PARCEL June 2015

PARCEL

MAY-JUNE 2015

www.PARCELindustry.com

IMPROVING YOUR SMALL SHIPMENT PROCESS SOMETIMES MEANS ADDING MORE CARRIERS TO THE MIX. SPECIAL REGIONAL CARRIER SECTION STARTS ON PAGE 15

OMNI-CHANNEL RETAILING CAN HAVE A BIG IMPACT ON SMALL PARCELS. P. 28 CHOOSING THE BEST WMS SOFTWARE MEANS KNOWING WHAT TO LOOK FOR. P. 30 TIPS AND TRICKS TO STREAMLINING YOUR OPERATIONS. P. 34

PARCEL

CONTENTS MAY-JUNE 2015 | volume 22 | issue 4

Features

Departments 06 Editor’s Note

Improving Your Parcel Mix

By Amanda Armendariz

07 Transportation ABCs

Mitigating Increased Rates? Don’t Forget Minimum Billable Weight!

By Brittany Beecroft

08 Ship Right

Is It Time to Reevaluate Your Regional Delivery Strategy?

By Christoph Stehmann

Hawaii

Pue uerrto Rico

UNE 2015 | www.PARCELindustry.com

MAY-JUNE 2015 | www.PARCELindustry.com

17

15 Regional Parcel Carriers’ 2015 Industry Updates

By Rob Martinez

09 Supply Chain Pivot

Frictionless Selling of Products in the After Market

By Rob Shirley

10 Supply Chain Success How Same-Day Delivery Will Reshape Retail

By Baris Tasdelen

12 Spend Perspectives

FedEx Changes the European Parcel Landscape!

By John Haber

28 Omni-channel Retailing

Can Have a Big Impact on Small Parcels

By Jane Bergos

30 Choosing the Right WMS

Software Means Knowing What to Look for

By Ed Romaine

14 Operational Efficiencies The Top 10 Must-Dos for Operational Excellence

By Susan Rider

36 PARCEL Counsel

Revisions to the NMFC that Shippers Need to Know — and Then Avoid

By Brent Wm. Primus, JD

38 Wrap Up

M2C: the New Reality?

By Michael J. Ryan

34 Level Best: Ideas for Streamlining Your Supply Chain

By Kyle Oslos

4

MAY-JUNE 2015 | www.PARCELindustry.com

president

chad griepentrog

publisher

marll thiede

editor

audience development manager marketing creative director advertising

amanda armendariz

[ amanda.c@rbpub.com ]

rachel chapman [ rachel@rbpub.com ]

cierra bauer kelli cooke ken waddell

[ 608.442.5064 ] [ ken.w@rbpub.com ]

PARCEL PARCEL (ISSN 1081-4035) is published 9 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2015 Š by RB Publishing Inc. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, RB Publishing Inc. or its staff becomes the property of RB Publishing, Inc. The articles in this magazine represent the views of the authors and not those of RB Publishing Inc. or PARCEL. RB Publishing Inc. and/or PARCEL expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine.

SUBSCRIPTIONS: Free to qualified recipients: $12 per year to all others in the United States. Subscription rate for Canada or Mexico is $35 for one year and for elsewhere outside of the United States is $55. Backissue rate is $5.

Send subscriptions or change of address to: PARCEL, P.O. Box 259098 Madison WI 53725-9098 Allow six weeks for new subscriptions or address changes.

REPRINTS: For high-quality reprints, please contact our exclusive reprint provider, ReprintPros, 949.702.5390, www.ReprintPros.com.

2901 International Lane Madison WI 53704-3128 p: 608-241-8777 f: 608-241-8666 www.PARCELindustry.com

MAY-JUNE 2015 | www.PARCELindustry.com

5

EDITOR’S NOTE

BY AMANDA ARMENDARIZ

Improving Your Parcel Mix recently arrived home from the 2015 National Postal Forum in Anaheim, CA, and while packages weren’t as big a topic of conversation as they were last year, there were still some developments that may interest shippers.

During new Postmaster General Megan Brennan’s keynote speech on Monday, she discussed a pilot test that the USPS had done in Virginia, in which test households received images on their mobile devices of whatever mail had been delivered to their mailboxes that day. This test reported an astounding response rate of people opening and engaging with their mail within a few hours or arriving home. If this technology is adopted in all regions, this is good news for mailers, as it increases consumer engagement with the mail. If implemented everywhere, this technology will likely be used for packages as well.

Now, of course, shippers don’t have many of the same concerns as mailers; after all, mail is (often) unsolicited, but packages are specifically ordered by the recipient and thus eagerly awaited. But while there is minimal concern about making sure the package is opened, it still would likely increase the customer experience if, instead of going online and checking tracking updates, the USPS simply was able to send a photo directly to one’s mobile device, showing that, indeed, the check — er, package — is in the mail (box).

It’s this type of innovation that will continue to revolutionize the small shipment experience, increasing customer satisfaction and, therefore, the bottom line. Improving shippers’ processes is a big theme of this issue, and there are a variety of ways to achieve improvement. From picking the right WMS software, to streamlining your operations, to providing a seamless ommi-channel experience, this issue is ripe with ideas. And one of the biggest improvements many shippers could implement is adding more carriers to their small shipment mix. It goes without saying that UPS and FedEx are both great at what they do; they’re not called the Big Two for no reason.

But only utilizing the Big Two is often not the smartest strategy; regional carriers can provide a level of service and cost savings that may not be available elsewhere. So be sure to take a look at our special regional carrier section, starting on page 15. Who knows; your next partner in innovation could be showcased on these pages.

As always, thanks for reading PARCEL.

Are you signed up for our e-newsletter?

If not, what are you waiting for?

As of press time, these were some of our most popular articles from recent e-newsletters: • Thoughts on FedEx Acquisition of TNT Express • Managing Your Logistics Services: “Serviceness” Counts!

• Reduce your cost with Density Pricing and Release Valuation To get great articles like these emailed to you on a monthly basis, just scan the QR code above, or go to www.PARCELindustry.com and click on the “Newsletter” tab a the top of the page.

Thursday’s Tip

Have you signed up for our Thursday’s Tip feature yet? If not, you’re missing out on some great information emailed to you every week! Don’t worry, we know you’re busy, so these tips are brief and easy to read — but yet much-needed information for any transportation professional!

All you need to do is sign up for our e-newsletter and you’ll get this information emailed to you the third Thursday of the month (plus an occasional extra one when we have some pressing news!).

CONNECT WITH US FOLLOW @ PARCELmedia Join PARCEL Magazine Group

6

MAY-JUNE 2015 | www.PARCELindustry.com

TRANSPORTATION ABCS

BY BRITTANY BEECROFT

Mitigating Increased Rates? Don’t Forget Minimum Billable Weight! ith so much focus on the recent changes to dimensional weight logic we want to be sure we do not overlook an equally impactful area concerning actual versus billed weights — Minimum Billable Weight (MBW). If you ship with FedEx, and use its packaging, you are subject to the MBW surcharge.

Minimum Billable Weight applies to the following (per the 2015 FedEx Service Guide): } A minimum billable weight of 2 lbs. applies to the FedEx Small Box, FedEx Medium Box, FedEx Large Box, and FedEx Extra Large Box for US, US Export, and US Import-rated shipments } A minimum billable weight of 7 lbs. applies to the FedEx Tube for US shipments } A minimum billable weight of 9 lbs. applies to the FedEx Tube for US Export and US Import-rated shipments

7lbs at now an $83.80 list rate — an increase over 65% at list. And, if we didn’t realize the impact of Minimum Billable Weight, we probably didn’t negotiate discounts at the 7lbs weight break so we’re not optimizing parcel costs as efficiently as we could (and should).

Can we do anything to offset these types of increases? The answer is yes. Billed weight reflects package density. How much your package actually weighs versus how much space it occupies. We pay the greater of the size of the box or the weight of the commodity. Minimum Billable Weight is a negotiable surcharge, similar to Dimensional Weight. We want to get the billed weight closer to actual so we need to

on your list rate, FedEx One Rate could provide some needed rate consistency. One Rate is inclusive of residential, delivery area, and fuel surcharges so you can get a pretty good sense of your immediate cost. The list rate from our previous example became $55.90, not including any negotiated discounts and/or applicable fees, fuel, or minimums. With One Rate, the Small Box, including fuel, residential, and delivery area surcharges, costs $56.25. Your FedEx One Rate volume counts toward your Earned Discount and qualifies for Money Back Guarantee.

What we do not what to do is manipulate package design. Logic may say, “If I waste less space, I will be billed at a lesser weight.”

What you save in packaging you will ultimately spend in replacement costs when your product is lost or damaged due to poor package durability. Likewise, we want to avoid over designing the package — anything more than a two inch buffer between package and product wastes packaging and money, and the product is no more protected with extra padding. Compression is an equal opportunity cost driver.

Minimum Billable Weight applies to the packaging being used, regardless how steadfast we are in the conservation of the packing peanuts. ¾

If you ship with FedEx, and use its packaging, you are subject to the MBW surcharge.

What does all of this mean? Let’s say you ship a 1lb box, Standard Overnight, to Zone 6. The 2015 List Rate for this box is $49.50. Bumping up to 2lbs the rate is now $55.90. That’s over a 12% increase on the list rate per package before you apply any applicable fees.

