SPECIAL REGIONAL CARRIER SECTION. PAGE 16
LOOKING AT YOUR PARCEL OPERATION FROM A WHOLE NEW ANGLE
HOW TO DETERMINE WHEN YOUR WMS SHOULD BE REPLACED. P.12
ARE YOU TAKING FULL ADVANTAGE OF YOUR PARCEL SHIPPING DATA? P.28
REDUCING THE IMPACT OF DIMENSIONAL SURCHARGES CAN BE EASIER THAN YOU THINK. P.30
CONTENTS /// Volume 24 | Issue 3
View on Website
28 30 34 36 40 06 EDITOR’S NOTE Expanding Your Horizons By Amanda Armendariz
08 SUPPLY CHAIN SUCCESS View on Website
2017 UPS and FedEx Weekly Fuel Surcharge Calculations for Express Services By Mark Taylor
10 SHIP RIGHT View on Website
Clearer in the Cloud By Chris Giles
12 OPERATIONAL EFFICIENCIES View on Website
When to Upgrade or Replace Your WMS By Susan Rider
14 SPEND PERSPECTIVES View on Website
Small Parcel Carriers and the Healthcare Industry By John Haber
16 SPECIAL SECTION: Regional Carrier Profiles
4 PARCELindustry.com MAY-JUNE 2017
28 DOING MORE WITH YOUR PARCEL SHIPPING DATA View on Website
By Jason Reeves
30 DIMS DON’T HAVE TO BE DIFFICULT View on Website
By Rafael Zimberoff
36 CHOOSING A SINGULATION METHOD View on Website
By Terry Brown
40 OPTIMIZING FROM THE INSIDE OUT View on Website
View on Website
View on Website
Robots Vs. Humans By Michael J. Ryan
APPLICATION ARTICLES 15 Opdimizer Reduces View on Website
By Kim Brown
Packaging, Loading, Blocking, and Bracing: A Parcel Shipper’s Exposures to Liability By Brent Wm. Primus, J.D.
50 WRAP UP
By David Frentzel
44 DETERMINING THE OPTIMAL NUMBER OF DCS FOR YOUR OPERATION
View on Website
48 PARCEL COUNSEL
By Jeffrey Haushalter
34 DON’T GET STUCK IN A RUT: WHEN TO CONSIDER LTL View on Website
46 TO SUM UP
Unexpected Dim Charges Pierbridge
PUBLISHING PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITORIAL EDITOR AMANDA ARMENDARIZ [ email@example.com ]
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CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (o) 608.442.5064 (m) 608.235.2212 [ firstname.lastname@example.org ]
PARCEL PARCEL (ISSN 1081-4035) is published 6 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2017 Â© 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. Back-issue 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.
P.O. Box 259098 Madison WI 53725-9098 p: 608.241.8777 f: 608.241.8666 PARCELindustry.com
EXPANDING YOUR HORIZONS By Amanda Armendariz
he parcel industry is constantly changing; it seems like every time I write my editor’s note, something new has happened (or is about to happen) that could cause shippers to change how they do things. And shippers are, for the most part, amazingly receptive to these changes — they roll with the punches with the best of them! But yet, professionals in all industries sometimes get stuck in a rut — I know it’s no different for me in my position as editor. We all adapt to the changes in our respective industries, but the basics, the building blocks of performing our job responsibilities, remain the same, because that’s how we’ve always done it. Sometimes that’s a good thing; after all, doesn’t the saying go, “If it
6 PARCELindustry.com MAY-JUNE 2017
ain’t broke, don’t fix it”? But sometimes, we are missing out on possibilities and partnerships that could take our organizations to a new level. Nowhere is this more obvious than in the regional carrier sector, which is why we have dedicated an entire portion of this issue to it. So many shippers focus solely on their relationships with the Big Two. Again, this is not a bad thing — UPS and FedEx are often the best choice for shippers. But utilizing only these two options causes shippers to miss out on the fact that sometimes, regional carriers can get their packages delivered more quickly and at a lower cost (which can significantly impact customer satisfaction, and who doesn’t want that?). So take a look at the profiles starting on page 16; there are a variety of carriers that could be integrated into your mix that, together with UPS and FedEx, could optimize your network. And the avoiding ruts adage applies to other aspects of the parcel life cycle, too. Our May/June issue covers hot topics like reducing your DIM charges, optimizing your parcel data, and more — it’s a treasure trove of advice for those shippers who want to expand their horizons. I wish you the best of luck as you strive to keep what’s working, fix what isn’t, and take your small-shipment organization to the next level. As always, thanks for reading PARCEL.
Here are some of the most-read articles on our site in recent weeks. If you haven’t already checked them out, you might want to — there is some great information in there!
Decoding the UPS Saturday Announcement By Krish Iyer
Shipping Data & KPIs: Oh, Great. Another Article About Data By Glenn Gooding
Top 5 Ways Cartonization Can Help You Avoid Unexpected Dimensional Rates By Bob Malley
2017 UPS AND FEDEX WEEKLY FUEL SURCHARGE CALCULATIONS FOR EXPRESS SERVICES By Mark Taylor
s part of their 2017 rate changes, UPS and FedEx have changed the way they calculate fuel surcharge as of February 6. Instead of calculating based on the monthly jet fuel average price two months previous, they are calculating based on the weekly average two weeks previous. The following graphs represent the differences between the monthly vs. weekly methods of express fuel surcharge calculation. It is clear by these graphs that as jet fuel prices trend higher, the weekly calculation raises the fuel surcharge with a faster response. The net result is that most of the 2016 year would have been at a higher fuel surcharge.
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IMPORT / EXPORT It’s important to note that UPS has changed the way it assesses the fuel surcharge on international air services, as well. Although it has the same basis as domestic air (jet fuel pricing), the index is different and has resulted in a higher surcharge than both air and ground services. Since this new fuel surcharge has been assessed, beginning February 6, it has run from 1.5% to two percent higher than the domestic air surcharge. FedEx has not announced any plans to follow suit on this change, so its international fuel surcharge remains the same as domestic express. CONCLUSIONS Negotiating terms on the transportation and surcharges could prove to be more valuable than just negotiating fuel, since a reduction on transportation would save on both the transportation and the fuel surcharge. Prioritizing where the most potential
savings lie is crucial to your negotiation strategy. It’s worth mentioning that now could also be a time to examine other carriers. The US Postal Service does not assess a fuel surcharge, and regional carriers may offer lower cost alternatives as well. Current agreement terms and any new proposals need to be evaluated using the new calculation methods. Frequently, shippers negotiate an incentive on the fuel surcharge and sometimes even a custom index. Most of the current terms on fuel were set under the monthly calculation. If the agreement is two years old or more, terms were also set under significantly different fuel market conditions and indices.
Mark Taylor is a Transportation Project Manager at enVista and a recognized transportation expert. With a background that includes operations, transportation network engineering, new service development, and parcel spend management, he brings a unique perspective to managing parcel programs.
For both UPS and FedEx, about 60% of the year would have been at a higher fuel surcharge with the new weekly calculation method.
Prioritizing where the most potential savings lie is crucial to your negotiation strategy.
The shaded areas represent where the weekly calculation would result in a higher fuel surcharge cost.
The US Postal Service does not assess a fuel surcharge, and regional carriers may offer lower cost alternatives as well. The shaded areas represent where the weekly calculation would result in a higher fuel surcharge cost.
