JANUARY-FEBRUARY 2017 www.PARCELindustry.com
Take Your Parcel Operation to
PARCEL AUDITING 101. P.14
TIPS TO THINKING LIKE A CARRIER. P.16
UNDERSTANDING YOUR CARRIER CONTRACT LANGUAGE. P.18
OPTIMIZING HIGH-SPEED ORDER FULFILLMENT. P.24
CONTENTS /// Volume 24 | Issue 1
14 16 18 20 24 06 EDITOR’S NOTE A New Year, a New Look By Amanda Armendariz
08 SPEND PERSPECTIVES Changing Dynamics of Global Trade and the Effects on the Small Parcel Market By John Haber
10 OPERATIONAL EFFICIENCIES The Politics of the Supply Chain By Susan Rider
14 PARCEL AUDIT 101 If auditing your carrier invoices isn’t a standard practice, you could be leaving money on the table. By David Wedekind
16 HOW TO THINK LIKE A CARRIER Come prepared to your next contract negotiation by changing your mindset. By Glenn Gooding
18 IS YOUR CONTRACT INTACT? Our top tips to understanding the language of your carrier contracts. By Brittany Beecroft
20 DELIVERY DISRUPTION IS DRIVING SHIPPER-CARRIER COLLABORATION Changing the way we view these relationships could benefit us all. By Mike Comstock
24 OPTIMIZING HIGH-SPEED ORDER FULFILMENT Decrease order turnaround times without breaking the bank. By Ed Romaine
26 AND THE AWARD GOES TO… Cascade Orthopedic Supply took home the Game Changer Award at the 2016 PARCEL Forum. By Amanda Armendariz
30 WRAP UP Technology Changes Everything By Michael J. Ryan
4 PARCELindustry.com JAN-FEB 2017
APPLICATION ARTICLES 12 Using Lights to Sort with LightSort Engineering Innovation Inc.
13 Why Your Parcel Auditing Recovery Is Underperforming ClearView Audit
28 Customers Want a Personalized and Customized Approach with Their Small Package Shipping PITT OHIO
29 Regional Small Package Carriers Are Providing A Valuable Alternative U.S. Cargo
PUBLISHING PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITORIAL EDITOR AMANDA ARMENDARIZ [ firstname.lastname@example.org ]
EDITORIAL DIRECTOR ALLISON LLOYD [ email@example.com ]
AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ firstname.lastname@example.org ]
CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (o) 608.442.5064 (m) 608.235.2212 [ email@example.com ]
PARCEL PARCEL (ISSN 1081-4035) is published 6 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2017 © 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 www.PARCELindustry.com
JAN-FEB 2017 PARCELindustry.com 5
A NEW YEAR, A NEW LOOK
By Amanda Armendariz
ou may have noticed that we are looking a little bit fresher and more modern in this first issue of 2017. Yes, we decided it was time to update our overall look, and we hope our readers enjoy it. But don’t worry — the content will always reflect the overall mission of PARCEL, which is still, and always will be, the same — to educate small-parcel professionals on the ins and outs of this ever-changing industry. So take a peek at our new look — we hope you like it! And speaking of the new year, one thing that I always appreciate about January (despite its post-holiday dreariness) is the fresh start, a chance to take on personal and professional goals that I perhaps did not achieve
6 PARCELindustry.com JAN-FEB 2017
during the previous year. That’s why this issue of PARCEL is filled with tips and tricks to help you start the year off right. From carrier contract negotiation tips to improving your relationships with the carriers (just to name a few), this issue is jampacked with almost everything you need to make 2017 your best yet. Whether you’re a parcel veteran or new to the industry, there’s something in here for you. And speaking of starting your year off right, I want to remind you to begin thinking about this year’s PARCEL Forum. I know, it’s only January, and registration doesn’t open until May, but I advise you to keep this event in mind as you plan for this year’s professional travel. As a reader of PARCEL, you know the top-notch content we provide. The PARCEL Forum is the same way, with the added bonus of allowing you to network with other logistics professionals and solution providers. So as you’re planning out 2017, be sure to visit www.PARCELForum. com for more info, and mark your calendars for September 18-20. We hope to see you in Nashville! Wishing you a happy and profitable 2017, and 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!
An Analysis of the FedEx and UPS Pricing Changes for 2017 By David Faour
UPS November Surprise a Classic Example of Duopoly Power By Glenn Gooding
Parcel Pricing and Benchmarking Survey — Live PARCEL Forum Results Unveiled By Rob Martinez
View on Website
CHANGING DYNAMICS OF GLOBAL TRADE AND THE EFFECTS ON THE SMALL PARCEL MARKET By John Haber
n 2016, the UK vote to leave the European Union and the election of Donald Trump as the 45th president of the United States were among the most visible of the perceived shifts away from globalization. As the UK eventually leaves the European Union, the likelihood of higher costs for cross-border trade with this country is possible, whereas the election of Donald Trump could mean an end to trade agreements such as the Transpacific Agreement (TPP) and NAFTA. As the world seemingly turns its back on globalism, many wonder how it will impact cross-border trade. FedEx and UPS have both been vocal in their support for globalization and strongly oppose restrictions on global trade. “We have tens of thousands of highly compensated people working for FedEx in the United States who are
8 PARCELindustry.com JAN-FEB 2017
involved in trade — pilots, mechanics, customs-clearance people, pickup and delivery personnel. That’s the story that never gets told when the tragedy of a local plant closing gets put on the TV.” – Fred Smith, CEO of FedEx “When we look at trade agreements, TPP in particular, we’re looking through the eyes of our customers. Our customers are telling us that they need to be able to hit these markets that are covered in TPP. They need some of the complexity taken out of the international trading rules.” – David Abney, CEO of UPS. RISE OF GLOBALIZATION Since World War II, the growth of globalization has risen steadily. Various publications note that there were four trends that hastened globalization: Multilateral trade negotiations of the General Agreement on tariffs and Trade (GATT) — the precursor of the World Trade Organization prior to 1995 Liberalization of trade and investments Deregulation and privatization of national industries Cheaper cost of foreign trade from technological developments in telecommunications and transportation As globalization grew, outsourcing became a norm for many companies looking to optimize costs. Some of the earliest US industries to feel the effects were the apparel and
textile manufacturers as many outsourced operations to Latin America and Asia. On the heels of the apparel and textile manufacturers were the high-tech companies, and the effect was tremendous. Once China joined the World Trade Organization in 2001, the country became the world’s leading manufacturer, producing about 80% of the world’s air-conditioners, 70% of its mobile phones, and 60% of its shoes. As manufacturing spread to emerging markets such as China, India, and Southeast Asia, supply chains expanded and integrators like DHL, FedEx, and UPS invested in acquisitions and global networks to take advantage of the growth. THE GREAT RECESSION The good times ended in the late 2000s and early 2010s as many large and well-established investment and commercial banks in the United States and Europe, which once benefited from over-inflated asset prices and risky loans, suffered huge financial losses and, for some, bankruptcy. As a result, governments had to step in and bail out numerous business and financial institutes. At the height of the global recession in 2009, the World Trade Organization reported that global trade contracted nine percent. This contraction was in conjunction with rising unemployment and declining commodity prices. Countries such as Brazil, who had become a star in global trade, soon saw its star dim thanks to its overdependence on commodity exports and even
six years after the recession has not fully recovered. Declines in cross-border small parcel transport were felt by DHL, FedEx, and UPS as manufacturing came to almost a complete halt. To stem losses from their respected international divisions, air capacity was reduced and networks were retooled to meet the reduced demand. THE RECOVERY The world emerged from the global recession much different. Slower economic and trade growth has defined this period; however, even though e-commerce has been around since the mid-1990s, the burst of technological advances and the rise of unconventional competition in this period has resulted in changes in how industries conduct business. For many, operational efficiencies are becoming a great benefit, while for others, the closing of physical stores has become a necessity to survive. Even the small-parcel providers have not been immune to these changes. The rise of e-commerce and Amazon as a logistics competitor, for example, has resulted in DHL, FedEx, and UPS investing heavily in sorting facilities, alternative delivery locations, route optimization, cross-border, and more to shorten the final mile as parcel volumes continue to grow and margins become more difficult to maintain.
