IS A 3PL OR BETTER SUPPLY CHAIN MANAGEMENT THE ANSWER? PAGE 22
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IS YOUR RETURNS PROCESS A HELP OR A HINDRANCE TO YOUR CUSTOMERS' SATISFACTION? P. 16 ASKING THE RIGHT QUESTIONS OF A 3PL PARTNER P. 28 BEYOND CARRIER DIVERSIFICATION: RE-THINKING THE APPROACH TO ADDING PARCEL CARRIERS TO YOUR NETWORK P. 18
The evolution of the supply chain:
BRIDGING THE GENERATIONAL GAP PAGE 14
CONTENTS /// Volume 28 | Issue 2
06 16 18 26 28 06 EDITOR’S NOTE The Evolving Supply Chain By Amanda Armendariz
08 SPEND PERSPECTIVES Small Parcel Takes a Seat at the Supply Chain Table By John Haber
09 TECH SPACE Building Resilience into Your Supply Chain in 2021 By Chase Flashman
10 PACKAGING 3 Sustainable Packaging Trends Changing the Industry By Emily Newton
12 SUPPLY CHAIN SUCCESS Is the USPS Still a Viable Option for Shippers? By Andy Johnson
13 PARCEL COUNSEL Parcels & Politics: A Look Ahead into 2021 By Brent Wm. Primus, JD
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14 GUEST COLUMN The Evolution of Supply Chain Through the Generational Lens By Patrick Maley
16 7 WAYS YOUR RETURNS PROCESS CAN IMPACT CUSTOMER LOYALTY AND RETENTION By David Sobie
18 BEYOND CARRIER DIVERSIFICATION: RE-THINKING THE APPROACH TO ADDING PARCEL CARRIERS TO YOUR NETWORK By Nate Skiver
26 COVID-19 AND THE RETAIL/ E-COMMERCE INDUSTRY By Steve Simonson
28 WHAT DO YOU REALLY NEED FROM A 3PL PARTNER? By Stephen T. Hopper, PE
SPONSORED CONTENT 11 FINDING CAPACITY IN A TIGHT MARKET 15 THE CUSTOMER-3PL RELATIONSHIP QUIZ 22 LOOKING FOR… …HOW TO OPTIMIZE YOUR SUPPLY CHAIN MANAGEMENT? …A 3PL THAT FITS YOUR NEEDS? HERE ARE 8 COMPANIES WITH ANSWERS TO HELP YOU. 25 AMP UP YOUR PARCEL SHIPMENTS WITH GOOD DATA
PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ email@example.com ]
AUDIENCE DEVELOPMENT MANAGER RACHEL CHAPMAN [ firstname.lastname@example.org ]
CREATIVE DIRECTOR KELLI COOKE ADVERTISING KEN WADDELL (m) 608.235.2212 [ email@example.com ]
PARCEL (ISSN 1081-4035) is published 7 times a year by MadMen3. All material in this magazine is copyrighted 2021 © by MadMen3. All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to PARCEL, MadMen3 or its staff becomes the property of MadMen3. The articles in this magazine represent the views of the authors and not those of MadMen3 or PARCEL. MadMen3 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
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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!
THE EVOLVING SUPPLY CHAIN
By Amanda Armendariz
his past year has highlighted the importance of a fully developed supply chain strategy like never before. Any slight cracks in an organization’s supply chain that may have been able to be glossed over before the pandemic quickly exploded into full-blown issues, causing significant delays and backlogs. While the world, for the most part, can now see the light at the end of the tunnel, we never will be able to return to the pre-COVID days of the supply chain — nor should we want to. 2020, while immensely challenging, was also the catalyst to dig deep into the inner workings of our logistics operations, taking note of what we do best and implementing concrete
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changes to fix those aspects where we fall behind. The customer experience continues to play an immense role in customer satisfaction, even more so, in many cases, than cost, so ensuring that the supply chain provides a seamless experience from order entry to delivery (and, in some cases, returns) should be at the top of the priority list. As many supply chain professionals reach retirement age, the industry is experiencing an influx of young professionals, bringing with them new ideas and new ways of doing things. This fresh perspective, combined with the wealth of knowledge the veteran professionals possess, could be just what we need to take the supply chain into the post-pandemic future. The guest column on page 14 highlights the evolution of the supply chain through the generational gap, and there are some significant takeaways from the study that is mentioned. As e-commerce continues to command a larger portion of consumers’ buying habits, it will be fascinating to see what steps the industry takes to meet this evolving demand. As always, thanks for reading PARCEL.
The Dangerous Pitfalls of Single-Carrier Parcel Shipping Strategies & How to Futurize Them By Bill Schroeder
Pandemic Playbook for Saving on Shipping By Todd Benge
Vital Factors for Parcel Shipping By Josh Dunham
SMALL PARCEL TAKES A SEAT AT THE SUPPLY CHAIN TABLE By John Haber
arcel shipping growth exploded in 2020 due to huge increases in e-commerce sales and has become a critical part of shippers’ overall supply chain strategies. In 2020, total e-commerce sales were estimated at $791.7 billion, up 32% from 2019, and represented 14% of total retail sales, up from 11% of total retail sales in 2019. The 2020 boom in e-commerce sales, attributed to the COVID-19 pandemic, was already underway well before the pandemic, and smart shippers were already making the needed changes within their supply chains. In a recent survey by Pitney Bowes, consumers said they do almost 60% of their shopping online, and they expect to do over 55% online after the pandemic ends. This represents a seismic shift in customer shopping habits and has led to major capacity issues in the US small parcel market. Prior to the coronavirus, consumers did just under 40% of their shopping online. FedEx and UPS, the largest parcel carriers in the US, believe the growth in e-commerce will continue to accelerate in 2021. “We don’t think e-commerce sales as a percentage of retail sales will decline, which means continued supply and demand imbalances,” Carol Tomé, CEO of UPS, said during the company’s quarterly earnings call on February 2. “This scenario supports our efforts to improve revenue quality while optimizing our existing network. These efforts, coupled with a relentless focus on productivity and effective capital allocation, should result in both operating margin expansion and a higher return on invested capital in 2021,” she said. This focus on improving operating margins by UPS and FedEx is driving up last-mile parcel costs and, as a result, a need for parcel expertise at the supply chain strategy table. Recent quarterly earnings announcements by Macy’s
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and Nordstrom’s highlighted last-mile delivery costs as a significant drag on earnings. Because of the drastic changes in buying habits, transportation networks are changing. In the past, items were often moved from the manufacturer to a brick-and-mortar store for customer pick-up. Now, there are different points such as direct-to-consumer (DTC), buy-online-pickup-in-store (BOPIS), curbside pick-up, buy-online-ship-to-store (BOSS), pick-up at an alternative location, and more. Less-than-truckload (LTL) providers, parcel carriers, crowd-sourced delivery providers, and other local couriers may all be required. They should all be part of an optimized solution to ensure available capacity and to reduce unnecessary surcharges. Aligning fulfillment to the last mile is also critical within the overall supply chain strategy, especially for efficiency and ensuring last-mile delivery time commitments of same-day, next-day, or two-day. However, for e-commerce, fulfillment facilities often require up to three times the space of a traditional fulfillment or warehouse facility because of product diversity and the need to have the products immediately accessible. Also, processing small parcel items often requires more labor per unit than bulk shipments, which means even more cost must be absorbed or passed onto the consumers.
Fulfillment strategies are also quickly evolving to include in-store fulfillment and other types of microfulfillment solutions such as smaller fulfillment facilities and delivery stations closer to customers to speed up the last mile. As a result, small parcel expertise is needed in fulfillment and warehousing strategies Ultimately, it is about tearing down business silos and working as one to achieve a single, optimized supply chain strategy. Utilizing the right technology to link each part of the supply chain is critical to provide the necessary visibility and across all aspects of the supply chain — inventory, operations, transportation, reverse logistics, last mile — to run seamlessly and in the most cost-effective manner. The data generated from such an optimized network will also prove beneficial in the form of new and personalized products and services for customers and the continuous need to enhance the supply chain further. But to be successful in today’s new environment, small parcels will need to play a more important role in shippers’ overall supply chain strategies.
John Haber is the Founder and CEO of Spend Management Experts and can be reached at firstname.lastname@example.org.