MAY-JUNE 2017 ď€´ PARCELindustry.com 9
CLEARER IN THE CLOUD By Chris Giles
p in the sky, a cloud can obscure the light of the sun, darkening one’s view. Down here in our digital world, it’s just the opposite — the cloud can shed light on information that has been hidden, making the view clearer. Shipping shows us some excellent examples of how a digital cloud can brighten a business owner’s day. The cloud is basically a single repository of data and applications, which can be accessed and added to from a range of mobile and desktop devices by everyone permitted to join. In shipping, carriers are already leveraging cloud technology to create greater efficiency in the supply chain. Take notification tools, for example. In the past, carriers emailed a tracking number to recipients,
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who then had to go to the carrier website and input that number to find out where the package or mail piece was and when it would be delivered. Now, the shipment itself becomes the trigger for notification. The cloud is enabling more data to be shared between carriers and recipients, and it then makes that data immediately available through automated applications triggered by real-world events. As soon as the parcel goes out, the recipient is notified by the carrier from the point of shipment. The carrier can link your supply chain to every point in the delivery process. The cloud even makes the reverse logistics of returns more efficient. Companies can prepare to receive them and ship out exchanges as soon as the returns arrive and are checked. In the job of managing the supply chain, the cloud is enabling you to use data you haven’t even seen before. Each carrier has its own cloud to leverage and share data and provide a better experience for their clients. However, shippers typically work with a variety of carriers, and each of their systems is different. Fortunately, there are now tools on the market that can standardize the interfaces for all those carrier systems. Such a tool helps you
manage seamlessly by giving you a single gateway to access all the carriers’ data and services. This allows you to readily complete a comprehensive cost analysis based on all your delivery options. CLOUD BENEFITS BEYOND THE SUPPLY CHAIN Cloud-based solutions are finding their way beyond just shipping parcels in the supply chain and are now also driving the reinvention of mail. These approaches are linking all the data sets that record what’s being delivered, where, and when. USPS is leveraging the cloud for its Informed Delivery and Informed Visibility capabilities, scheduled to be demonstrated at the upcoming National Postal Forum. Its current IMB system can predict delivery days, but these new services will use data and applications in the cloud to tell you the hour a mail piece or parcel will arrive. In addition, USPS will be able to link important details of the mail piece to the notification. For example, being able to tell a recipient a credit card is coming should substantially reduce the risk involved in such mailings. In addition, we see many clients with back office shipping and warehouse-based fulfillment operations that enjoy discounted contract rates with carriers. And while other divisions and departments of these companies often do a substantial amount of office shipping, they don’t always take advantage of the
negotiated carrier rates. That’s because there’s been no simple way to connect all of a company’s shipping activities to be able to leverage carrier discounts across the enterprise. But now the cloud enables all the sending data of an organization to reside in one place. Consolidating this office and supply chain data can give you more leverage with a carrier. Office sending is more attractive to carriers since it’s a higher margin service, so they’re more prone to offer you better discounts. However, in order to link all the supply chain and office sending data, you need access to the different carrier systems. Here, the same tools that standardize the interface to all carrier systems for the supply chain can be used throughout the company. These cloud-based solutions are very cost-efficient Software-as-a-Service (SaaS) offerings, which are surprisingly easy to implement — key for deploying them company-wide. Thanks to these tools, the work your supply chain people have done to lower carrier costs doesn’t have to stop at the warehouse. Supply chain shippers can also use the cloud to extend its benefits across their own operations. With a standardized interface, shippers who employ distributed warehousing at multiple sites can quickly access all carrier information in the cloud. This makes it easy to make better decisions about which warehouse to ship from, optimizing for cost and time of delivery to each recipient. You can even factor in the option of shipping items from different retail locations. Very sophisticated decisions such as these can now be made because the data — all the criteria for those decisions — can be readily available in one place. The advantages that cloud-based solutions have brought to the supply chain have created broad, unexpected consequences. Companies are leveraging those advantages across the whole organization, encompassing multiple locations and a mobile workforce. This gives managers more visibility and control — and that delivers lower costs to the company and a better experience to their customers. Supply chain shipping, where the cloud is well-established, has indeed set the stage for a slew of benefits that has expanded to include office shipping and more throughout the organization.
CHRIS GILES is Vice President, Global Product Management, Pitney Bowes. He has over 20 years of experience in the industry and is a recognized thought leader. For more information, please visit www.pitneybowes.com
WHEN TO UPGRADE OR REPLACE YOUR WMS By Susan Rider
he subject of warehouse management systems (WMS) is something that should be evaluated by every DC operations team, every year. The IT team should be involved, but more importantly, it’s the operations team that uses the tool and determines the gains from a new system or upgrade. IT should be the services group that supports the task, but all too often, the IT department is the group that determines when to upgrade the existing system or when to look at a new one. Speak up, operations team! You need a voice in this decision because an antiquated system causes rework, costly errors, and your business will find it hard to keep up with today’s competition without throwing people at the task, which becomes very expensive. Not to mention, throwing
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the new hardware to malfunction and not operate efficiently.
people at the task in today’s environment is harder. Trained workers that can assist in the immediate emergency of getting orders out the door are harder to find, which brings on many headaches and non-performance. Modern technology and new apps can streamline the process of implementing much-needed functionality. If your current system is inflexible and the support is lousy, don’t even think about upgrading the current system. If the support is bad now, it is likely that the support will be bad later, no matter what the salesperson promises. Plus, if you are going from an old platform to a new Java or more current platform, it’s not an upgrade — it’s a new install, so you might as well investigate the new tools and systems that are available. Below are some tips by functional area that justify looking at a new system. 1.
If you have an older system that has a problem with handling large volumes of data or you are experiencing a need to reboot frequently, you have an issue. Immediately start investigating or, more importantly, budgeting for a new system.
2. The system or process you are currently using will not accept new hardware interfaces easily, causing
3. The receiving process will not accept ASNs or purchase order receiving; therefore, you must create a receipt. This process creates at least 30% and up to 60% additional work. 4. The system will not allow you to store and pick from multiple locations. This creates inflexibility and increases walk times and touch times. Today’s WMS systems should have ultimate flexibility so that your operation can do multiple types of picking, especially if you have gone to multi-channel operations as many companies have in order to compete with e-commerce. 5.
Putaway of product after received is not directed, thereby allowing the receiver to put it in whatever spot possible. Most companies that have this restraint have created rules to avoid havoc. Rules are always helpful and are usually followed when you have tenured employees, but new people tend to look for ways to avoid the rules.
You are not verifying replenishment, which means that when your pickers go to a location to pick, they could be picking the wrong product.
Order picking is limited. Today’s distribution centers need a variety of pick methods to maximize productivity. Batch picking for e-commerce orders is often the most productive. Therefore, if your system limits you in the picking area, it is costing the company money and, more likely, affecting customer service.
The best way to improve your operations is to have accountability of task in every area so an error can be attributed to a certain person, therefore correcting the mistake. Also, accountability helps ensure that the workers are indeed working. Without accountability, it is too easy for them to hide or to escape work and run through the day like a snail. Older systems have very little accountability, whereas newer systems have productivity tracking, reports, and graphs as part of the standard product.
If you are finding that you have more than one percent errors at the verification station, you are doing a lot of rework and creating a new position (called a runner) in the warehouse. A runner is someone that fixes
mistakes. They run to get the right product when the wrong one was picked, or they return the wrong items picked to location. It’s time to evaluate a new system if this area of your warehouse has an extreme amount of people. 10. If you are shipping parcels, it is imperative that you have a good shipping system. Some older ones cannot accept ancillary letters (such as O’Donnell, for example) or dashes. Many older systems require a reboot when an error is found, delaying your packing stations and parcels to be shipped.
Technology is the key in winning the distribution process in today’s supply chain world. If your technology is not an enabler but a frustration, it’s time to look for a better tool. Technology in the WMS world has come a long way. There are good systems that don’t require a tremendous amount of cash outlay. Do your due diligence and select the system with the right fit for your company.
Susan Rider, Supply Chain Consultant, Executive/Life Coach can be reached at susanrider@ msn.com.
MAY-JUNE 2017 PARCELindustry.com 13
SMALL PARCEL CARRIERS AND THE HEALTHCARE INDUSTRY By John Haber
s the population ages and regulatory requirements increase, a recent study by Deloitte forecasts global healthcare spend to reach $8.7 trillion by 2020. The number of parcel-dominated, healthcare-specific warehouses have greatly increased through mergers and acquisitions, in addition to new construction facilities. Over the years, UPS has acquired specialized providers such as Marken, Pieffe Group, CEMELOG, and Polar Speed to expand its European healthcare distribution network. Additionally, UPS has built specialized facilities in North America, Latin America, and Asia-Pacific. DHL has also invested heavily in facilities as well as made targeted acquisitions, such as niche Italian logistics provider MIT Safetrans and Brazilian cold chain specialist
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Polar Transportes. Additionally, DHL is studying ways to reduce costs in healthcare facilities. In April, the company announced a pilot test using a collaborative, autonomous robotics solution at its life science facility in Tennessee. The pilot will last for two months and involves robots from Locus Robotics serving as picker companions for piece-picking order fulfillment in the warehouse. The pilot rollout will utilize different picking strategies with the LocusBots in the warehouse. Assessments will be made on the robot’s ability to communicate with the picker and the warehouse management system, how it navigates the warehouse and its overall versatility. FedEx’s TNT Express and GENCO acquisitions give the company additional strength in this sector. TNT Express’ well-built network for temperature-sensitive delivery provides solutions for hospitals, clinical trials as well as with direct-to-consumer products. Acquiring GENCO brought robust recall solutions to FedEx’s suite of healthcare solutions. PACKAGING Because of product temperature sensitivity, packaging is extremely important. The type of packaging depends on a number of factors, including desired time-in-transit, mandated temperature and humidity ranges, and other environmental concerns. The three integrators all offer packaging options as
well as consulting services in case shippers need assistance. FedEx, for example, provides its Temp-Assure packaging solutions, which includes thermal blankets, deep freezing, and various other packaging options. UPS’ Temperature True packaging is similar to FedEx and also provides reusable packaging, as does DHL. SHIPMENT TRACKING AND MONITORING Shipment tracking and monitoring for on-time delivery performance is critical; however, other factors are just as important. Ensuring that the integrity of the product has not been compromised as well as meeting strict compliance requirements are also closely monitored and tracked. All three integrators offer tracking tools that allow real-time tracking, 24/7 monitoring as well as intervention capabilities while in-transit, and documentation for compliance purposes. Such tools are available for all modes of transport — road, air, and ocean. OUTLOOK The three major integrators — DHL, FedEx, and UPS — have made significant investments in this industry in anticipation of financial opportunities. For manufacturers, aligning with the right supply chain partners will prove beneficial as they will achieve operational efficiencies and, thus, overall company profitability. A winwin opportunity for all!
