above-par order fulfillment strategy. Amazon built its order fulfillment strategy around offering choices to its customers. In doing so, it made the online shopping experience all about the customer and his/her decisions. The e-tailer provides high levels of supply chain visibility as shipments move from Point A to Point B, maintains good inventory control, and understands its cost to serve. One good metric to use, when judging the efficiency of your order fulfillment processes, is the “Perfect Order,” or one that is on time, complete, intact, and includes the right shipping paperwork. In an environment where order fulfillment can comprise over 60% of the typical warehouse’s total direct labor, even small gains in this area can lead to profitability improvements
  1. Now, deliver on that strategy (on every order). Not only does shipping have to be free and fast, but if it includes a hovercraft and a promise to get a package to your doorstep within an hour, then all the better. We’re at a point where anything less simply doesn’t meet customer expectations. There’s little (if any) room for error on this step. Retailers that want to convert digital consumers know that competing on price and customer experience just isn’t enough anymore; they have to also be able to compete on speed and choice. Handled improperly, same-day delivery can be a logistical nightmare and major risk for retailers. It’s also a necessary evil for them, and something that they all have to be able to do for at least some of their customers. Making that happen requires locations and/or warehouses positioned close to those buyers; a modification of existing fulfillment procedures; a smart, profitable BOPIS strategy; and ensuring that the right product is in the right place and at precisely the right minute.

  1. Focus on continuous monitoring and improvement. Companies can no longer wait until quarterly review meetings to uncover a problem that happened a month ago. Smart companies use daily scorecards to gather, compare and disseminate meaningful, actionable intelligence (e.g., what products were shipped? How quickly were orders fulfilled? Did we pick all of our orders yesterday? If no, how can we make that up today?). By taking an introspective look at their e-commerce operations and developing metrics based on those results, retailers can adapt faster in a world that demands speed, accuracy and delivery on promises. 
  2. Make the right transportation choices. If your company can’t access data that provides strategy around carrier contract alignment and then facilitates choosing the most economical transportation mode, it’s probably losing money. And, if it’s channeling all of its resources into getting same-day and next-day shipments out the door as quickly as possible − without worrying about whether or not those are the best and most economical decisions − it’s losing even more money. These are huge risks in an era where companies are being forced to go head-to-head with Amazon and Walmart, both of which offer same-day and one-day delivery to 72% and 75% of the total U.S. population, respectively. Retailers should be using technology (i.e., transportation management systems or TMS) to select not only the most economical mode, but also one that meets customers’ delivery expectations. Leveraging transactional audit across all modes, provides companies consolidated, visibility to know the rate they paid, identify service gaps, and improve their ability to make good transportation decisions going forward.

Following these guidelines, companies can effectively improve the e-commerce experience without sacrificing profitability − all while satisfying a lot of happy, repeat customers.

Ready to learn more ways retailers can improve e-commerce performance to satisfy customer demands for service and choice? Download Transportation Insight’s e-commerce guide.

7 Pitfalls Imperil Indirect Spend Management

Indirect Spend analysis requires different processes and technology knowledge from those of direct procurement. There are more stakeholders, segment complexities, and varying levels of expertise at the suppliers. Some items are commodities, and others are specialized for a business unit and rely upon a continually changing and improving set of technologies.

Efforts to improve Indirect Spend management relies on a complete understanding of the wide variability in factors that affect the cost of an item, the cost of procurement and issues that arise for vendor and buyer .