The tube can be equally expensive.

We’re sending some promotional material Standard Overnight to Zone 6. The actual weight of the tube is 1lb at a $49.50 list rate. Applying MBW the billed weight is

change the variable creating the increase.

Be familiar with your discounts at the minimum billable weights. Too often we target our actual weights when we should be negotiating our billed weights. If your 1lb package automatically bumps to a minimum 7lbs, seven pounds is now your target weight break for any negotiations.

Don’t forget FedEx One Rate. While not for everyone, One Rate pricing is a considerable alternative for anyone with Standard Overnight Base, Retail, or account specific rates. If you are shipping that Standard Overnight package to Zone 6, and seeing a 12% increase

BRITTANY BEECROFT is Director of Parcel Pricing at AFS. She can be reached at bbeecroft@afs.net.

MAY-JUNE 2015 | www.PARCELindustry.com

7

SHIP RIGHT

BY CHRISTOPH STEHMANN

Is It Time to Reevaluate Your Regional Delivery Strategy? ccording to eMarketer, US retail ecommerce sales will total approximately $350 billion in 2015. This represents a big opportunity for US businesses.

Customers want choices when it comes to delivery options. Our research shows that when it comes to free shipping versus fast shipping, the majority of Americans (82%) find free shipping where the product arrives in five to seven days more attractive, while 17% prefer fast shipping where the product arrives in one to two business days for a fee.

On average, Americans who find fast shipping more attractive than free shipping would be willing to pay $8.50 for the package to arrive within two business days. Relatively few (19%) would be willing to pay more than $10 for fast shipping.

Therefore, businesses should continue to adjust their strategies to respond to consumer preferences and offer flexible delivery options.

BUILDING THE RIGHT CARRIER MIX In addition to the major carriers and the USPS, there are hundreds of regional carriers that range from “micro-regionals,” that cover single cities or partial states, to multi-state regionals.

These regional carriers can help automate processes to help your business consistently meet challenging, service level agreements (SLAs). They can also help with cost savings.

In many cases, they can help reduce per-parcel shipping costs by as much as 40%.

In addition, since regional carriers do not need the extensive infrastructure re8

MAY-JUNE 2015 | www.PARCELindustry.com

quired by larger national and international carriers, they can often provide more flexibility with ground-delivery options, including next-day delivery. They can also give your business the ability to introduce and expand incentives such as flat rate shipping and free pickup, and can be more flexible with accommodating special circumstances when they arise.

You may also be able to negotiate better pricing with regional carriers, which can be passed on to customers or used to boost profits.

KEY CONSIDERATIONS FOR ADDING REGIONAL CARRIERS When evaluating whether regional carriers can add value to your shipping operations, consider the following: } Where do you ship and how well do your destinations align with coverage offered by regional carriers? } Are your customers looking for faster delivery, or discounted or free shipping? } Do you know if you’re getting the best available parcel pickup, tracking and delivery service? } How much can you save by using regional carriers?

Also, inquire about whether a regional carrier uses automated parcel sorting solutions.

These sorters are not just for high volume parcel businesses. New solutions can help small and mid-volume shippers of lowweight articles process fewer than 1,000 parcels per hour to more than 30,000 items per hour, and achieve some of the same benefits, including lowering costs and increasing efficiency with package delivery.

These low-weight parcel and flats sorting systems are flexible, operationally efficient and tailored to meet a business’s specific

needs. In addition, they can help your business with Intelligent Mail Package barcode compliance and accurate dimensioning.

If you find that a regional carrier could provide these types of benefits for your business, the next step is to consider if you should diversify to optimize these benefits.

MULTI-CARRIER SHIPPING SOLUTIONS Depending on the volume of packages that you ship, you might also want to consider using multiple regional carriers instead of one carrier to help make sure you can maintain SLAs. After all, one regional carrier might not be able to handle all of your packages.

By carefully automating and managing carrier selection, it’s possible for businesses to drive significant efficiencies, reduce shipping costs and increase customer convenience. One way to accomplish this is by simplifying shipping operations via a single, automated multi-carrier system. These powerful, yet scalable web-based solutions can enable businesses to compare multiple carriers and select the most cost-effective shipment method that meets delivery requirements for every parcel shipment.

They can also help optimize, integrate and automate all shipping processes while providing the highest degree of real-time visibility and control of an operation.

Incorporating regional carriers in addition to national carriers can offer important long-term benefits to your shipping operations, including consistent service levels, flexible delivery options and overall savings, both increasing customer satisfaction and boosting your bottom line. ¾

CHRISTOPH STEHMANN is Chief Operating Officer, Digital Commerce Solutions, Pitney Bowes.

SUPPLY CHAIN PIVOT

BY ROB SHIRLEY

Frictionless Selling of Products in the After Market he supply chain continues to amaze as its permutations are constantly innovated and improved.

What happens to useful products after they are manufactured, consolidated, warehoused, shipped, retailed, bought and utilized by the original owner is also tantalizing.

We are all familiar with how antique stores, garage sales, flea markets, consignment stores and Craigslist serve this aftermarket.

Phynder has developed a frictionless way to match buyer and seller and was launched for the iPhone this year in NYC and San Francisco by Sam Nada, Mary Shirley (my daughter) and Brian Slizgi as co-founders.

I met Sam, President of Phynder at the South by Southwest (SXSW) interactive conference in Austin this spring. Sam was one of 40 entrepreneurs sponsored

by Dell who were participating in a “pitch off” of their startup firms to judges in a hotly contested contest of startup firms.

Phynder advanced to the top round. Sam said, “Phynder is like a combination that would occur if Craigslist and Tinder had a smarter & safer baby! It uses smart mobile iPhone to advertise with photos, descriptions and price that can easily be viewed on a swipable interface within a market by buyers on their iPhones.

Interested parties can ask questions and have them answered over a unique app.

Once the buyer becomes more interested, they access a GPS system to route themselves to the buyer and product at a scheduled time. If buyer and seller agree on price, funds are transferred using an app and the buyer leaves with the product.”

Phynder was launched as its third major market in Austin the same week as SXSW. I have tried it myself as a seller of some furniture that I wanted to move. It took me about two minutes to photo, describe and post each item on their free app. The visibility and elegance of the app is evident.

They currently charge nothing for the service in order to build volume. It competes with eBay on a localized basis, but is much easier to use. With no fees, including even shipping, this was compelling to me and I liked the speed, efficiency and pure convenience of it too.

Sam told me, “We are going to quickly expand to more markets like Los Angeles soon and keep refining what the buyers and sellers are looking for. Apps for android will be available and reception from the market and investors has been strong.”

Frictionless selling is remarkable because it removes barriers to create an open market. This is a major step forward.¾

ROB SHIRLEY is CEO of ExpresShip, a strategic consultancy in the global supply chain. Contact him at rob@xpship.com or visit www.xpship.com.

MAY-JUNE 2015 | www.PARCELindustry.com

9

SUPPLY CHAIN SUCCESS

BY BARIS TASDELEN

How Same-Day Delivery Will Reshape Retail s logistics professionals, we try to help shippers deliver their products in the least amount of time and at the lowest possible cost. However in today’s retail world, it is all about driving sales through value-add, while keeping an eye on the bottom line. Whether the product moves from a fulfillment center to the buyer in a corrugated box, or from a distribution center to a store shelf on a pallet, the goal is the same: reach the customer before some other retailer does, exceeding the customer’s expectation, at a profitable cost point. Efficient, effective logistics make this transaction possible. The past decade has been reshaping the nature of retail: exponentially growing ecommerce volumes, big retailers moving to omni-channel and transit times getting shorter. Amazon has grabbed a greater share of the retail market by reducing its prices and offering free two-day shipping (with Amazon Prime membership), even if it means razor thin margins. Being the titan that it is, whatever Amazon decides to do affects all retailers. As a result, twoday free shipping has become the norm of ecommerce, or put another way, it is the new minimally acceptable expectation. Big box retailers and smaller sized retailers alike have to change and adapt in order to compete with Amazon. Major retailers such as Borders and RadioShack have disappeared, mainly because they couldn’t keep up with the changing environment. The consumer of today has more

knowledge, demands instant gratification, and uses digital merchandise whenever available. The consumer can go to a brick-and-mortar store, compare the merchandise on the shelf to the alternatives on a mobile phone, read product reviews, compare prices, and make purchasing decisions from an array of options.

Amazon has been offering same-day delivery in many major metropolitan areas for a couple of years, and started offering one-hour delivery in Manhattan in December, 2014. Google Express provides free same-day shipping from many retailers in select metro areas.