OUTLOOK The 2017 outlook is perhaps one of the most difficult to foretell thanks to political changes yet to be put in place. Still, FedEx and UPS remain positive for the US economy. FedEx noted in its fiscal second quarter earnings report, “Consumer fundamentals remain solid as a tightening labor market supports incomes and spending. Business confidence has also improved, which should translate into greater capital spending next year, especially as the energy sector gradually recovers.” UPS’ optimism for 2017 is evident with its October announcement of 14 Boeing 747-8 cargo jets, a deal worth $5.3 billion with the
first plane scheduled for delivery later this year. UPS will deploy the cargo planes on international routes while shifting some earlier-model 747s to domestic routes. On the global front, there are risks to the outlook, including geopolitical tensions and the possibility of economic policy missteps around the globe. Despite these risks, DHL, FedEx, and UPS will continue to invest in global trade and will adjust services and networks in a timely manner to address potential global risks.
John Haber is the Founder and CEO of Spend Management Experts. Contact John at solutions@ spendmgmt.com.
JAN-FEB 2017 PARCELindustry.com 9
View on Website
THE POLITICS OF THE SUPPLY CHAIN By Susan Rider
ne of the most paralyzing, detrimental things for a supply chain is politics. I’m not talking about Democrats or Republicans but, rather, executives and teams that feed on power and are jealous of other department successes. Most leaders believe their executive teams work together for the better core of the company and that undermining and brutal designs of usurping power does not exist. But are they correct? Hardly! This disease, so to speak, is present in so many organizations today, and when it is fed, it becomes like a cancer. Oftentimes, when it’s opened up, it gets worse but is harder to discover because it gets smarter and hides better. Good people usually get frustrated with politics and will simply just move on. Some brave executives will face it head on but
10 PARCELindustry.com JAN-FEB 2017
usually get the “you’re not a team player” comment. Consultants that make it apparent and report it get replaced. No one wants to admit that this disease of corporate politics almost undoubtedly lives and thrives within their company; even the least political CEO can breed politics in the corporation. So how do you discover if your company is thwarted by politics? Hiring is a major way to stop the bleeding. Hire people that really want to work for a company and make it successful versus working for their own political gains. You can tell their motives by asking them why they would like to come work for the company. Surprisingly enough, some will say it looks like a good place for advancement. The other clue is their resume. Moving along every two years to collect a better title can be a red flag. You should also have a strict rule on performance compensation being tied to the company’s success. If political executives’ compensation is tied to the success of the others, they will be less likely to undermine other departments in the company. An anonymous, complete review of a department or executive may give you some intelligence on what is really happening within the company. But you must act on it; if someone puts their neck out enough to really be truthful and tell what’s going on and nothing is done, the
next time it happens, no one will risk complaining. You are therefore fueling the corporate politics engine. But you must determine and investigate if these remarks are just a soured employee disciplined by the executive or if the complaints have merit. Uncovering the facts is a tricky game, and the larger your company is, the harder it is. REAL-LIFE EXAMPLES The IT company is a usually a place where politics reign. Companies that have strong IT departments where the IT executive feels he or she runs the company usually have many problems. The IT department is a service department. All other departments in your company are customers to the IT department, and if you change the compensation based on the grade the other departments give the IT managers and executives, you will see a totally different organization. Unfortunately, the critical supply chain usually falls way down on the IT manager’s list of priorities. Merchandising and distribution is another area. The merchandisers (people that order the products to sell) can often be overheard saying, “Those idiots in distribution did it again!” These two companies need desperately to work as a team. One good way is for merchandising to work in distribution for a week or, better yet, busy season to discover just how hard it is to make merchandising’s demands.
Susan Rider, Supply Chain Consultant, Executive/Life Coach can be reached at firstname.lastname@example.org.
By Clark Cassell View on Website
Using Lights to Sort with LightSort Engineering Innovation Inc. (Eii) introduced its new LightSort parcel processing solution at the 2016 Parcel Forum and received a strong reception from conference attendees looking for innovative and cost effective solutions for their operations. LightSort was originally designed for a customer wanting both to increase throughput and reduce errors while sorting lightweight parcels and poly bags for the Postal Service. The customer also wanted a system that was flexible and mobile so that changing sorting configurations was quick and easy. LightSort accomplishes this with a modular sorting rack that features several bin locations. When a barcode on a package is scanned, the correct bin destination “lights up.” Guesswork is eliminated and sorters can get the package to the right location every time. Any number of racks can be integrated into a sorting system. The solution’s ease of use begins with quick assembly and intuitive operator training. For operations that have ongoing changes in sorting requirements, racks can be moved around in differing arrangements and bin locations instantly re-designated with new sort plans. Rearrangement and new sort plans might happen several times a day. Operations that need to sort to a large number of destinations can split the work up into sorting groups. For example, a sorting requirement with 750 locations might be split into three groups of 250 each. This would necessitate only 18 racks vs. 54 of them, considerably reducing floor space requirements. Changing sort plans is as easy as onboarding a CSV file via flash drive onto the rack controller device, and then scanning a sort plan barcode to determine which plan to activate. In the above example, if the three plans were utilized daily, operators would need only to scan the appropriate sort plan barcode when going to the next group of parcels. LightSort’s features a wireless ring scanner that’s integral to the solution’s success. It allows for hands-free operation and barcodes can be sorted from any angle. Another key attribute is the organization of bags into the bin locations. Up to ten bags can be preloaded into each bin. When a bag is full, the operator can quickly unhook it, push it out the back and lift the next one into place.