John Haber is the Founder and CEO of Spend Management Experts. Contact John at solutions@ spendmgmt.com.
Opdimizer Reduces Unexpected Dim Charges Opdimizer Is The First Defense Against Increasing Dim Charges Increasingly, the gap is widening between what shippers expect to pay for parcels and the charges they are surprised to find on their carrier invoices. Why? Because over the last 10 years, explosive eCommerce growth has squeezed parcel carrier capacity. As a result, parcel carriers have put a greater premium on space utilization by lowering the threshold at which shippers must pay dimensional (“dim”) weight rates for shipments that are lightweight relative to their size. This means that shippers will pay more if they don’t carefully manage shipping cost estimates and packing processes. Pierbridge’s Opdimizer (Op∙DIM∙izer) is a cartonization technology that enables shippers to instantly and more accurately determine the most cost-effective way to pack cartons and reduce, or eliminate, unexpected dim rate charges. Dim Weight Rating 101 Dim weight is calculated by multiplying the length, width, and height of a package, and then dividing that result by a special number, called a “dimensional weight divisor”, “dim divisor”, or “dim factor”. The shipping cost is priced according to the higher of either the dim weight or the actual weight. FedEx and UPS have both recently announced the standard dim factor for 2017 will be reduced from 169 to 139, making it more likely that shipments will be subject to dim rating. The US Postal Service applies dim factors to Priority Mail shipments to zones 5 and beyond. Although larger shippers have the leverage to negotiate higher dim factors based on their volume, most shippers, especially smaller eMerchants, can no longer afford to ignore how they pack cartons.
How Opdimizer Saves You Money Opdimizer calculates the most cost-effective way to pack an order, taking into account multiple factors such as order SKU dimensions and weights, available container dimensions, carrier service and dim factors, and packing rules such as % fill, lay flat, don’t pack with, pack alone, and zone picking. Opdimizer returns the best containers to use, rate shops the best carrier services, and provides an image depicting how items should be packed. Pierbridge’s Transtream TMS software integrates seamlessly with Opdimizer, but other shipping systems, shopping carts, warehouse management, or order management system can use Opdimizer’s API to estimate costs in order entry and control packing in fulfillment. Conclusion There is no doubt about it. Ever decreasing dim factors will continue to result in ever increasing, and often hidden, shipping costs. With more customers expecting “free” shipping, your bottom line will be impacted without cost-effective cartonization processes in place. Opdimizer technology is the perfect solution to help take the guesswork out of cost-effective packing and rating. See the Opdimizer demo and video at www.opdimizer.com.
email@example.com 508.630.1220 www.pierbridge.com
SPECIAL REGIONAL CARRIER ADVERTISING SECTION
DON’T OVERLOOK THE VALUE OF US REGIONAL CARRIERS A common mistake that I often see shippers make is relying only on UPS and FedEx. Of course they’re likely going to be part of your shipping mix in some capacity, but for some shipments, costs and times could be cut (and customer satisfaction increased!) by partnering with one of the regional carriers that serve the industry. Seem daunting? Don’t worry; it isn’t. The following pages will introduce you to some of the leading players in the regional carrier arena. If you find one that services a good portion of your customer base, feel free to reach out and start the conversation. Introducing new carriers into your mix can be simpler than it seems, especially when you’re working with pros like these.
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NORTHERN MARIANA ISLANDS
FEDERATED STATES OF MICRONESIA
Spee Dee Delivery
OH, WV, PA, MD, DE, NJ, CT, RI, MA, NY, VT, NH, ME and parts of MI, IN and KY
CT, DE, FL, GA, IN, KY, MD, MA, MI, NH, NJ, NY, NC, OH, PA, RI, SC, VA, WV, and Washington DC
IL, IA, MN, ND, SD, WI as well as select cities and ZIP Codes in MO, NE and MI Upper Peninsula.
AZ, ID, CA, NM, NV, OR and WA
TX, OK, LA, AR, TN, NM, MS and AL
United Delivery Service
PA, NJ, OH, CT, RI, MA, DE, MD, VA, WV, IN, WI, MN, IL, and parts of MI
OH and parts of WV, MI, PA and KY
IA, IL, IN, MI, MN and WI
International Bridge HI, AK, and US territories: Puerto Rico, American Samoa, Guam, Northern Mariana Islands, Virgin Islands, Federated States of Micronesia, Marshall Islands and Palau
PUERTO RICO VIRGIN ISLANDS
MAY-JUNE 2017 ï€´ PARCELindustry.com 17
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 18 PARCELindustry.com MAY-JUNE 2017
For over 30 years, Dicom
has delivered reliable, flexible and cost effective shipping and logistics solutions
We are one of the largest, most experienced and highly respected regional overnight parcel carriers on the East Coast. Our coverage of 6800 zip codes extends from Maine to Virginia and into the Midwest. Dicom operates 38 terminals, which are ready to serve you 24/7, 365 days a year!
Our Advantages • Flexible for late pickups and early deliveries • lndustry efficiency performance rating of 98.6% • Express parcel service in the Northeast providing next day ground deliveries • Consistently low claims • Superior Safe-driver “Modification Factor” • Trademark personalized service • Pricing that represents an outstanding service value
Simplify & speed up your transport with smart4 technology suite.
Contact us today for your transportation needs dicom.com firstname.lastname@example.org 1-800-877-4745
Our Services • Ground • Same Day • Rapid Response • Expedited Mail • Priority Overnight • Logistics and Warehousing • Medical Logistics
Flexible Last-Mile Solutions The majority of consumers don’t care what it takes to get their e-commerce orders delivered to their doors and into their hands. They want free shipping, expect their packages to arrive on time and they don’t want to wait several days to receive their orders. LaserShip provides e-commerce businesses an alternative to national carriers and is strategically located to serve the largest portion of the U.S. population, bringing the speed and flexibility shippers need to fulfill their customer promises. Founded in 1986, LaserShip is a small parcel carrier that facilitates last-mile delivery to the eastern U.S. for shippers that desire reduced transit times and increased flexibility within their supply chain. LaserShip has evolved into a leading provider of same-day and next-day delivery services for premier e-commerce businesses, including five out of the 10 largest shippers in the U.S.
LaserShip is consistently fine-tuning its delivery network in order to successfully offer same-day, next-day and two-day delivery to more than 100 million consumers in its network. This year alone, LaserShip will re-locate 14 of its facilities to support the high e-commerce growth rate. Today, LaserShip has over 60 facilities, four sortation centers, and a network of over 5,000 independent contractors throughout 20 states that it partners with to deliver packages when, where and how consumers want. That means offering later pick-up options- giving you time to process and ship more packages daily. The last mile of the supply chain can be the toughest for shippers, but with the right delivery partner and flexible shipping solutions, it can give businesses the competitive edge they need to succeed in today’s e-commerce world. Leave the last mile to LaserShip so that you have more time for what’s important- growing your e-commerce business.
E-Commerce Delivery Solutions International Bridge, Inc. specializes in rapid and reliable small-parcel delivery for many of the world’s largest eCommerce retailers. Our delivery network provides quality zone-skipping services to our clients across the U.S. while also serving as a first/final-mile for our international shipping solutions. Domestically, we focus on expedited delivery to all points within the U.S. with specialized offshore services to Alaska, Hawaii, and Puerto Rico. Internationally, we provide fast customs clearance and simplified cross-border shipping for both China-to-US and US-to-China eCommerce purchases. Discover how our unique small-parcel solutions connect the most demanding eCommerce providers in the world with their consumers every day.
myib.com 877.727.2354 email@example.com 20 PARCELindustry.com MAY-JUNE 2017
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. 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.
