DON’T SETTLE FOR
SILVER Three Ways to Improve Your Delivery Visibility pg 18
visibility of your supply chain is a must — but how? pg 20
concerns to take into account. Page 24
Business Intelligence — are you evaluating the right data? Page 26
MAY-JUNE 2011 | volume 18 | issue 2
PARCEL PUBLISHER Marll Thiede EDITOR Amanda Armendariz email@example.com
International Sales Options BY TOM STANTON
The Secret to Culture Change BY MARK TAYLOR
Sending It Back! BY PETER STARVASKI
Shipping Alternatives to Corrugated Boxes BY DENNIS SALAZAR
Command and Control Survey BY ROB SHIRLEY & JARED OAKLEY
Selecting a WMS Package BY HIRAM KNICKERBOCKER
Low Cost Parcel Options for Residential Shippers BY ROB MARTINEZ
Don’t Settle For Silver
Supply Chain Visibility Technology Will Change the World
Environmentally conscious practices are becoming the norm, but there are still other packaging concerns that must be taken into account by shippers. BY BRITTANY BEECROFT
The Business Intelligence Revolution
Are you using your data to drive the outcome you want? BY JONATHAN SHAVER
What to Ask Your “Transportation Service Provider” Sales Representative BY BRENT WM. PRIMUS, J.D.
EXTRAS Editor’s Note
ADVERTISING Ken Waddell | firstname.lastname@example.org Josh Vogt | email@example.com
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PARCEL (ISSN 1081-4035) is published 9 times a year by RB Publishing Inc. All material in this magazine is copyrighted 2010 © 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
Small but Important BY MICHAEL J. RYAN
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Having 100% visibility of your supply chain isn’t just a possibility — it’s a must. BY MIKAEL TRAPPER
PRODUCTION DIRECTOR Chad Griepentrog
New Opportunities with USPS Lightweight Parcels BY ELIZABETH LOMBARD
Three ways to improve your delivery visibility. BY JONATHAN TURNER
CIRCULATION Rachel Spahr | firstname.lastname@example.org
CONTRIBUTING WRITERS Brittany Beecroft, Jonathan Shaver Mikael Trapper, Jonathan Turner
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EDITOR’S NOTE AMANDA ARMENDARIZ
Knowing Better, Doing Better “You can’t manage what you don’t measure.” How often have we all heard that saying? More than we’d like, I’m guessing. And yet, as is often the case with phrases that have become so commonplace they almost seem trite, there is much truth to the statement. It seems like simple common sense, but do we really measure everything that we should in order to run our operations effectively? Maybe some of you do, but if you’re like me, I admit that there are times when measuring relevant data falls to the wayside. And I don’t just slip up in my professional life, either. I finally balanced our checkbook after neglecting that task for months, and it was an eye-opener — and a painful one at that! — to see how much money we spend eating out. But, armed with that information, we can now change our habits to better reflect our financial priorities. As another saying goes, “When you know better, you do better.” If asked to summarize the theme of this issue, those two statements I quoted above pretty much capture it all. We’ve got a great piece on Business Intelligence, which tells you not just what to measure, but how you deal with the results. You can start managing what you’re measuring, which can help you make the decisions that separate you from your competition. And once you “know better,” if you want to do better by increasing your visibility within the supply chain, well, we’ve got the articles covering that for you, too. So sit back, enjoy spring turning into summer, and get on your way to measuring and managing your operation to the best of your ability! As always, thanks for reading PARCEL.
MAY-JUNE 2011 | www.PARCELindustry.com
GoinG Global with Tom
International Sales Options I was recently asked to review three companies that make it simple to sell in foreign markets. Considering the current administration’s efforts to increase exports, these three companies provide a service that you might want to consider.
transaction. Unlike the other two companies, TradeGlobal does not handle the orders physically and instead acts as an information technology partner. They do not purchase the goods from you so the international order settles on the merchant account. The company supports the merchant’s shopping cart at check-out and proInternational Checkout is a seven-year-old, privately vides all information for a delivered price to a foreign destination. owned company that offers to integrate with the seller (at no TradeGlobal provides shipping tools so that orders ship direct from cost to the seller). Orders are placed on the merchants’ website the merchant to the international consumer. The company also and linked to a new checkout window. For example, an inter- provides international consumers with two shipping options (expenational customer would shop directly at www.DrMartens.com, dited and standard). Their flat rate fee is less than $10 if you ship add their items to the shopping cart and then click a button using their transportation account. If TradeGlobal’s transaction that opens a new International Checkout window to complete fee is passed along to the consumer the retailer maintains full the purchase. Merchants are not required to give a discount off margin on international orders. www.tradeglobal.com/home.aspx their web price; however, they may choose to do so to offset the shipping and handling costs to the customer. The international I type oF ServICe: customer pays in local currency and the seller is paid in US dollars on a US credit card. Over 400 merchants are already using if you are an enterprise-level shipper wanting to maintain control of the this service. The company guarantees against international fraud transaction, Fiftyone has software flexibility and a distribution program and is the only service of the three reviewed here that ships that makes them the recommended choice. to any deliverable destination in the world (including military if you are shipping small packages all over the world, international Checkout addresses). Testimonials on their website by worldwide consumhas the world distribution system to get your products where they need to go ers are impressive. www.internationalcheckout.com quickly and reliably. Many of their customers are brand name mid-market companies. You ship to them and they manage all the international shipFiftyOne has developed a very sophisticated software program ping and sales follow up. So if you want international sales with minimal that integrates with your shipping software to handle international investment from your staff, this is the company for you. transactions in more than 90 countries worldwide. They let interif you want shipments to go direct from your DC to international consumers national customers complete their purchases entirely within the and are interested in low-cost, flat-fee processing cost shipment to major customer branded environments. FiftyOne tends to attract larger international cities, Trade Global is your best choice. merchants that focus on brand building and customer relationships. They also have a global distribution program that handles air consolidation and works with DHL and local area small packII Fee StruCture: age carriers for competitive pricing and service. They launched Company Who is billed Fee Structure in 1999 E4X and have four years of experience with their current platform of broader services. FiftyOne deals with enterprise level companies that have over $10 million in US sales revenue. Pricing varies according to shipper volume, is user specific and unpublished. Shippers are charged a percentage of the sale depending upon volume. www.fiftyone.com
TradeGlobal is a privately held corporation that operates on a transaction fee-based model. TradeGlobal delivers outstanding customer service while allowing the merchant to control the 6
May-june 2011 | www.PARCELindustry.com
Percentage of each sale
Percentage of each sale
Flat Fee (approx. $10/trans)
thomaS m. Stanton international Analyst, Licensed Customs Broker can be contacted at www.afms.com, email@example.com, 503.246.3521 or 503.704.6015.
Parcel PersPectives with Peter
Sending It Back! Internet retailers are keenly aware that an efficient returns program is a critical factor for maintaining customer loyalty. Quite often, a customer’s first visit to an Internet retailer is the result of a search engine; however, that customer’s willingness to use the same store again is a direct result of their individual experience. While many stores have mastered the speedy execution and delivery, a bad returns experience can shut down a customer for good. Enter the postal returns work-share model. Newgistics, incorporated in 1999, was a pioneer in the work-share model with the USPS for return services. They, too, provide a hybrid label (they refer to theirs as ‘smart label technology’). In this return model, the customer uses the United States Postal Service for the initiation of the return. Put another way, they can return the merchandise the same way they would mail any parcel. And in a mirror of what occurs with the outbound shipments, the USPS then brings the parcel to one of Newgistics processing centers (they have at least a half dozen in the US). And Newgistics facilitates the final delivery of the return. Returns processing for consumers is a growing business, and Newgistics is currently the market leader among Internet retailers taking advantage of the Parcel Return Service (PRS) program available through the USPS. UPS and FedEx both have introduced offerings in this space (and interestingly, Newgistics has recently used its network to provide competitive out-bound shipment services). The USPS facilitated returns service by UPS and FedEx are named UPS Returns Flexible Access and FedEx SmartPost returns, respectively. There are a variety of ways to process the return on the outbound side. Two of the most common methods are to place a 4” by 6” inch return label into the box as it is being packaged, or to provide the label at the bottom of a packing slip, as a 3” by 8” label image. The major difference between the two is that the first is all done at the time of packing and is a synchronous process, while the latter can be done as a separate batch as part of the pick-release process and asynchronous to the actual shipping of the parcel. There is no real pro or con to either; picking one over the other is more a function of how a warehouse is set up to operate. However, the “cut along the dotted line” approach with the packing slip is generally less expensive than traditional label stock. With that said, neither of those options are my particular favorite. Recently, while 8
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talking to the director of transportation for GSI Commerce, Gerry McGowan, we discussed what we both agreed is a best practice for returns management.