7 Variables Complicating Indirect Spend Management

  1. Low Average Spend: The product volume is generally on the smaller side because of the wide assortment of product and service categories and a large number of suppliers. In this case, the procurement group is unable to coerce better pricing or terms during negotiations with suppliers.
  2. Frequent low-volume purchases: Often, the frequency of purchases of small individual values, makes indirect sourcing difficult and resource-intensive.
  3. Maverick/Uncontrolled/ Non-negotiated Spend: Maverick Spend is the purchase of legitimate goods but using unauthorized buying arrangements or unapproved suppliers. Companies understand the value of robust management of direct spend, but may not recognize the benefits of managing Indirect Spend. The fact is that cost savings for indirect procurement does not originate from a specific bill of materials, as with direct procurement. Often, companies underestimate the Indirect Spend totals and the potential cost savings. Indirect Spend purchases usually are not covered by a contract negotiated in collaboration with a professional procurement group. Items purchased outside of an agreement could be a one-time purchase of office supplies, or travel expenditures, or expenditure on critical ad-hoc technical troubleshooting services. These costs add up over hundreds of items, categories, suppliers, and transactions.
  4. Driven More by Internal Stakeholders: Indirect procurement professionals may not have any mandate over an internal stakeholder’s budget. Unlike with direct spend, the procurement group has less say concerning Indirect Spend. Internal stakeholders hold on tightly to their approved budget and spending authority. Also, many of the expenditures require in-depth industry knowledge and experience to specify a product or service. These factors and this complexity make it more difficult for the procurement function to control indirect spending. The company’s procurement team must act as an internal advisor, influencing decision-makers about optimizing spend and getting more from suppliers.
  5. Hard to Evaluate: There exists hundreds of categories, adjacent categories, item suppliers and distributors, and each mandates an exceptional understanding to procure cost-effectively and also with an eye on long-term value to the company. Each of the tens of thousands of suppliers invests in a sales team assigned to each buyer. Motivation for those sales teams may not always be in the buyers’ best interest.
  6. Measuring Suppliers: It can be more challenging to measure the quality of indirect goods and services. There might be metrics for individual vendor performance, but there are few industry standards against which to benchmark those metrics. In some cases, delivery of indirect products and services is not in a company’s ERP system, so tracking contract renewal and evaluating vendors can be spotty. 
  7. Requires Diverse Experience: Purchases are as diverse as safety products, marketing software, maintenance items, and electricity supply. This breadth of categories requires a procurement group with expertise and a willingness to learn the full range of products and services.


Indirect Spend Management Requires Broad Capabilities

Organizations working to manage Indirect Spend must maintain a variety of skill sets within the operational areas tasked with overseeing these critical budget areas. 

Facing these diverse needs, companies are often challenged to maintain the level of expertise that a trusted procurement partner can often provide:

  • Professional purchasing experience or training
  • Broad category expertise
  • Project and change management
  • Influencing, engaging and advising budget-owners (stakeholders) across the company
  • Specification, facilitation, negotiation, and supplier management
  • Data analysis, creating business insight from raw data
  • Technological know-how
  • Recognizing supply risk from issues like constraints on industry capacity, regulation, or rapidly rising demand
  • Acknowledging the market’s preference for sustainability and the ability to cost-effectively comply
  • Understanding of current market conditions and market pricing trends

Strategic Sourcing Supports Procurement Decisions

Buyers are not all the same. Many procurement decisions have an economic buyer, the person who makes the money decision, and a needs buyer, the person with a job-to-be-done.

Guidance from a procurement group can help meet the requirements of both of these buyer-types. Proper specification of the product or service delivers what conforms to the need, while aggregating volumes and dutiful negotiations keep prices low.

By employing a Strategic Sourcing mindset, these procurement experts look across all activity to address planning, supplier qualification, item specifications, technology advances, training, support, outsourcing, contract negotiation and periodic contract review. Strategic Sourcing identifies the lowest total cost − not just the lowest purchase price. It embraces the procurement lifecycle, from specification to payment.

Strategic sourcing often creates a close, partner-like relationship with a supplier to meet the needs of all buyers, and in turn, improve service to end customers. For more information on employing a strategic sourcing mindset to control Indirect Spend costs through improved procurement practices, download Transportation Insight free guide, “Uncover Indirect Spend: Control Cost with Strategic Sourcing.”