The question is not whether same-day

Same-day deliveries will only be viable in metro areas, at least in the near future. Without high population density and stores or DCs that are in 5-10 mile radius of the consumers, the economies will not allow same-day delivery. For same-day retail deliveries, the product has to be in close proximity to the consumer in the first place, which is one major advantage many brick and mortar stores have over Amazon. Stores will need to take over some of the volumes from fulfillment centers, as they will be closer to the end consumer. For same-day service, traditional parcel carriers will need to be substituted by decentralized or distributed delivery systems. Picking up from shippers, consolidating and sorting them in a central hub and then loading them to delivery trucks for delivery in the same day would require too many hubs, and too many hours. Instead the same courier has to pick up orders and deliver them in the same run using an optimized routing solution. There has to be a DOMS (Distributed Order Management System) that is capable of tracking inventory at each store and finding the optimum store for shipping the order. As in omni-channel, shipping from stores has its own complexities beyond just having the inventory. The store is designed for servicing physical shoppers, and repurposing the store associates as shipping associates and using back storage as a shipping station can be complicated. One other aspect of shipping from stores is that the SKUs that will be available for same day delivery will be limited by the capacity of the ship-from locations, so careful inventory demographic and velocity patterns are a critical part of the equation.

The retailers who want to remain competitive have to build a road map, identifying if same-day is going to drive more customers to their business.

10

MAY-JUNE 2015 | www.PARCELindustry.com

delivery will become the new normal; it is when and how. The answer to “when” is sooner than you think, as Amazon will keep expanding its reach, including groceries in its product mix. The harder question is “how.”

Today’s typical delivery systems cannot handle same-day delivery, so any retailer looking into same-day delivery has to find a solution that is outside the box. UPS and FedEx offer sameday delivery, however they are extremely expensive services aimed for critical applications, and are not viable options for retailers.

One advantage of skipping the parcel system is the possible elimination of cardboard boxes. Since the shipment will not have to endure the drops from chutes, transits in trucks, and miles of conveyor belts, the merchandise can be delivered in a sealed pouch, which reduces overhead in the store that would result from a full shipping station, as well as savings on corrugated.

While it’s a relatively new concept for many retailers, florists have been delivering flowers same-day for decades. Besides flowers, groceries, drugs, auto parts, shoes, office supplies, and gifts are ideal candidates for same-day delivery. Today, companies like Google Express and crowd sourced applications like Uber, Shutl, and Deliv.co allow retailers to deliver shipments in metro areas. With the exception of Google, none of these companies existed 10 years ago, yet they are playing a great role in providing same-day delivery services.

While we don’t have a crystal ball to predict the future of shipping trends, we

know that customers are looking for faster delivery, and free shipping. For free shipping where transit time is not critical, USPS consolidated services such as SurePost and SmartPost are becoming the norm. For fast deliveries, consumers are expecting to pay a shipping charge, as long as it is not extreme. The retailers who want to remain competitive have to build a road map, identifying if same-day

is going to drive more customers to their business, what carriers and systems they can utilize, which SKUs would be in the mix, and start testing. The best time to undertake this effort is yesterday. The second best time is now. The clock is ticking.

BARIS TASDELEN is Sr. Analyst, Transportation Solutions Consulting at enVista.

In the March/April issue of PARCEL, we made a small mistake in creating the chart that appeared in the “DIM Weighting: It’s Not Just Ground” article. The corrected THRESHOLD DIM DIVISOR chart should have < 3 cu. ft.

194 read as follows. > 3 cu. ft.

225

You can access the full article by going to http://tinyurl.com/DimWeightNotJustGround.

MAY-JUNE 2015 | www.PARCELindustry.com

11

SPEND PERSPECTIVES

BY JOHN HABER

FedEx Changes the European Parcel Landscape! edEx’s recent acquisition of TNT is a great example of the old adage, “never say never.” Back in the 1990s, FedEx pulled out of the European market with over $1 billion in losses. However, FedEx is positioning to become a big player in the European market and in March the company announced its intentions to acquire beleaguered European-based TNT Express for $4.8 billion.

TNT Express is the same company UPS failed to acquire two years ago due to regulatory concerns by the European Union.

Pending European Commission approval, FedEx’s market share in Europe is estimated to surpass that of UPS’ in some European countries and most importantly will provide FedEx a pan-European road network that will prove beneficial in the growing cross-border e-commerce market.

Considered the smallest of the four global integrators, TNT Express has struggled to recover from the 2009 recession and the ongoing economic sluggishness within Europe. Meanwhile, the three larger integrators, DHL, FedEx and UPS, have steadily taken market share by introducing new services and expanding networks linking Europe to the rest of the world. This linking of networks is a key motivation behind the acquisition. In a joint statement, FedEx and TNT Express noted that the combined company would merge TNT Express’ European road platform and its air hub in Liege, Belgium, with FedEx’s global capabilities including its North American and Asia-Pacific 12

MAY-JUNE 2015 | www.PARCELindustry.com

EUROPEAN MARKET SHARE OTHER UPS TNT FEDEX DHL 0%

POST PRIOR

5%

10%

15%

20%

25%

30%

35%

40%

DHL

FEDEX

TNT

UPS

OTHER

41% 41%

22% 10%

0% 12%

25% 25%

12% 12%

networks. FedEx CEO Fred Smith stated the acquisition would improve FedEx’s cost structure by reducing pick-up and delivery costs. This is likely due to improved pickup and delivery densities.

ed FedEx will be just shy of UPS’ share of the market, making it a key player.

Based on Ecommerce Europe data, there were about 3.7 billion parcels sent in Europe in 2013. Despite local post offices’ growing parcel service offerings, the intra-European express and small parcel market is dominated by the four integrators. There are other viable competitors in the market, including Dynamic Parcel Delivery (DPD), a subsidiary of France’s La Poste’s GeoPost, and General Logistics Systems, a parcel delivery group owned by Royal Mail.

These two companies are among the largest players within the European Economy service level parcel market and both have dense European networks. They compete heavily on price and generally offer lower cost solutions than the larger players.

Once the merger is completed FedEx will be just shy of UPS’ share of the market, making it a key player.

In addition, based on DHL estimates, the European international express market is dominated by four global integrators with an 88% combined market share. The chart above depicts the carrier volumes pre-TNT acquisition and postTNT merger. Once the merger is complet-

45%

Soon after the FedEx and TNT Express announcement, XPO Logistics announced its intentions to acquire Frenchbased Norbert Dentressangle. This latest XPO acquisition will provide an entrance into the European market and give XPO a road network and access to Norbert Dentressangle’s growing ecommerce business. Why the interest in Europe?

While Europe is not completely out of the woods yet, economically speaking, it is on the mend and it is also an e-commerce hotspot. Ecommerce Europe estimates that B2C ecommerce in Europe grew 16.3% to almost $393 billion in 2013. Furthermore, Deloitte estimates that half the European population shops online and in the UK alone, e-commerce represents 13% of total retail sales.

Products such as UPS’ Access Point target this growing ecommerce market. Originating out of the 2012 acquisition of Belgian-based Kiala, UPS’ renamed service, UPS Access Point, is a click and collect service that has expanded across Europe and is now entering the US market. In addition, Amazon, DHL and Audi have introduced a creative solution in which Audi owners can use their cars’ onboard infotainment connect system to allow DHL to deliver items ordered through Amazon Prime via one-time keyless access to a vehicle’s trunk.

Not wanting to be left behind, FedEx hopes the TNT Express acquisition will propel them into a leadership role in European delivery services and further its reach globally.

However, it is going to have to be careful. Once it receives the expected approval from government regulatory bodies, the integration process will be long. UPS, DHL and others will take advantage of the situation and launch campaigns to steer customers away from FedEx and TNT Express not only in Europe but likely elsewhere including the US. Shippers should use this time to take advantage of potential lower rates in the short term but be wary of long-term cost increases due to the acquisition. ¾

JOHN HABER is the Founder and CEO of Spend Management Experts, a global transportation spend management consulting firm. With nearly two decades of transportation spend management experience, John has helped some of the world’s leading brands drive greater efficiencies through their supply chain operations, while reducing transportation costs by 20% and more. Contact John at solutions@spendmgmt.com.

OPERATIONAL EFFICIENCIES

BY SUSAN RIDER

The Top 10 Must Dos for Operational Excellence s operational excellence an elusive dream? I think not but it is a definite commitment of time and talent every day. Below are 10 steps that will help you achieve this goal.

Training and training aids are critical and should be done by a person that understands the process. Not by a Human Resource person that would flunk a validation because he or she just read out of the manual and truly doesn’t understand the process.

1. COMMUNICATE As in every part of your life, communication is essential. Supply chain communication across your network can make the difference whether you achieve a good result or bad. For instance, say IT is working on a project in the distribution center adding a new feature, but Operations is unaware of this work. Therefore, Operations, needing this area fixed, purchases a solution or manufactures a work around. Whose fingers are pointing at whom?

This is a common instance that increases cost when the left hand is unaware of the right hand’s actions. Proper communication helps to break down silos.

3. KNOW YOUR OPERATION A beneficial step is to go through a process flow mapping. Initially, this is labor intensive but a great tool for the future and should be maintained with any changes added over time.

in like industries. What gets measured gets noticed!

4. KNOW THAT YOU ARE IN THE “PEOPLE BUSINESS” Whether you like it or not, you are in the people business, which is sometimes the most challenging aspect of your business.

If you hire well and you create a culture of passionate teams, your company will not only excel but will be the envy of all.