Best Practices As a best practice, we envision a returns website that brings up the customer’s order would facilitate the best experience for both the customer and the retailer. When a customer enters the return site, their order is automatically brought up on screen. The software asks what they want to return, and also prompts them with: Why? The customer is then given the option to either print the label or have it emailed to them for printing later. This agnostic approach allows the retailer to pick whatever returns service they want on the back-end, and it gives them instant visibility into what is being returned and why. It also provides a convenience for the customer by having options on how they receive the label.
The customer returns process has a direct impact on if your customer returns; a well-thought out process will delight the customer rather than frustrate them and bring them back to your store for future sales. The multiple offerings with the US Postal Service bode well for all of us, and should be considered a part of your carrier strategy. p
Peter starvaski has over 10 years in the parcel shipping industry and is a recognized industry expert in parcel shipping, having authored numerous articles and whitepapers. He is currently Director, Product Management for Kewill’s Shipping Products.
REGIONAL ALTERNATIVES with Rob
Shirley and Jared Oakley
Command and Control Survey The prevailing view on supply chain management is that a key I have teamed up with Jared Oakley, who is pursuing a PhD to a firm’s overall success can be found in establishing stronger at the University of Memphis in Marketing and Supply Chain, relationships with the partners in a supply chain. On the other to gain a more complete picture of what is occurring within hand, I think we all have seen supply chains where the customer supply chains. We have framed 10 questions for shippers, car(meaning the partner that has the most customers) is using riers and logistics providers who read PARCEL, and supply their power to “leverage” the partners, presumably increasing chain leaders of major shippers were selectively invited. The their margins. Various examples of how firms prevail financially information will be shared in summary form completely for as channel relationships are strengthened have been published. comparison to respondents and in the next issue of PARCEL. The lesson here is that supply chain management is not a zero To see the first article in this three-part series of Command and sum game — the more we cooperate, the more we all prosper. Control, go to the content section of www.PARCELindustry.com The combination of global competition and economic slow- and search “Shirley”. p down resulted in a bright light that illuminated opportunities in supply chains to align more closely with their chain to co-create additional value. These actions often require more ROB SHIRLEY is President of ExpresShip, a strategic technology investment in technology, larger unit volumes and are based partner in the global supply chain. Contact rsXPship@gmail. on mutual trust. We are looking for your input in order to com. JARED OAKLEY is a PhD candidate at The University of Memprovide information on exactly how this is working for you in phis. His email is JJOak98@yahoo.com. today’s environment. Please answer online or write on this document and fax in order to gain a comparative of your supply chain vs. others: Name____________________________Title___________Company___________________________Phone__________________________ Email____________________________Address_______________________________City________________State_______Zip_________
For responding via fax, 1 = strongly disagree, 5 = strongly agree. Your contact information is necessary to participate and you can either use this page and fax to 866.657.2902 or go to: www.surveymonkey.com/s/C35TNBY The support from our Information Technology department (IT) is sufficient to manage our supply chain _________ Our major supply chain is being utilized to squeeze lower prices to benefit one of the partners _________ The dashboard we use lets us recognize and correct exceptions_________ We are below our projected quarterly budget with regards to transportation spend_________ Our distribution centers are managed to centralized and measurable controls_________ We have the most upside potential for cost savings on our inbound traffic_________ In making vendor selections, system interface is an important consideration_________ The new dimensional weight formula for parcel and express had a big effect on our cost_________ We use a Transportation Management Solution (TMS) for logistics cost control_________ For LTL, we still utilize CzarLite rather than another negotiated price_________ Don’t forget, only those that answer the survey will receive the summary information electronically to compare to their own input. With the alarming changes going on in the world’s supply chain caused by a multitude of disasters, dependency upon non-developed countries, fuel price acceleration and a surprisingly lack of visibility upstream from vendors, it is safe to say that the value of supply chain expertise based on knowledge, experience and technology will continue to accelerate. MAY-JUNE 2011 | www.PARCELindustry.com
TRANSPORTATION ABCs with Rob
Low Cost Parcel Options for Residential Shippers Residential deliveries are on the rise. In fact, residential deliveries have doubled from 20% of the overall parcel market to 40% in less than a decade. If you’re like most residential shippers, your margins are getting squeezed on both ends. Customers expect free shipping. Carriers keep raising prices.
Challenges of Residential Deliveries While there are several challenges to residential deliveries, chief among them is that these shipments can cost significantly higher than commercial shipments. Delivering packages to a residence costs the carriers more than a business address. Driver and fuel costs are higher outside of high-density commercial routes. Carriers are forced to recover costs through residential surcharges ($2.45-2.75), delivery area surcharges ($1.85-3.00) and other “accessorial” charges that often account for more of the total cost than the freight charges (Figure 1). Figure 1: One-Pound Ground Residential shipment to Zone 2
It’s also challenging to maintain current address information for residential customers. Consider the fact that 40 million people move annually in the US, and nearly three quarters of the population moves an average of once every five years (source: USPS Annual Report). To recap, residential deliveries are more challenging and costly than shipping to businesses. Shipping costs are skyrocketing out of control. And online shoppers want free shipping. What’s a shipper to do?!
Residential Shipping Choices Fortunately, residential shippers have several delivery options outside of the private parcel carriers, including the US Postal Service, parcel consolidators and regional carriers. For lightweight, low-value, non-urgent, residential shipments, the US Postal Service and parcel consolidators are hard to beat in price, service and value. Let’s start with the Postal Service. In recent years, the Postal Service has improved delivery transit, reliability, tracking systems and many other areas. The results are paying off. In a recent Multichannel Merchant survey, 59% of shippers view the USPS as a competitive alternative to UPS and FedEx. (Figure 2) Do you see the US Postal Service as a viable competitor to FedEx and UPS for your business?
Moreover, residential discounts in most carrier agreements are not as aggressive as commercial incentives. For example, it’s typical to see a 36% incentive off published list rates for Ground Commercial packages, but only 20% or so for Ground Residential shipments. There are other challenges, too. The parcel carriers are not required to obtain a signature for residential deliveries. Package tracking is somewhat limited. Final package disposition is often “left at door,” which can lead to higher costs through “Where’s my order?” calls to customer service, loss/damage claims, returns and reships. More importantly, all delivery problems can lead to a poor customer experience, negative publicity, customer attrition and revenue loss. Not to mention reships, restocking and other operational costs. 10
MAY-JUNE 2011 | www.PARCELindustry.com
No longer a “one price fits all” shop, the USPS offers a variety of pricing formats including retail, online, volume based, weight/distance-based, flat and regional rate products. Moreover, if you spend at least $2 million annually, you can negotiate custom pricing.
First Class Mail Parcels weighing one-to-13 ounces are a bargain even at the Retail rates of $1.71 to $3.41. With private carriers FedEx and UPS, the residential surcharge alone costs $2.45-2.75. The Postal Service does not charge for “accessorial” charges like fuel surcharge, residential delivery, area surcharges, pickup service, Saturday delivery, etc. Residential shippers can lower costs using USPS unlimited weight envelopes and boxes to mitigate higher charges due to weight, zone and surcharge combinations. USPS recently added regional boxes to flat rate options, adding yet another low-cost alternative to the convenience and cost advantages of unlimited weight products for inner zones.