At the Parcel Forum, Eii was elated when people came up and offered ideas for the solution that they could see in their own operations. Perhaps the most significant one was reversing the workflow entirely and utilizing the system in picking environments for small items. LightPick is now on the drawing board. With LightSort, Eii has once again shown that throwing more automation at a problem isn’t always the optimal approach, especially if that automation is prohibitively expensive. LightSort leverages low cost technology, giving operators the opportunity to do their job more quickly with greatly reduced error and less stress. For more information and to see a short video, visit Eii’s website at: http://www.eii-online.com/products/lightsort You can also call 800.350.6450, extension 4110, or email Sales@eii-online.com Clark Cassell is a Business Development Associate at Engineering Innovation Inc.
800.350.6450 Sales@eii-online.com http://www.eii-online.com/ products/lightsort
By Brad Hollister View on Website
Why Your Parcel Auditing Recovery Is Underperforming As we begin reviewing our company’s shipping metrics from last year, we find ourselves trying to analyze bits and pieces of data from various sources and multiple carriers which are equivalent to a stack of digital cocktail napkins. Most shippers quickly recognize they do not have the tools to perform a proper analysis of our carriers. Without data nor accurate metrics, most shippers are dependent upon our incumbent carriers providing their own carrier scorecards which inevitably reveal their service was an astounding 99.9% on time. At the same time shippers are admiring the service results reported by our carriers, most shipping executives are simultaneously receiving solicitation calls and emails from inside salespeople at ambitious parcel auditing firms with a promise for savings ranging anywhere from 3% to 7% of shipping costs. What gives? Where is the discrepancy between carrier service claims and auditor service claims? In hopes of shedding some light on the incredible discrepancy between carrier service reports, let’s think about these two drastically different claims made from 1) the major carrier’s perspective and 2) the tempting claims from sales people claiming to recover ‘free’ money without any work from the shipper. The use of cutting edge technology has helped make the networks of parcel carriers (including regionals) nothing short of remarkable. Carriers employ thousands of people with sole the purpose of creating ways to further improve service and efficiency. The problems causing package mis-sorts, missed linehaul cuts, or any other list of service issues are quickly identified by engineers and carriers move quickly to repair the underperforming segments into a more efficient operation than the other service centers. Carrier service is good and only getting better with each passing day. Most parcel auditing company’s’ claims paint a much different picture. Many overly ambitious salesmen compete mainly by exaggerating claims including “XYZ auditing firm finds more than any other auditing firm”, or that “Typical savings range anywhere from 5% to 7%.” While it is likely that all auditing
firms have found more than another firm on an instance, or found an abnormal recovery period, neither is the norm for the parcel auditing industry. If any carrier terminal or service center operated at a 93% or 95% on time delivery rate, people would lose their jobs until the target service levels were restored. How important is parcel auditing? Most shippers audit their invoices. At the most recent Parcel Forum 66.7% of respondents reported they utilize a third party auditing firm and 15.6% of respondents audit their invoices internally. The measurable result of small parcel auditing on a company’s shipping costs will be greatly determined by its package characteristics. If you utilize more expedited shipping services, you will experience a greater failure rate than using ground services. For ‘late shipment’ package auditing, shippers may want to temper their expectations without selling the exaggerated claims of savings to upper management. The largest benefit of parcel auditing for many shippers is not only in the processing of late shipments, but having access to data. If the only strategy is to review weekly invoices, companies are missing a tremendous opportunity. Too many auditing firms merely review online bill on a weekly basis to find late shipments, and ignore treasure trove of information which is available when accessing all of shipping data (across all carriers) in real-time. Auditing is an important tool to provide visibility and ability to fix broken processes. As supply chain strategies become more automated and advanced, shippers will require more from their auditors than simply processing of Guaranteed Service Refunds (late shipments). Tomorrow’s real-time Audit will truly transform how you monitor and control your entire supply chain and will yield greater results, which will be critical in future, particularly as carrier networks become stronger and more efficient. Brad Hollister is the Executive Vice President of ClearView Audit, a cutting edge Technology company located in Madison, WI which specializes in shipping execution, auditing, and analytics across all modes of transportation in real-time.
http://clearviewaudit.com email@example.com 608.709.8050
PARCEL AUDIT 101
View on Website
If auditing your carrier invoices isn’t a standard practice at your organization, you could be leaving money on the table.
new year is often the time to implement new processes. With peak season behind us, it is important to reassess freight and parcel audit processes — what works, what doesn’t, where can you save, or even where you should start. Freight carriers submit invoices on a daily basis, while small package providers will generally invoice on a weekly basis for each active account, including all of the shipments that were either manifested or picked up in that week’s billing cycle. There are many similarities between carrier invoices; however, how claims and credits are managed is very different. Of note, some carriers do not allow short payments in their standard invoicing processes and will only issue a credit for claims that were approved in a future billing cycle. On the other hand, other carriers do allow adjustments to be made in advance of payment and will approve the claim and adjust the amount due prior to payment. This point is important because the audit process and timeline for claim
14 PARCELindustry.com JAN-FEB 2017
submission will be dependent on the carrier and type of claim. In order to perform a comprehensive audit, it’s important to focus on the following four audit points. RATE AUDITS The purpose of a rate audit is to ensure that a shipper is billed per the original negotiated rates in an agreement and published carrier tariff. Rate audits are the least likely to result in consistent savings but can result in the largest claims if an error is made on the invoice. Most often, rating errors are identified when new agreements are executed or accounts are created that need to be inclusive of a shipper’s rating agreement. A good rate audit ensures that all of the negotiated discounts, incentives, and other agreed-upon terms are invoiced per the agreement. The rating process requires that carriers are able to capture the service, zone, weight (billable, including DIM), and shipper information. Based on this detail, auditors should be able to confirm that all charges are invoiced correctly.