People spend a good portion of their lives in their jobs. They are either engaged and enjoy what they do or they hate going to work every day. Treat your associates fairly and with respect. Affirm positive actions and you will reap big results. Affirmation is low hanging fruit and should be a process that is spread among the entire management team. It doesn’t cost much but unfortunately most companies don’t understand the inherent value. When you get “A” players in any level of your organization, develop a plan to keep them and grow them for a succession of all stars.

Challenge every department on every team to find better processes and redirection of paperwork, reduction of non-value steps.

2. TRAINING Another common problem is quality training or the lack of training. The typical large distribution center has 40% turnover rate per year. Depending on geographic location it could be more. A good training program is essential and could increase productivity 10-20%. Why? Training and validation of training ensures that all associates understand the “steps for success.” If people don’t know the proper processes, they create inefficient steps, gradually chipping away at productivity numbers.

14

MAY-JUNE 2015 | www.PARCELindustry.com

Once you have your process map flow, the next step is to audit the process. Are these steps actually occurring in the warehouse? Have the associates created a work around? If so, is the new process better and should your current process be changed? Now look at each component; is there a new and efficient way of accomplishing this task? How can you reduce walk time or touches out of each component? Would an investment in new MHE or software reap big returns in any step? Then map the process to key performance indicators (KPI). Evaluate your metrics compared to others

5. CUSTOMER SERVICE IS ESSENTIAL Many think when we talk about customer service, we are talking about external customers. Every department needs to know who their customer is and communicate with them. Survey them and find out how to better service them and from these support teams you can improve productivity.

For instance, IT, Maintenance, Human Resources are suppliers to Operations. If IT doesn’t support with good systems or a fault tolerance plan, operations will fail.

If maintenance doesn’t maintain a sorter and it goes down, Operations fails.

CONTINUED ON PAGE 32

REGIONAL PARCEL CARRIERS’INDUSTRY UPDATES FOR

2015

Rob Martinez

W

hat’s new with the regional parcel carriers in 2015? It’s safe to say, a tremendous amount of growth and change!

In recent months, many of the regional providers have experienced double-digit volume growth, network expansion, industry consolidation, and key strategic alliances. Notable announcements: LaserShip Headquartered in Vienna, VA, LaserShip expanded its East Coast service area for B2C ground deliveries by implementing operations in NH, RI, WV, DE, NC and FL. It also opened new sortation centers in Orlando and Charlotte, and relocated its largest sort center from Bristol, PA to one twice the size in Paulsboro, NJ, to better manage volume and offer greater 1-2 day delivery along the East Coast. LaserShip also acquired Prestige Delivery Systems Inc. as part of its continued strategy of aggressive network expansion. The deal allows LaserShip to expand to the Midwest and enhance coverage with additional operations in KY, IN, MI, OH, PA, NY, WV and VA. GSO In January 2015, southwest regional provider GSO (CA, NV, AZ) entered into a strategic alliance with Norco/Overnite Express. In the arrangement, GSO assumes responsibility for all overnight package deliveries, while Norco focuses on same-day “last mile” messenger and

courier services. Shippers also benefit by gaining increased access to more than 1,200 drop boxes throughout CA, NV and AZ and GSO’s larger service footprint.

LSO In February 2015, LSO acquired Express Courier International, a same-day carrier in the southwest and mid-south region, to form what it describes as a super-regional parcel carrier, spanning across 13 states throughout the Southeast and Southwest.

“Our combined strength will allow us to provide our customers with unique service offerings, customized solutions, sameday, as well as regional overnight services, enhanced footprint and expanded product variety,” said Chuck Moyer, CEO of Express Courier International.

With the growth in ecommerce, we are also seeing a renewed investment interest in the regional parcel carriers. GSO was recapitalized by Hallifax Partners last year, and Eagle Merchant Partners acquired LSO. Further industry consolidation and additional strategic alliance announcements are expected in the years ahead.

What’s fueling the spree of acquisitions and partnerships? Two key factors are the continued growth of residential package delivery through ecommerce, as well as the need to expand delivery footprints and product portfolios.

According to Rick Jones, LSO’s President and CEO, many courier companies specializing in last mile services have the majority of revenues tied to a relatively

small number of customers. These couriers are realizing the need to broaden their revenue base and product offerings — something the regionals can provide — and at the same time, the regionals benefit by boosting product offerings and density.

Chuck Hammel IV, PITT OHIO’s Director of Ground & Supply Chain, sees industry consolidation as an exciting way for regional carriers to strengthen their networks and collectively further compete with FedEx and UPS. “It’s not just the eye test anymore; the data indicates that customers want an alternative solution to giving their business to the two industry giants and we are tasked with helping them to realize the value in making the change,” Hammel recently said in an email exchange.

Said Kristen Castaldo, United Delivery Service’s VP of Business Development, “Industry consolidation (or partnerships) is hugely beneficial for shippers and carriers. UDS has partnerships with PITT OHIO and Eastern Connection, as well as close relationships with OnTrac and LaserShip. There are so many shippers looking for a better, more cost effective solution for their business and if we can add value to our partners by recommending regional carriers in other parts of the country, it’s a win/win all around.”

The marketplace is responding. Shipware recently sent an emailed interview to the major regional providers, and nearly every single one reported double-digit growth in 2014 with expectations for the same in 2015.

MAY-JUNE 2015 | www.PARCELindustry.com

15

LSO’s Jones thinks it’s a factor of the market’s greater overall awareness of regionals, and shippers’ willingness to move off the status quo and into a multi-carrier solution. “Awareness of regional carriers has now increased and with it we are seeing an accelerated adoption of regional carriers as part of shippers’ logistics planning,” he said.

However, regional carriers continue to make up a relatively small part of the overall parcel market. Shipware estimates that the annual revenues of the largest regional providers are approximately $1.2 billion combined, compared with combined global package revenues of $87.6 billion for the Big Two ($38.7B, FedEx, and $48.9B UPS).

Shipware’s Live and Interactive Parcel Pricing (PARCEL Forum, 2014) presentation revealed that only eight percent of shippers use regional carriers “extensively,” and 26% reported “some, but not significant” usage. That leaves 66% of volume parcel shippers that don’t use regional carriers at all. And those shippers that do leverage regional carriers reported less than 15% of volumes are routed via regionals.

However, the shippers using regional carriers reported multiple benefits including cost savings up to 35%, fewer surcharges, a larger 1-2 day delivery footprint, and improved dimensional and minimum package charges. Moreover, 44% of regional carrier shippers expect to increase usage by as much as 25% this year.

In conclusion, the regional parcel delivery industry continues to evolve. Shippers that want greater flexibility, improved transit times and lower-cost alternatives to FedEx and UPS are wise to evaluate today’s regional delivery providers. A map of several regional parcel carriers has been provided on the following two pages to help you get started. Good luck!

ROB MARTINEZ, DLP is President & CEO of Shipware LLC, an innovative parcel audit and consulting firm that helps volume parcel shippers reduce shipping costs 10%-30%. Rob offers 25 years’ experience negotiating parcel contracts — on both sides of the negotiating table — for some of the most recognizable brands in the world, and is a sought after speaker and industry thought leader. He can be reached at 858.879.2020 Ext 114 or rob@shipware.com.

16

MAY-JUNE 2015 | www.PARCELindustry.com

Hawaii

Eastern Connection

Lasership

Spee Dee

OH, WV, PA, MD, DE, NJ, CT, RI, MA, NY, VT, NH, ME and parts of MI, IN and KY

VA, OH, MD, GA, NY, MA, PA, NC, CT, FL, NJ, ID, KY, MI, WV, RI, ME, NH, AL, VT, DE, SC and Washington DC

MN, WI, IA, IL, SD, and parts of ND, NE and MO

GSO CA, NV, AZ and NM

LSO TX, OK, LA and NM

IntelliQuick Delivery

AZ, NV, NM, CO, UT, CA and ID

International Bridge Hawaii, Alaska and US territories including Puerto Rico

OnTrac

United Delivery IA, IL, IN, MI, MN and WI

US Cargo OH, WV, and parts of IN, PA and KY

CA, AZ, NV, OR, WA, UT, CO and ID

PITT OHIO CT, MD, MA, MN, NJ, OH, PA, RI, WV, WI and parts of IN, IL and MI

Pue uerrto Rico MAY-JUNE 2015 | www.PARCELindustry.com

17

COMPANY PROFILE

Overnight Delivery to CA, NV, AZ, and NM Founded in 1995, GSO makes over a million deliveries each month throughout California, Arizona, Nevada and New Mexico utilizing 36 operating facilities. GSO customers enjoy later pickup times, earlier deliveries, fewer fees, dedicated service representatives, proactive package tracking, and robust customer service, all at market leading prices.

GSO Services include next day Ground and Freight service across a geography that would otherwise be 2-3 days with the national carriers, at competitive rates. Additionally, GSO Priority customers enjoy 40% savings, later pickup times and Saturday delivery options.

GSO services customers across many industries with unsurpassed customer service and specialized account manage-

18

MAY-JUNE 2015 | www.PARCELindustry.com

ment operations to fit specialized shipper requirements. GSO continues to invest in innovative technology allowing for integration with enterprise and third party systems, real-time tracking, POD capture, and robust reporting capabilities.