Parcel Consolidators Parcel consolidators market their services as providing delivery times at or near First-Class Mail Parcel service standards, but at lower pricing. Other benefits include improved shipment visibility and less handling and damage. According to the USPS, the major ground consolidators are FedEx SmartPost, UPS Mail Innovations, Streamlite, Blue Package Delivery, Newgistics, DHL Global Mail, Fairrington Transportation, Kaleidoscope Services, OSM Worldwide, ParcelPool and SP Express. Each leverages USPS Parcel Select services and workshare discounts. Consolidators handle pickup, sortation, transportation and induction to the USPS hub. USPS handles the “final mile” delivery. The deeper the induction to the USPS, the greater the workshare discounts enjoyed by the consolidator, and in turn, the greater the cost savings available to shippers. While parcel consolidators are a great cost-savings option for volume shippers, there are millions of online sellers who ship fewer than 50 parcels a day. For these smaller shippers, a new carrier called EquaShip (www.equaship.com) is launching in Q3, positioning itself as “the antidote to free shipping.” With prices expected to be at least 10-30% below UPS and FedEx’s, EquaShip is catering to smaller shippers’ unique needs with later cut-off times for pickup and drop-off, 100% track-and-trace and $100 of bundled “real” insurance on each parcel (as opposed to “declared value” insurance which excludes many items). EquaShip claims transit times will be faster than USPS Parcel Post, FedEx SmartPost or UPS Basic, and insists that pricing is all-inclusive, in contrast to the many accessorial surcharges that commonly appear on monthly FedEx and UPS invoices. EquaShip will roll out with major cities first and eventually cover the entire country.
offer reliable parcel delivery services at rates as much as 40% less than national carriers. Many shippers will cite overall value proposition, including cost savings, consistent service performance and innovations that make it easier to ship with regionals. What’s more, regional carriers offer multiple delivery options that offer many benefits — including lower cost, flexibility and, in many cases, better service. In summary, residential shippers are wise to measure current shipping and handling policies and costs, and evaluate alternative residential delivery options. US Postal Service, parcel consolidators, regional carriers and other options could significantly reduce your shipping costs. Maybe you can offer free shipping after all? p
ROB MARTINEZ MQC, CMDSS, is President & CEO of Shipware, LLC, a parcel audit, recovery and consulting firm that helps parcel shippers reduce costs 10-30%. Rob welcomes questions and comments, and can be reached at 858538-3359 or firstname.lastname@example.org.
Regional Carriers Regional carriers such as Eastern Connection, Lone Star Overnight, OnTrac, Spee-Dee Delivery, US Cargo and others MAY-JUNE 2011 | www.PARCELindustry.com
MASTERING MANAGEMENT with Mark
The Secret to Culture Change
How do leaders change their corporate culture? Like the old apathetic victims. This is an upgrade from Stage One because joke about eating an elephant, the answer is one bite at a time. even though their life sucks, they see others around them The book, Tribal Leadership: Leveraging Natural Groups to whose lives are working. They may have conversations of, “if Build a Thriving Organization, is the result of a 10-year study only I had a college degree,” or “if only I could afford a car,” of over 24,000 people. Authors Dave Logan, John King and then my life would work. If you think of the TV show The Office, Halee Fischer-Wright guide leaders as they learn how to recog- this is the culture of the staff. They do the minimum amount of nize their culture and what steps they can take to nudge their work to get by and don’t show initiative. Motivational speakers culture to higher performance, bit by bit. and assessment tools aren’t effective. Twenty plus years ago, the authors recognized that “strategies failed 70% of the time” (p 211). In their inquiry as to why Stage Three this occurred, they discovered Peter Duckers’ statement that This is dominant culture in almost half of US workplace tribes, “culture eats strategy for breakfast” was true. where the language is “I’m great” and they are thinking, “and Their research affirmed that just as birds flock and fish school, you’re not.” In The Office, this was the character played by people tribe. A tribe is a naturally forming group of 20-150 Steve Carrell. Stage Three people are competitive and work to people. If you are a small company, this can be a single tribe. show everyone that they are smarter and better than anyone For large organizations, there can be many tribes. They can be else. This personally competitive cultural stage produces limdepartments or cross over. For example, it is easy to spot the ited innovation and almost no collaboration. cultural difference between sales and engineering. Tribes operate at different cultural stages, which can positively or nega- Stage Four tively impact your results as an organization. A high-performing Representing 22% of workplace, their language is “we’re great.” tribe can be three to five times more productive. Stage four is the zone of where productivity improves substanAuthor and MIT professor Edgar H. Schein says changing cul- tially, three to five times more than at Stage Three. Teams are ture is about “observation, inquiry and leverage. This means the norm and genuine stable partnership is the structure. At observing the ways in which an organization’s employees act; this stage, people feel more alive and have more fun. Zappos is deducing (or inquiring about) the ways they think; and putting a company at Stage Four. in place small behavioral changes that lead them, bit by bit, to think about things differently” (Strategy + Business, Feb 2011). Stage Five What follows is a cultural map, which will allow you to This is the culture of two percent of workforce tribes, and the lanobserve and assess five stages of corporate culture and guage is “life is great.” Here, people focus on realizing potential the unique leverage points to lead your group to the next by making history. Teams at Stage Five have produced remarkhighest level. able innovations, leading their industries and the economy.
Stage One The language used is “life sucks,” and people act out in despairingly hostile ways. Life is so unfair for this segment that anything is permissible. This is where we see workplace violence, extortion and sabotage. It is only two percent of the workforce, while 40% in prisons.
Stage Two The language used here is “my life sucks.” This group makes up 25% of workplace tribes and exhibits the behavior of 12
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Once Tribal Leaders identify which cultures exist in their tribe, they can use specific leverage points to upgrade the culture. But first, they have to move themselves to Stage Four by shifting the way that they work and the structure of the relationships around them. It can’t work from a “do as I say, not as I do” behavior. Leaders have to “walk the talk” and authentically act differently. Specifically, at Stage Four, leaders know and act from their “core values.” A core value is “a principle without which life wouldn’t be worth living.”
IF THE STAGE IS CURRENTLY
THEN UPGRADE THE CULTURE BY USING THESE LEVERAGE POINTS…
MENTOR OTHERS BY…
Stage 1. “Life Sucks”
Let them go
Get them out of their environment
Stage 2. “My Life Sucks”
Working intensively with those who want things to be different; help them to succeed
Find them mentors to get supported
Shared values & multi-person projects
Put them in groups of three-person teams or triads; find a project bigger than one can do alone
Go for history-making projects
Engineer a market changing opportunity
Focus on world-changing efforts with crosscompany collaboration
Network with people and companies at Stage 4; change the world
Stage 3. “I’m Great” Stage 4. “We’re Great” Stage 5. “Life is Great”
As a Tribal Leader, you can change the culture of your organization bit by bit — and make it run faster, more productively and more effectively. The result will be greater strategic success, more profit, less stress and more fun! p
MARK TAYLOR delivers workshops, keynotes and retreats for companies that want to facilitate corporate change based on the models and processes
of Tribal Leadership. He is a Chair of several “think tanks” composed of successful Manhattan CEOs focused on “outperforming” their competition. Mark applies his 35 years of experience as an accomplished CEO and corporate manager towards increasing the effectiveness and enhancing the lives of CEOs. Mark holds a MBA and is certified coach and Approved Tribal Leader. Visit his blog, www.vistagenyc.com, or contact him at (212) 867-5849 or email@example.com.
MAY-JUNE 2011 | www.PARCELindustry.com
PACKAGING with Dennis
Shipping Alternatives to Corrugated Boxes This may be unexpected coming from a guy who sells boxes for a living, but I am the first to admit sometimes the best shipping container is not a box. Even though corrugated die cut mailers and RSC style shipping boxes both offer excellent protection and are relatively low cost, today’s fast-rising packaging and shipping costs make this an excellent time to consider the wide variety of mailer envelopes available today.
Does the Application Really Require a Box? We work with so many shippers of many different products that it is not unusual to find a product that is shipping in a box just “because it always has.” The most common miss-application we see is with soft goods such as tee shirts, golf towels and clothing unnecessarily shipping in corrugated boxes. Certainly those products are not fragile or subject to damage, and in terms of cleanliness, many would contend that a corrugated box is probably not the cleanest, or most dust free, option. At the same time, a large assortment of hard goods, including books, DVDs and even pharmaceuticals, are commonly shipped in mailer envelopes. Remember, a product does not have to be soft in order to be unbreakable, so each item should be individually reviewed.