BILLING ADJUSTMENTS The billing adjustment audit confirms that any invoiced accessorial charge was accurately billed based on the shipment information. There are many accessorial fees that can be assessed on a package. Just because a shipper incurs a residential surcharge or address correction does not mean that the charge is valid and should be approved for payment. A good example is an address correction. Often, carriers will assess this fee if there is any difference between the consignee address provided on the manifest and the actual delivery address. Regardless of the extent of the difference, an address correction can be applied by the provider. Often, these charges can be disputed and reversed if a shipper has proof that there was not a material difference between the two addresses. This particular charge also is an exception to highlight if a shipper is consistently receiving a surcharge for packages shipped to the same address. In that case, the billing audit should result in reference data clean-up that will eliminate the potential to incur the charge altogether. Billing adjustments are
By David Wedekind
very common, but they can be difficult to identify without the proper tools. If a shipper is not reviewing these charges and validating they should be applied, money is being left on the table. LATE SHIPMENTS Of the audit points, the ability to identify packages that were not delivered on time will result in the most consistent cost savings and the highest return. Unless there is a valid exception reason, a late package will result in a credit for the transportation expense, presuming a waiver for late shipment filing is not included in the terms of your agreement. Both carriers’ networks are designed to deliver packages on time, but often anywhere from two to five percent of packages do not meet the service commitment. The percentage of late packages increases significantly around seasonal peaks, to the point that both providers waive the service refund rights of all shippers for everything but express or overnight packages from the end of November through Christmas. The window to file for a
late package is only 15 days from the invoice date; therefore, it is important to implement a process that identifies these exceptions quickly and to have resources in place to rapidly file these claims. Beyond the credits obtained from service failures, understanding how each provider is performing by service level is critical. Late deliveries directly impact the customer experience and, if not reviewed, can have an impact well beyond transportation charges. COMPLIANCE AND OS&D In addition to auditing the charges submitted on an invoice, the audit process should also look for invalid shipments, duplicate shipments, and support the process for filing for lost and damaged shipments. Compliance auditing is best supported when the invoice data received is validated based on the manifested detail. Supplementing the invoice with the shipment or order information will ensure that a shipper is not billed for shipments that are not their own, that shipments planned but not delivered are tracked, and, in most cases, will
include enough order information to help facilitate damage claims. CONCLUSION Shippers need to be diligent about how much they are spending and saving on parcel shipping. Terms are ever changing, forcing companies to strategically develop, implement, and continuously refine a freight audit processes. David Wedekind is Director of Operations at enVista. Within this role, he is responsible for the implementation and management of all freight and audit parcel customers across enVista’s Carmel, Indiana, Ellesmere Port, England, and Hyderabad, India offices.
FOR SPECIFIC HELP ON PARCEL AUDITING, PLEASE CONTACT: AFS Logistics | www.afs.net ClearView Audit | www.clearviewaudit.com enVista | www.envistacorp.com Intelligent Audit | www.intelligentaudit.com RateLinx | www.ratelinx.com Veraction | www.veraction.com VeriShip | www.veriship.com
JAN-FEB 2017 PARCELindustry.com 15
View on Website
HOW TO THINK LIKE A CARRIER: CONFESSIONS OF A FORMER CARRIER COST MODEL EXECUTIVE By Glenn Gooding
f there is one thing I have learned in over a decade in the shipping consulting space, it’s that the majority of shippers fear making a carrier change. They’re scared that if they push too hard, they’ll get dropped. So how do you, as a shipper, approach your carrier with confidence that you will get a better agreement? Simply put, you need to be as prepared as the carrier is. You need to know what they know. They want your business, provided that they can capture it at the right price. So you need to know which details their pricing executives care about as they assess your characteristics. When the carrier evaluates you as a current or potential customer, they see you through four filters. #1 – SMALL PARCEL SPEND One of the first ways the carrier looks at
16 PARCELindustry.com JAN-FEB 2017
pricing decisions based on that knowledge. The non-incumbent carrier will do a lot of homework to analyze the landscape and answer questions about how the incumbent prices, wins, and retains that industry vertical. With these answers, the non-incumbent can look at ways to enter that space and gain traction to compete in the field.
you is through your small parcel spend. This factor determines how to proceed in pricing decisions. If you’re a small- to medium-sized shipper (under $100,000 annual ship spend), the process is straightforward. The carrier profiles your unique shipping characteristics, including product mix (air vs. ground service levels), commercial versus residential percentages, weight and zone distributions, and delivery density. Then, based on those thresholds, the carrier will proceed with the finer details of the negotiation. Things start to get interesting for medium- to large-sized shippers (more than $100,000 annual ship spend) because carriers look at more than the company itself — they examine your alignment with their network as well as with your industry vertical. UPS and FedEx undergo intense competitive analysis to see how the competition plays in a vertical, and they make their
#2 – ALIGNMENT WITH THE CARRIER NETWORK Carriers really work to create value-added solutions that are meaningful to your business as well as to your specific vertical. Their goal is to improve margin and to make their solution sticky. While the carriers’ cost to ship is always a component, their pricing decisions aren’t limited to costs alone. At this point, the science of negotiation transforms to an art, and they look to provide you greater value and to make themselves attractive to your industry. One example of carrier network alignment would be an “end of runway” solution, where a distribution center is built close to a carrier’s major shipping hub. This relationship undercuts the carrier’s immediate profitability, but it provides a long-term win by securing business, making it hard for the customer to switch to another carrier. Companies and customers in that industry get faster service at a lower cost, while the carrier gains reliable business from the stickiness of the value-added service. #3 – COMPETITION AND CREDIBILITY Next, carriers evaluate the competitive risk of losing your business or engaging with you as a potential client. That evaluation is dependent on whether the carrier is an incumbent or non-incumbent. The incumbent carrier carefully evaluates the risk of losing you. It wants to retain your business and will make sure the services it offers you go above and beyond competitive rates. Pricing executives analyze your rate structure, contract, and terms and conditions. Then they evaluate your negotiation history with the company.
Have you been with them for many years? Do you have a record of threatening to leave but never following through? In addition, your incumbent carrier looks at how effectively it has been integrated with you as a customer. The more ingrained your business is, the harder it will be for you switch to a competitor, and the risk of losing you goes down. Conversely, non-incumbent carriers care about the likelihood of gaining your business. When you approach the non-incumbent as a potential customer, the organization sees how ingrained you are with your incumbent carrier as a measure of your credibility. The non-incumbent takes a risk by engaging with you. In fact, when I hear a client say, “At the end of the day, we want to stay with our incumbent,” I never advocate that they actively engage the non-incumbent. The move would likely do more harm than good because the non-incumbent carrier will sense they have no chance of winning the business. If you have any history of approaching the non-incumbent carrier with a promise to sign a deal, then backing out, executives will take that into consideration. #4 – BRAND With the very large clients, brand matters. Alignment with a strong brandname shipper can be seen as a strategic win or a crown jewel in a carrier’s list of clients. Will your brand add value to theirs if they work with you? If so, this could be the final droplet that tips the scales in your favor. Additionally, there is often a synergistic relationship between the brand and the carrier, becoming vendors to one another. Synergy weighs heavily into the strategic decisions made by the carriers. THE BOTTOM LINE The carriers know how you think and will come to the table ready. But with the proper approach, so can you. It all starts with thinking like a carrier.
Glenn Gooding is Executive Vice President of iDrive Logistics and an industry-leading cost model expert. Glenn can be reached at firstname.lastname@example.org or 678.567.6847. JAN-FEB 2017 PARCELindustry.com 17
View on Website
IS YOUR CONTRACT INTACT?