BUILDING RESILIENCE INTO YOUR SUPPLY CHAIN IN 2021 By Chase Flashman
t’s all about being prepared for the unexpected. The past 12 months have put a spotlight on the weaknesses of supply chains across the globe, prompting many organizations to rethink their strategies. With COVID-19 putting additional strain on businesses, companies need to focus on preparing for unexpected events and building resilience into their supply chains. How can businesses build resilience? Investment. Investment can be used to mitigate risks and increase a company’s ability to rapidly recover from disruptions. This is absolutely critical to ensuring business survival. Organizations should proactively invest in technology that will make their supply chain more intelligent and autonomous; two other crucial factors in building resilience. This can be a costly process, which is why companies should identify areas of vulnerability and focus on how they can minimize or completely eliminate those risks. In addition to investing in technology, building resilience also requires a powerful plan along with the following characteristics: digitalization, visibility, and agility. COVID-19 has put a strong emphasis on automation and the use of machine learning to mitigate disruptions to the supply chain. Digital transformation allows organizations to diminish the time it takes to make strategic decisions while increasing operational efficiency. Many supply chain operators share the same goal of achieving end-to-end transparency. Digitizing processes allows businesses to have access to real-time information while simultaneously improving visibility and giving those involved in the supply chain full control. The pandemic has paralyzed countless supply chains around the world due to their outdated systems. With social distancing and restrictions of movement in place,
it can be difficult to maintain control over day-to-day operations. A digital approach that includes cloud-based applications can help businesses digitally track every single product and asset movement, helping them identify and respond to disruptions immediately.
In addition to digitalization and visibility, businesses should be agile and ready to tackle challenges and disruptions in order to build a more resilient supply chain. In addition to digitalization and visibility, businesses should be agile and ready to tackle challenges and disruptions in order to build a more resilient supply chain. Agility means being flexible in decision making and being prepared to rapidly respond to unexpected changes. Companies that have an agile supply chain are on the right track to outperforming their peers. Investing in the right technology can enable
the agile adaptation of your businesses supply chain and its ability to face challenges head on. In addition to identifying the right strategies and technologies, businesses must not overlook safeguarding themselves and their data from cyber threats. As the world becomes more connected, cybersecurity becomes even more crucial. For this reason, security should be part of every resilient supply chain strategy and companies should put additional effort into preventing the possibility of cyberthreats endangering their businesses. Investing in resilience, digitalization, and agility is like training for a marathon. We know more disruptions are coming, and continuously developing a supply chain foundation that is robust, flexible, and capable of continued optimization is essential. By empowering your business with the tools it needs to be more agile and resilient, your team will be equipped with the knowledge and data to forecast and better prepare for future disruptions. For businesses to thrive and be successful in a post-COVID economy, building resilience must start now.
Chase Flashman is Co-founder and CEO of ShipSights, a developer of industry-leading supply chain data analytics software & producer of enterprise-level consulting solutions.
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3 SUSTAINABLE PACKAGING TRENDS CHANGING THE INDUSTRY By Emily Newton
rowing consumer awareness of packaging waste — and especially the impact of single-use — is driving a kind of sustainability revolution in the packaging industry. More often, consumers are asking for eco-friendly products. New trends have steadily emerged to meet these needs, and for manufacturers and businesses in the packaging industry, awareness of these trends will be essential to offering customers sustainable goods. 1. Growing Use of Recycled Materials Despite significant efforts to encourage consumer plastic recycling, most plastic goes to landfills. National Geographic estimates more than 90% of plastic produced every year isn’t recycled. Finding ways to make recycled plastic more useful could help improve these numbers and make packaging more sustainable. According to data from the Beverage Marketing Corporation (BMC), the use of recycled PET (rPET) plastic in water bottles rose from 3.3% to 18.2% between 2008 and 2017 — a 452% increase. Some companies have also completely substituted conventional plastics for rPET in some products. A growing number of companies are finding ways to substitute nonrecycled plastics for rPET and similar materials. As customer demand for sustainable packaging rises, more businesses may invest heavily in their use of these materials. 2. Low-Weight Packages to Cut Production and Transport Costs Businesses are finding that cutting down on the overall weight of a package can make their products much more sustainable. Lighter boxes are easier to transport, helping
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reduce the carbon footprint associated with product logistics. Doing more with less also helps companies cut down on their total use of plastic, even if they’re not transitioning away from bottles or similar packaging just yet. However, this change may leave some consumers disappointed. Typically, the newer packages are still made of unsustainable materials. Items like plastics and polymers are non-biodegradable, though they may be recyclable or made of recycled materials like rPET. These lighter packages can help drive down production costs and reduce the carbon footprint associated with packaging transportation. However, this may not be enough for consumers looking for truly sustainable packaging. There are other drawbacks to the approach, as well. Lightweight plastics may seem to have a lower environmental impact than similar containers made of glass or metal due to their weight. However, the longterm ecological effect of these plastics may not be reflected in terms of transportation emissions alone. 3. New, More Sustainable Materials Businesses are also looking for innovative materials to cut down on the use of plastic and other less-than-sustainable materials. There’s been a surge in the popularity of common packaging standbys, like cardboard and paper. While these materials can be resource-intensive to produce, they tend to have less of a long-term impact on the environment. Most types of paper and cardboard are
biodegradable, and the average box will decompose in just two months — compared to 400 to 1,000 years for something like a plastic bag. The box will also be broken down into soil by microorganisms and decompose in the environment. By contrast, plastic bottles will likely break down into microplastic flakes that will linger in the ground. Other, more innovative materials are also finding new use. Bio-packaging made from biological materials like seaweed, mushrooms, and cornstarch is starting to be used experimentally. These options offer a low environmental impact and high biodegradability. The ability to offer a range of materials is often considered a sign of a good packaging supplier. As these materials become more common, their availability may be a reliable indicator that a given supplier is taking sustainability seriously. Some businesses are also investigating the use of reusable fabrics in place of plastic bags and similar packaging. These containers are more expensive to produce, but they offer a lower environmental impact and may be reused by consumers.
Emily Newton is the Editor-in-Chief of Revolutionized. She regularly covers trends in the industrial sector.
Read about additional packaging trends impacting the industry by visiting PARCELindustry.com/ SustainablePackagingTrends
Finding Capacity in a Tight Market By Steven Bergen, President, GLS-US
Prior to 2020, one-carrier shipping was considered the ideal logistics approach. Businesses sought to secure the best available cost from a national carrier with little concern — or perceived need — for other solutions. For many, something that wasn’t broken surely didn’t need to be fixed. After last year, though, the sudden demand for transport capacity created more urgency for shipping diversification. Adding fuel to the fire, a report from ShipStation found that 83 percent of customers are less likely to purchase from a business again after a negative delivery or shipping experience*. As we witnessed over a record-breaking 2020 peak season, capacity issues create a vicious cycle for all involved: backlogs beget carrier delays, parcel damage and loss, leading to customer dissatisfaction directed toward the sender who, facing a seeming industry-wide lack of capacity, sees no choice but to continue adding to the original carrier’s backlog. How many customers were lost during peak season due to capacity problems?
(and is priced accordingly), but often ground is faster for regional shipments. Sound counter-intuitive? Remember that air freight is much more susceptible to delays, which are easily compounded depending on how many airports a package is cycled through. On the other hand, if you send a package 500 miles via ground, its assigned truck will drive the dynamicallygenerated fastest route overnight, through the most favorable weather conditions, to ensure on-time delivery. GLS-carried packages, for example, frequently arrive up to a day faster than those handled by national carriers. Businesses with multiple sites can also choose to consolidate individual packages going to the same general area into larger less-than-truckload (LTL) pallets, and then dispatch them to the office location nearest the end-recipients. While the pallets must be separated again at the second location for individual delivery, depending on scale, the resulting net capacity savings could be a powerful benefit for shippers — and as GLS-US customers know, using the same carrier for both LTL and parcel can vastly simplify this approach. While there’s no one-size-fits-all way to ensure that your customers’ capacity needs are always met, as an approach proven successful by large shippers, diversification may very well be an effective strategy for you too. With door-to-door deliveries now perceived as an integral part of the ‘new norm,’ businesses making the effort to secure additional resources for positive delivery experiences are likely to come out on top. There’s no better time for rapid business expansion than now, so find a way to turn current capacity complexities into an advantage — or risk being left behind by those more willing to find unique solutions to today’s unique challenges.