Seven Advantages of Mailer Envelopes The advantages of mailer envelopes are numerous and include:
First and foremost, they are usually lightweight compared to corrugated boxes. When every ounce matters, mailer envelopes save money.
They are compact and efficient to store and to ship.
They usually reduce labor and packing time compared to forming, filling and sealing a corrugated box.
The cost of messy and laborious void fill can be completely eliminated when a shipping box is too large.
Many mailers can be custom-printed and branded in smaller quantities than comparable size boxes.
There are automatable versions of some mailers with available equipment options designed to improve packing efficiencies and eliminate labeling.
Most have easy peel adhesive strips, eliminating the need for tape or glue.
may-june 2011 | www.PARCELindustry.com
Will That Be Paper or Plastic? That may be the last question they ask at the grocery store but probably the first question you should ask yourself if you are considering utilizing mailers. Paper-based products are of course the greenest options because most have a high recycled content, are biodegradable, compostable and easily recyclable. Most paper mailers can be custom printed and are available in a wide variety of sizes and styles, including gusseted versions, which create three dimensional shipping containers for higher profile products. Plastic mailers provide several advantages, as well, but the two key ones are that plastic is both lightweight and water resistant. From a green perspective, many are now available in biodegradable versions or, depending on resin type used, can be easily recycled wherever a common plastic grocery bag is recycled.
Padded or Plain? Another decision that needs to be made is one of cushioned versus unpadded mailers. The good news is that paper-padded mailers typically are filled with shredded newspaper, which is usually 100% post-consumer waste. The downside of this is that they tend to be a little heavier than their plastic counterparts; however, for customers who want the greenest available packaging and whose product requires some protection, paper padded mailers are definitely the best option. Plastic-padded mailers are usually lined with bubble packaging, but please remember that not all bubble packaging is created equal. Ask about the composition and specifically about the recyclability because some bubble versions are not recyclable at all or only under very specific and rare circumstances. We always aim for the easiest possible recycling option for any product we offer because we know that greatly improves the odds that the product will not end up in a landfill. Whatever you do, please do NOT use mailers that are paper on the outside and plastic bubble on the inside, because they cannot be recycled and can only end up as landfill waste. As always, seek the advice of a good packaging supplier who offers multiple options. They can usually supply samples and will assist in the evaluation and testing process. p
Dennis sAlAzAr is president and co-founder of Salazar Packaging, Inc. and one of the most prolific writers in the area of sustainable packaging. Contact him at firstname.lastname@example.org.
Practical IT with Hiram
Selecting a WMS Package Many companies adopt a warehouse management software package in an attempt to simplify their fulfillment activities. In addition to handling fulfillment activities of the shipping department, many packages include support for customer support departments, allowing self-service access to shipping history to support customers. From an IT perspective, there are several main points that any company looking to adopt a consolidated solution should consider:
Established Carrier Options Many solutions offer support for FedEx, UPS, USPS and generic carriers such as LTL carriers. As many multi-carrier systems have development cycles that do not coincide with carrier product offerings, support for new offerings from established carriers often reflects a delay awaiting a new version or product offering to support additional features and offerings that the carriers implement in their independent solutions.
standard practices, many of the “costs” for the solution will not be simply monetary in nature but will require significant changes to processes and business practices.
Practical tiP Updating the inventory may not be as easy as it was under a legacy solution, and this may result in a slower “To Market” speed in the future. Individual contributors may not be able to make major updates to product or procedural tables, causing increased workload of IT resources. To plan for these changes ensure that your IT project planning can handle, prioritize and resolve issues as they crop up.
Shipping Carrier Selection Ensure that your solutions allow flexibility in carrier selection to meet your business needs. Most solutions offer at least basic support for the large consolidators, but the support for multiple carriers will vary between solutions and providers. If smaller or regional carriers are a part of your small package strategy or you have complex routing plans due to customer or business requirements, make sure the chosen solution offers extensibility to support non-standard carriers. Often these modules are referred to as “Generic Carriers” and the majority of the main providers offer this functionality, but your mileage may vary. Some “Generic Carriers” are fairly adept and flexible, easily allowing non-standard or LTL carriers to be added to your mix. Other options will require extensive coding and modification of your solution to support custom carriers.
Conclusion Warehouse Management Systems add many important features to a business looking to gain control over Shipping and Receiving. Just make sure that your solution balances stability with flexibility to help meet your business needs. p
Hiram KnicKerbocKer is Implementation Engineer, Pitt Ohio. Contact him at email@example.com or 412-232-3015 x6493.
Customization Costs Be prepared for very high customization costs to adapt the solutions in the multi-carrier product to your specific business. As one of the primary advantages of warehouse management solutions is to bring internal processes into line with industry
may-june 2011 | www.PARCELindustry.com
SHIP RIGHT with Elizabeth
New Opportunities with USPS Lightweight Parcels On April 17, new pricing for USPS Mailing Services products went into effect. This includes First-Class Mail (FCM), Standard Mail, Package Services (Media Mail, Library Mail, Bound Printed Matter, Parcel Post), Periodicals and Extra Services. And while shippers might have easily dismissed this rate change assuming that it mostly applied to letter and flatsize mailpieces, shippers of lightweight packages might want to take a look. Mailing Services products are limited to a price ceiling called the Consumer Price Index (CPI). The April price change per class of mail was limited to 1.74%; however, the areas of highest impact included FCM Flats (5.343%) and Standard Mail parcels and Not Flat-Machinables (11.3%). In addition to price changes, there were two key changes to FCM parcels: the rating structure and the introduction of new commercial pricing categories. Effective April 17, the first three ounces in each FCM parcel category are the same price. Parcels weighing up to and including three ounces will all pay a single price. The additional ounce price of 17 cents will apply after the first three ounces. Prior to April 17, there were two price categories for FCM parcels, Retail and Commercial. Retail prices applied to single FCM parcels, and mailers that met certain preparation and volume requirements qualified for Commercial prices. Effective April 17, Commercial FCM parcels is split into two categories, Commercial Base and Commercial Plus — both offering singlepiece and presorted pricing options. Shippers can qualify for single-piece Commercial Base pricing when using an approved postage payment method. These include permit imprint, IBI (Information Based Indicia) meters that electronically transmit transactional data to the USPS, and PC Postage. In this case, there is no minimum volume requirement unless the shipper is using a permit imprint, which requires a minimum of 200 pieces or 50 pounds. Postage per piece is 15 cents less than that of Retail pricing at the same weight. For presorted Commercial Base pricing, the mailer must meet the 500-piece minimum as well as other preparation requirement. This new FCM Commercial PLUS category is most interesting — and for the right applications, could save shippers significant 16
may-june 2011 | www.PARCELindustry.com
STRATEGIES While the most significant increases apply to FirstClass Mail flats, Standard Mail parcels and Not FlatMachinables, mitigating postage increases in general includes the re-design of mailpieces, i.e. parcels to flats, flats to letters, and implementing solutions to prepare mailings at automation prices. Leveraging technology to gain delivery information of mailpieces and packages electronically may not only reduce fees, but also improve processes and enhance communications. Use of the electronic options of Delivery or Signature Confirmation service, or electronicallyfiled Certified Mail with electronic Return Receipt as alternatives to the traditional Certified Mail or Certified Mail with the “green card” Return Receipt may serve as cost-saving options in many applications. April 17th price information can be downloaded via Postal Explorer http://pe.usps.gov/default.asp. Click on the link in the left blue navigation frame under “*New* April 17, 2011 Pricing Information.” Please note the USPS usually posts the new Notice 123 Price List just prior to, or on, the effective date of the price change. Contents of website subject to change.
dollars. The PLUS category is designed for machinable parcels that weigh over 13 but less than 16 ounces, although packages may weigh as little as 3.5 ounces. You may recall that the maximum weight of FCM is 13 ounces, and pieces weighing more than 13 ounces fall into Priority Mail. However, under this new FCM Commercial Plus pricing category, parcels may weigh up to (but not including) 16 ounces!