MAY-JUNE 2014 | www.PARCELindustry.com
Why Choose LSO? At LSO, we’re making shipping personal again. Regional parcel carriers like LSO offer more flexible and economical shipping solutions than the global giants. And regional carriers are looking even more attractive with customers’ continued reliance on ground versus air transport, lower operating costs and fewer accessorial charges. The bottom line? Regional carriers like LSO can deliver substantial savings by reducing overall shipping costs for both ground and especially express overnight deliveries. No wonder shippers across the U.S. have turned to regionals as an alternative complement to fill voids in the market. When it comes to delivering a flexible, more personalized service for your customers, regional carriers can provide unique solutions based on their needs. Consider a regional carrier strategy with LSO – the South’s premier regional carrier for 25 years.
LSO.com 800.800.8984 firstname.lastname@example.org
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Parcel & Freight Deliveries throughout the West In business since 1995, GSO is a regional carrier offering Priority, Ground parcel and LTL service throughout California, Nevada, Arizona, New Mexico, Oregon, Washington, and Idaho. By focusing on a specific geographic footprint, GSO can provide its customers with the flexibility, convenience, cost savings and customer service that other carriers are unable to match. GSO Ground provides you with next-day delivery over a much larger geography than the worldwide carriers; areas which require 3-4 days with the worldwide carriers can be reduced by at least a day. GSO Freight, with its straightforward per-pallet pricing model, has simplified the LTL shipping process by eliminating the complicated shipping routines that come with using a traditional freight vendor. And for customers who need Priority Overnight delivery service, GSO Priority offers shippers
later pickup times, Saturday delivery, and cost savings of 40% when compared to the global carriers. With Priority, Ground, and Freight delivery service, GSO can accommodate the shipping needs of thousands of companies across a variety of industries, while focusing on unsurpassed customer service and specialized account management operations to fit specialized shipper requirements. To meet the technological needs of shippers, GSO continuously invests in innovative technology that allows for integration with enterprise and third-party systems, real-time tracking, POD capture, and robust reporting capabilities. While GSO has seen tremendous growth over the years with a total of 48 distribution hubs and tens of thousands of packages delivered each dayâ€”our small-company values remain intact. We make it a point to provide a high level of personalized service with a dedicated customer service center and an account management group that can assist with any questions or issues. Weâ€™d like to learn about your shipping needs. Contact us today.
www.gso.com 888.744.7476 email@example.com www.gso.com
DOING MORE WITH YOUR PARCEL SHIPPING DATA Taking full advantage of your parcel reporting starts with knowing where to look.
By Jason Reeves
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ar too often, parcel intelligence reporting is underused — if used at all — by even the highest-volume parcel shippers. Shippers tell me they know their shipping costs because they can pull all that information after the shipments leave their facility each day. Or they say, “I need to focus on getting the packages from our warehouse. I don’t have time to sort through my parcel invoice data.” These sentiments are understandable; the day-to-day is demanding enough without digging into the minutiae. But when it comes to your parcel data, what you don’t know can hurt you. Much of the cost of parcel shipping is affected by what happens after the package leaves your location. The good news? Relevant, actionable data is more accessible — without exhausting time or resources — than you might think.
YOU’VE RUN THE REPORT. NOW WHAT? Even when you have the data at your fingertips, the time to review and make the most of those insights perhaps seems non-existent. But if you can budget just 30 minutes a week to reviewing key performance indicators (KPIs) important to you, the return on that half-hour investment could be a game changer. Consider starting with reporting on these “quick hitters” to drive immediate data-driven decision making.
SOLVING THE REPORTING CHALLENGE Raw carrier invoices are data-rich files full of detailed information. But invoices aren’t designed for easy, meaningful analysis or on-demand and data-driven parcel decision making. These files are hundreds of columns and rows deep. They’re often header-less and otherwise unformatted. And they tell a story, as my data science colleague Travis Rhoades has written for PARCEL, when you know what to look for — and how to look. (Editor’s note: If you would like to read Travis’s article, please visit PARCELindustry.com/DataStory) A DIY approach is doable but will take time and require manual parsing to pull out meaningful data. Another option is to enlist the support of a credible parcel intelligence provider — one with years of meaningful parcel benchmarking data and a large, diverse client base — to provide immediate visibility and expertise without undue burden on your team.
ACCESSORIALS As I mentioned earlier, a significant portion of the cost of shipping a package is accrued after it leaves your location. These accessorial fees can include residential surcharges, address corrections, delivery area surcharges, and additional handling. Without visibility into these additional charges, you could be overlooking as much as 25% of your parcel spend with your carrier. For a shipper with one million dollars in annual volume, that’s $250,000 in hidden costs. If you’re not accurately accounting for shipping as a percentage of the total cost of your goods, it’s likely eating into your net income projections. Don’t forget that when working with a carrier, everything is negotiable. They know the full scope of your shipping fees. You should, too. THIRD-PARTY SHIPMENTS Many parcel shippers use third parties, perhaps a manufacturer, to directly ship packages to a client on the shipper's behalf. While this practice can improve efficiency, it includes some risk. Maintaining visibility into shipments tied to your carrier account but sent via a third party is important for addressing mistakes or misuse. Providing a carrier account number to a third-party shipper requires trust, but that trust shouldn’t be blind. RATE COMPLIANCE MONITORING The choice of service type is a
key determinant of overall shipping cost, which explains why many parcel shippers establish service type guidelines for their logistics departments. But guidelines are just that: guides. Without access to reporting, effectively tracking compliance and maintaining accountability is nearly impossible. CARRIER RELIABILITY Because the role of the carrier is so fundamental to the entire shipping process, carrier performance is sometimes overlooked in the drive for data analysis. Upon a package’s departure, your expectation — and the carrier’s guarantee — is that the package will arrive to your customer at the agreed-upon time. We know this expectation is not always met, but how often it falls short isn’t easy to pinpoint if you’re a high-volume shipper. Start by viewing the customer's experience holistically because it doesn't begin when the carrier picks up the package, but rather when they place an order. Pair your internal order entry time data with the carrier's time in transit for true end-to-end visibility into the customer experience — from initial order, to fulfillment, to delivery. Acting on such data can make all the difference between happy, repeat customers and negative customer satisfaction. It’s your brand, not the carrier, whose reputation is on the line when promises aren’t met. Reliability tracking provides you the data to spot trends and performance weaknesses or otherwise ensure carrier accountability. NOW GET STARTED With the increasing prevalence of big data, the breadth of information shippers have at their disposal is stunning, if initially daunting. Start here, and you’re on your way to better business decision making.
Jason Reeves is the Product Manager for VeriShip’s parcel intelligence platform and works with shippers to understand and optimize their reporting and data analytics processes. He can be reached at firstname.lastname@example.org or 913.933.3535. MAY-JUNE 2017 PARCELindustry.com 29
DIMS DON’T HAVE TO BE DIFFICULT DIM charges are often a “gotcha!” for shippers. But with careful planning, you can avoid — or at least minimize — their impact. By Jeffrey Haushalter
any supply chains have been struggling to control costs and maintain budgets under the new dimensional (DIM) calculations put in place by FedEx and UPS. Those changes, introduced as part of the 2017 General Rate Increase (Figure 1), decrease DIM factors, add accessorials, and apply DIM surcharges against a larger pool of packages. While carrier negotiations around DIM factors and surcharges postpone some financial impact, there are additional ways to mitigate and even eliminate DIM surcharges from your operation. PROFILE YOUR DIM Review recent invoices to estimate the magnitude of DIM surcharges. Key fields to look at are billed weight versus scale weight and the handling accessorials that are being applied.
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Dimensional surcharges have three root causes: Item-level DIM, based on the inherent nature of what you sell Package-level DIM, based on how efficiently you overbox and/or overbag Order-level DIM, based on how customers order and how orders get fulfilled in your operation Plot every item sold on the following item surcharge grid (Figure 2), which looks at a product’s longest length and density. This grid assumes a single ship item, as is, without any additional packaging. Items plotted in the green shaded area are dense enough and short enough to avoid dimensional penalties. The remaining “trouble” items appearing in other sections of the grid incur one or more costly surcharges. Long term, trouble items represent your core dimensional dilemma, which is largely a function of the products you
choose to sell. Perform additional plots to recreate this analysis at the shipment and order level and incorporate additional volumetric surcharges, like girth. Share this analysis upwards and across your organization. It raises key questions about the items that are sold, how they come packaged from suppliers, the pricing that is sought from customers, and the profitability of selling DIM items. WORK WITH YOUR SUPPLIERS Recognize the diminished role retail packaging plays in an internet world. Where possible, work with suppliers to remove excess packaging, consolidate accessory boxes, and eliminate dead space. Focus on minimizing the largest offending dimensions of trouble items. This may involve disassembly, compression, nesting, and hiding. Opportunities found here are win-wins because they increase both storage and shipping density for suppliers and shippers.