By focusing on a specific geographic footprint, GSO is able to provide customers with more flexibility, greater convenience, lower costs, and excellent customer service.

www.GSO.com 800.322.5555

COMPANY PROFILE

Save Time & Money with OnTrac OnTrac is the premier regional parcel carrier in the Western United States, providing overnight delivery at ground rates to more than 60 million consumers. OnTrac was founded in 1991, and has grown to become a top choice for e-commerce and companies looking to speed up delivery without the cost of express shipping.

The OnTrac service area includes every ZIP Code in California, and the major metropolitan areas of Arizona, Nevada, Oregon, Washington, Utah, Colorado and Idaho. Their regional hub-and-spoke model enables them to make next-day ground deliveries at distances up to 500 miles, with fewer fees and lower surcharges than national carriers.

Flexibility is something OnTrac is known for. They offer later pickup times, which means shippers can increase productivity and process more orders per day, and their “can do” attitude sets them apart from other carriers. They also offer a Money-Back Service Guarantee as a commitment to exceeding their customer’s expectations.

Last year, OnTrac became the first regional carrier to offer a USPS Package Consolidation Service. It’s called DirectPost, and combines the speed of their OnTrac Ground service with the last-mile delivery network of the Post Office. Packages are delivered within the Western United States in the same amount of time as a national carrier’s ground service.

DirectPost has no residential fees, no area surcharges, and includes end-to-end tracking.

OnTrac is a SmartWay Transport Partner, a USPS Workshare Partner, and is integrated with over thirty different multi-carrier software providers. For more information, call 800.334.5000 or visit ontrac.com.

www.ontrac.com 800.334.5000

20

MAY-JUNE 2015 | www.PARCELindustry.com

MAY-JUNE 2014 | www.PARCELindustry.com

21

COMPANY PROFILE

Regional Small Package Carriers Are Providing A Valuable Alternative In the past, you may have thought about the possibilities of using a regional carrier to handle your small packages but were unsure about making a change. Now more than ever, regional carriers offer a choice that’s economical, reliable, flexible and personalized.

PITT OHIO has thrived on providing valuable solutions to its customers and that was no exception when they launched their small package service in 2009. They found that shippers are looking for an alternative when they inevitably begin to feel pressure by small package giants whose accessorial charges continued to climb. PITT OHIO’s GROUND service combats those industry trends by leveraging their network of regional based partnerships to reduce shipping costs and lower accessorial charges through client collaboration.

Flexibility and convenience were missing from the picture, so PITT OHIO put significant focus on offering unique solutions based on customers’ needs. They specialize in solution based selling including handling irregular and non-conveyable items that others prefer not to. A variety of these solutions includes pool, general distribution and routed work in addition to parcel, lightweight and dedicated options.

When it comes to delivering a personalized service, regional carriers offer more than customers may expect. PITT OHIO’s GROUND service understands their customers’ needs and are focused on providing quick response times that offer a seamless and integrated experience. Through their world class IT systems, PITT OHIO customers have the ability to leverage back office integration & tracking and tracing functionality on demand with our GROUND service.

Optimizing your small package shipping can be overwhelming, but it doesn’t have to be when you trust a regional provider.

PITT OHIO’s GROUND service leverages regional based partnerships to offer 48 state coverage with the ability to determine a solution that works best for you and for your customers.

www.pittohio.com/parcel

COMPANY PROFILE

Customers Want a Personalized and Customized Approach with Their Small Package Shipping Business continues to be more demanding and the pace just continues to get faster. Customers are expecting more from their providers and requiring customized solutions to meet their needs. This is certainly true in the small package industry. While other larger providers try to establish a “one-size-fits-all” approach, regional providers are listening to their customers and establishing true partnerships that benefit the customer’s needs.

Flexibility, personalization, and customization are what customers want and U.S. Cargo is able to deliver.

U.S. Cargo is a specialized regional carrier and small package delivery company providing consistent, cost-effective, and reliable Ground, Premium, and Customized services. They offer a personalized approach and commitment to meet the transportation and logistical needs of their customers. Each customer has different needs, and U.S. Cargo can accommodate both standard and unique requirements.

24

MAY-JUNE 2015 | www.PARCELindustry.com

U.S. Cargo’s personalized service starts with understanding the customer’s needs and providing a customizable solution. They have a “hands-on” approach to package sorting and offer better shipment integrity than the competition with only 1 in 6,000 packages experiencing a claim. U.S. Cargo’s dedicated customer service team, operating at both the corporate and local station levels, is available to provide professional, friendly, and quick follow-up and response.

The ability to get your small packages delivered how and when you need them does not have to be a challenge; U.S. Cargo provides flexible shipping and logistics solutions for their customers.

www.us-cargo.com

COMPANY PROFILE

Driven to Deliver for Over Three Decades Eastern Connection, the premier, regional small-package overnight carrier on the East Coast, has been driven to deliver the most reliable, flexible, and cost-effective shipping and logistics solutions since 1983. Based in Cumberland, RI, we cover over 6,800 ZIP codes in the Northeast, we have expanded services in the “Rust Belt,” and have 16 facilities.

We are open seven days a week, 365 days a year, and we have received rave reviews for seamless deliveries even during the epic snow storms this past winter.

Services. Includes Next-Day Ground, Priority Overnight, SameDay/Next-Flight-Out, Second-Day, Logistics & Warehousing, Trucking, and Expedited Mail. We also have a specialized Medical Logistics division.

Strategic advantages. Later pickups, earlier deliveries, and pricing significantly less than the nationals. Only service in Northeast that provides next-day ground deliveries by end of day.

Highest quality. Advanced technology, including real-time reporting, that matches and sometimes exceeds that of the nationals. Industry’s best record for on-time, intact deliveries.

Superior record for claims damage and driver safety.

Guaranteed customer satisfaction. Services that are more personalized and flexible that the nationals.

Accolades. Numerous customer service awards and national media recognition, including WSJ, Inc. Magazine, and NY Times.

Stability. One of the longest-operating and most highly respected carriers in the industry, with original and actively involved ownership. As we keep growing, we remain true to our original values that have led to our industry leadership.

www.easternconnection.com 800.877.4745 sales@easternconnection.com

COMPANY PROFILE

The First Choice... In Last Mile Delivery United Delivery Service (UDS) has been a leader in last mile deliveries for B2B and B2C shippers for over 40 years. We provide same day, next day and routed distribution services for companies throughout the Midwest. Our team is committed to helping your company reach their goals by utilizing our expanded service area, real time GPS technology and competitive shipping rates.

Ship Faster: Later processing times and flexible services means UDS can offer faster shipping than national carriers, while our dense, integrated Next Day routing system sets us apart from other regional carriers.

Complete Visibility to Every Delivery: UDS offers real-time online tracking. We capture Visual Proof of Delivery (VPOD), Visual Proof of Attempt (VPOA) and GPS so customers can be certain where the driver and packages were at the time of delivery / attempt.

Advanced Courier Technology: UDS has developed proprietary software that allows for fast, seamless integration to your management system. Our experienced team of developers can react quickly to adapt to our customers needs and the growing needs of the industry.

Call us today and let us show you how easy it is to ship with us!

Save Money: Save up to 40% on your current costs!

Personalized Service: With 24/7/365 Customer service, your customers will always be our priority. Courtesy calls for undeliverable attempts and delivery notices that can be tracked online are just some our standard personalized services!

www.UnitedDeliveryService.com 630.930.5201 MAY-JUNE 2015 | www.PARCELindustry.com

25

COMPANY PROFILE

LaserShip â&#x20AC;&#x201D; Your Last Mile Delivery Solution Founded in 1986, LaserShip has grown to have the largest oneday and two-day delivery footprints in the entire Eastern United States. With 62 locations servicing 20 states and Washington, D.C., LaserShip has full connectivity to the Eastern U.S. and an expanding presence in the Midwest. The rapid development of e and m-commerce has LaserShip continuously expanding their network in order to grow with its partners. Just last month, LaserShip moved into its largest of four sort centers in Paulsboro, New Jersey.

LaserShip makes the last-mile delivery process faster, more cost efficient, and more flexible for retailers. LaserShip provides next-day delivery for B2C and B2B shippers, point-to-point and dedicated delivery services, and expedited air services for critical deliveries with next flight out strategies executed both domestically and internationally. LaserShip helps you build customer loyalty with late pick-up and customizable delivery

26

MAY-JUNE 2015 | www.PARCELindustry.com

options, enabling your customer to receive their package just hours after they have purchased it. At the same ground rates, LaserShip delivers at a reduced transit time compared to national carriers.

Consumer experience is a primary concern and LaserShip cultivates loyal shipper and consumer relationships with sevenday delivery solutions and proactive experience representatives.

With the use of technological tracking tools, a cohesive team ideology, and a trusted network of independent contractors, LaserShip dedicates itself daily to generating positive customer experiences. With collective efforts, LaserShip is pursuing the leading position in the regional parcel delivery industry.

sales@lasership.com 703.761.9030 www.lasership.com

COMPANY PROFILE

THINK GLOBALLY. SHIP REGIONALLY. LSO, the South’s premier Regional Carrier, has provided regional deliveries on direct routes that set the standard for reliability for more than 24 years. Via express and ground transportation, we ship throughout Texas, Oklahoma, now to most of Louisiana, southern and eastern New Mexico and all of Mexico.