If shippers learn anything from the pandemic, it should be to avoid putting all their eggs in one basket. Savvy logistics pros are becoming more creative with diversification efforts, partially by finding regional carriers to fulfill critical capacity needs — sometimes with simplified costing models, increased flexibility, or time savings that create a competitive advantage. While national carriers have quietly been turning away volume, experienced shippers have made regional carriers their ‘secret weapons’ in the battle for capacity. Another possibility for finding capacity is to reconsider modes. Air freight is widely perceived as the ‘gold standard’ for speed
www.gls-us.com 800.322.5555, ext. 4 email@example.com
*ShipStation “Last Touch, Lasting Impact” 2020/21
IS THE USPS STILL A VIABLE OPTION FOR SHIPPERS? By Andy Johnson
he term, “A Perfect Storm” gets overused, but it would truly be the best description for the USPS in 2020. It’s no secret the organization was already struggling with debt and aging infrastructure when the year began. However, the COVID-19 pandemic, unprecedented e-commerce spending, mail-in ballots, and a new Postmaster General all combined to further clog the network, create delays, and drive customer frustrations to new levels. When UPS, FedEx, and other carriers limited their peak season volumes and, in some cases, discontinued service entirely on less profitable accounts, the US Postal Service became the recipient of much of this extra business. The USPS delivered over one billion packages during the holiday peak, but with an on-time performance of less than 65% for the month of December, millions of parcels were not delivered in time for the holidays. Customer confidence in the USPS was further decimated in 2020 as the carrier fell behind on everything from late checks and overdue bills, to missing prescriptions and baked goods. In short, the USPS was rapidly becoming the place your packages went to die. The Postman Cometh When Louis DeJoy was appointed the 75th Postmaster General of the USPS in May of 2020, he inherited an unwieldy organization, over $160 billion in debt, that was originally designed to move more letters than parcels. No stranger to business or supply chain management, the ex-New Breed Logistics CEO quickly set out to overhaul the organization and began the long process of converting it to a sustainable business model. By the end of 2020, DeJoy had launched 57 different initiatives to curb work hours, specifically costly overtime, and shuffled the deck of top executives by removing or reassigning 33 high level positions. Over 670 mail sorters
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were decommissioned or taken offline, and many of the familiar blue collection mailboxes were removed or relocated across several states. Other changes included directives for mail carriers to begin their routes on time rather than wait for all mail to be processed, and extra or late delivery trips were prohibited. Several of these changes sparked a political battle, with opponents fearing they would lead to uncounted mail-in ballots at election time. Federal judges granted injunctions to some changes, though several were only temporary injunctions, and the USPS has already begun the appeals process for others. DeJoy has promised more changes in the coming months, such as eliminating the “Alaskan Bypass” program, which currently costs the USPS around $100 million annually to subsidize delivery of groceries and other goods to remote areas of the 49th state. Though austere measures like these are likely needed to drive long-term change and stem the flow of red ink, the short-term impacts have been slower mail, with delays spiking over 140%. We Deliver For You If the 1990’s USPS tagline was modernized, it would likely read, “We Deliver for You. Maybe.” With all these changes, is the USPS still a feasible contender in the parcel industry? The answer is, maybe. It depends on several factors such as the shipper’s business rules, the package size, and — the biggie — the promised delivery time. With FedEx pulling SmartPost volume back into its network and Amazon delivering more and more of
its own packages, this will incrementally help with USPS capacity over time. However, for the foreseeable future, parcel capacity will continue to be tight and shippers may want to consider the USPS as a means to diversify their carrier base. The caveat is success will depend on the shipper’s ability to rate shop across multiple carriers, employ new routing logic, and their operational sophistication and flexibility (or lack thereof). Leveraging the USPS may also make sense for apparel retailers and others who ship lightweight items (poly bags, etc.) by taking advantage of the lightweight rates that are traditionally better than other national providers. However, on-time service will continue to be an issue with the USPS for the foreseeable future, and promised delivery times may need to be adjusted. It’s taken a global pandemic and historic online shopping volumes to accomplish what snow, rain, heat, and gloom of night never could. But as the US Postal Service grapples with modern-day operational challenges, there is still cause for optimism. Change is in the works, and as shippers continue to optimize their networks, it may be the USPS could fill a niche void or possibly supplement parcel capacity in a specific market.
Andy Johnson is Project Manager, enVista. With 15 years of experience, Andy has worked extensively in supply chain and managed transportation. He can be reached at anjohnson@ envistacorp.com.
PARCELS & POLITICS: A LOOK AHEAD INTO 2021 By Brent Wm. Primus, J.D.
n this column, we usually discuss laws and regulations affecting parcel shippers that are already in effect. In this installment of PARCEL Counsel, we will take a look at some pending changes in the regulatory landscape that could have a very significant impact on parcel shipping in general and the last mile of e-commerce deliveries in particular. There are a number of different business factors that can affect the cost of providing parcel delivery services. One major factor is the classification of individuals providing parcel delivery services as either employees of a trucking company or delivery service OR independent contractors. Whether persons working as a driver, working in a warehouse, or providing other services are classified as employees or self-employed independent contractors can determine and affect the benefits they receive, their legal status when providing services, and, under some circumstances, a customer’s right to recovery on claims for loss and damage of the parcels. Generally speaking, if a person is classified as an employee, it leads to increased costs for the employer that
they would not encounter if the person was considered an independent contractor. One example of this is that an employer has to provide worker’s compensation insurance to its employees, but not to an independent contractor. Other examples are that an employer has to pay state unemployment insurance and the employer’s share of Medicare and social security. The battle between classifying persons as employees or independent contractors has been at the forefront of the transportation industry for years. There were concerted efforts during the Obama administration to reclassify independent contractors as employees. The pendulum swung in favor of the independent contractor classification during the Trump administration. The pendulum now appears to be swinging back under the Biden administration. There are two developments in particular for which a parcel shipper should be on the lookout. The first is that on February 19, 2021, the Department of Labor withdrew something known as a guidance letter that had been issued in April, 2019. The gist of that guidance letter, directed to an unnamed “virtual marketplace company” after it inquired, confirmed that certain workers providing work for this com-
pany were indeed considered independent contractors. The effect of the February 19, 2021 withdrawing of this guidance letter indicates that the Department of Labor may not be considering typical “gig workers” to be independent contractors in the future. The other development is the Pro Act, which has been introduced into both houses of Congress. The gist of the Pro Act is to establish at the federal level what is known in California as AB5 and its ABC test. If passed into law, and survives any challenges in court, this could substantially reduce or even eliminate the current independent contractor model for all of the states. To conclude, it must be noted that there are very strong opinions on both sides of this issue. I will leave it to the reader to decide whether they believe the status quo should remain in place or a new approach adopted. All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (PARCELindustry.com). Your questions are welcome at firstname.lastname@example.org.
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THE EVOLUTION OF SUPPLY CHAIN THROUGH THE GENERATIONAL LENS By Patrick Maley
his was the year that supply chain and logistics went from being a conversation among industry professionals and insiders, to a topic of discussion at the dinner table. The pandemic made it very clear how imperative supply chain resilience is to the success and survival of our economy and everyday way of living. While on one hand, the COVID-19 pandemic has been a great disruptor of supply chains, it is also serving as a catalyst for change and innovation. And this transformation brings with it many questions about the future of the industry, along with fresh insight from those who will lead it in the future. Across the Generation Gap Looking at the future of supply chain through a generational lens provides an interesting — and crucial — perspective into where supply chain management is headed. How do we get the next generation excited about being a part of the industry? How do we capture the critical knowledge and experience that is leaving the industry as the older generation begins to retire? A recent study commissioned by BluJay and conducted by Adelante SCM, in partnership with the Council of Supply Chain Management Professionals (CSCMP), found that 75% of the respondents — supply chain and logistics professionals — expect to make moderate-to-extreme changes in how they design and operate their supply chains to become more resilient. Looking at this number on a generational level, a greater percentage of Millennials/Gen Z respondents (38%) expect to make Many or Extreme changes compared with Generation X (34%) and Silent/Boomer respondents (31%). Perhaps it’s that Millennials/Gen Z supply chain professionals view this moment as their opening. The pandemic, in other words, is their shot to transform and prepare
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supply chains for a better tomorrow. What’s evident from the research is that there are clearly differences in perspectives and priorities between Silent, Boomer, Gen X, Millennials, and Gen Z generations. Each group has stereotypes about the others, which often hinders effective communication and collaboration between them. The truth, however, is that each group can learn a lot from each other. For instance, 55% of Silent/Boomer respondents said they Agree or Strongly Agree that customer experience will become the number-one brand differentiator. Gen X and Millennial/Gen Z respondents, however, had higher percentages (64% and 65%), respectively. The results suggest that the younger the generation, the stronger the belief that competing on customer experience will overtake price and product as the number one brand differentiator. The conversation has shifted from cutting costs to how do you create a better, more unique brand experience and how do you improve customer satisfaction to edge out your competitors. Millennials and Generation Z respondents most recognize the importance of business intelligence, analytics, and machine learning in delivering an enhanced customer experience, and therefore put greater emphasis on investing in these areas. The study also found that Silent/Boomer respondents view external trading partners as being a much bigger barrier to supply chain and logistics innovation than internal functional groups, while Gen X and
Millennials/Gen Z respondents believe just the opposite. Also, the younger the generation, the more they view siloed systems and/or processes as a top barrier to innovation. While opposing viewpoints, these two generational perspectives actually point to a common need, which is to break down silos — both internally and externally. This is a process that needs to be intentional and collaborative, and this is where the institutional knowledge from the older generation can be helpful in navigating already existing external and internal channels to make progress. Improving Communication and Collaboration One strategy to get past the stereotypes and create a more unified team is to emphasize shared goals. As a recent HBR article points out, “By doing so, both older and younger people can see themselves as part of the same team working toward the same outcome. Indeed, focusing on commonalities or a common direction can reduce perceptions of ‘us’ versus ‘them’ and can create or reinforce a sense of ‘we’.” At the end of the day, resilience is born out of collaboration and relationships, so it’s imperative that businesses foster an open environment that encourages and promotes a healthy dialogue and the flow of information among team members — of all ages — to fortify their supply chains now and in the future.