For the single-piece and presorted Plus pricing options, the shipper must use a permit imprint and meet other requirements. These include mailing more than 5,000 machinable parcels at Commercial Plus prices each year, electronic postage statements and the correct inscription on the package. In addition to this unique weight limit for Plus parcels of just less than one pound, the pricing for FCM Commercial Plus parcels is unique. A fixed Commercial Plus price is charged at a single-piece price and each of the presorted price levels. The single-piece price is $3.89, and for presorted Plus parcels, the 5-digit, 3-digit and ADC prices are $3.21, $3.41 and $3.61 respectively, and single-piece Commercial Base price for a 13 ounce parcel is $3.26. A package exceeding 13 ounces would fall into the Priority Mail category so let’s assume $4.75 for a Commercial Base Priority Mail flat-rate envelope. That’s $1.50 more in postage. Whereas, postage for a qualifying FCM single-piece PLUS parcel is $3.89 — reasonable middle ground. Savvy shippers will want to take inventory of all their lightweight shipments. As a means to mitigate expenditures and avoid carrier accessorial charges, shippers may consider moving to this new FCM Plus category for parcel shipments that fall into the sweet spot of greater than 13 ounces but less than one pound. Next issue, I will discuss the PRC’s recent approval to the Postal Service’s request to move commercial First-Class Mail parcels to the Competitive Product (Shipping Services) category. p
ELIZABETH LOMBARD Manager, Certifications and Postal-Carrier CMDSM, CMDSS, MDC, MDP, EMCM Enterprise Learning and Development Pitney Bowes Inc.
MAY-JUNE 2011 | www.PARCELindustry.com
Don’t Settle for Silver
Three ways to improve your delivery visibility By Jonathan Turner
first glance, logistics and Olympic snowboarder Lindsey Jacobellis’ infamous gold-medal-losing race may not appear to have much in common. But take away the snow, the global television audience and the intense media scrutiny that followed, and you have a vivid illustration of what happens in supply chains countless times a day: Like Jacobellis (who made the mistake of celebrating what appeared to be a guaranteed first-place finish a few feet too soon), many companies relax their shipping visibility just shy of the true finish line, even though many other competitors are nipping at their heels. Think about it: Few companies these days would dream of shipping goods from Asia to the Americas or from US city to US city without the help of sophisticated visibility systems. But how many rely on similar systems and processes once
may-june 2011 | www.PARCELindustry.com
individual customer shipments are loaded onto last-mile delivery trucks? Just as important, how many can say they know for sure what takes place while delivery professionals are at customers’ homes? The answer is not enough. And that’s a mistake that could be costing companies more “gold” — also known as repeat business — than they think. Thankfully, better last-mile visibility has become far more achievable in recent years due to the emergence of several new systems and services and the more strategic use of some techniques and devices that have been in companies’ tool kits for years.
GPS: A Birds-Eye View of Driver Activity Consider the case of GPS systems. In addition to their primary function of assisting delivery teams with navigation, these tools
have the ability to enhance a company’s visibility in at least Surveys: An Inside View of the Delivery Experience three key areas. First, if a customer calls or emails with a shipment-related This final tool may seem like an odd fit, because it’s more typiquestion on the day of a delivery, a GPS device can help cus- cally employed to measure other aspects of company operatomer service reps track exactly where an item is at the time of tions such as manufacturing or marketing. However, customer the query. As a result, CSRS can provide customers with much feedback about how well delivery teams performed is one of more accurate, real-time information about the locations and the most valuable and underutilized supervisory resources companies have available to them today. estimated arrival times of their orders. Whether this feedback is collected via leave-behind surSecond, companies can use GPS tools to see how closely driver teams are sticking to the delivery routes that have been veys, a call-in number or outbound phone/email surveys, it’s an mapped out for them. It’s good information to have since any excellent way for companies to see what’s really going on when deviation from these routes could have a domino effect on on- these teams reach a customer’s home. These surveys don’t have to take long. Nor do they have to time delivery and fuel costs. Third, companies’ dispatchers can combine the real-time geo- be administered by a “live” customer service rep; in fact, autographic information provided by GPS devices with their compa- mated phone surveys, which are less expensive to administer, nies’ order and route information to make last-minute decisions frequently have a higher response rate. But they do need to as needed (like changing the sequence in which items are going measure the service attributes or performance requirements that companies deem the most essential to their last-mile delivery to be delivered) in order to improve customer satisfaction. success — and that they might not otherwise be able to confirm. (For example, measurable attributes might include how profesHand-Helds, Smartphones and Blackberries sional a team looked, how polite they were and how carefully – A Quick (and Accurate) Look Or think about hand-held devices: They may be small in size, they moved through a customer’s home when making a delivery). Just as important, survey feedback needs to be used, but they ultimately can deliver huge visibility benefits. Among other things, they can eliminate companies’ reliance on route because unless companies act upon the information that cussheets and cell phones and reduce the inefficiencies associ- tomers took the time to provide, they’re only providing the illuated with manually updating key information each time an sion of caring about delivery quality. And customers in this day order’s delivery status changes. In a matter of seconds, deliv- and age can see through such illusions very quickly. Whether it’s offering disgruntled customers a small-value gift ery teams can scan items as they’re loaded onto a home delivery truck and off-loaded at their final destination; they also card to take the sting out of a less-than-satisfactory deliveries can capture customers’ signatures once delivery is complete. or contacting a team that failed to wear the required uniform or Then their scans can immediately be transmitted so schedules, protective booties to remind them of what’s expected — comtracking programs and reports can be updated continuously panies must let all concerned parties know they’re truly watchand simultaneously, providing all stakeholders with the latest, ing and that they care. most accurate visibility. Should these devices have cameras on them — which most Go for the Gold now do — drivers can also use them to photograph and send There are some who might say that these recommendations are photos of any deliveries that have damages. As a result, compa- much like dessert — much-appreciated and nice to have but not nies can see what’s wrong with items while teams are still in a essential. After all, they argue, last-mile deliveries usually occupy customer’s home — and immediately recommend the best cor- very small fraction of a very long supply chain, and that makes rective strategy. This is especially useful because sometimes the their significance in the overall scheme of things marginal at best. However, when you think about in strategic terms, that fracright incentives, such as a discount for accepting an item as-is, tion of time could potentially be the most important of all, can be less expensive than the cost of a return and re-delivery. In a similar vein, hand-held devices can also help drivers because it’s the only segment in the entire supply chain that set a company’s exceptions management process in motion, companies’ customers actually see. Just as important, lastwhether that exception is a damaged product that needs to be mile deliveries represent the final chance that companies have reordered or a delivery that needs to be moved back an hour to shine before a transaction is complete. It’s your call: Do you want your company to be known for firstor two due to substantial delays. Best of all, these capabilities are all now more affordable than ever because companies rate performance all the way to the finish line? Or do you want no longer have to invest in the rugged but expensive hand- to be viewed as the company that almost did? The answer you held machines that were the only game in town until a few choose could be one of the most competitive decisions you years ago (unless their drop-offs involve a high piece count, make all year. because that requires much faster scanning). Instead, if they have the proper software, they often can use Smartphones and Blackberries for the same purpose — at a fraction of the price. jonathan turner is with 3PD. Visit www.3pd.com for more information.
may-june 2011 | www.PARCELindustry.com
Supply Chain Visibility Technology Will
CHANGE TH By Mikael Trapper
MAY-JUNE 2011 | www.PARCELindustry.com
HE WORLD Having 100% visibility of your supply chain isn’t just a possibility — it’s a must. MAY-JUNE 2011 | www.PARCELindustry.com
hrough supply chain visibility technology, it is now possible for companies to view their parcel and freight shipments no matter their locations and track them in as close to real time as data feeds allow. Executives, managers and ground-level employees can use visibility technology to make onthe-spot, educated decisions that save their companies money and increase efficiency. Unfortunately, outside of supply chain professionals, not a lot of people know that supply chain visibility technology exists. Even some big companies are still using paper invoices to track volume, costs and trends, even though paper processes leave a large amount of room for overpayment errors and are generally inefficient. Paper options and processes will likely soon become obsolete. As the globalization of our cities, countries and regions makes it more necessary for companies to ship worldwide in order to remain competitive, electronic supply chain visibility technology will become more mainstream. Companies will use it not only because it enables them to create savings and correct logistical errors, but because the environment will continue to be a priority, and using paperless methods is a very powerful tool that any company can use to make greener shipping decisions. Can you imagine what it would it mean for the planet if every company in just the US were to track its packages and make sure they were being delivered by the most efficient routes possible? The positive effects on the environment would not just be impressive, but incalculable.