Carrier contracts can be tricky to understand — but it is crucial you do so. Here are some ways to make the process easier.
ne of the biggest mistakes a shipper can make is to nickel and dime a negotiation. Routinely chipping away at pieces only weakens the entire structure. Here are some things to watch out for. OBJECT: MINIMUMS UPS offers rebates — a quarterly incentive program paying shippers on a percentage of net transportation spend. Rebates reflect incentive off net transportation spend, less fuel and any applicable accessorials. Generally tiered, the revenue bands are determined by a customer’s 52-week rolling net average. Simple enough. We negotiate spend levels to ensure we achieve incentive,
18 PARCELindustry.com JAN-FEB 2017
BY BRITTANY BEECROFT
so how wouldn’t we earn the incentive? It’s actually pretty common, thanks to a little factor called the minimum. Packages that hit the minimum net package charge will contribute to rebate tiers. However, the contract language states the rebate amount will not be paid on these packages. What? Impact: Contrary to its name, minimums can pack a mighty punch to your bottom line. Say your deferred agreement offers a 4.8% rebate off the net transportation spend of $667,106. Now remove the net spend impacted by the minimum — as a general example, look at your net rate sheet provided by the carrier. Now look at your service guide, Zone 2, one pound for Ground. If you see that dollar amount anywhere on your net rate sheet,
you are hitting the minimum. That package (and spend) will not be part of your rebate payout. Your total is $536,205 counting towards the rebate. We expected a rebate check for $32,021. Instead, we receive $25,737. Multi-million dollar companies who pass on the portfolio tiers and go straight for the rebate (the logic being that cash in hand is better, no?) can destroy a bottom line if they don’t watch the verbiage in the rebate. The argument can be (and has been) made that portfolio incentives are the more reliable means of investing shipping back in your company; gross spend, not subject to minimums. If your company prefers the deferred incentive, just double check for these five words — subject to all applicable minimums. If you can’t remove the verbiage, try to reduce the minimum. OBJECT: WEIGHT An issue for many shippers is knowing
package weight. And by package weight, we don’t mean the weight you recorded in your warehouse when you packaged the item. We mean the weight at which the carrier billed you. If you ship fishing poles and hockey sticks, “billed weight” is no stranger to you. But our friends in the jewelry and small goods business may also be experiencing this as UPS and FedEx shift the dimensional divisor to 139. Multiply your box dimensions — LxWxH. Divide by 139. The number you get is the billed weight of your shipment. For those of you avoiding the dim by using a FedEx box, grab an invoice and make sure you aren’t paying MBW (Minimum Billable Weight). Your aim for this object better be good because billed weights are moving targets. Impact: If your aim is more suited for a target the size of a grizzly bear versus skeet shooting, dim adjustments would be your object of choice. Let’s look at a $200 milion shipper. Annualized impact for 2016 is a little over $15 million. With the change to a dim of 139, the pending impact is over $17 million. That’s a two million dollar cost increase and a dim impact almost 10% of net cost. The shipper, and most likely its customers, will feel that hit, so we would consider dimensional waivers based on account number or a freeze in the logic change. An option often overlooked, but very effective, is negotiating the billed weights to offset the increase in cost — since it is those weights driving your costs. MBW is more akin to a deer, as it’s a bit more difficult to detect.
The tube can be expensive. We’re sending some promotional material Standard Overnight to Zone 6. The actual weight of the tube is one pound at a $54.35 list rate for 2017. Applying MBW, the billed weight is seven pounds at now a $92.02 list rate — an increase over 69% at list. And if we didn’t realize this surcharge existed or understand its impact, we probably didn’t negotiate discounts at the seven-pound weight, which is your billed weight. OBJECT: GRI GRI (General Rate Increase) is as direct an impact as you can take because it impacts everyone. Unless you are in the very small percentage receiving your own custom list rates, everyone’s service guide is increasing — not saying your rates are if you have a cap or freeze (that’s impact), but the object itself takes a blanket hit. For 2017, FedEx stated the following average increases: Domestic Express and Export/Import go up 3.9%, while Ground/Home Delivery increases 4.9%. Impact: We thought our rates would increase five percent — turns out they went up over 10% because of weight. How do we get that increase more manageable? We want to limit the impact — cap or freeze the increase. Adjusting incentives is how carriers implement the cap. Year 1, you receive a four percent rate cap with a 60% reduction to Next Day Air. When we move into Year 2, FedEx won’t generate a service guide specific to the cap — they will adjust your incentives to offset the increase.
Unless you are in the very small percentage receiving your own custom list rates, everyone’s service guide is increasing.
Your 60% could now become 60.8% — the equivalent of a four percent increase. Don’t forget minimums (if it’s not the weight it’s the mins, right?). If you don’t have flat minimums, your work on the cap is not done. If those reductions change from that last time you negotiated, your list rate could be at a four percent increase, and your minimum charge could increase 16% due to the change in the reduction. Be sure the clause applying the cap to the minimums is on your contract as well. OBJECT: RAMP UP This one really goes one of two ways — no impact at all or complete discount annihilation. Ramping up (grace period) is essentially restarting your contract’s revenue aggregation. You are offered a certain discount, at a certain tier, for a certain period of time in exchange for all spend that went into your tiers being removed. You will then “ramp up” that spend over the designated weeks until you hit the target tier. If your spend is consistent week over week, no problem. Or if you had some low volume months, you can restart the Earned Discount to shed the lesser spend, which otherwise wouldn’t come off until the 52 weeks ran its course. Those seasonal pockets or changes in revenue can create a healthy net rate increase, and your customers’ reactions to their subsequent increases are generally less than graceful. Impact: We need to watch any net rate increases when falling off tier if we ramp up. Revenue tiers reflect gross spend and gross discounts. The change in that discount is your net rate impact. A four percent tier discount, when lost, can create a 12% net rate increase if your base discount is aggressive. The more aggressive the contract discount, the more aggressive the net rate increase when the discount is lost. Limit the net rate impact to keep your contract intact.
Brittany Beecroft is Regional Sales Vice President at AFMS. She can be reached at 304.374.4739 or email@example.com.