LSO’s unique operational network and responsive custom shipping solutions enable customers to increase their revenues through later pickup flexibilities, reducing their overall shipping costs and improving service levels for their customers. Move up to the world of advantages that LSO’s superior regional service delivers.

800.800.8984 www.LSO.com info@lso.com

MAY-JUNE 2015 | www.PARCELindustry.com

27

By Jane Bergos

OMNI-CHANNEL RETAILING CAN HAVE A BIG IMPACT ON SMALL PARCELS

N

ow that e-commerce is “all grown up” and retailers are getting more and more sophisticated, the next challenge to tackle is creating a true omni-channel business. Companies have been talking about omni-channel for years, but the reality is that most are just barely scratching the surface when it comes to matching the vision for omni-channel and taking advantage of all that it could potentially offer. Capitalizing on this next big trend in retail is going to take a change in thinking for many companies, and achieving true omni-channel success will mean accepting the philosophy that brick-and-mortar (B&M) and online are one entity – albeit an entity with separate teams and separate processes all working toward the same goal.

That goal is customer loyalty. In an increasingly customer-centric world, cus-

tomers want what they want, when they want it and where they want it. The customer journey is no longer one-size-fits all. Even if the purchase experience begins online, customers then have a number of ways they can move through that journey. And retailers need to be nimble when it comes to engaging with customers each step of the way, providing a seamless, consistent and complementary experience across all channels. Many of these changes will impact, or be enabled by, the ability to process and ship small parcels quickly and from multiple locations in order to meet the expectations of your customers and to drive operational efficiency for the business.

THE OMNI-CHANNEL PROMISE The retail sector is in the midst of a revolution, as consumers embrace new technologies that enable them to research and shop at their convenience —

anytime, anywhere. Customers can take advantage of a multitude of sources of product information, including in-store displays, retailer websites, mobile apps and social media. These trends have opened up the possibility of purchasing products or services that may not have been available to the customer otherwise. And, if done right, the needs of the customer are met at every step of the purchase journey, regardless of which channel or combination of channels the customer chooses to use.

In addition to the convenience and time-saving omni-channel offers to customers, there is also the promise of increased efficiencies for retailers, as well. One of the biggest challenge for retailers looking to provide a seamless brand experience is integrating existing channels of interaction.

Information and data must be able to flow between the applications and systems that support each channel. Achieving this integration by having the right infrastructure in place means you are able to know your customers across every channel, at every step of the customer journey.

And taking it one step further, very few retailers have the ability to take a holistic view of their inventory. Merging inventory order management systems (OMS) is key. Consumers expect their orders to be quickly delivered direct to their homes or available for them to pick up at local stores at a specific time. The last thing you want to happen is that an item is sold online, only to have the consumer find that the item is actually not in stock or available at their local store. When all of your data is integrated and readily available, regardless of whether the inventory position is in a distribution center (DC), a store, or a third party vendor, you are better able to meet customer expectations.

Having the ability to know your customers every step of the way also yields benefits when it comes to the returns process. Having a sophisticated data integration infrastructure in place helps to manage returns, speed up disposition to DCs and allow for faster processing. All of this means faster credit to the customer, increasing the likelihood that they’ll make another purchase right away, while

they’ve been recently browsing a site and making mental notes of other products on their wish list.

Interestingly, streamlining the returns process may have even more of an impact on the customer experience and maintaining customer loyalty than the shipping process. Customers already expect fast shipping, but many companies are still struggling to perfect fast returns and exchanges. Leveraging a superior returns solution that enables the merchant to define the speed or cost of the return will help to offer a fast returns experience, which can be a key differentiator.

TRAINING A SPECIALIZED WORKFORCE Another factor that comes into play with omni-channel and its effect on the small shipping process is the need for specialized training of all employees – whether they be e-commerce employees dealing with returns at B&M locations or workers in your DC. Optimizing packaging practices is now more important than ever thanks to recent changes in dimensional (DIM) weight pricing. Since January, FedEx, UPS and others in the shipping world have broadened their use of DIM weight by eliminating the exemption for packages measuring less than three cubic feet and making DIMs apply to all shipments.

Retailers dealing with small- to midsized packages need to train their workforce to deal with these new realities.

Train them on box selection and packing techniques or build rules into your warehouse management system (WMS) to optimize packaging and help minimize the financial impact. Another tactic is to diversify shipments and returns with multiple vendors to include a provider that does not charge for dimensional weight and offset some of the costs associated with a national carrier. There’s no need to put all your eggs in one basket.

MAKING IT EASIER ON YOUR E-COMMERCE WORKERS Achieving smooth data integration between channels can help your workers in other ways, as well. By leveraging a returns solution that offers advanced visibility you ensure your workers are not overwhelmed by unexpected volume coming

in for processing. Knowing how much is coming in and when improves operational efficiency, allows for more accurate labor planning and means that returns are processed and back in stock for faster resale.

In an omni-channel world, this visibility is more important than ever because return parcels need to be “smart” — meaning that they are visible for sale, re-routed to the appropriate destination and workforce optimized, allowing the merchant to best manage the receipt and processing of merchandise.

Operational efficiency means faster processing, which in turn leads to a decrease in call center volume. When customers receive automated emails updating them on shipment status and are able to track their returns in transit, there are fewer “WIZMO” (where is my order) calls to customer service.

GIVE THE CUSTOMERS EVEN MORE THAN THEY EXPECT Providing a consistent experience is a key driver of brand trust. As customers engage with your brand across multiple touchpoints, technology systems must be integrated across store, web, mobile, tablet and catalogue.

Anything that makes the experience more convenient for customers will only make them happier. Give them the option to return or pick up items in the store, even if they’ve bought them online. Offer conveniences like pre-paid return labels so, if shipping it back is their preferred method of return, all they have to do is apply the label to the box and pop it in the mail. Branded tracking so customers can monitor where their package is in-transit and in the returns process helps to continue to build trust and deliver a higher level of customer satisfaction.

Achieving true omni-channel takes a shift in philosophy. Creating a single, consistent brand experience is no easy task; but having a solid infrastructure, robust tools and a clear strategy will help to fulfill the omni-channel promise. ¾

JANE BERGOS is Director of Marketing at Newgistics.

She can be contacted at jbergos@newgistics.com.

MAY-JUNE 2015 | www.PARCELindustry.com

29

CHOOSING THE RIGHT WMS SOFTWARE MEANS KNOWING JUST WHAT TO LOOK FOR

By Ed Romaine

W

arehouse Management System (WMS) software can reduce labor costs and improve overall efficiency in order fulfillment operations, setting the stage for improved financial performance for your company.

WMS software controls the movement and storage of materials and handles transactions such as receiving incoming product, storage and retrieval of Stocking Keeping Units (SKUs), packing and shipping. It reduces labor costs by optimizing order batching and picking and mini-

30

MAY-JUNE 2015 | www.PARCELindustry.com

mizes process redundancy. It increases overall order fulfillment performance by streamlining operational flow, and increases order picking accuracy, improving customer service and reducing the cost of returns. Functions can also include management of dynamic locations; inventory management by batch, lot and serial number; automatic balancing of inventory across storage units; cycle counting; and location counting.

Traditional WMS software focused on inventory and order management within the four walls of the warehouse. Over the

past decade and a half, the largest WMS software companies enhanced their offerings to be more comprehensive with applications reaching outside the four walls including yard, transportation and vendor management. These areas of functionality have blurred the lines between traditional WMS and Enterprise Resource Planning (ERP) systems.

At the same time, several companies with specific focus on Warehouse Control System (WCS) applications enhanced their software to include advanced work zone, equipment and labor optimization,

in addition to many feature sets that used to be considered WMS-only. This emerging breed of warehouse software is being recognized as Warehouse Execution Systems (WES), and they have become more competitive with the traditional WMS packages on the market.

WHAT’S IMPORTANT IN WMS SOFTWARE? This double expansion of WMS software, beyond four walls and the incorporation of more real-time functionality, makes a WMS mandatory in all volume order fulfillment operations. So, when is the right time to consider the installation of WMS software? Certainly when developing a new, greenfield operation, WMS software should be included and considered as an integral part of design planning. The other time is when currently installed software has outlived its functionality due to its inability to meet growing and changing business requirements. Perhaps the software has reached its transaction limit. Or, does the company have a need for additional automated materials handling equipment to meet market growth or growth in seasonal/promotional demand?

Existing WMS software may not be able to handle the additional equipment.

What you want is a wraparound system that meets all of your specific management requirements, but not wrapped so tightly that it becomes a customized system that is difficult to expand and service.

When considering the installation of WMS software, it’s important to evaluate options. There are a lot of WMS software packages available. Here are some important features to consider to narrow the field.

} Modular, Configurable Design. WMS software should be designed to offer a variety of order picking technologies and interface to third-party WCS applications when needed to synchronize operations among different types of automated equipment. WMS software should allow you to add control modules in phases, as business requirements dictate, or in one large implementation for cost savings. Modular architecture and object-oriented design allow users to add modules and expand feature sets quickly and at low risk to system performance. WMS software should also ac-

commodate configurable interfaces for a variety of ERP host and other ancillary warehouse support systems required for advanced warehouse operations.