Figure 1 Figure 2
Additional Oversize Surcharge
Negotiated Dim Factor
Additional Handling Surcharge
No DIM Penalty
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Educate your internal supply chain and key suppliers on the “magic rule” numbers (Figure 3) that trigger dimensional surcharges and impact margins. Encourage your supply chain partners to design for item-level compliance. Finally, evaluate the suitability of DIM items to drop ship from the supplier and assess if the existing packaging can safely ship alone without overboxing. Invest in packaging to reduce transportation costs. This gives your shipping department the flexibility to choose how best to fulfill an order. EDUCATE AND INCENT YOUR CUSTOMERS Customers typically don’t appreciate the nuances of shipping difficult products but can be persuaded to change behavior through incentives and promotions. One powerful way to both increase revenues and decrease shipping costs is to upsell. Share with your marketing and sales department two quick-win opportunities
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for items that have a large dimensional (billed > scale) weight component or high DIM accessorials: Buy more. Similarly dimensioned items likely can be nested or offset, providing more weight with little expansion of the overall cube. Ride for free. Heavier compatible items that fit in the same overbox incur no additional shipping charge if their weight is less than the DIM surcharge. Apply incentives opportunistically at checkout or proactively through email promotions. Taken together, the total shipping cost per item is reduced and profitability increased. ADOPT OPTIMAL PACKAGING Optimal packaging attacks the cost of fulfilling the entire order by minimizing total cost components such as transportation, packaging, void fill, and warehouse labor. It has two key sub-components: cartonization routines and the carton regime.
Cartonization is the process around matching ordered items to shippers. Successful algorithms have high fill percentages and minimize the human element of picking the wrong shipper(s) for the order. Cartonization algorithms need correct data and parameters to operate effectively. A key data input is the “footprint,” which represents the longest side of an item. Evaluate every item’s footprint against your available boxes. Look for long footprint items that have no choice but to be forced into higher cube boxes. Remove or tape down excess packaging, such as hanger tabs and bag tails, when capturing an item’s dimensions. Also fold or roll clothes, pack slips, instructions, and catalogs. This prevents artificially large item dimensions from biasing the overbox selection. The carton buffer percentage is a key parameter that limits how much to put in a carton before it is full. Consider a new technique called granulated buff-
Apply incentives opportunistically at checkout or proactively through email promotions. Taken together, the total shipping cost per item is reduced and profitability increased. ering, which dynamically adjusts the carton buffer based on the granularity of the order. Larger items (boulders) get larger percentages and smaller items (sand) get small percentages. This allows more product to go into a carton versus traditional static buffers. Next, evaluate your carton regime in light of your specific order profile. The carton regime is the collection of boxes and bags used to package an order. More package choices usually lead to
reductions in DIM charges. Tailor your carton regimesâ€™ volume and dimensions to your specific order and item profiles and avoid general sized boxes. Consider â€œon-demandâ€? packaging if your business involves a large number of items that are dimensionally different. The on-demand approach reduces packaging DIM by building a customized box. Some key advantages are less DIM, increased sustainability, and a reduction in the number of boxes stocked.
Lastly, shippers must have a dimensionally efficient gift fulfillment strategy. Avoid tactics that add significant cube to a gift order. In-lieu donations encourage customers to eliminate gift boxing while traditional gift wrap, gift bags, and premium printed shippers can provide a DIM-compatible customer experience. Dimensional surcharges have been steadily increasing over the years and are now a painful fact of life for many shippers. Profiling your dimensional surcharges, working with suppliers and customers, and adopting new methods are crucial to staying controlling costs and staying under budget.
Jeffrey Haushalter is Partner, Chicago Consulting. He focuses on helping his clients manage their warehouse operations, parcel spend management, transportation optimization, and more. Contact him at email@example.com.
DON’T GET STUCK IN A RUT: WHEN TO CONSIDER LTL Sometimes shipments are just too big or too expensive to ship via parcel. That’s when LTL can be a big boost for your budget.
anaging shipping costs is key to any e-commerce business, yet many merchants fail to use the full set of options at their disposal. Most retailers understand that a customer isn’t just buying a teacup; they are buying a delivered teacup. They know to consider the full cost of a shipment when calculating profitability. Most parcel-sized deliveries ship via USPS, UPS, and FedEx. After weighing the options, a merchant might elect to send the teacup via UPS 2nd Day Air. The end result: the customer hopefully receives an unbroken teacup in two business days, delivered directly to their house. But what happens when a merchant gets an order for 20 boxes of teacups? They could send each box via parcel, but they might have saved almost 50% had they shipped those boxes by freight. I find that merchants that don’t use freight often forget to look past parcel shipping to consider freight. For shipments too big or expensive for parcel shipping, it’s important to look
into “less-than-truckload” (LTL) freight. LTL refers to small freight deliveries that are too large to be classified as parcels and too small to fill an entire truck. Here are some factors to consider when deciding when to use LTL freight: 1. Package Size: Consider LTL if your package’s weight and dimensions are on the edge of USPS, FedEx, and UPS parcel size limits. Parcel size limits top out at between 70-150 pounds and/or 108 inches in length, depending on the carrier. 2. Number of Packages: If there are many packages going to the same destination (for example, 20 boxes of teacups) LTL could also be a cheaper, more efficient solution if the shipment can fit on a pallet. 3. Time to Transit: UPS and FedEx have predictable delivery times via Ground service and require little or no lead time to schedule a pickup. LTL pickups can take a day or two, and transit times are often estimates. If your shipment is time-critical because it is
perishable or a customer requires a specific delivery time, a ground parcel service may be the best path. If you can be flexible in shipment times, LTL can often save a lot of money. Overall, if cost is more important than speed, LTL freight can often be less expensive for shipments on the edge of parcel dimensional or weight requirements, or a large multi-parcel shipment of packages going to the same location. NAVIGATING THE COMPLEXITIES Often, merchants are concerned about the complexities of freight, but they needn’t be. Because of the complexity of the LTL/freight marketplace, I usually recommend occasional shippers work with a broker, since that can allow for single point of contact to a wide variety of LTL options. A broker can help a company sift through carriers to find the best fit for their needs. There are numerous national and regional freight services. Unlike parcel carriers, the cost of shipping and
By Rafael Zimberoff
delivery options of LTL freight varies wildly from service to service, with differences in price of 200% or more. Both UPS and FedEx also have huge freight networks, but these may not be your best option. There are many factors that determine the price of an LTL shipment: accessorial charges, freight class, minimums, distance, base rates, and weight. There are also physical requirements to consider to successfully ship products by LTL. Here are some major considerations to take into account: 1. Accurate Dimensions and Weight: Accurately estimating freight dimensions (length, width, height, and weight) are very important. LTL carriers rely on freight dimensions to allocate the number of individual loads for each truck. The Department of Transportation regulates the weight of trucks on the road, and accurate freight weights allow carriers to manage their truck weights. Inaccurate freight dimensions or weights can result in
costly shipment adjustments from the carrier. 2. Location Requirements: Many freight services assume pick-up and delivery locations have loading docks. When making arrangements, find out if loading docks or lift gates are required, as well as if there are other accessorial charges for special accommodations. 3. Freight Class: There are 18 different types of freight class. The lower classes are for dense freight that isn’t easily damaged. Higher freight classes represent lighter, less dense freight that is fragile and difficult to move. Higher classes equal higher rates. Teacups can cost more than books. Perishables needing refrigeration also cost more. 4. Risk Tolerance: Merchants need to determine their freight’s value, their willingness to risk damage or loss, and whether to get insurance directly from the freight company or purchase their own. Are these antique teacups or the dime store variety? Will the customer care if a
few teacups arrive broken, or will it be a deal-breaker? Some e-commerce shipping products are now extending their services beyond parcel to include LTL/freight capabilities. Partnering with a freight broker, these services can provide searchable rate shopping for freight carriers using the many cost criteria. These shipping solutions also offer efficiencies to streamline fulfillment by importing customer orders from multiple carts, marketplaces, and CRM/accounting systems; providing bulk printing labels; and offering ways to easily lookup and track orders. Merchants can often realize significant cost savings using LTL freight. With a little research and the right tools, you can conquer the unknowns of freight and start saving money!