Patrick Maley is CMO, BluJay Solutions. To view the full results of the study, visit http://2020. supplychainresearch.info.
The Customer-3PL Relationship Quiz 3PLs can be invaluable, and critical to your success. So, the relationship you have with your 3PL is pivotal. Are you more of a partner or a customer? Take this short quiz to find out if you and your 3PL are a business match. Just tally the number of “Yeses” for your score! 1. Are you confident your contract pricing is best-in-class? 2. Is your 3PL willing to make financial and operational investments to support your needs? 3. Does your 3PL’s technology capabilities and infrastructure meet your needs today, and can they meet your future state goals? 4. Is the current technology integration efficient and effective? 5. Does your 3PL’s reporting systems and performance analytics meet your needs? 6. Does your 3PL deliver innovative ideas and strategic support solutions? 7. Does your 3PL consistently look for opportunities to streamline processes? 8. Can you count on your 3PL to deliver relatively flawless execution and not negatively impact your customer relationships? 9. Do you have agreed upon Service Level Agreement (SLA) performance metrics established and memorialized in your Services Agreements? 10.Do you receive weekly or monthly reporting that tracks your 3PL’s SLA performance? 11. Is your 3PL meeting or exceeding the SLA minimum requirements? 12. Do you have productive quarterly or semi-annual business reviews with your 3PL?
in place, one most of your competitors and peers would look upon with envy. But, some targeted improvements can really elevate your operations to the next level. First, identify these shortcomings and discuss them directly with your 3PL. If your 3PL is a true partner, they will openly help you improve areas of deficiency. If Your Score is 9 or Below: Okay, you’ve got some work to do. Your 3PL is most likely not a strategic business partner but a vendor. Whether or not it feels like it, they’re probably negatively impacting your business. Silver lining though, there’s significant opportunity for improvement! Either by developing a formalized action plan to identify and address problematic areas in your current relationship… or seek out a new 3PL partner. How Shipware Can Help: In short, our team can help you get the most out of your 3PL. That’s maximum value (and maximum profitability!) out of your current, or future, 3PL relationship. Why would I need help? you may be asking yourself… There are thousands of 3PLs in the marketplace, specializing in different areas, offering different tech, and operating on a countless number of different pricing models. There are no formalized pricing or contract standards. Some bundle pricing, some charge by line item. Some make their margin on transportation services, while others make it on pick & pack transactions. Comparing 3PLs is apples-to-oranges and, as such, many merchants “don’t know what they don’t know” when it comes to 3PL pricing benchmarks and contract best practices. That’s where Shipware adds significant value. When it comes to 3PL, we understand best-in-class pricing, have significant benchmarking data, and know SLA best practices. We help establish reporting mechanisms, so providers know what’s expected of them, and our merchant clients know the key issues to focus on. Then, we put enforcement teeth into the contractual language to hold providers accountable. Contact the Shipware Team today to uncover, and quantify, opportunities to improve your 3PL relationship.
If Your Score is 12: Congratulations! The relationship you have with your 3PL is the gold standard and your contract is *chef’s kiss* - feel free to stop reading, stick your Service Agreement on your refrigerator door, (virtually) high-five your colleagues and celebrate your thriving business. If Your Score is 10 or 11: Hey, you’ve got a solid relationship and business partnership
www.shipware.com 858.879.2020 email@example.com
ties. What’s more, 87% of consumers are unlikely to buy again from a brand after a poor return experience. All of these stats point to one thing — your return process has an undeniable impact on your customer loyalty, and in turn, your bottom line. Let’s take a look at seven ways you can raise customer loyalty and retention through returns management.
7 WAYS YOUR RETURNS PROCESS CAN IMPACT CUSTOMER LOYALTY AND RETENTION
By David Sobie
f you ever find yourself frustrated by dealing with returns, you’re not alone — over 75% of consumers feel returns are the most painful part of buying online. Of course, we know returns are unavoidable — especially in e-commerce, where shoppers can’t try items on before purchasing — but they don’t have to be miserable for you or your customers. By taking the time to put a robust returns solution in place, you have an opportunity to make returns a strategic opportunity for reducing costs, keeping more sales, and increasing customer loyalty. And that last point is significant. With 89% of shoppers checking the return policy before making a purchase, it’s clear that an effortless return experience is at the top of their priori-
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Offer Box-Free Return Drop-Offs Remember how we mentioned that a majority of shoppers find returns to be the most painful part of buying online? Imagine what a big advantage it would be if you could solve this problem for them by letting them eliminate the hassle and wait of returning by mail. Many merchants provide shoppers with multiple delivery options when checking out, like paying more for expedited shipping. The same idea applies to returns, where shoppers want choices and control over the process. Delight them with the convenience of buy online, return to store by offering box-free, in-person return drop-off to a thirdparty network. No shopper wants to deal with the dreaded arts-and-crafts project of printing labels, taping up boxes, and waiting in line at the post office to send items back through the mail. Instead, they can start online and receive a QR code and directions to the nearest drop-off location. Amazon understands the advantage of removing this friction from the online shopper journey and offers multiple box-free drop-off options, from Kohl’s to Whole Foods to the UPS Store. Amazon is training consumers to expect this level of service for all their returns, making it vital for merchants to match this level of convenience. Make Return Drop-Offs Contact-Free with QR Codes The coronavirus pandemic not only altered the way retailers do business, but shifted the ways in which people feel comfortable shopping, as well. While many consumers still crave an in-person experience, they’re looking to do it as safely and with as little contact as possible. As technology like digital wallets becomes a popular payment option to allow for contact-free transactions, similar steps can be taken when it comes to accepting returns. For retailers offering in-person returns, consider using QR codes to allow for a completely touch-free experience. Shoppers can initiate their return online to receive a code corresponding to their unwanted item. That way, when they come in to make the return, they can hold up the code on their phone for an associate to scan and pull up the necessary information. Take things a step further by providing a place for shoppers to bag their items themselves, helping to prevent your associates from unnecessary contact as well. Provide Immediate Refunds Ask a customer service agent the number one question they receive, and they’ll almost always respond with some version of, “Where’s my refund?” When returns aren’t processed quickly, customer service teams receive a higher rate of frustrated calls from shoppers who may not purchase again after a poor experience.