} Seamless Scalability. Companies that start small with automated materials handling equipment generally outgrow it and must add newer, more complex systems to meet process requirements. WMS software must be able to seamlessly accommodate system expansion. Modular and extensible software does this.

} Truly-Versioned Platform. Medium and large WMS software packages are frequently pieced together to meet specific requirements for a particular project.

These are often called custom spin-offs, and this approach prolongs product delivery and integration, lacks backward compatibility, slows down problem resolution, relies on specific resources for support and changes, and lacks longterm support. In a “truly versioned” software product, the additional software features implemented for various projects are adopted into the core baseline code and available in all subsequent versions of the software. This ensures fast and cost effective implementation, and a host of other advantages for the users of the WMS product.

} Backward Compatibility. This is a key feature of a true software product. WMS software is backwardly compatible if it accommodates the full feature sets previously delivered to its installed base.

Backward compatibility eliminates the need to pay for re-implementing custom software features previously added for your particular operation when upgrading to a newer version of the product. It also decreases risk and minimizes schedule concerns. Backwardly compatible software allows seamless upgrades, which help reduce the overall cost of software system ownership.

} Service. Will the software supplier be around to help troubleshoot the system?

A premier supplier becomes your partner and will provide consultation and technical guidance for your company and will be able to help you decide how and when you may need to upgrade.

HOW TO BUILD YOUR CASE The first step is to build a factual base upon which to construct an RFP for a WMS software package. Fact-finding helps in two important areas. It defines the type of WMS package that you may need, plus it helps facilitate management buy-in to the plan by providing a qualitative and quantitative analysis of risks and rewards.

1. Define your customer base. What types of businesses are your customers and potential customers involved in? What do your customers expect from you? Do they require that you conform to their product receipt and packaging protocols or do they look to you to establish your own protocols based on how they expect to receive products, and in what time frame? Do they have special handling, picking, packaging or inspection requirements? Your own sales and marketing staff can provide this information. Also, visit your customers’ websites to get a sense of how they position themselves to their customers.

2. Next, based on the analysis of customer needs, determine the strengths of your operation in meeting them, and also areas where it may need to improve.

Is there a desire to improve in certain areas or processes, for example, better throughput, more efficient manpower utilization, faster deliveries, fewer returns? Would changes in these performance areas increase business from existing customers? Would changes in your systems convert more prospects to customers? Is the organization planning to incorporate or add automated storage and retrieval systems? Will the legacy system support these changes?

Also visit the websites of trade publications that cover your markets to learn about market trends. What are the marketplace challenges facing your company? What is your company’s market share? Who is your competition and how are they different from you? Is the market open to more competition?

3. Once you have gathered the qualitative information about your customers and your company, collect and analyze your company’s performance metrics. Metrics are quantitative measurements of MAY-JUNE 2015 | www.PARCELindustry.com

31

warehouse or distribution center performance. This includes processing efficiency in receiving, putaway, replenishment, fulfillment, packing and shipping. Does your company have goals established for performance in these areas? Can performance be improved in any of these areas?

4. After all of this information has been reviewed, organized and prepared in report form, take it to your executive management. The project won’t succeed without their buy-in. The more logically and factually you can present your case, the more likely executive management will give the green light to proceed. Show, don’t tell. Management buy-in requires that your proposal answer how WMS software will support various operating areas of the organization and help it meet its business objectives. Decide what you must have then demonstrate how the WMS will improve such performance measurements of efficiency as employee productivity, increased picking throughput, and higher accuracy levels.

PAYING FOR ITSELF One critical aspect of securing management buy-in is an analysis of Return on Investment (ROI). How much will the WMS software package cost and how fast will that investment be paid pack to the company through reduced labor costs, improved order picking accuracy, increased system throughput, and overall operational efficiency?

Meet with your chief financial officer to determine if the company has established ROI guidelines. Generally, a payback period of less than two years is considered a reasonable return.

Look for a WMS software supplier who is willing to work with you to determine the payback period. This is where your metrics evaluation will help. Your metrics provide a baseline from which the performance of the new system can be evaluated. In addition, you can have your supplier conduct a time study analysis to help prove in the new system. Use this information for a demo to ascertain if the proposed software package will meet

your specific requirements. Before you sign a purchase agreement, make sure you know the final cost of the system.

WMS software is a critical element in the successful operation of warehouses in a variety of industries. When it’s time to upgrade your system software, select a package that can grow with your company and respond quickly to changing marketplace requirements. A little up front study and a careful review of software options will help you make the right choice. ¾

ED ROMAINE is VP Sales & Marketing, SI Systems (www.sihs.com). Ed has over 30 years in helping organizations improve their order fulfillment and warehouse systems and processes including warehouse software and high speed order fulfillment and conveyance technologies and can be reached at romaine@sihs.com or 484.894.5211. He is also the current chairman of the Automated Storage & Retrieval Systems (AS/RS) group and former chairman of the Supply Chain Execution Group (SCE) and Order Fulfillment Solutions groups of America.

CONTINUED FROM PAGE 14 6. ORDER FULFILLMENT IS THE MOST COSTLY PROCESS IN THE DISTRIBUTION CENTER How can you increase throughput or reduce head count? First, know what you do today, so map your process. Second, identify the methodology of your picking processes, such as strict packing, serpentine, cluster, etc. Is there a better way? Third, do an analysis of your pick medium, shelving, carton flow rack, push back rack, a frame, etc. Can you increase productivity by upgrading? Are you taking advantage of premium slotting or the golden zone? Fourth, would technology enhance the process? What new technologies or trends have been introduced?

Has the cost been lowered on a previously evaluated technology?

7. REMOVE BARRIERS OF SUCCESS What, you have barriers on purpose? Yes. This is also a common problem. Many times the “C Level” executives are not aware that these exist but they do. Your 32

MAY-JUNE 2015 | www.PARCELindustry.com

associates know these exist and can easily verbalize all barriers. Listen to them.

They do the job eight hours a day. They know what is keeping them from performing their job efficiently.

8. CONTINUALLY RAISE THE BAR Challenge every department on every team to find better processes and redirection of paperwork, reduction of non-value steps.

9. KNOW THE VALUE OF FRESH EYES! There are consultants in the world for a reason, and most add value. One client said, “We don’t know what we don’t know.” Every day you get used to the “we’ve always done it that way” mantra. It is hard to look outside the four walls and see other beneficial changes. You take your body, your car, your lawn mower for check ups. Why not your distribution center? Have an operation audit done by an outside consultant. One that knows practical operations, not one that has never

worked with distribution center operations like someone fresh out of college.

10. DON’T PAVE OVER COW PATHS! If you’re from Kentucky you will know what I am saying but for those of you that don’t, I will clarify. Often times when a distribution center makes a change (new conveyor, new storage rack, new software, etc.) they identify the project with their old processes instead of reviewing new and improved ways of accomplishing a task. This happens all the time and is very prominent with acquiring and implementing new software.

Constantly evaluate new technologies, new trends, and stay aware of what is going on in the field by reading publications or going to industry shows/conferences that add educational opportunities. Don’t be stuck in the “we’ve always done it that way” mud. ¾

SUSAN RIDER, Supply Chain Consultant, Executive/ Life Coach can be reached at susanrider@msn.com.

Level Best: Ideas for Streamlining Your Supply Chain

E

ven if you’re not in the parcel industry, the concept of different packaging levels requires no introduction. Rather than making one single box, bag, carton or container responsible for doing everything from storing and promoting your product to keeping it safe during shipping, levels allow several varied layers to achieve the same goals.

In many ways, streamlining your logistics operations is much the same, because no matter how large or small your facilities are, they’re full of opportunities to reduce waste and improve efficiency at various layers — and many reasons why it makes good sense to take advantage of a combination.

34

MAY-JUNE 2015 | www.PARCELindustry.com

LEVEL ONE: YOUR EMPLOYEES For starters, consider the value that the individuals working on your DC floors can bring to the table.

Nearly a decade ago, my company did just that when we launched a formal Lean program and decided to give the professionals at each facility the opportunity to spearhead the program’s projects instead of insisting that all of them be run by corporate executives. Over the years, these employee-driven teams have come up with highly innovative ideas for projects that we otherwise might have overlooked, helped us execute a nationwide 5S effort in a matter of months and enabled us to

complete many more projects than one small, higher-level department could have executed. In the process, they’ve played an instrumental role in helping us generate more than $47 million in savings.

We’ve witnessed a similar phenomenon within the safety committees at each of our facilities. (And if you don’t think a high-performing safety program is part of streamlining operations, think again. There’s a lot of inefficiency that occurs when an injured employee isn’t functioning at 100% or you have to use a less experienced replacement while an injured employee is out of pocket.) Often populated by clerical, hourly and non-supervisory professionals, these commit-

By Kyle Oslos

tees have been the creative force behind some of the most well-received and effective training materials, events, games and programs being used in our company’s safety program today.

LEVEL TWO: YOUR EQUIPMENT If your company wants to give its logistics efficiency a more literal lift, the next level of streamlining — optimizing the performance of industrial equipment such as forklifts — could be an ideal fit.