How It Works Most supply chain visibility technology is web-based, which means that it is paperless and software-less. Going the webbased route allows companies to manage complex supply chains without having to try and interpret stacks and stacks of paper or involve their IT departments. Personnel at all levels can easily query imported shipping data using an online visibility dashboard with just a few key strokes. High-level personnel and upper management can make large-scale strategic decisions and hold the appropriate people accountable for noncompliance with their company’s shipping policies, and mid- to ground-level employees can see the dollar impact of each and every decision they make, thereby making leaner, greener day-to-day decisions. Below are two hypothetical scenarios that will hopefully help you gain a greater understanding of how the major functions of supply chain visibility technology might be able to help you and your company create and support a greener supply chain.
Scenario 1 Issue: You want to increase the number of shipments you consolidate in order to cut down on the amount of fuel emissions for which your company is responsible but first need to determine which shipments could be consolidated and whether consolidating them will make sense financially. Actions: You request four to 52 weeks of your company’s detailed shipping history directly from your carriers
may-june 2011 | www.PARCELindustry.com
electronically, then use your supply chain visibility technology to benchmark your company’s shipping characteristics against those of the thousands of other similar companies. (Note: If you are already set up to receive live data feeds, you will not need to request additional data from your carrier.) Next, you create reports based on your benchmarking results that show that if you had been consolidating all of the orders being placed by a particular client on a daily basis, you could not only have saved money but also limited the amount of pickups being made. You use your supply chain visibility technology to consolidate these orders, monitor the number of pickups and deliveries and track your savings. Results: By consolidating the orders for one client, you reduce the amount of deliveries being made from five a week to two to three a week. This enables you to take advantage of the prices of consolidated shipments while reducing the amount of surcharges that appear on your carrier invoices, saving you three to 10 percent on your annual logistics expense.
Scenario 2 Issue: Shipping by air is most the expensive way to ship, and you’ve just learned that most climate experts believe that aviation is responsible for at least five percent of the warming caused by greenhouse gases. You want to switch the bulk of your company’s air shipments to a more efficient mode, but are concerned that doing so will increase transit times and cause delays for your end customers. Actions: You access your online supply chain dashboard and select report parameters that allow you to create a report that contains all of your company’s air shipments. You then select additional parameters that will determine which air shipments could be sent by another mode and still arrive at their destinations on time. You do this for both your inbound and outbound shipments. When you are finished running your reports, you are able to see that while it would delay transit times to ship by any mode other than air for your outbound shipments headed to Europe, the bulk of your inbound and outbound shipments shipped within the US would not experience delays if sent via ground. Your supply chain visibility dashboard notifies you that within the US, UPS uses more train services than any other carrier. Because your visibility program allows you to switch all of your national shipments to UPS with just a few clicks of the mouse, you are able to share your preferred carrier choice with the rest of your company and begin monitoring in-house compliance with your decision right away. Results: By moving more of your business over to UPS, you are able to negotiate better base rates and push for a lengthier contract. You are able to save $23,000 annually by switching the majority of your shipments being shipped within the US over to UPS and shipping by ground. (Disclaimer: This is a hypothetical scenario. Your company may be able to achieve greater savings with a carrier other than UPS.) In addition to enabling you to make better, greener, faster shipment consolidation and mode selection decisions, supply chain visibility technology can also help you to run a greener supply chain through:
High-level benchmarking that shows how similar companies have found ways to go green and achieve better carrier incentives at the same time • Analyses that show how warehouse consolidation or moving warehouses would result in shorter transit times, less fuel emissions and greater savings • The ability to import all of the green services offered by carriers into your visibility dashboard so that you have immediate access to all of your carriers’ greenspeciﬁc solutions • Acting as your live routing guide and monitoring not only in-house compliance with your company’s green ordinances, but vendor and carrier compliance • Enabling you to manage all of your logistics-related invoices online so that in addition to auditing your carrier invoices and being compensated for any discrepancies, you can see where waste and unnecessary spending is occurring throughout your supply chain • Providing you with all of the data you need to show your carriers your actual logistics spend and leverage your volume to achieve better base rates • The ability to track and view individual shipments and receive email alerts when shipments are being sent by a mode or carrier that is not in alignment with your company’s green shipping policies so that you either reroute shipments or make contingency plans • Signiﬁcantly reducing the enormous amount paper invoices that you would otherwise be receiving from your carrier When sourcing supply chain visibility technology, you can look to Oracle and SAP, both of which offer supply chain visibility tools, or ﬁnd a provider that is able to create custom technology solutions speciﬁc to your company or industry. The best way to ﬁnd a company that offers custom solutions would be to ask partners for referrals, search on the Internet using phrases like “supply chain data analytics provider” and “logistics expense analysis,” and research authors of green supply chain articles to ﬁnd out which providers they might recommend. Another thing to keep in mind is that custom solutions providers may be able to provide you with more personal service and green solutions than bigger outﬁts, are often cheaper and may be able to implement solutions in much less time than bigger organizations. Mid-size and smaller companies, in particular, may decide it is in their best interest to partner with an organization that is not a huge conglomerate. As you search for a supply chain visibility technology provider, familiarize yourself with some of the technology that’s available by asking potential third party partners for things like free online demonstrations. Supply chain visibility technology is the future. The more companies use it, the sooner we will all beneﬁt.
MIKAEL TRAPPER is Managing Partner, BridgeNet Solutions, Inc. Visit www.bridgenetsolutions.com for more information.