If your returns solution allows for refunds to be initiated the moment an item is dropped off, shoppers are no longer waiting. Not only does this reduce the burden on your CX team, but it relieves shoppers from having to constantly check their credit card statements or panic that their return was lost or forgotten. Make Exchanges Effortless While returns are unavoidable, you can keep more sales by turning refunds into exchanges instead. The key is to make exchanges as easy as possible to complete, in order to increase the likelihood of your shoppers not just asking for their money back. Ideally, online exchanges should be conducted in as few clicks as possible. In fact, with the right software in place, you could even allow shoppers to exchange for another size in just one click! For example, if your shopper is returning a pair of shoes online and selects “Too Small” as the return reason, your software could immediately suggest the next larger size available as an exchange option. In this way, not only do you get to save the sale, but your shoppers get what they really want without any hassle. Promote Your Return Policy to Remove Customer Uncertainty Did you take the time to build a seamless return policy that your shoppers love? That’s great! Now stop trying to hide it in obscure spots like your site’s FAQ section. Trying to pretend returns don’t exist doesn’t actually prevent returns. It just frustrates shoppers who will still make the return anyway, except now they’re irritated. It’s tempting to think otherwise, but highlighting your return policy does not encourage returns. Quite the opposite, it makes shoppers feel more confident about buying in the first place, as they feel comforted that it won’t be a huge hassle if things don’t work out. And since we know shoppers look at return policies before they buy, making them clear and easy to find is a great way to boost customer retention. Enhance Sustainability with Reusable Packaging Over 61% of shoppers only buy from retailers with sustainable business practices, so providing eco-friendly return options is another way to make them happy, while amplifying your values. Collecting returned items from different retailers at your third-party return drop-off location and aggregating them into reusable totes for bulk shipping provides a huge opportunity to make returns better for the planet — not just by reducing fuel waste with fewer shipments, but reducing greenhouse gas emissions by replacing cardboard boxes with reusable containers. As an added bonus, aggregation helps you reduce costs by avoiding expensive individual shipments. After all, it costs a lot more to ship 15 one-pound boxes than it does to ship one 15-pound box. Don’t Make Shoppers Contact Customer Service Think about the last time you had to make a call to return an
item that didn’t work out. You more than likely had to wait for a robot to list off a series of options before eventually getting to a human who — if you’re lucky — won’t transfer you to two or three other departments before you’re finally connected to the right person. And then what? Maybe they try to convince you to keep the item. Or they may provide a series of frustrating steps you have to complete just to get rid of something you don’t want in the first place. No one wants to make a call in order to return something. If you can automate your return process via software, you’re providing a streamlined experience for your shoppers — and avoiding confused and frustrated customer service calls in the process. With a branded online flow, you can allow your shoppers to choose return reasons, request exchanges, and select refund methods in just a few clicks. Since we know returns play a huge role in customer retention and satisfaction, this is a way to remove a burden from both your shoppers and your customer service team. As an added bonus, you’ll enjoy cost savings by not having to hire agents to explain your return process over the phone.
David Sobie is CEO and co-founder of Happy Returns. Visit www.happyreturns.com for more information. MARCH-APRIL 2021 PARCELindustry.com 17
By Nate Skiver
BEYOND CARRIER DIVERSIFICATION: Re-thinking the Approach to Adding Parcel Carriers to Your Network “Insanity: Doing the same thing over and over again and expecting different results.” Albert Einstein While Einstein was not describing shippers’ approach to parcel carrier sourcing, it can be an accurate description of the strategy commonly referred to as carrier diversification. All too often, shippers look for opportunities to add a new carrier to fit into their existing program by “peeling off” a small portion of volume, but this approach is flawed and doesn’t always achieve the desired results. Don’t believe me? Let’s find out why this is the case and what shippers can do to change it. 18 PARCELindustry.com MARCH-APRIL 2021
First, let’s define this concept a bit. Executed well, carrier diversification can provide several benefits such as increased capacity, operational flexibility, improved speed to customer, and reduced expense. But does arbitrarily adding carriers for the sake of having more options achieve these benefits? Usually not, and the solution to this issue begins with shippers’ ability and willingness to think differently when assessing their parcel program. Common Carrier Diversification Mistakes Even the most experienced sourcing and transportation professionals are susceptible to making mistakes when evaluating their parcel programs. Below are a few common pitfalls, which can impede carrier base optimization efforts. 1. Focusing on current constraints. “I can’t move volume from my primary carrier, or I will lose my discounts.”
Sound familiar? This is the first point of focus for many shippers when assessing their parcel program, which can often end the process before it begins. For those who press on, this constraint often dictates the process as shippers seek solutions that fit into their current program. This issue is not limited to carrier volume and revenue requirements, as shippers often focus on reasons why they can/should not add carriers, such as technology constraints or implementation risk. While these constraints cannot be ignored, they are often introduced into the process too early, and focusing attention here first is a very effective way to derail carrier diversification plans. 2. Jumping to solutions. Einstein once shared this view on problem-solving: “If I were given one hour to save the
The Self-fulfilling Parcel Prophecy
planet, I would spend 59 minutes defining the problem and one minute resolving it.” While assessing a parcel program isn’t exactly like saving the planet, I think Einstein was on to something here. Instead of utilizing a basic problem-solving process, shippers sometimes jump to quick fix and/ or one-dimensional solutions, such as shifting volume to a low-cost service to reduce expense or adding a carrier to increase capacity. By not establishing well-defined program objectives, this can result in addressing one issue or need, only to create unintended problems elsewhere. 3. Self-fulfilling prophecies and a fear of change. Who knew there was so much psychology involved with parcel carrier sourcing? The impact of how shippers think about these decisions cannot be overstated, so let’s review a couple of examples in Figure 1. This may appear a bit dramatic, but it does happen, and it not only impedes the ability to source carriers and services that align to specific program needs, but it results in wasted time spent achieving a sub-optimal result.
any of the statements in Figure 2 sound familiar? Conscious or not, these thoughts frequently prevent carrier diversification success. A Different Approach to Carrier Diversification An effective way to avoid these mistakes is to apply a basic problem-solving framework, with a few mental tips and tricks to keep your focus on one objective: sourcing the services and delivery capabilities that align to your specific parcel program goals. Notice the objective did not include
specific carriers nor current carrier contract requirements. This is a key component of the mindset required to “think outside the box” (or polybag) when evaluating your parcel program. With this in mind, let’s review the basic thought process. Please note, while the following content is focused on a different approach to carrier diversification, the examples are oversimplified and are included to illustrate the thought process only. Define program objectives, completely unconstrained We begin with focusing on the most important expense and service components of the program, ignoring, for the moment, all carrier-related details. One way to do this is to define objectives for key metrics, such as total parcel expense, cost per package, cost per unit, customer promise on-time performance, etc., but remove the carrier and service names from the baseline data view. Figure 3 doesn’t really tell us much, but that’s kind of the point. We begin with a view aggregated by service type only, with no carrier specific information. At a high level, we have determined expense reduction ($2.75M, $0.28 per package) and delivery performance targets (improvement of OT + Early to Customer Promise from 94.5% to 95%) and areas of opportunity, listed below. Figure 2
Fear of Change There are many “reasons” given for not changing or adding carriers, which may be derived from a fear of change. Do MARCH-APRIL 2021 PARCELindustry.com 19
1. 14% of Ground Residential volume delivered early, presenting a possible opportunity to convert to Parcel Select. 2. Parcel Select OT +Early (93.8%) is below target, but also had 10.5% of packages deliver early. This presents a unique challenge, especially with Parcel Select representing the highest expense. 3. Parcel Select Lightweight (LW) OT +Early (93.8%) is also below target. Introduce segmentation by carrier… generically Figure 4 shows a gradual progression with two additions: listing a carrier for each
service (generically displayed as Carriers A and B) and a breakdown by carrier for multi-carrier services (e.g., Parcel Select). I know what you’re thinking. If you manage this expense, you know the carrier and service names, so why not list them? Remember, we are trying to avoid placing constraints on the process until it is necessary. If we focus on carrier specific details now, it will be tempting to jump to solutions which fit into the current program’s (a.k.a Carrier A’s) requirements. Let’s take a look at what we can glean from this view. 1. Ground Residential is sourced with one provider, Carrier A, so in addition Figure 4
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to the Parcel Select conversion option, we may need to explore an alternative Ground service to address the $8.35 cost per package. 2. Parcel Select is split between two carriers, with Carrier A supporting 75% of the volume at a noticeably higher cost per package ($6.05) than carrier B ($5.25). While the OT +Early is similar between the carriers (94% Carrier A, 93% Carrier B), 12% of Carrier A packages delivered early, presenting an opportunity to re-allocate volume to a Parcel Select service similar to Carrier B. 3. Parcel Select LW remains a challenge, as both Carrier A and B provide similar cost per package ($3.55 Carrier A, $3.40 Carrier B) and OT +Early performance (94% Carrier A, 93% Carrier B). More information is needed, but we may need to consider expedited options to address the lagging delivery performance.
All too often, shippers look for opportunities to add a new carrier to fit into their existing program by “peeling off” a small portion of volume, but this approach is flawed and doesn’t always achieve the desired results. Adding carrier and service details, maintaining focus on identified opportunities In Figure 5 Carrier A is UPS (no surprise there), and Carrier B is Pitney Bowes. It is obvious that UPS accounts for the majority of volume and spend, but instead of focusing on how to fit other carriers into the program without compromising a UPS rebate (say with
a $50M top tier revenue threshold, and current spend of $55.2M), we will complete our thoughts on outlining potential solutions which align to broader program targets. 1. Ground Residential options become a bit clearer, as FedEx Home Delivery is an alternative to UPS Ground, either as a standalone option or as part of a larger shift from UPS to FedEx. Re-allocating a portion of Ground volume to one of the many Parcel Select options (existing SurePost or Pitney Bowes Standard, as well as DHL eCommerce Expedited or Expedited Max) remains an opportunity as well. 2. Re-allocating Parcel Select volume to a more optimal mix of less premium (DHL eCommerce Expedited Max, UPS SurePost) and more standard (Pitney Bowes Standard, DHL eCommerce Expedited) services may provide an opportunity to maintain or improve delivery performance and reduce expense.