Forklifts are costly assets that are worth their weight in gold when they’re moving heavy loads from Point A to Point B. However they’re a prime example of unused capacity during their return journey to point A, because they’re usually traveling without cargo.

Forklift task interleaving has the potential to eliminate most of these empty transits by changing these vehicles’ inefficient boomerang-like route configurations into more circular, multi-stop ones that involve several productive tasks along the way. As a result, companies can make considerably better use of their forklifts’ traveling time while also significantly impacting the overall efficiency of the operation.

It’s important to note that like Facebook relationships, interleaving can be complicated. It can’t be executed well without the help of highly trained engineers. And it absolutely requires robust systems as well as a layout and slotting plan that incorporates interleaving functionality. As a result, it may not be an option for every operation. However given the proper support, it can also be well worth the effort, especially if your operation uses multiple forklifts.

LEVEL THREE: LABOR MANAGEMENT SYSTEMS In case you didn’t get the memo, labor often represents the single largest expense in most warehousing and fulfill-

ment operations, which is why the next level of facility streamlining is growing in popularity.

Labor Management Systems are highly advanced technologies that enable companies to measure, monitor and enhance workforce productivity to the nth degree.

Used in conjunction with sophisticated engineering techniques, they can help operations do everything from improving individual employees’ accountability and pinpointing star performers to improving managers’ efficacy and enabling better planning and scheduling. In the process, they can usually lower an operation’s workforce expenses by anywhere from five to 30%.

Not surprisingly, these great benefits often come at great expense. It’s not unusual for LMSs — and the professionals’ time it takes to get them implemented — to cost as much as $1 million per facility (although there are also many highly productive LMSs that cost less than 10% of this, and they often have most if not all of the functionality you’ll need.)

However speaking from my company’s own positive experience, choosing to invest in these systems for your larger, more complex operations may be one of the wisest decisions you’ll ever make.

LEVEL FOUR: WAREHOUSING COLLABORATION The final recommended level, warehousing and supply chain collaboration, is perhaps the toughest sell of all, at least judging from the small number of companies that are actually engaging in it.

Much has been written about this practice in recent years, and people have been almost unanimous in their praise about its considerable value proposition.

After all, who can argue with benefits like building more cost-effective loads, splitting the costs of assets or sharing highly qualified personnel? But so far it’s been all talk and little action, and many believe it’s because most companies are

still looking for perfect matches.

The good news is, finding collaborative partners may be easier than you think, because companies’ logistics operations don’t have to be doppelgangers in order for them to succeed at collaboration. All it really takes is some sort of supply chain parallel or intersection such as: a need for one company’s product pick-ups near another’s product drop-off points or the presence of additional fulfillment capacity for one company in a market where another happens to need fulfillment services but doesn’t have the capacity to justify a standalone operation.

So don’t hold off on trying collaboration until all the partnership stars align.

You could be waiting a very long time and missing out on some powerful efficiency-building advantages in the interim.

BONUS LEVEL: ALL OF THE ABOVE The nice thing about the tactics within these levels is that each can easily be implemented on its own — and rolled out as circumstances allow.

Just as important each also has the potential to mesh very well with the others and to become even more powerful when used together.

In fact, the more multi-faceted and many-layered you can make your efforts to streamline supply chain operations, the more likely you are to meet with success — and ultimately to take your logistics excellence to a whole new level. ¾

KYLE OSLOS is Senior Director at APL Logistics, one of the world’s largest providers of warehousing, transportation and other global logistics services for industries such as retail, consumer goods, industrial and automotive.

MAY-JUNE 2015 | www.PARCELindustry.com

35

PARCEL COUNSEL

BY BRENT WM. PRIMUS, J.D

Revisions to the NMFC That Shippers Need to Know — and Then Avoid n this installment of PARCEL Counsel we will consider one of three relatively recent changes to the National Motor Freight Classification (NMFC) which I believe to be very detrimental to a shipper’s interests. These changes relate to (1) establishing a 180 day time limit to submit claims for refunds of duplicate payments; (2) a requirement for mandatory arbitration; and (3) eliminating the 15 day “grace period” for submitting claims for concealed damage.

By way of background, the NMFC is published by the National Motor Freight Traffic Association (NMFTA). Its primary purpose is to assign a class number to the merchandise being transported to use for determining the freight charges.

However, there is an equally important section relating to rules and procedures.

Although many parcel shipments move pursuant to the terms of an air bill, other parcel shipments are transported by motor carriers pursuant to a truck bill of lading. The bills of lading used by the major trucking companies typically incorporate by reference the provisions of the NMFC as well as their own individual tariffs. A list of the carriers using the NMFC may be found on the NMFTA website http://www. nmfta.org/pages/membershipdescription.

As of May 1, 2015, these carriers included UPS Ground Freight Inc. and FedEx Freight Canada Corp., FedEx Freight & FedEx Truckload Brokerage Inc. It is very important to note that even though a carrier refers to the NMFC in their bills of lading, the individual tariffs of the carrier may have provisions which supersede or 36

MAY-JUNE 2015 | www.PARCELindustry.com

replace similar provisions in the NMFC. Thus, the only way to know for sure what is in the tariffs of the carriers you use… is to read them.

I. Duplicate Payments The term “duplicate payment” is used to describe inadvertent payments made to a carrier for invoices already paid. Since January 1, 2013, the Classification includes duplicate payments in the definition of an “overcharge.”

An overcharge is a charge made in excess of the tariff rate for which the shipper is entitled to a refund. The federal statutes provide that a claim for an overcharge must be asserted within 180 days of receipt of the challenged freight bill…or else it is deemed to be waived. The effect of this provision of the NMFC is to apply the same treatment to duplicate payments.

This provision stands in direct contradiction to a long standing decision of the Interstate Commerce Commission (ICC) determining that duplicate payments were not the same as overcharges and, accordingly, were not subject to the time limits relating to overcharges.

While at one time duplicate payments were quite frequent, with the evolution of sophisticated, computerized billing processes, there are no doubt fewer duplicate payments than even a few years ago. Nevertheless, they do occur. When they occur they could be substantial.

For instance, an $8 charge for a parcel shipment is perhaps no big deal; however if over the course of a few months thousands of individual shipments were paid for twice, a very substantial amount of money could be involved.

By the very fact that they occur due to mistake, duplicate payments might not

be discovered by the shipper until long after the mistake was made. Although carriers are required by federal regulation to identify, record, and notify the payor of any such duplicate payments, it is my sense that this doesn’t happen as it should.

This new time limit in the NMFC does not seem to me to be at all fair. As stated by the ICC in 1975, “The carriers and their representatives are reminded that, had they acted to resolve duplicate payment claims promptly and with understanding of the reasons for which they occurred, instead of attempting to retain as a revenue source these monies paid in error and not paid for performance of transportation services, our action herein would not be necessary.”

In the next installment of PARCEL Counsel we will continue this discussion and take a close look at the changes relating to mandatory arbitration and the new time limits for giving notice of claims for concealed damage — and the easiest, although not easy, way to avoid them. ¾

BRENT WM. PRIMUS, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc.

Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (www.PARCELindustry.com). Your questions are welcome at brent@primuslawoffice.com.

WRAP UP

BY MICHAEL J. RYAN

M2C: the New Reality? here has been a lot of focus on the B2C and B2B worlds.

However, we are on the verge of being a Manufacturer to Consumer (M2C) global economy. With the advances that have been made in the global small parcel business, you can manufacture a product in just about any part of the world and deliver the order via small parcel service to the primary mass populations.

This concept has been around for more than a decade but is starting to take shape. A great example of this is when Apple launched its latest iPhone version and was taking “pre-orders.” This “direct from factory” approach will impact many wholesalers, retailers, e-tailers, and omni-channel providers.

Let’s look at one of the most difficult commodities and one that has multiple channels… the carpet industry. If you were able to go online and order new carpeting for your house from a factory in India that had the style, quality, price and color and have it delivered to your house (pre-cut by room size) in 7-10 days, then you would probably do it. This will also be less expensive than going to the local carpet store and, of course, if it has FREE SHIPPING… that would truly be amazing.

The retail industry could have a new competitor. This approach will eliminate multiple levels of mark-up and provide the lowest landed cost to the consumer.

Price-conscientiousness is a key attribute of buyers online. This could be a threat to Amazon, who has invested billions in setting up a global network to get closer to the consumer. In the near future, Ama38

MAY-JUNE 2015 | www.PARCELindustry.com

zon’s strategy to be close to the consumer is spot on and it will be a dominant player in the e-commerce space.

As the new “low cost” manufacturing countries come online, they will continue to challenge the traditional retail model.

All of the major global players (DHL, FedEx & UPS) are building up their infrastructures in these countries in preparation of this new model.

The e-commerce world is getting smaller each day, and it is easier to place

orders. The consumer really doesn’t care where the product comes from… they just want a good price, good quality and, of course… free shipping!

M2C… the new e-commerce challenger option! ¾

MICHAEL J. RYAN is the Executive Vice President –Parcel Solutions at ProStar Logistics and has over 25 years experience in the parcel industry. He can be reached at 708.224.1498 or michael.ryan@prostar.com.

The retail industry could have a new competitor. This approach will eliminate multiple levels of mark-up and provide the lowest landed cost to the consumer.