JAN-FEB 2017 PARCELindustry.com 19
DELIVERY DISRUPTION IS DRIVING SHIPPER-CARRIER COLLABORATION View on Website
Too often, shippers and carriers feel at odds with each other. Changing the way we view these relationships could benefit everyone. By Mike Comstock
he small parcel market is transforming rapidly based on the demands of e-commerce, omni-channel capability, and the bold moves of Amazon. Consumer demands are evolving, driven by Power Shoppers and Millennials. They are becoming more focused on not only cost but choice, control, and convenience of online shopping. This poses a challenge for shippers in their efforts to serve their customers. For example, Millennials are three times more likely to use an internet delivery service than non-Millennials, according to the 2016 UPS Pulse of the Online Shopper study. Carriers continue to evolve their services to provide more choices and flexibility, but pricing is complex and continues to increase, squeezing margins of online sellers. There is no shortage of insight and advice on how to sharpen one’s skills in negotiating small parcel carrier agreements. And while negotiating favorable discounts can drop more margin to a shipper’s bottom line, it must be remembered that the carrier is an extension of the online seller’s value chain that touches the customer. And carriers must
20 PARCELindustry.com JAN-FEB 2017
recognize that their services and pricing must allow e-commerce retailers to compete with Amazon. With this in mind, can shippers and carriers really work more collaboratively to profitably improve the customer experience? Dan Gagnon, VP Marketing for Global Logistics and Distribution at UPS, offers three tips to improve collaboration. 1. Allow the carrier to understand your business strategy. Is the goal to double profit or double business? 2. Share as much information as you can about your products and customers. Understanding the characteristics of products as well customer buying behavior will enable the carrier to provide services that are appropriately suited to the shippers’ requirements and their customers’ needs. 3. See the big picture…. both now and how it is evolving. Understanding total cost, not just the shipping cost, is important to overall success. Clearly, these tips require a degree of collaboration between the carrier and the shipper that may not always be easy to find, but doing so will return benefits. Furthermore, both shipper and carrier must possess a common perspective that collaborative relationships are truly a win-win. Mr. Gagnon says that in his experience, working in partnership with shippers offers both initial benefits and benefits that continue to accrue as the business relationship evolves. Shippers, however, harbor the concern that intertwining their operations too tightly with their carrier leaves them susceptible to price increases for which there is no alternative, since the cost of change to another carrier is unacceptably high. In fact, creating high switching cost is a widely used tactic in both the shipping as well as other industries. Another concern for shippers is the possibility of significant disruption due to a labor action of a union-organized carrier. A recent example is the potential risk associated with the UPS aircraft maintenance workers’ recent authorization of a strike if their threeyear-old negotiation fails to produce an acceptable contract. So, can collaboration really exist in the small-parcel shipping world? Collaboration is a relationship that is built on breaking down friction points and impediments between the shipper and carrier. It requires management buy-in, mutual trust, efficient flow of information, and the ability to understand and measure the benefits of the collaboration, ensuring a true win-win outcome. The diagram on the next page suggests an approach in describing the increasingly aligned relationship between logistics providers and their customers. Most e-commerce shippers would fall in the cooperation or coordination category. Company objectives, quarterly targets, product yields, and individual incentives can all work against collaboration if not properly aligned. That alignment may require a change of perspective for both carrier and shipper. Carriers need to consider the lifetime value of customers rather than looking at only product yields. Shippers must consider total costs, not just freight rates or discount levels. So what can prompt collaboration? The short answer is competition. JAN-FEB 2017 PARCELindustry.com 21
The duopoly of small parcel shippers has resulted in near parity between FedEx and UPS when it comes to services and Price-based negotiations arm’s length relationships pricing. A move on the part of one precipitates a near identical move from the other. But the Cooperation landscape is changing. Competitive pressure from Amazon has Fewer suppliers Longer disrupted the market in terms of term contracts cost and service. Driven by the need to compete with offers such as free shipping, Coordination online retailers have been the catalyst for UPS, FedEx, and Information links other carriers offering lower cost E-enablement, integrations services using USPS last mile delivery. The evolving e-commerce landscape is the catalyst Collaboration for improvements in service offerings beyond simple pickup Joint SC strategies Technology sharing and delivery of shipments For example, both UPS, with Source: Harrison, A. and Van Hoek, R. (2008), “Logistics MyChoice, and FedEx, with DelivManagement and StrategyCompeting through the supply ery Manager, will notify recipients chain”, 3rd edition, Pearson of impending deliveries, delivery Education Limited. delays, release signature, vacation holds, and enable recipients to redirect deliveries to alternative points or tailor a delivery window but for an additional fee. This capability serves the customer with more flexible delivery options while improving the delivery efficiency of the carriers through reducing re-deliveries. Although some e-commerce shippers encourage their customers to sign up for these services, the question is whether the uptake is significant. A collaborative approach would see the carriers develop an incentive scheme so that shippers could in turn incentivize their customers to register for this service or perhaps automatically register them with the ability to opt-out. Another area that is an opportunity for collaboration and an area in which Amazon has taken the lead is the return process. Providing free returns and quick refunds are high on the list of priorities for online shoppers. In fact, the UPS Pulse Online Survey indicates that 81% of online shoppers say it is important or very important for e-commerce sellers to offer free returns. Both UPS and FedEx offer return services which, if effectively implemented with outbound shipping, provide a convenient service and a high level of certainty that return shipments travel with the originating carrier. When combined with a customer-friendly refund process, online retailers can provide a return process that can compete with Amazon. All key players in the small-parcel market have “solutions” groups that offer value added services. The challenge for Open market negotiation
22 PARCELindustry.com JAN-FEB 2017
shippers is to understand whether these services actually meet the detailed needs of their businesses and at what cost. FedEx, UPS, and DHL proudly display case studies about customers who have been delighted with a solution to a critical business need. In some cases, the solutions leverage their core offerings, while others were delivered through their value-added capabilities. Since your carrier is already part of your fulfillment or logistics supply chain, consider whether they can work more collaboratively. So, how can you do this? Here are several tips: Assess your current situation. Understand each step of your fulfillment value chain by looking at your various metrics. Share your assessment with your carrier representative. Make sure your carrier knows your objectives, issues, and plans. Of course, share only what is appropriate, but this may be more that what has been shared historically. Ask your carrier representative to suggest how your company’s requirements can be addressed. If the carrier offers relevant services, request a proposal including complete pricing, implementation plan, metrics, and references. Since more of your logistics value chain will be placed in the carrier’s hands, make sure there is a contingency plan in the event business does NOT go as usual. Consider whether alternative carriers may be a better option. You may have better rates from the incumbent carrier, but when including a value-added service, the total cost may increase. An alternate carrier may have a better solution in terms of cost and service. It may be the case that your current carrier and a 3PL provides for the best solution. Be honest with your carrier since you are building a more collaborative relationship. Start with a pilot implementation. Logistics processes entail a lot of detail. Make sure to get these details understood and handled properly before making a major shift in your processes. Realize you are entrusting them with mission-critical processes, so the cost and impact of switching to an alternative later may be much greater. Make sure you receive service and pricing assurances from your carrier that are commensurate with your commitment. While your carrier may not have the right solution for providing an expanded level of service for your fulfillment value chain, working with a collaborative approach will improve the working relationship. The logistics industry is in transformation, and the traditional carriers will continue to be challenged. So, whether your carrier innovates to offer new services or acquires or allies with another company who is an innovator, having collaborative relationship can only help.