3. Although there are few options, Parcel Select LW delivery performance could be improved by re-allocating volume to DHL Expedited Max or perhaps USPS First Class Package (via Negotiated Service Agreement, assuming 1M+ packages are awarded) if the expense increase is acceptable. We have now outlined three clear areas of opportunity and identified potential solutions to explore when seeking to diversify our carrier base through a parcel RFP. Stopping the Carrier Diversification Insanity Now consider if we had started with a view like the one in Figure 6, summarized by carrier, with no defined targets. It would have been easy to focus solely on the UPS rebate tier, perhaps by shifting a small portion of volume between Parcel Select services or converting some UPS Ground volume
to SurePost. But instead, we were able to avoid this mistake, face our fear of change, and break the cycle of the parcel self-fulfilling prophecy. Adding the right carriers and services to your parcel program is a challenging process, often complicated by biased thinking and burdensome carrier contract requirements. But it does not have to be this way, if you are willing to start with a clean slate, keep an open mind, and stop the insanity of parcel carrier diversification.
Nate Skiver is the founder of Level Playing Field Spend Management, a parcel consulting company which provides value for its clients through creating parcel shipping programs which reduce expense, while delivering a positive customer experience. Prior to founding Level Playing Field, he spent more than 15 years focused on building, executing, and managing parcel transportation programs for leading global apparel companies. He can be reached at firstname.lastname@example.org.
TRITEK PARCEL SORTER Tritek Gets the Job Done! OCR and Barcode Reading Scale, Labeler, Induction Feeder Determines Package Shape and Size Designed with a Small Footprint Configurable to Any Facility’s Size up to 1,096 Wheeled Containers
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LOOKING FOR… …HOW TO OPTIMIZE YOUR SUPPLY CHAIN MANAGEMENT? …A 3PL THAT FITS YOUR NEEDS? HERE ARE 8 COMPANIES WITH ANSWERS TO HELP YOU.
a2b Fulfillment, an award-winning provider of order fulfillment, valueadding services and customer care, is celebrating its 20th anniversary this month. With over 680,000 square feet of warehousing space in Georgia, South Carolina, Utah and Canada (and more space in the Northeast on the way — stay tuned!), a2b reaches most U.S. households within 1-2 days via ground shipping. a2b specializes in full-service support; including fulfillment for e-Commerce, Direct Response, Retail (including Amazon), plus offers an Order Management system, Reverse Logistics, Kitting and Assembly and Live Agent Customer Care, all geared to round-out a turnkey solution. a2b’s technology, facilities and processes are designed for speed and accuracy, making same-day shipping a reality. For more information about our programs and services, please contact us online or call 1-866-843-3827. www.a2bf.com 866.843.3827 email@example.com
Your company faced lots of changes over the last year. With change can also come an opportunity for you to take a deep look at your company and your parcel shipping supply chain to see where you could (and possibly should) be making some changes to your supply chain management, and if the answer can come from within your organization or if you need to look elsewhere. This is a big decision, so we have brought you 8 companies with a variety of solutions and expertise to answer your questions. Take a good look at each one of them, check out their websites, and then call or email them.
CONFIDENCE: 98 years of experience has allowed CT to create a broad range of supply chain solutions — all tailored to meet our clients' unique requirements. CT offers customized products, services and software which address today’s needs for comprehensive, global supply chain and 3PL solutions. TRUST: Firms of all sizes have relied on CT to assist them in making solid, informed decisions regarding their Supply Chain and Business Intelligent needs. Our team of professionals assists our clients in leveraging expertise and technology to maximize ROI. SOC II and ISO 9001:2015 certified processes ensure stringent governance, and trusted support to your transportation partners, delivering meaningful and insightful management and information. LEADERSHIP: CT is a leader in our industry. CT’s enterprise level software for freight management includes: FreitRater™ and FreitWeb LCR and FreitLion™ for TMS, AuditPay™ for
customized solutions for global freight payment, and our group buying program, TranSaver™. We create customized solutions that allow you to control the ever-changing needs of your global business. CONFIDENCE, TRUST AND LEADERSHIP... TRADITIONS SINCE 1923 This is the foundation and tradition that our clients have relied on since 1923. Our services and software will provide you with the latest leading-edge applications and systems, enabling better management and reduction of supply chain costs while adding more visibility, control and insight to your organization; that's our commitment to you. ctlogistics.com 216.267.2000, Ext. 2111 firstname.lastname@example.org
Multi-Carrier eCommerce all with one partner? Our solution: X-Parcel What if you had a company that could shop every one of your label requests across all carriers and services levels and in seconds return the best option, are you interested? How about a company that could pick all those packages from multiple carriers with one truck, run it through sort operations and linehaul it into the right carrier network each day? FirstMile is just that company. We’ve been helping companies unlock the power of a multi-carrier approach in order to reduce costs, save time, and provide the best possible experience for every customer. Our system makes it simple for you to access the best carrier for the job, selecting from a range of national, regional and local parcel and mail carriers, including First Class and Priority Mail.
FirstMile is a multi-carrier e-commerce parcel carrier. Our unique approach allows our customers to do it all with one API connection, one pickup via our FirstMile owned and operated vehicles, one invoice and one point of contact. We even handle claims. Need 5 days or less service? No Problem. Need 2-4 day service? No Problem. Just want the lowest priced service possible for every package? No Problem. If you are tired of the headaches from trying to navigate the e-commerce shipping labyrinth, let FirstMile help. Oh, and our systems integrate seamlessly into common shipping platforms like ShipStation & many more. www.firstmile.com 888.993.8594 email@example.com
Link Supply Chains offers a unique menu of E-commerce solutions for companies to leap into E-commerce or improve upon their digital presence. We are a technology company aligned with key marketing partners to bring a one of a kind experience to our customers. We offer a subscription based marketing service as well as a project based approach. We can help companies deliver on: Digitizing their product offering; pictures, video, marketing assets. Storing all their digital assets in the cloud for an organized downstream use. Creating product selling videos for sales teams. Creating customer facing sales videos. Delivering A.I. based market predictions for companies. Cleaning up data that is disorganized, missing information or out of date. Helping companies get their critical data back into their AS400 or older architecture.
Call us today for your free 60 min consultation to build your free E-strategy plan! Our Supply Chain consulting teams have worked with building out a logistics network for E-commerce to replacing ERP’s and upgrading supply chain processes. Stand up TMS for companies wanting to bring transportation inbound, in-house. Selected and implemented last mile routing software. Selected and implemented WMS for companies. Develop 3PL & 4PL relationship solutions. We simplify supply chains! www.linksupplychains.com 218.409.8700 firstname.lastname@example.org
Pace — Your Southern 3PL Solution Explosive growth in e-commerce. Trends accelerated by the pandemic. Heightened consumer expectations for fast delivery and more visibility. We know you're experiencing significant change. Change creates challenge. Adapting to change creates opportunity. Pace is committed to Solving Logistics Together in a market that is constantly changing. For over twenty years, we have partnered with shippers by providing customized 3PL services and helping you discover processes for enhanced delivery performance and cost savings. Pace specializes in B2B and B2C parcel delivery solutions to help you meet the evolving, omnichannel demands of your customers. Our eight pool points and final mile expertise enable a seamless shipping experience. Coordinate your deliveries with inbound receiving, scanning, sort and seg, last mile delivery, and dedicated customer service. Our systems integration capabilities provide you the insights you deserve. A great customer experience arises from a strong culture, so we invest in ours to serve you better. Serve Relentlessly, Do the Right Thing, Get the Job Done, Do What You Say, and Always Improve are the Pace Values you can expect to drive your business forward. Pace — Your Southern 3PL Solution. Change–Challenge–Opportunity. https://pace-usa.com 866.410.7222 email@example.com
At Saddle Creek Logistics Services, we know that navigating the ins and outs of parcel shipments is a critical element of a complete omnichannel fulfillment solution. Offering options. We have cultivated strategic relationships with the top parcel carriers. By leveraging our diverse carrier network, you can explore options and services from multiple carriers, rather than committing to a single freight company. What’s more, our database consolidates multiple carriers, so we can provide you with a single report for your entire program. Controlling costs. We process millions of parcel shipments for our clients every month. The greater our collective volume, the better the rates we can negotiate. Furthermore, our robust OMS system and rate-shopping solution enable us to find the best transit option in real-time. This allows you to take advantage of the
best rates with the optimal carrier, while still meeting customer delivery expectations. Staying ahead of the curve. We are in constant communication with carrier representatives and stay on top of new developments. We benchmark transit times and rates, so we can see trends, identify issues and be proactive in addressing them. Using our robust parcel analytics tool, we can help you understand the true impact that rate increases and surcharges can have on your business and propose creative ways to mitigate them. For more information about parcel shipping, read our whitepaper: www. sclogistics.com/parcelwp.