Rafael Zimberoff is the founder of ShipRush, a Seattle-based software company that specializes in serving small- and medium-sized businesses with shipping solutions. For more information, please visit www.shiprush.com. MAY-JUNE 2017 PARCELindustry.com 35
SINGULATION METHOD By Terry Brown
ulk parcel flow requires singulation (i.e., each parcel is uniformly separated, spaced, and aligned) before entering a downstream automated sorting system. In the post and parcel industry, efficient unloading of bulk parcels (parcels, bags, and/or “smalls”) is critical to achieve required throughputs, service levels, and optimize building space. For the warehouse and distribution industry, high-volume e-commerce operations with a wide variety of package types (bags and small cartons) handle bulk parcels between the packing and shipping operation.
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In both industries, operations are tasked with considering the benefits of manually singulating parcels vs. using automated singulators and the impact of each strategy on the bottom line. Additionally, the type of downstream sortation system (loop sorter vs. line sorter) directly impacts the type of automated singulator to provide the highest system performance and ROI. INDUSTRY CHALLENGES & OPPORTUNITIES Typical Manual Singulation Operations Unload operators can manually singulate parcels by separating them into a one-dimensional (1D) flow and loading
onto an extendable conveyor inside the truck. The advantage to this approach is that no automated singulation is required for the downstream sorting process. However, this manual singulation method allows a relatively low unload rate of approximately 850-900 parcels per hour (pph) per operator. Typically with two operators per truck, rates of 1,350 to 1,450 pph can be achieved. Due to the relatively low unload rates, additional unload doors (and therefore increased building costs and material handling equipment (MHE) costs) are required to achieve throughputs necessary to meet service levels and cutoff times. In addition, the conveyor
system leading to the sorter is more sophisticated with controlled merges and additional metering/gapping belts. Typical Bulk Unload and Automated Singulation Operations with 2D Flow Bulk unloading is more common in the industry. Unload operators bulk unload parcels (mainly cartons) onto an extendable in a 2D flow (i.e., parcels are side by side without separation, but not stacked on top of each other). Unload rates are increased significantly to 1,100-1,300 parts per hour (pph), with a resulting savings in load door positions, building costs, and MHE costs. Typically with two operators per truck, rates of 1,750 to 2,100 pph can be achieved. Accordingly, bulk unloading requires approximately 30% fewer doors compared to singulated unloading to achieve the same building throughput. Usually, loose smalls and polybag shippers are separated at the door for separate handling and processing. Bulk unloading requires singulation downstream just prior to the automated sorting process. Conventional parcel singulators on the market today provide high throughputs, typically 7,500 to 10,000 pph and usually feed line sorters. These rates are achieved since the singulator “pushes” parcels to the line sorter at a constant speed. Conventional parcel singulators typically handle cartons only. Additional drawbacks include equipment footprint, maintenance, noise level, and energy consumption. Bulk Unload & Automated Singulation Operations (3D Flow) Bulk unloading of 3D flow is similar to 2D flow but with the added benefit of operators having the flexibility to stack parcels on the extendable conveyors. Unload rates are further increased to 1,300-1,600 pph with a single operator and 1,800-2,250 with two operators, enhancing the benefits of 2D bulk flow. A potential drawback of 3D flow for some companies is the higher probability for damage if parcels contain fragile contents.
THE OPPORTUNITY With the strong growth of e-commerce, the post and parcel industry is faced with handling a significantly larger volume of smaller cartons and polybag shippers. Since conventional singulators are designed as a push system and generally handle cartons only, the downstream sortation technology is limited to line sorters. Loop sorters offer significant operational benefits, including better handling of polybags, flexibility in induction locations, flexibility in general arrangement with vertical and horizontal curves, built-in recirculation, virtual sortation to significantly increase throughput, lower noise, and lower maintenance. The decision between loop or line sortation is dependent upon the specific operation and application, but until recently, loop sorters were not a viable option due to limitations in automatic singulators.
bulk flow. Manual singulation reduces pack-out operator efficiency and requires controlled merges and metering to the automated shipping sorter. For bulk flow, a simple transport conveyor is used to transport the parcels to the automated shipping sorter. However, sorter induction operators are required to singulate parcels onto the automated shipping sorter. Similar to the post and parcel market, automatic singulators to feed loop sorter inductions were not a viable option due to limitations. BULK PARCEL HANDLING FOR LOOP SORTERS There are a few solutions available on the marketplace that can enable automatic singulation, which transforms a bulk flow of parcels into a flow in which each parcel is uniformly separated, spaced, and aligned before the in-feed to the automated induction of a high-speed loop sorter. With the capability to handle a wide variety of items, automatic singulation offers a single-system solution that can handle parcels, flats, totes, and bags from the collection and distribution sorting areas. Cyclical operation enables adjustments to the speed of the parcel flow in response to changing levels of demand at the induction. With a fully automated system, the need for manual handling and supervision during normal operation is significantly reduced.
Unload rates are increased significantly to 1,100-1,300 pph, with a resulting savings in load door positions, building costs, and MHE costs. As a further consideration, 3D bulk unload flow reduces a conventional singulator’s throughput to 5,000-6,000 pph, considerably reducing the capacity of the downstream line sorter. E-COMMERCE For high volume e-commerce distribution companies, the packing area is often decentralized from the order fulfilment process (e.g. loop sortation), especially if a wide variety of carton and bag sizes will be used to optimize the cube and customer experience. Typically, the flow from the packing area is manually singulated by the pack-out operator or
THE SINGULATION PROCESS With high-end automatic singulation solutions, the parcels are transported from the bulk unload area to the automated singulation machine by feed lines that can be configured with fully automatic container tippers, extendable conveyors, and loading conveyors. Some applications offer conveyors offset rollers that small batches of parcels pass over as they enter a singulator MAY-JUNE 2017 PARCELindustry.com 37
in-feed. These align the parcels so that they are released in a single flow with a uniform gap between each parcel. Seamless integration of the automated singulator into a loop sortation system enables a pull system that adjusts the flow of parcels to meet the demand at the induction. The downstream induction line controls the call-up of parcels from the singulator which, in turn, can call up parcels from the upstream bulk system. If a double detect data capture feature is available on the automated system, it can automatically check the dimensions of each parcel for items which are over length, over height, or an abnormal shape, such as double parcels. Items that are detected as out of gauge are automatically removed from the main flow via a dynamic, high-speed vertical diverter that is optimized to match the speed of the conveyor. The diverted out-of-gauge parcels are processed downstream of the automated solution.
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FAST AND FLEXIBLE INTEGRATION Not all automated singulation solutions offer a high level of configuration flexibility. This flexibility allows for retro-fitting into the induction of an existing loop sorter or for integration into a new parcel handling system. Both retro-fit and new installations can be optimized to achieve a compact footprint and highly efficient use of available space, in addition to offering reduced installation and commissioning times. A top-of-the-line automated singulator can match the throughput of one high capacity induct line, up to 3,500 pph. For parcel applications, typically three to four inductions per induction area can achieve a sustained rate of 7,500-10,000 pph per area. Multiple induction areas can be configured on the loop sorter to achieve 20,000+ pph with a singulation accuracy of 97%+ without double detection, and even higher accuracy with double detection.
MAKING THE SHIFT Transitioning to automation doesnâ€™t necessarily mean a company will need to replace all of its existing equipment. As companies look to shift away from manual singulation, it can be done slowly and strategically where it is needed most. Start by implementing automated parcel sorting at the busiest distribution centers and work your way up to complete automation. As e-commerce continues to surge, the volume will soon justify the need for automation. Embracing the need for automation can lead to fewer misrouted packages, disappointed customers, and frustrated clients.
Terry Brown is Director of Sales, Sortation & Distribution, BEUMER Group. He holds a B.S. in Mechanical Engineering from the University of Wisconsin-Milwaukee and an MBA from the Keller Graduate School of Management.