Mike Comstock is Senior Advisor at Grand Canal Solutions and the co-founder of Ursa Major Associates, LLC. He can be contacted at firstname.lastname@example.org.
JAN-FEB 2017 PARCELindustry.com 23
View on Website
OPTIMIZING HIGH-SPEED ORDER FULFILMENT Want to decrease the time it takes your orders to get into your customers’ hands —without breaking the bank? Here are some of our top tips.
n today’s environment of same-day service levels in the warehouse, the definition of high-speed will vary greatly by not only the industry, application, and organization, but also from quarter to quarter and year to year. So let’s look at a number of tips that can help juice your numbers, starting with the easiest. 1. EASY PROCESS AND EXISTING HARDWARE MODIFICATIONS. Look at your order fulfilment processes as if you have never seen it before. There could be low-hanging fruit that you haven’t noticed during the day to day battles.
24 PARCELindustry.com JAN-FEB 2017
Examples include: Processes that require multiple touches. How can you kit, queue, or replenish differently to eliminate touches? Can you create a “hot zone” that eliminates orders being routed to multiple zones for completion? Eliminate zones and long-distance routing everywhere possible. Equipment that is laid out inefficiently. Existing software underutilization. Having visited thousands of warehouses, we often find processes that have either been set up improperly in their WMS or simply not utilized. In many cases, your organization owns the software, and increasing and fixing the software
functionality is truly a low-hanging fruit that is easily harvested. Documentation and promotional material inserting into orders. The number of documents that have to be inserted into an order has risen exponentially over the last few years. Unfortunately, many organizations still resort to having operators at pack-out hand-insert them. Automate this process. There is fairly new technology in the marketplace that can generate a return on investment in under a year with perfect accuracy and almost plug- and-play simplicity. 2. SLOTTING WILL OPEN YOUR EYES... AND OFTEN BLOW YOUR MIND!
By Ed Romaine
A thorough analysis of your inventory and order processing often provides tremendous value for an operation. By understanding a SKU’s physical characteristics, velocity, and order tendencies, the ability to increase throughput levels and eliminate wasted labor, floor space, and errors are usually abundant. What will a good slotting report provide for handling your fast movers? Identify where in your warehouse each SKU should be located by utilizing a number of key criteria such as: best material handling equipment, floor location, and ergonomics. This translates to less walking, reaching, stretching and bending activities, and improved throughput. You should insist on a prioritized slotting report with each SKU movement generating a cost savings. Since SKU movement comes at a cost (labor), knowing which activities will generate exactly how much in labor savings (measured in dollars) makes resource planning much easier and justifiable. Do you have a group of SKUs that would perform better with a different material handling technology than what you currently have? A good slotting and
material handling equipment configuration report can provide these answers. Optimize cube from receiving through shipping and into the truck. Will pre-packaging (or kitting) provide huge benefits? An example of this is an operation that routinely packaged SKUs in 50 quantities. A slotting analysis showed that by introducing five and 25 quantity packages of just five percent of their total SKUs would reduce their daily picking labor by over 25%. Best way to implement slotting? An organization’s choices are usually: 1. Buy slotting software and hire or train employees. 2. Utilize slotting modules in your WMS. 3. Use a third-party resource. Each choice has pros and cons. Your organization’s time frame to implement and budget will be your best guide in making the decision. 3. USING INTELLIGENT AUTOMATION. When properly automating your picking process, you will improve not only your high-speed picking throughput, but you’ll also increase your accuracy and order cut-off times while reducing labor. Which type of automation is best? The very short answer is the system(s) that optimizes your order profiles, product characteristics, and business model. For high-speed order fulfilment systems, the top technologies include: A. A-Frame Pick-to-Tote/Shipper Systems. This system is comprised of vertical channels (each containing one SKU) that automatically insert the required SKUs into a passing tote or shipper as it passes by on conveyor. These systems can pick up to 4,200 orders per hour (A-Frames pick so fast that they are not measured in lines or items, but in orders), utilize zero picking labor, have triple sensor validation for ensuring accuracy, and can be integrated into existing facilities. B. Flat Sorter (Bombay) Systems. Single items are placed onto the moving induction platforms as they pass the operator. When the platform with the needed item/SKU moves over the order requiring that item/SKU, the platform’s bottom doors open (like a plane
dropping bombs), placing the SKU in the correct order. Any combination of order destinations can be utilized to meet an organization’s requirements, such as: chutes, boxes, conveyor for bagging applications, etc. The size and length of the system, number of inductors, and order positions are determined by the order profiles and required throughput. These systems can reliably achieve throughput of 1,200 to 1,500 pieces per hour. C. Shuttle Technologies. These systems utilize a series of carts or robots that move horizontally and/or vertically in a rack system, retrieving variable-sized cases or totes and delivering them to a workstation for picking. The speed, weight capacity, rack utilization, and configuration of each system is dependent on the exact manufacturer. They generally can handle up to 75-pound loads and can perform between 750 to 1,000 lines per hour. D. Horizontal Carousel Systems, which are a series of bins with shelves mounted on a long oval track. Multiple carousels operate as one workstation (called a pod). The operator is picking from one carousel while the others are rotating and getting in position to be picked next. Integrated pick-to-light allows throughput of between 350 to 550 lines per hour with extremely high levels of accuracy. E. Robotic Horizontal Carousels can also be tiered up to three levels and an integrated robot can be used to pick from the carousels and delivered to workstations via conveyor (similar to shuttle technologies). These systems often provide throughputs of 750 to 1,000 lines per hour with a very fast return on investment. Handling high-speed order fulfilment requirements often relies on a blend of the above three tips. The key is knowing how much and when to implement, but always review your return on investment and business plan.
Ed Romaine is VP of Sales & Marketing, SI Systems. He can be contacted at 484.894.5211 or email@example.com. JAN-FEB 2017 PARCELindustry.com 25
AND THE AWARD GOES TO... View on Website
PARCEL media and PARCEL Forum were pleased to present Cascade Orthopedic Supply with the second annual Game Changer of the Year award at the 2016 PARCEL Forum in Dallas, Texas.
By Amanda Armendariz couple of years ago, Cascade Orthopedic Supply was facing a challenge: once UPS and FedEx implemented dimensional-based (dim) pricing, what was the best way to deal with the rising shipping costs that almost inevitably resulted? As an organization that ships, on average, half a million packages a year (with just a little under 10% of those shipments designated as irregularly shaped), it was crucial that the company take steps to combat this change. Its president, Jeff Collins, explains, “The switch by major carriers to a dimension-based pricing model made managing dimensional data a critical — and inevitable — step in taking back control of shipping costs. The integration of dimensioning is a significant investment, requiring research, new costs, and a rethinking of our processes.