TForce Logistics is a regional, final mile provider with North American coverage. We service Ecommerce, Medical, Financial and B2B final mile requirements, delivering same-day, next-day, everyday solutions. Our network extends throughout the 65 major markets across Canada and the US providing supply chain advantages to our customers. With competitive prices, our everyday delivery services are accessible to every person, everywhere. TForce logistics equips our customers with complete order visibility and tailored solutions for every delivery. Leverage our supply chain tools to save you time and money, allowing your business to thrive.
www.sclogistics.com 866.668.0966 firstname.lastname@example.org
9 out of 10 shippers are overspending on shipping services. Obtaining best-in-class discounts and terms from your shipping carriers requires deep domain expertise, data mining, bid analysis technology, rate benchmarking, and a competitive bidding process. It may sound complicated and time-consuming, but it’s not. At least not for businesses that engage Shipware to manage their cost reduction and control efforts. In fact, Shipware lowers our clients’ shipping and fulfillments costs an average of 21.5% annually with no required change in carriers, no disruption to your operation, and little time involvement on their part. How do we do it? Airtight solutions that every high-volume shipper needs to spend efficiently:
through restructuring and renegotiation of your carrier contracts by aligning terms to fit your shipping profile. Our consulting team builds a cost-reduction strategy, based on your unique case, and drives the RFP process.
Parcel & LTL Carrier Contract Analysis & Optimization Shipware attains significant cost savings
CT Logistics ctlogistics.com 216.267.2000, Ext. 2111 email@example.com a2b Fulfillment www.a2bf.com 866.843.3827 firstname.lastname@example.org
3PL Contract Analysis & Optimization Outsourcing fulfillment? Don’t think only the national carriers are laser-focused on margins. Most 3PL contracts are not optimized, are lacking critical Service Level Agreements, and hide excess costs that can be eliminated with expert analysis and negotiation. Contact Shipware today to learn more!
FirstMile www.firstmile.com 888.993.8594 email@example.com
www.shipware.com 858.879.2020 firstname.lastname@example.org
Saddle Creek Logistics www.sclogistics.com 866.668.0966 email@example.com
Link Supply Chains www.linksupplychains.com 218.409.8700 firstname.lastname@example.org Pace https://pace-usa.com 866.410.7222 email@example.com
Shipware www.shipware.com 858.879.2020 firstname.lastname@example.org TForce Logistics www.tforcelogistics.com
Amp Up Your Parcel Shipments with Good Data Chances are, you’re painfully aware that major parcel carriers raised their rates again this year. The average published general rate increase (GRI) for FedEx and UPS is 4.9%. However, lightweight residential service rates and surcharges are increasing at a much higher rate. The impact will vary based on your characteristics, but most parcel shippers should budget a net impact between 8 and 9%. How can you measure the net impact of these changes? Start with good, accurate data. Make sure you have the right processes in place to capture good data at the point of shipping, often as part of the pick process. Since issues related to incorrect weight and dimensions are quite common, explore methods to capture, automate and audit package weight and size. Accurate data can then be input into your OMS, WMS and/or TMS and shared with your carriers. Why you need good data Carriers are increasingly demanding better data. If you supply incorrect weight or dimension information, they will capture the accurate data in their network and adjust charges accordingly. (Of course, they only change invoices when it is in their favor.) You can also be penalized for providing bad data. For 2021, USPS has added a $100 surcharge for parcels that ship in excess of the maximum mailable size limit (a dimensional weight of more than 130 inches). UPS’ audit fee takes it a step further. If average charges on an invoice are 2% higher than expected, they will assess a 6% fee. While FedEx has not yet instituted a comparable fee, they are likely to follow suit soon. Use good data to your advantage with carriers when auditing their invoices. Check for billing errors and duplicated charges. Also, watch for unexpected charges such as USPS’ undeliverable fees, UPS’ shipping charge correction audit fees, FedEx’s new
6% late-payment fee, address-correction fees, third-party billing, brokerage fees on international shipments and more. You will also need good data if you want to leverage rate-shopping software. The system selects the least-cost service based on the information you provide. If the package weight/dimensions are missing or incorrect, the shipping charge that is selected by the rate shop will be different than the actual charge from the carrier. Overcoming the information gap While more companies are improving their capabilities with regard to parcel data, there is still a big gap. Many lack the robust systems and parcel analytics platform or business intelligence (BI) tool required to capture and interpret the data. They may also be short on subject matter experts who are up to speed on the latest changes and able to apply them correctly. If you fall short in this category, it may be time to invest in these resources or partner with a third-party provider who can supply them. The small parcel market is expected to continue to grow exponentially. Getting a handle on your parcel costs now is sure to have a big impact on your bottom line in the years ahead. For more on parcel shipping, read Parcel Shipping to Meet Ecommerce Demand. Download the whitepaper: www.sclogistics. com/parcelwp. By Megan Rudolph, Senior Director, Parcel Operations
www.sclogistics.com email@example.com 866.668.0966
BY STEVE SIMONSON
COVID-19 AND THE RETAIL/E-COMMERCE INDUSTRY A year after COVID-19 restrictions hit most of America, we take a look at how the retail and e-commerce industries are handling this shift to increased online ordering and closing of many physical stores.
020 was an unprecedented year for the retail industry. Prior to the pandemic, retailers were already struggling with rising e-commerce sales, bankruptcies, and store closures, which were only further compounded when COVID-19 hit. Experts credit the virus with accelerating e-commerce growth by five years, with this shift in shopping behavior expected to remain even after the pandemic subsides. While the effects of COVID-19 had varying impacts on the industry, no retailers were completely immune from the ramifications, and they faced various obstacles at every step of the supply chain. Drastic Changes in Distribution Profiles and Volumes The increase in online ordering and brickand-mortar closures has resulted in more companies shipping directly to consumers. This is a radical change for retailers that built their operations to support case quantity deliveries to stores — or more drastically, manufacturers that are used to supplying retail distribution centers (DCs). In addition to dealing with growing volumes, companies are also having to redesign their distribution operations as they transition from processing pallets of
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a single item for hundreds of stores to a handful of different items for thousands of customers. Unfortunately, many DCs are not equipped to deal with this massive change in order profile and volume. As a result, many companies have had to add extra shifts to accommodate the growth and are increasing labor at a time when it is already scarce and safe social distancing is a necessity. Added Headaches for the Holidays Despite the economic uncertainty stemming from the pandemic, 2020 holiday spending was still up from the previous year, with online holiday sales in the US jumping more than 32% over 2019, according to Adobe Analytics. While the increased holiday sales were a bright spot for retailers’ revenues, the additional volume further amplified existing warehousing and shipping challenges. Attempting to avoid delivery delays and overwhelming their logistics operations, many retailers, including Amazon, Walmart, and Target, kicked off their holiday season even earlier in 2020, offering major deals and discounts starting in October. Despite their best efforts to circumvent these challenges, retailers still met many struggles during the
holiday season. Some Amazon sellers got an added dose of distribution troubles when the e-commerce giant began enforcing stricter shipping limits on third-party sellers using Fulfillment by Amazon (FBA). Amazon wasn’t the only company putting pressure on retailers this season. After adding peak surcharges just a few months earlier, UPS and FedEx started imposing volume caps on major retailers after Black Friday. Desperate to ensure on-time delivery and preserve customer satisfaction, many retailers turned to alternative last-mile providers such as Shipt and Instacart, while others offered discounts or other perks for customers using buy online pick up in store (BOPIS) or curbside pickup services. Similarly, with increased online sales came a record number of returns, prompting retailers to implement new return policies and methods to accommodate customers and reduce the cost and labor associated with processing returns. Retail giants Amazon, Walmart, and Target even went as far as to offer customers refunds without asking them to return their purchases. Some retailers also struck partnerships with carriers that enable customers to drop off returns at FedEx,
UPS, and USPS locations or even arrange for home pickup, such as Walmart did with its “Carrier Pickup by FedEx” service launched in late December. Leveraging Brick-and-Mortar Locations As online orders continued to put pressure on already strained warehouse operations, retailers began looking for creative and lucrative ways to utilize their brick-and-mortar locations. When government restrictions forced many stores to close their doors, many retailers began exploring ship-from-store models. Transforming brick-and-mortar locations into micro-fulfillment centers enables retailers to cut delivery times and costs while also improving the customer experience. In addition to ship-from-store, more retailers are now expanding their in-store fulfillment offerings, including BOPIS and curbside pickup, to avoid delivery delays and minimize contact. With social distancing still a must, many retailers are also embracing automation to help increase speed and capacity while also limiting human interaction. Previously
requiring a large investment and lengthy installation process, solutions utilizing autonomous mobile robots (AMRs) can be deployed in as little as a few weeks with minimal capital expenditure. AMR solutions are also growing in popularity due to their flexibility and scalability, enabling retailers to utilize them in a variety of different applications and environments, and expand and relocate them as needed to address changing volumes and requirements. Looking Ahead Going into 2021, retailers and manufacturers must look at modifying their current DCs and adding new DCs and alternative fulfillment methods to accommodate the volume growth and change in order profiles. The increase in online sales volume over the last few years has put a lot of stress on material handling equipment (MHE) manufacturers, and the effects of the COVID-19 have only made matters worse. Processes like BOPIS and in-store fulfillment have also caused considerable stress on the system. When these services
were first offered, the volume was low and typically managed by one employee. However, as COVID-19 spread, many retailers rushed implementation of these services, which often resulted in a plethora of operational issues as well as a negative customer experience. With 2020 now behind us, retailers and manufacturers must immediately start preparing their distribution operations, focusing on improving their MHE and fulfillment processes to ensure business success and customer satisfaction in the next normal. While online shopping saw huge spikes during the pandemic, studies show these convenient delivery trends are here to stay. Therefore, the future of retail is going to require a hybrid approach to offer a truly omnichannel experience and continue to meet changing demands.