OPTIMIZING FROM THE INSIDE OUT There are a multitude of reasons why you should pay more attention to your internal logistics.
wenty years ago at this time, Seinfeld aired its famous “yada yada yada” episode — and all of us gained a new catchphrase for how easy it can be to skip over or miss crucial elements of a story. Take away the cameras, actors, and witty repartee, and you could be describing the fate that often befalls internal logistics, especially when it comes to acknowledging its importance. Although this practice is clearly alive and well, it is anything but a common
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topic of discussion in most logistics circles, and even when it is, the attention paid to it is often cursory. As a result, many companies could be forgoing a number of prime opportunities to improve everything from their workflows to their bottom lines. With that in mind, allow me to elaborate on why this frequently underrated area of the supply chain is truly no joke. WHAT IT IS Internal logistics describes all of the
hand-offs, transfers, and flows that happen within the four “walls” of an organization, whether those walls are literal or figurative. As such, it concerns how materials, documents, supplies, and data move between one department, area, location, or division of your business to another. Some examples of this area of logistics include ensuring that: Offices, manufacturing plants, or store locations have fixtures and key pieces of clerical equipment, paper, printer ink, and other supplies for
By David Frentzel Equally important, many of the issues or inefficiencies that occur within these “minor” areas are often easily resolved or avoided. Just ask the DC employees who found a way to reduce order fulfillment lead times and improve productivity by thousands of dollars per year simply by switching their label printer to a less out-of-the-way location.
their employees Various hospital departments are able to get everything from pharmaceuticals to housekeeping materials to the point of use via the proper internal channels The files for loans, virtual service orders, or job applications are smoothly migrating through various people’s inboxes (physical or electronic) A business’s on-site amenities like snack areas, break rooms, or in-house stores remain well-stocked and well-equipped Companies’ distribution centers (DCs) don’t have service delays due to missing forklift batteries, maintenance parts, and such
WHY IT’S IMPORTANT Like its more famous counterparts, internal logistics clearly supports many functions that help ensure an organization’s smooth operation. However, unlike them, the kinds of
things it enables are usually either behind the scenes, indirectly related to an organization’s core competency, or are smaller-scale in terms of the distances, parties, or number of handoffs involved. It’s precisely because of these qualities that internal logistics activities are often permitted to transpire for years on end with little to no true analysis or change. After all, why sweat the minor details of items’ internal flow when there are so many more critical supply chain challenges to attend to, including many that are customer-facing? How hard can it really be to figure out how to efficiently transfer goods from one part of a company’s building, campus, or network to another — or to just pick up the phone and order more of what you need? And will the world really end if an employee doesn’t get his or her daily cup of coffee or if it takes a few extra days to locate a document misfiled in the document storage room? But just as “for want of a nail . . . the kingdom was lost,” little things sometimes have a way of adding up to major inefficiencies if an organization isn’t careful. That’s what a retailer found out when it moved its store display and fixtures delivery management out of its store operations and into its logistics organization and realized that its previously ad hoc methods had been costing it dearly in terms of additional storage, transportation, and expediting expense. Equally important, many of the issues or inefficiencies that occur within these “minor” areas are often easily resolved or avoided. Just ask the DC employees who found a way to reduce order fulfillment lead times and improve
productivity by thousands of dollars per year simply by switching their label printer to a less out-of-the-way location. In addition, let’s not forget that as larger portions of companies’ supply chains become well-optimized, it’s the uncharted, often ignored portions of the supply chain that ultimately may hold the key to bigger gains. Unmeasured processes are frequently full of redundancy, waste, and inefficiency, and few corners of the supply chain are more unmeasured than this one. HOW YOU CAN CHANGE IT FOR THE BETTER The good news is that once you’re ready to move forward with a more strategic approach to your internal logistics, there are a wide variety of applicable tools. The better news is that many of them — like the following — are probably in your wheelhouse already. Lean. You can teach almost any group of professionals and even front-line operators to use this well-respected continuous improvement discipline (which often yields huge improvements) within a matter of days, and most Lean projects take just three to six weeks. In light of that, why not provide Lean training for at least some of the people who routinely oversee or have a hand in your internal logistics? 5S. This highly popular set of kaizen practices (whose five Ss stand for Sort, Set in Order, Shine, Standardize, and Sustain) can work wonders in terms of helping single areas or facilities within your organization reduce clutter and improve organization. Encourage MAY-JUNE 2017 PARCELindustry.com 41
some of the employees involved in your internal flow to give it a try in one or two problem areas, or consider rolling it out on a more widespread basis. You’ll be surprised at how much better these newly organized areas will perform. Labor Management Systems. While these highly advanced technologies are typically associated with larger operations or more visible business functions, they are just as applicable to smaller operational areas within an organization, including many that are connected to your internal supply flows. Play your internal logistics cards right, and it could mean related labor savings of anywhere from five to 30%, savings that are increasingly relevant as labor markets tighten. Scorecards and Other Visibility Tools. Many organizations are quick to measure their external logistics operations but reluctant to measure their own. If you’re already using scorecards for your 3PLs or carriers, take a page from your own playbook and introduce something similar for
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your internal logistics processes. Not only will it help you pinpoint areas that need improvement, it could also encourage those who are involved in your internal logistics to step up their performance because sometimes all it takes is just the thought of being measured to inspire better work. Outsourcing. Similar to external logistics, there are times when an external company can bring in unique expertise and cost efficiency into an internal logistics operation, whether it is running an inbound-to-manufacturing operation, assembling parts kits to feed a manufacturing line, or provisioning electronic service orders from a remote overseas operations center.
So if you suspect your company’s internal logistics has been an afterthought or you’re looking for new ways to introduce additional productivity into your operations, consider applying one or more of the tools I’ve recommended or leveraging many of the other tools and optimization approaches that have been so successfully deployed for your external logistics. Your employers will be grateful you encouraged them to look within. Your employees will enjoy having better, more reliable ways to access the supplies they need. And you’ll be glad you finally took its potential seriously.
THE FULL STORY Hopefully I’ve succeeded in convincing you that the practice of internal logistics isn’t just a forgettable placeholder because in the grand scheme of things, nothing could be further from the truth.
David Frentzel is a partner with New Harbor Consultants. With over 30 years of experience, he currently focuses on helping companies to improve business outcomes with more effective supply chain and logistics strategies and operations.
DETERMINING THE OPTIMAL NUMBER OF DCS FOR YOUR OPERATION
When answering the question of, “How many DCs is right for my organization?” there are a variety of factors to take into account.
ach organization is unique in the products they carry, where their customer base is located, what their customer expectations are for lead times, and how they ship their products to their customers. Each organization also has a business strategy on how to approach their distribution network. For instance, is the organization consumer-based with lightweight, small products that are shipped via parcel? Are their customers willing to wait for their product or willing to pay the freight to get them? Then one location
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BY KIM BROWN
may be all that this organization needs. Likewise, is the organization shipping to retail stores with a large variety of products that could make shipping expensive? In this scenario, the organization may want to review where their customer base is and move as close to them as possible to reduce shipping costs while still servicing the customer in a timely manner. Different Factors for Different Organizations First, we need to recognize that what is right for one organization is not neces-
sarily right for all. Distribution network strategy is not a one-size-fits-all, and the number of distribution centers needed to support it can change based on business climate. For instance, is the organization growing? An organization that is growing or just starting out is most likely just developing its network. For those organizations, it is best to start with one location so that the company can define processes and create the company culture first before trying to duplicate those processes and culture in other locations. If an organization is mature, it is likely that it has established the correct amount of locations, and the thing it may want to review is if its distribution centers are in the correct location to support the
current customer base, product portfolio, and/or delivery system, as these things can change over time. Distribution centers are a trade-off in costs. There is a point of no return for each organization, which is the cost of running the number of distribution centers it has versus the amount of sales being generated through the distribution centers to support those costs. Distribution center costs are more than just the brick and mortar of the building and the utilities to run it. You must also consider the number of people needed, the amount of inventory required, and the extra inbound/outbound costs if you are transferring product from a central location to remote locations. Other things to consider are the overhead costs, such as purchasing for multiple sites, and the IT infrastructure (servers, software, etc.) needed to support multiple sites. So, what is the correct number of locations? To determine the number of locations, start with the customer base. Where are the customers located? What is the delivery lead time that the customers expect? Doing a heat map of where your customers are located is a good first step to determining the number of distribution centers. Once the heat map is developed, you can mark rings around the concentration of large customer bases. This will give you your first view of how many areas of concentration you have and, thus, the potential for the number of distribution centers needed to support your customer base.