MAY-JUNE 2011 | www.PARCELindustry.com
Environmentally conscious practices are becoming the norm, but there are still other packaging concerns that must be taken into account by shippers. By Brittany Beecroft or carriers to not only become competitive in the demand is not primary across all markets, but it is evident. A small parcel market but also obtain a competi- 2010 Clownfish study shows luxury consumers make purchastive advantage, the carrier’s capacity to differ- ing decisions based on the perceived value of the product — entiate itself from the competition and adapt to not if that product arrives in green packaging. But don’t rule changing industry standards must be high. UPS, them out as environmental enemies. They want to know what’s for example, must be able to leverage its ser- in it for them — so tell them. Packaging that is beautiful and biodegradable; paper-based vice from one market to another and avoid competitive replication as it expands its packaging plastic wrap instead of oil-based bubble wrap — recent studies show half of those surveyed would pay 20 cents more for biooptions to embrace green ideology. Green ideology is global; organized environmental aware- degradable packaging in lieu of petroleum-based plastic. Econess dates back to the late 19th century in Europe and the friendly benefits the environment and the bottom line. But how United States as a counteraction to the Industrial Revolution. can we, as consumers, know when our packaging is truly recyGreen economics stresses the importance of balancing eco- cled and not just flimsy? Enter the FTC and “The Green Guides.” nomic growth with ecological health. For example, the goal of GoGreen is to improve DHL’s CO2 efficiency by 30% in all Guides Gone Green departments by 2020. The company received distinction as Perception is reality. And perceived value can be cheaper to a “selective landmark” in the 2009 Land of Ideas initiative. produce than the actual product. The luxurious lipstick you DHL offers competitive innovation through climate protection. bought comes in a box that says “recyclable.” What does To be economically competitive and environmentally conserva- that mean — the lipstick can be recycled, or just the box, or tive, DHL provides customers with an opportunity to reduce both? A matter of interpretation or intentional deception? The carbon footprints in a way that actually increases that custom- Federal Trade Commission (FTC) offers “The Guides for the er’s green initiative and climate awareness. Use of Environmental Marketing Claims” — or, more familiarly, DHL is in a great position to promote green ideology. Offering “The Green Guides.” The Green Guides define what constitutes GoGreen products, DHL is the first logistics company to offer interpretation, substantiation and deception when labeling consumers carbon-neutral packaging, a competitive innovation your packaging eco-friendly. in the transportation and logistics industry. Consumer demand Being eco-friendly should be a strategy for differentiafor an economic and environmental equilibrium is growing; the tion, not deception. UPS, for example, realizes and upholds 24
MAY-JUNE 2011 | www.PARCELindustry.com
victims of dynamic compression, which is why shippers are encouraged to consult their carrier’s package testing lab to verify the durability and sustainability of the package composition before using it to send merchandise. If you are at 50% of your strength, you are also at 50% of your support, which now introduces the elements of shock and vibration. Shock occurs when a package is dropped or rattled by another package. Packages rarely fall flat; they normally strike an edge or corner or hit the bottom surface of the package when they land. This impact can cause abrasions to the package surface or tear the packaging entirely, now subjecting the contents to damage. While not frequent, it should be noted packages can and do fall from significant heights of over 30 inches. To ensure some level of protection, a two-inch buffer should be allowed on each side between the product and the packaging. The Size Is Right As trucks, aircraft and sortation belts move, they create levShock, vibration, compression — this is what your package is exposed to each time it gets sorted in a hub or station and els of vibration. Vibration varies from a steady constant hum to loaded on the van. Is it any surprise, then, that a shipper might a several pinpointed sharp jolts. Packages on a trailer driving think, “I don’t have time to worry about eco-friendly packaging; cross country are subject to vibration for days. This constant movement can loosen closures and weaken packaging as well I’m worried enough that my package will be ruined in transit!” And it’s a valid concern. A package traveling a mere couple as shift the package contents, resulting in pressure points on hundred miles may be loaded and reloaded as frequently as five the box, bag or container. Two additional packaging hazards to consider are climate times between truck, terminal and hub. Handling can range from manual to machine sortation, which is why the Guide to and altitude. Contractor vans are not air conditioned so if it is Packaging for Small Parcel Shipments warns both shippers 100 degrees outside the van, it is 100 degrees inside the van. and recipients the big “Keep Upright” label on the box is not a Likewise if the van is traveling through below zero temperaguarantee it will be. The report succinctly explains transit ori- tures the packages are below freezing as well. Most cargo jets entation may be different than intended orientation. The intent are pressurized, but trucks can hit altitudes over 10,000 feet. is valid; a package being handled five times is going to travel If your product is combustible or alive, climate and altitude are on numerous belts and down numerous chutes. Carriers offer pivotal hazards for it. definite delivery times so these packages need to be scanned quickly and moved to the next destination. Therefore package It’s Easy Being Green… Isn’t It? We want to be green, and FedEx will make sure we are. Say, for handlers will sort the packages in a manner that keeps the center of gravity low, so the package is not top heavy and at risk for example, you need to sign a document for work and return the falling off the belt, and keeps the label visible at all times. Over paper to your employer. Instead of using a plain, white, potentially two million packages move through the FedEx Memphis hub non-green envelope, FedEx offers the reusable envelope. You can actually use the same envelope more than once. After you pull per day; damage prevention is a necessity, not a luxury. Not only is your package moving on the belt in perhaps an the tab to open the envelope a second adhesive tab is available to unintended position, but with two million packages moving reseal the envelope — being green is as simple as peel and stick. The USPS, meanwhile, is the first certified Cradle to Cradle along with it, rest assured it is being stacked at some point. Package handlers do not stack one package on top of the next carrier. What is unique about this certification is the ecoin a columnar fashion but rather the packages are interlocked. friendly concept is not limited to the end product but promoted The goal — to securely move as many packages as quickly as from initial design to final deliverable. A product that can be possible. The concern — compression. The report warns ship- recycled safely is important but so is how much energy and pers using corrugated boxes that the box strength, when inter- water are consumed in creating the product. To highlight their locked in transit instead of column stacked, can be reduced awareness of the carbon footprint, the USPS reminds conby up to 50%. Handlers try to keep the heavier packages on sumers they come to our homes almost every day of the week the bottom of the stack, but since packages are stacked and anyhow so why not keep online deliveries with the USPS and loaded as they are received, smaller, less-dense packages are create a new friendly footprint for ecology and the economy? subject to supporting the weight of the package wall. Compression is not exclusive to stacking. When a sortation belt jams, packages can slam into each other and continue to Brittany Beecroft is a Senior Pricing Analyst at Logica Corp. Prior to that, press together until the jam is alleviated or the belt is turned she spent 12 years as a Strategic Pricing Analyst with FedEx. Contact her at off. Compressive forces can impact the top and bottom as well firstname.lastname@example.org or 801.758.7369. as the sides of the package. Palletized packages are frequent this economic and environmental initiative through its Eco Responsible Packaging Program. You don’t get the label if you don’t pass this test, and you don’t keep the label if you don’t remain compliant. The Eco Responsible Packaging Program evaluates three areas of a shipper’s packaging — materials content, right sizing and damage prevention. Only the secondary packaging is evaluated, not the manufacturer’s packaging. UPS evaluates the sustainability of the transportation packaging and its fill content, e.g. bubble wrap, and the packages that pass participate in the program and carry the Eco Responsible Packaging logo. Those who do not pass are encouraged to visit the UPS Package Lab and receive guidance on how to become more eco-friendly — economically and ecologically.
may-june 2011 | www.PARCELindustry.com
The Business Intelligence Revolution Are you using your data to drive the outcome you want? By Jonathan Shaver
Everybody’s talking about Business Intelligence (BI). So what is it, and how can it help you? In short, BI is using existing data to drive a desirable future outcome. Savvy BI programs know: a) What significant data to capture b) How to warehouse the data c) Which specific figures to access d) How to effectively access them… …to guide their activities toward a desired outcome. Let’s break that down even further, starting with the most important point first, which is, in this case, the end. Stephen Covey has said that one of the habits of highly effective people is that they “start with the end in mind.” A highly effective plan for business is no different. What is it that you want your organization to do? Where do you want to end up? What outcome are you looking for? Once you have a clear picture of your destination, survey your data. (It is important to note that all quality decision making begins and ends with quality data. Without accurate and meaningful data, it is virtually impossible to make quality business decisions. Thus, without sufficient data, it is highly likely that, at times, your company is making poor business decisions.) 26
may-june 2011 | www.PARCELindustry.com
What information have you kept? What should you be keeping? How can you analyze that information to help you predict whether or not you’ll reach your goals and objectives? Anybody can get you “the numbers.” Running reports is not challenging. BI is not reporting. It isn’t even “fancy” reporting. BI is knowing specifically which numbers to run and how to use them to create a trajectory toward your goal. The key to a successful BI initiative is tangible results. Here are a couple of examples of BI applications that many of us have encountered: 3 Netflix patterns the movies a member has rented and targets them with “Movies You’ll Love”
Amazon.com suggests “other items that a customer may want to consider” after making a purchase
Facebook tailors its ads to individual accounts based on age, gender and other individual factors
The profiling of your historical purchasing into a pattern that in turn presents you with new purchasing opportunities targeting your preferences is standard practice in E-Commerce shopping. The ability to track if you did purchase the preferences
presented is also common. It is also a Business Intelligence 5. Establish some initial Key Performance Metrics that the Business Intelligence solution can track and, in turn, proapplication. The process reviews historical data looking for patvide direction. These metrics should be both impactful, but terns to suggest a positive future action for the business operaachievable to track. tion. Once again, the key is that the results are tangible. Many Business Intelligence applications, including the consumer buying example above, drive revenue performance, 6. Ensure that the BI initiative has a tangible benefit and return. This can include direct cost savings, increased cusrepeat business and increased customer satisfaction. This tomer retention, revenue or profit. has been the more common area of investment in Business Intelligence. Whereas now, companies are focusing on (with some challenges) applying Business Intelligence applications 7. All data collected has to be “scrubbed” and refined to make useful. Underestimating this requirement can lead to results to increase the profitability of the business, not just the revthat are misleading and ultimately costly for your organization. enue. Here emerges the opportunity for Business Intelligence within the transportation field. The use for BI is complex for the transportation professional Typical Pitfalls in the Creation of a BI Solution because much of the logistics function is a reaction to other initiatives within a business. For example, outbound freight 1. The Business Intelligence initiative is not well-defined with a specific tangible result that can be measured. is really an expense against sales and inbound freight is an expense against cost of goods sold. Therefore, the framework for Business Intelligence has to work within the category that it 2. Data resides and is controlled within different departments throughout the organization, making collection too chalrelates to within the company. lenging to achieve desired results. If we simplify the goal of Business Intelligence to support better business decision-making, we can begin to craft a 3. IT controls the Business Intelligence process and transporBusiness Intelligence strategy for transportation. tation initiatives are not recognized or even understood; therefore, they are not prioritized. What do I need to do to incorporate Business
Intelligence in the transportation field?