Steve Simonson is Vice President of Supply Chain Consulting Services at Tompkins International. He can be reached at firstname.lastname@example.org.
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BY STEPHEN T. HOPPER, PE
WHAT DO YOU REALLY NEED FROM A 3PL PARTNER? Before you embark on a 3PL partnership, here are the important questions to ask.
n a previous article (“To 3PL, or Not to 3PL?”, in the January/February 2020 issue of PARCEL), I wrote about some of the high-level pros and cons of outsourcing your logistics operations to a third-party logistics (3PL) company. This “make vs. buy” decision should not be made lightly, and it can be quite stressful, especially for a distribution-intensive business whose competitive advantage hinges on the success of its warehousing and distribution operations. Once you commit to hiring a 3PL, you’ll need to decide what, specifically, you want your 3PL to do for you. A typical 3PL relationship is built on several important moving parts, so let’s dig a little deeper and go beyond the general pros and cons. Before you begin your formal search for a qualified 3PL — and certainly before you sign a contract with one — you’ll be wise to consider each relationship component and explore it thoroughly. That way, you can identify the combination of 3PL services that will best support your unique business requirements. Your Place, or Mine? Your supply chain relies heavily on several important capital assets. Perhaps the most obvious example is the physical facility (the warehouse building and its surrounding yard) at which
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your inventory will be stored and your fulfillment operations will take place. The geographic location of this facility (or of each facility in the logistics network) is usually extremely important because it directly impacts operating costs related to transportation, labor, taxes, insurance, depreciation, etc. In addition to the physical facility, almost every warehousing and fulfillment center incorporates various types of fixed equipment, such as storage racks and shelving; conveyor, packing, and unitizing equipment; and workstations. It usually requires various types of powered and unpowered mobile equipment, such as industrial trucks (forklifts, orderpickers, etc.), pallet jacks, and carts. And physical automation, such as sortation systems, industrial robots, and goods-to-person picking systems, is becoming more and more common in warehousing because it can offer a compelling business case. Plus, many logistics operations rely on capital equipment that operates outside the “four walls” of the warehouse. These may include owned or leased vehicles (tractors, trailers, trucks, vans, etc.) that deliver products to customers. The question here is, who is going to provide these capital assets for your fulfillment operations? In most cases, the 3PL partner includes them in their contract, but some 3PLs are willing to run your logistics operation using assets you own or
lease. In the supply chain industry, the former is known as an “asset-based” 3PL, while the latter is known as a “non-assetbased” 3PL. Depending on your situation, either type of 3PL might make good economic sense for your business, but you should consider and evaluate the alternatives before selecting your 3PL partner. Who’s Got the Conn? The reality is that those who manage modern supply chains must effectively control the flow of information, just as they control the flow of their products. Consequently, reliable supply chain information systems and related technologies are the backbone of today’s warehousing and fulfillment operations. When businesses adopt best practices across their logistics operations, from planning through execution, they depend on accurate and timely information so they can manage, control, and track orders, inventory, workflow, and activities. And this includes the blocking and tackling that occurs in warehousing and fulfillment operations. When interviewing 3PL candidates, it’s important to discuss supply chain information systems with them. Ask them if they can provide their own information systems to support your warehousing and fulfillment operations, or if they will need to use yours. Some common examples include: Warehouse management system (WMS) Transportation management system (TMS) Parcel manifesting and shipping software Labor management system (LMS) Electronic data interchange (EDI) software Import/export software Supply chain digitization and visibility software Supply chain reporting tools (key performance indicators [KPIs], dashboards, etc.) Some 3PLs already have robust supply chain information systems and technologies in place and offer their use as part of their contracts. Further, some of these 3PLs insist on using their own systems to manage all their customers’ warehousing and fulfillment operations. And yet other 3PLs offer limited supply chain information systems, if any, to support their customers’ operations, and instead they expect their customers to provide this essential infrastructure for them to use. It is vitally important to establish which party’s information systems will serve as the backbone that ultimately controls your supply chain, so be sure to discuss this upfront with potential 3PL partners. Boots on the Ground The physical facility and equipment and the information systems comprise the fundamental infrastructure for your warehousing and fulfillment operations. Regardless of whether your 3PL provides either or both components, however, this infrastructure is of little value to your business without workers to manage and operate your supply chain. In fact, qualified people are the most important component of any successful supply chain. MARCH-APRIL 2021 PARCELindustry.com 29
Obviously, your supply chain operations will depend heavily on direct labor to do the physical work of receiving, putaway, inventory management, picking, packing, shipping, and any other warehousing and fulfillment activities. Although you might assume that your 3PL will provide this workforce, it’s not uncommon for the 3PL’s customer (or some other party, like a staffing company) to be responsible for hiring, training, managing, and retaining the necessary direct labor. Discuss your staffing requirements with your potential 3PL partners, and decide whether you or your 3PL will provide the workforce for your operations. Of course, the success of your warehousing and fulfillment operations will depend on more than just direct labor. It will also depend on an effective team of qualified logistics practitioners who will ensure your operations successfully support your business objectives. For example, these professionals must have solid expertise in current supply chain industry best practices so they can manage your operations efficiently and cost-effectively. They must be knowledgeable about regulatory compliance requirements mandated by the FTC, the DOT, the Department of Commerce, the EPA, the FDA, OSHA, the EEOC, and departments of labor at the federal, state, and local levels. And if your business ships internationally, they must also be knowledgeable about the regulatory requirements associated with global trade. Plus, your logistics operations will rely on these practitioners having strong business relationships with other key partners in the supply chain ecosystem, such as carriers, customs brokers, freight forwarders, and port authorities. With these things in mind, discuss the requirements of your logistics workforce with your potential 3PL partners. Decide how much of the workforce in your warehousing and fulfillment operations (if any) you would want to be responsible for providing. Remember that authority and accountability must be reciprocal, so whichever party provides each staff member should be accountable for the results they provide. A Three-Legged Stool All three components — the physical facility and equipment, the information systems, and the workforce — are integral parts of your logistics operations, and your supply chain is likely to collapse if any one of them is ineffective. Each provides measurable economic value, and many 3PLs would be happy to include all three components in their contract with you. It pays to give due diligence to identifying the blend of 3PL services that will best satisfy your business requirements.
Stephen T. Hopper, PE is Founder & Principal of Inviscid Consulting, whose mission is to help business plan and streamline their warehousing, logistics, manufacturing, and distribution operations to drive down operating costs, boost capacity, improve service levels, and mitigate risk. He can be reached at email@example.com or 404.832.5326. 30 PARCELindustry.com MARCH-APRIL 2021
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