26 PARCELindustry.com JAN-FEB 2017
We saw opportunity as well as cost: to optimize warehouse space and pick/pack operations, to give customers shipping costs in real time, and to enter a new era of efficiency and control.” The change in dim pricing did indeed present these opportunities, but it was also a challenge to find the right solution that would allow these opportunities to be realized. So, armed with their checklist of problems (growing and unpredictable shipping costs; the inability to accurately quote shipping costs to customers at time of purchase; no ability to audit shipping invoices for overcharging; and difficulty in managing irregularly shaped items), Cascade executives set out to find the perfect partner for a solution. One thing that is critical to understand, Collins shares, was that the company’s goal was two-fold. “More than simply patching individual issues, we wanted to implement
sweeping, integrated efficiencies that would create a new standard for ‘best practice.’ Our goal: to raise the bar in speed, economy, and quality in every aspect of how shipping touches our business — from first contact with a customer, through the sales and fulfillment process, and ultimately to our bottom line — yielding service, competitive, and revenue advantages.” THE PROCESS After exhaustively researching available options, Cascade became convinced that it would have to implement something new to achieve the company’s goals: an integrated combination of PathGuide’s Latitude Warehouse Management Manifest and Shipping System and Postea’s QubeVu Dimensioning Solution. This implementation didn’t disappoint. It presented modern, fast, scanning technology at an affordable price. And that wasn’t the only benefit. Collins explains, “A secondary issue was the lack of integration with our warehouse management system and ERP systems. QubeVU’s API, along with their willingness to work with our developers, allowed us to take advantage of the technology AND have it integrate with our operating systems.”
Darryn Diamond, Warehouse Lead for Cascade Orthopedic Supply, accepts the PARCEL Forum ’16 Game Changer of the Year Award Winner from Joel Dunkel, President of PARCEL Forum
THE RESULTS Some of the most significant quantitative outcomes the company has experienced are: More precise shipping quotes during the order entry process has resulted in a more effective customer service experience. Having highly accurate data in hand to use when deciding what carrier and service level to use for each outbound shipment has resulted in a net reduction of shipping costs per unit of sales. Furthermore, Collins notes that while Cascade ships primarily with one vendor, due to volume rebates that are available with consolidating the company’s shipments, one significant outcome of this implementation is that Cascade is now able to negotiate better pricing once they had more detailed information regarding the types of packages the company was shipping. Increased flexibility at the shipping station itself has resulted in a net increase in the amount of shipments that can be manifested in a given shipping day, which means nearly every order that makes it into the ERP system prior to order cutoff times now goes out same-day.
Additionally, Collins is looking forward to the opportunities this implementation will bring in terms of the availability of SKU dimensional information. “SKU dimensional information opens the doors to a host of other operational and value add services,” he elaborates. “Want to do warehouse automation? Need dimensions. Want to quote shipping charges on your website? Need dimensions. Want to work on inventory slotting? Need dimensions. This information is critical for advancing operations and working at best in class.” Feel like these changes are something to implement in your organization? Will Crosby at Postea shares his top tip. “First and foremost: Get started on dimensioning today. Install dimensioning capability on every incoming/outgoing portal and start collecting that data in a WMS that is designed for it. The more data you collect, the better off you’ll be when it’s time to plan, choose a carrier mix, and negotiate contracts.”
A CLEAR WINNER When selecting the winner of this year’s award, our PARCEL Forum Advisory Board — a group of logistics professionals who guide the educational content of the Forum — received many great submissions, but Cascade demonstrated that it truly was a game changer. The organization went above and beyond simply trying to reduce shipping costs. Instead, cost reduction was only one aspect of their goals. Their desire to capture all the data available and use it to improve their bottom line, their understanding of their shipment profile, and the customer experience made them a clear winner, in our eyes. And we were proud to present Darryn Diamond, who accepted the award for his entire organization, with the PARCEL Forum Game Changer of the Year Award during a luncheon sponsored by Spend Management Experts. Think your organization could be a game changer? Stay tuned; we’ll be sending out submission forms for the 2017 award within the next couple of months! And we look forward to presenting another worthy company with this award at the 2017 PARCEL Forum in Nashville, September 18-20!
PRODUCT SPOTLIGHT Transportation Visibility at Your Fingertips enVista is the leader in global freight audit and payment solutions. With mobile dashboards and comprehensive, real-time reporting, enVista brings unparalleled visibility and data analytics to help you better manage your global transportation operations. We are highly experienced transportation consultants, freight invoice auditors and carrier contract negotiators passionate about your success. Let’s have a conversation. enVista 317.208.9100 www.envistacorp.com
JAN-FEB 2017 PARCELindustry.com 27
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.
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.
View on Website
TECHNOLOGY CHANGES EVERYTHING Michael J. Ryan
typewriter (first manual, then electric). This became the new standard. Then came along the word processor and then the computer, which has evolved into tablets and cell phones. There are devices now that you can speak into and they do the typing for you. The cell phone is changing our world and how we purchase items. You can see how this has changed for us over time.
Is your business ready for this next evolution in technology?
he way consumers buy today will change dramatically in the future. There has been a lot of focus in the e-tailing arena on how to market your product, do effective fulfillment, and compete with Amazon. The advancements in technology will continue to change how buying habits are enabled in the future. Let’s take a look at how people communicated over time. As humans evolved, languages were developed. The fountain pen came into existence and, soon, handwritten newspapers. The newspaper evolved into a way that it could be replicated in a production format. During the evolution of the newspaper, the pen and pencil became a reliable source to document our thoughts. A major technology advancement came in the form of a
30 PARCELindustry.com JAN-FEB 2017
Let’s look into the near future once more. You can virtually buy anything from your cell phone. Amazon has just released a program where you can walk into a store and pick up what you need and just walk out the store. These items you picked will be charged to your Amazon account. However, this is just the beginning. There are many companies that that aggregate their respective industry, such as Travelocity, Trivago, Cars. com, Indeed.com, and so on. We are heading to an “agnostic buying behavior.” People want good products at a good
price and are becoming less website-loyal. They are still loyal to brands but don’t care where they come from. As Amazon is building its Global Distribution Model, it is bringing the products closer to the consumer to drive down their final mile delivery cost at a highly competitive delivery time. I would argue that Amazon is the closest entity to this model, but I would not rule out that a small merchant on the other side of the world (with very little infrastructure cost) could compete with Amazon on any brand. It is technology that will make this happen. I realize that you can google anything today, but it leads you to multiple websites. I believe the future model will do all the work for you and just order your item based on the price you want to pay and the transit time that you are comfortable with. This could be Amazon’s worst enemy or best friend. However, this is an opportunity for every merchant to sell on a global basis. In summary, the modern-day consumer will exhibit this agnostic buying behavior. We are already seeing this in some of the SMART applications that are being used today. Is your business ready for this next evolution in technology?
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 January/February 2017