4. The Business Intelligence initiative is not actually Business Intelligence, but a series of reports showing historical pat1. View transportation through a BI “lens.” The data itself has terns without the ability to project impact forward. inherent value. Many companies spend time, dollars and resources having late packages tracked for the reclamation of shipping dollars with a parcel carrier. The $8.00 a shipper may Beware of the Phantom BI Solution get back in credits pales in comparison to the impact of a lost Business Intelligence is not the delivery of reports or data. customer, repeat business from an existing customer or a can- This will mislead you in your initiative and will result in celled order on the business. The view of this function needs to your losing credibility within your organization. Viewing life evolve. The current state of late packages is contentious with through a Polaroid (static) view will limit the business applicarriers because it is focused exclusively on the credit, not the cations for the information. It is critical that you collaborate both internally and exterbusiness impact to the end recipient. The result? Carriers don’t want to share the data because of the credit focus and ship- nally with partners and stakeholders who are committed to supporting your goals. This would include your carriers, other pers don’t get data they may need for their BI strategy. third parties and also your current system providers. Many organizations, including your own, have data accessible 2. Carriers and vendors must be your partners in the Business Intelligence solution. They control the external data that com- to you. The biggest and most common challenge is that the data pletes the business cycle. As transportation professionals, is in so many different places. Select the methodology and sysyou own the relationship with carriers and vendors and there- tem to collect data and be sure that the data can be enriched. Developing a Business Intelligence program is a journey. fore, by extension, own the data relationship with the carriYour journey has now begun and with the right plan will pay ers as well. You need their support to build your BI solution. dividends for your organization. 3. You need to partner with the correct technology support. This could be internal, through your company’s developed products, a licensed Business Intelligence software appli- Jonathan Shaver is President and Founder of IntraVex, a Transportation Busication or a Business Intelligence service. Whatever the ness Intelligence company. He has his MBA from Northwestern’s Kellogg School course taken, the correct data infrastructure needs to exist of Management. He is a Board Member of the Transportation Logistics Council, an active member in the Council of Supply Chain Management Professionals to deliver the correct analytics. and the Parcel Shippers Association. 4. Identify all the transportation touch points in the business process. These are all areas of opportunity and data collection. may-june 2011 | www.PARCELindustry.com
PARCEL COUNSEl with Brent
Wm. Primus, J.D.
What to Ask Your “Transportation Service Provider” Sales Representative If you are a shipper, you are no doubt approached by a sales representative of a company providing transportation services from time to time. And, sometimes such an initial contact may lead to more serious discussions. In these discussions, questions about rates typically dominate. A shipper may also ask questions about the services available and the provider’s ability to perform them. However, there is another question that should be asked but is, I believe, often overlooked: “What are you?” Let me explain. Earlier this year I attended an industry conference. While visiting with various persons in the conference hotel lounge, someone I knew introduced me to one of the other attendees. I asked him the usual question, “What do you do?” He said he was a sales representative for “such-andsuch” company. Since the name of the company did not indicate the nature of the company’s business, the next natural question to ask was “What is such-and-such?” to which the attendee replied “We are a transportation service provider.” As a transportation lawyer, this inevitably led me to ask, “So are you a carrier or an intermediary?” to which the attendee replied “Neither.” This reply only heightened my curiosity. I went on to ask, “So, are you consultants?” He replied, “Yes, but we also go in to a customer’s place of business and pick up their freight and then arrange with other providers to get their freight to destination.” If you are a regular reader of this column, you probably understand that this response only increased my curiosity. I won’t relate further details of the conversation, but I will tell you that the issue was ultimately resolved when we used a computer terminal located in the hotel lounge to log on to the Federal Motor Carrier Safety Administration (FMCSA) website and determined that his company was a duly licensed motor carrier. So, why does this matter at all other than to resolve a friendly debate? It matters because the legal nature of a “transportation service provider” determines its legal rights and responsibilities. To state the obvious, a carrier and an intermediary are just that. Carriers have primary responsibility for the safe handling of the freight in its possession and the resultant liability for
may-june 2011 | www.PARCELindustry.com
claims for cargo loss and damage. Further, there are different types of carriers — motor carriers, air carriers, rail carriers and ocean carriers — and they all have differing legal characteristics. These differences were previously explored in a past column entitled “Fundamental Legal Differences within UPS and FedEx.” You can search for this column in the content library of www.PARCELindustry.com. Also, when one is dealing directly with a carrier and pays the carrier its invoice, one knows that the carrier has been paid. When one is using an intermediary and pays the intermediary its invoice, the risk arises that the intermediary may not pay the carrier who then looks to the intermediary’s customer, you, for payment. There are also different types of intermediaries — truck brokers, intermodal marketing companies (IMCs), surface and air freight forwarders, and so forth. Just as different types of carriers have differing legal characteristics, so do the different types of intermediaries. These legal differences in turn result in different legal rights and responsibilities with respect to their shipper customers. Thus, the most important question to ask a transportation service provider is “What are you?” and don’t take “neither” for an answer! All for now! p
BrENt Wm. PrimUS, J.D., is the CEO of Primus Law Office, P.A., the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the PARCEL website (www.PARCELindustry.com). Your questions are welcome at brent@ transportlawtexts.com.
Wrap up with Michael
Small but Important
The international small parcel business in the US is estimated to be a $10 billion-plus market and growing seven to 10%. DHL Worldwide Express restructured its US operation and exited the domestic air/ground in February 2009, which has changed the landscape of the US market. DHL has done a great job in returning to its original roots as an international small parcel provider. Its operation in the US is at one of its highest levels of service in the company’s history. It’s amazing what happens when a company will focus on its core competencies. However, DHL is still a small player compared to Fed Ex, UPS and the USPS. On a global scale, DHL still maintains a “market leader” position. As DHL has restructured its US operation, it has re-established itself as a real contender in the global air express market. With all this being said, the small international shipper in the US has taken on a new priority. DHL has recognized that this is a critical market segment in order to be successful in the US. However, it does not have the resources to effectively sell and retain this segment. This SMB segment is estimated to be worth $ 2 billion-plus and considered to be the most profitable.
These three organizations have a special contract to sell and service small international shippers. This allows the small international shippers to get better discounts and a higher level of service… just like the big shippers. This has been designed for customers that do not currently use DHL’s services. The DHL re-sellers are well-positioned because DHL’s market share is about 10% in the US. International small parcel shipping is a bit more complicated than a domestic parcel. It requires the carrier and/or reseller to offer up a more personal approach, which is where the resellers provide great value to the small international shipper. “The small international shipper needs more attention and support because of these complexities,” states George Flowers, the CEO of Preferred Shipping. His organization has the longest relationship with DHL (19 years) and has developed a model that creates a personal approach with the customer. The international small parcel business in the US is “Small but Important”… to both the carriers and shippers. p
Michael J. Ryan is Director, Business Development at DSC Logistics and has been in the parcel industry for over 25 years. He can be reached at 847-3935862 or email@example.com. In an effort to grow and maintain this business, DHL has established a new channel strategy. It has contracted with three authorized resellers in the US: Preferred Shipping: www.preferredship.com ProStar Logistics: www.prostarlogistics.com InXpress: www.inxpress.com
may-june 2011 | www.PARCELindustry.com