Determining the Delivery Method The next step to this is determining the delivery method that the organization uses. How heavy is the product being shipped? What is the dimensional factor? What is the mode of transportation being used? The transportation structure is just as important as the customer base and is the next layer of rings that needs to be placed on the heat map. For instance, is your delivery method by parcel? Where is the parcel hub that you want to use, and what is the area serviced in the lead time that your customers expect? If customers expect one to two days of in-transit time and want things shipped ground to be less expensive, then you will want to layer on the heat map only the area that the local parcel hub supports — not their full map. You will also want to make sure what the pickup time is that you desire, as parcel companies typically have two different sorts that are associated with their time-in-transit maps. Twilight versus midnight sorts are standard terms used for this. Depending on which sort your freight gets pulled out of the hub will depend on whether the map you are using is correct or not. A good rule of thumb to get the latest pull time is to locate your distribution center within 30 minutes of a major hub that has both the twilight and midnight sorts. Within this ring, you could then choose a location that could service more than one of your customer concentrated rings. For instance, choosing a location in Pennsylvania that is near a
parcel hub can get your product to five major cities on the East Coast in one day. If this is where some of your customer base is, you can have one location service five large customer bases! There are studies that show how many locations it takes to serve the country based on current population. These studies can also be a guide to check your heat map against to determine where potential customers are; this could be your next expansion. Let’s wrap this up by remembering to keep the customer first! What their expectations are in terms of time in transit and the cost to serve those expectations are paramount to determining the number of locations right for your organization. Balancing the cost to serve with the cost of running a distribution center is also a major consideration. Can you afford to have one distribution center and ship everything via air to meet customer needs, or do you need to be as close as possible to your customers to ship via ground in a short time window? It is also important to note that as business changes, it is essential to review the number of locations and where they are located to keep up with your customers’ expectations!
Kim Brown is Vice President of Global Logistics, Quality Bicycle Products. She has extensive experience in carrier negotiation, lean manufacturing and distribution principles, network optimization, and site selection. Contact her at firstname.lastname@example.org.
Can you afford to have one distribution center and ship everything via air to meet customer needs, or do you need to be as close as possible to your customers to ship via ground in a short time window?
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TO SUM UP
If you are shipping parcels, it is imperative that you have a good shipping system. Some older ones cannot accept ancillary letters (such as O’Donnell, for example) or dashes. Many older systems require a reboot when an error is found, delaying your packing stations and parcels to be shipped. — SUSAN RIDER
[When attempting to reduce DIM charges], focus on minimizing the largest offending dimensions of trouble items. This may involve disassembly, compression, nesting, and hiding. Opportunities found here are winwins because they increase both storage and shipping density for suppliers and shippers.
Some e-commerce shipping products are now extending their services beyond parcel to include LTL/freight capabilities. Partnering with a freight broker, these services can provide searchable rate shopping for freight carriers using the many cost criteria.
— JEFFREY HAUSHALTER
— RAFAEL ZIMBEROFF
If you’re not accurately accounting for shipping as a percentage of the total cost of your goods, it’s likely eating into your net income projections. Don’t forget that when working with a carrier, everything is negotiable. They know the full scope of your shipping fees. You should, too.
Distribution centers are a trade-off in costs. There is a point of no return for each organization, which is the cost of running the number of distribution centers they have versus the amount of sales being generated through the distribution centers to support those costs.
— JASON REEVES
IN THE JOB OF MANAGING THE SUPPLY CHAIN, THE CLOUD IS ENABLING YOU TO USE DATA YOU HAVEN’T EVEN SEEN BEFORE. EACH CARRIER HAS ITS OWN CLOUD TO LEVERAGE AND SHARE DATA AND PROVIDE A BETTER EXPERIENCE FOR THEIR CLIENTS. HOWEVER, SHIPPERS TYPICALLY WORK WITH A VARIETY OF CARRIERS, AND EACH OF THEIR SYSTEMS IS DIFFERENT.
It’s important to note that UPS has changed the way it assesses the fuel surcharge on international air services, as well. Although it has the same basis as domestic air (jet fuel pricing), the index is different and has resulted in a higher surcharge than both air and ground services.
— KIM BROWN
— CHRIS GILES
— MARK TAYLOR
PACKAGING, LOADING, BLOCKING & BRACING: A PARCEL SHIPPER’S EXPOSURES TO LIABILITY By Brent Wm. Primus, J.D.
n many past installments of PARCEL Counsel, we have focused on a carrier’s liability for loss and damage to cargo. However, in this issue, we will look at how improper packaging, loading, blocking, and bracing can expose a shipper to liability when a shipper assumes responsibility for these tasks and then does them improperly. In traditional parcel and less-than-truckload shipping, the shipper will tender to the carrier one or more packages or boxes. Oftentimes, these items are placed on a pallet and shrink-wrapped. The problem arises when the packaging or container for the product breaks or leaks and causes contamination or damage to other cargo on the trailer or in a warehouse. Examples of these contaminants are things such as paint or extremely odiferous liquids.
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In these situations, the carrier would first settle the claim of the owner of the property and then turn to the shipper whose product caused the damage for reimbursement. Shippers have also been sued for indemnification for clean-up costs resulting from spills of their products while in transit. While these liabilities would exist absent a tariff provision, virtually all carriers — whether motor, air, rail, or ocean — have specific provisions in their tariffs, terms and conditions, or service guides covering this. For example, an item in FedEx’s current Terms and Conditions for US shipments states: If a shipment is refused by the recipient, leaks or is damaged, the shipment will be returned to the sender if possible. If the sender refuses to accept the returned shipment or it cannot be returned because of leakage, or damage due to faulty packaging, the shipper is responsible for and will reimburse FedEx for all costs and fees of any type connected with the legal disposal of the shipment, and all costs and fees of any type connected with cleanup of any spill or leakage. In addition to liability for damage relating to cargo, shippers also are exposed to liability for personal injuries or deaths caused by their negligent loading, blocking, or bracing of cargo in a carrier’s vehicle. This is likely to occur
when the shipper has loaded the trailer and then sealed it with instructions to the carrier not to break the seal. While this might protect the integrity of the load, it also prevents the carrier from making its own inspection as to whether the goods were property loaded and secured. When a consignee dock worker or a carrier driver is subsequently injured at the time of unloading, the shipper would be responsible if it is determined that it had indeed improperly loaded the trailer. An even more extreme example would be when an improper loading of a trailer results in an accident on the highway. One of the most serious incidents of which I am aware occurred a few years ago, when a trailer on a railroad flat car shifted so that it struck an oncoming train on the adjacent track, resulting in a derailment of both trains. If it were to be determined that the trailer shifted due to improper loading by a shipper, all of the liability for this accident would flow back to the shipper. To conclude, in addition to having processes in place for proper packaging and loading, a shipper should also review its liability insurance policies to be sure coverage is in place for these exposures. All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Your questions are welcome at email@example.com.
ROBOTS VS. HUMANS Michael J. Ryan
here has been a lot in the news recently about the expanded use of robots. How would robots work in the parcel business? The real answer is that technology is already a key driver for productivity by the major carriers. It all started with the barcode, and now there are sorting facilities that have humans only placing or removing packages from the operation. The use of robots in the parcel business will continue to grow in the future. One of the first customer-facing robots (“Sam”) in the parcel business is working in a FedEx Office in Manhattan. Sam assists the local staff in bringing broken Samsung devices to the back of the store as the front desk associate completes the transaction. FedEx CEO, Fred Smith, was quoted at a recent conference as saying, “Don’t be afraid of
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technology and innovation and robotics. It makes people more productive. It makes goods less expensive. It makes life better.” We have seen how this has come true in the automotive manufacturing in the US. In fact, one could argue that robots saved the auto industry from leaving the US. There is a keen drive to bring more manufacturing back to America. It will be the use of technology and robotics that will drive this higher level of productivity and allow US manufacturers to be more competitive with lower wages from around the world. I recently attended the ProMat conference in Chicago, and robotics will be more attainable for smaller organizations.
iRobots are good for business as long as we don’t lose the human spirit in the process. Let’s take a look at how robotics will impact the parcel business. There are three components to the physical movement of a shipment: pick up, transport, and
delivery. There is no question that robots will assist in the transport segment. There are active situations that have “driverless” trucks on the road doing long haul moves. This is in an early stage but gaining acceptance and viability. There is also a strong possibility that robots could be used in manual sort facilities. These facilities usually have very physical, demanding tasks that could be done with limited downtime and high productivity. On the pick-up side, robots could be used in high-volume areas like office buildings, retail stores, and mobile drop boxes. On the delivery side, they could be used to assist drivers in unloading trucks and making simple deliveries. As you can see, there are endless opportunities. In this new machine-to-machine work world, there will be new jobs created to support and maintain this new workforce. We have seen this in many industries, but it will start to take shape in the parcel business. It has been stated that the new norm is a $3.00 delivery in the US… this can only be achieved by a high level of automation in the process. Robots are good for business as long as we don’t lose the human spirit in the process.
Michael J. Ryan is the Executive Vice President at Preferred Parcel Solutions and has over 25 years of experience in the parcel industry. He can be reached at 708.224.1498 or michael.ryan@ preferredship.com.
PARCEL May/June 2017