LOOK INSIDE: FOCUS ON 5 PARCEL TMS SOLUTIONS PAGE 14
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THE 2019 PARCEL
FORUM WRAP UP. P.20
BEST PRACTICES TO IMPLEMENTING A MULTI-CARRIER STRATEGY. P.22
9 WAYS AUTONOMOUS MOBILE ROBOTS COULD SOLVE YOUR DCâ€™S LABOR ISSUES. P.26
2020 IMPACT YOUR SHIPPING SPEND? PAGE 18
CONTENTS /// Volume 26 | Issue 7
08 16 18 22 26 06 EDITOR’S NOTE
18 PREPARING FOR 2020
Looking Toward the New Year By Amanda Armendariz
08 SUPPLY CHAIN SUCCESS Change Is the Only Constant in Transportation By Joe Wilkinson
What impact will the carriers’ rates have on your budget? By Todd Benge and Bernie Reeb
20 THE 2019 PARCEL FORUM WRAP UP A peek at our annual conference, which, this year, was held in Dallas, Texas, and was one of our best yet. By Amanda Armendariz
10 OPERATIONAL EFFICIENCIES Learning from Your Peers By Susan Rider
11 SPEND PERSPECTIVES New Parcel Solutions Cater to SMBs’ Small-Package Needs By John Haber
22 EMBARKING ON YOUR MULTI-CARRIER JOURNEY A shipping strategy that utilizes multiple carriers can be a boon to your bottom line, but there are best practices that should be followed in order to maximize your chances of success. By Steve Beda
12 GUEST COLUMN Why Customer Experience Must Be a Priority in Transportation Technology By Oscar Sanchez Duran
16 SPEED IS THE NAME OF THE SHIPPING GAME
24 STRATEGIES FOR LOWERVOLUME SHIPPERS
As more and more retailers strive to offer same-day delivery, they are implementing some key strategies to close the gap. By Justin Cramer
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While it sometimes seems that a higher shipping volume can open more doors, lower-volume shippers can take some key steps to level the playing field. By James Reed
26 COULD AUTONOMOUS MOBILE ROBOTS SOLVE YOUR DC’S LABOR ISSUES? Nine ways this technology could improve your operation. By Ed Romaine
30 PARCEL COUNSEL F.O.B. Origin or F.O.B. Destination: Report from the Field By Brent Wm. Primus, JD
SPONSORED CONTENT 07 PARCEL SHIPPING: DOES A TMS ALONE MAKE THE GRADE? 14 INCREASE EFFICIENCY WITH A TMS FOR YOUR PARCEL SHIPPING 29 HOW TO PICK THE RIGHT ROUTING SOFTWARE FOR YOUR FLEET?
PRESIDENT CHAD GRIEPENTROG PUBLISHER KEN WADDELL EDITOR AMANDA ARMENDARIZ [ firstname.lastname@example.org ]
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PARCEL (ISSN 1081-4035) is published 7 times a year by RB Publishing All material in this magazine is copyrighted 2019 © by RB Publishing. 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 or its staff becomes the property of RB Publishing, The articles in this magazine represent the views of the authors and not those of RB Publishing or PARCEL. RB Publishing 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.
NOVEMBER-DECEMBER 2019 PARCELindustry.com 5
LOOKING TOWARD THE NEW YEAR By Amanda Armendariz
ur 2019 PARCEL Forum just concluded a couple of weeks ago, and one of the things I noticed most at the show was the focus on preparing for 2020. Many shippers, of all sizes, expect their volumes to increase year after year, especially given the way that e-commerce just keeps growing, but it can be hard for organizations to accurately forecast their shipping spend given the new accessorials and surcharges that are often introduced throughout the year by some of the major carriers. Coupled with the fact that as of the time of this writing, UPS hasn’t released its general rate increase (GRI) for the new year, and you have a conundrum on your hands. While it would be nice if we all had a crystal ball that showed exactly what our shipping spend would look like in the upcoming year, it’s unfortunately not that simple. However, there are steps that shippers can take to prepare their operation for the new year, even if some of the details are up in the air. It’s absolutely critical that you know your organization’s shipping profile. You need to have a concrete, cohesive look at exactly what surcharges are most common for your shipments before you can see
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where you can cut costs. Don’t be afraid to collaborate with other departments, either. For example, if you notice that a lot of your shipments are subject to a dimensional weight surcharge, take this opportunity to collaborate with those in your organization who are responsible for packaging design. A brainstorming session could lead to a new way of designing your boxes that reduces the number that are subject to DIM. Or perhaps you notice that a large segment of your customer base repeatedly orders the same products on a recurring basis. Perhaps implementing a subscription-based option would allow you to better plan and standardize your shipment volumes throughout the year. Whatever your operation looks like, the point is that you need to start preparing now, rather than trying to scramble to react to your first invoice in January. Overall, 2020 should be a good year for shippers. You can make it an even better one by staying up to date on all the latest industry happenings in PARCEL. And don’t forget to register for the 2020 PARCEL Forum in Nashville. If you take back even one idea from this conference and implement it into your operation, attending will be more than worth it (and who doesn’t want to spend a few days in Nashville?) As always, thanks for reading PARCEL, and best wishes for a prosperous 2020.
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!
How Merchants Can Turn Holiday Shoppers into Lifelong Customers By Christopher Vaughn
Defining the TMS Market By Geoff Milsom
5 Common Pain Points for Shippers By D. Shawn Shaw
Parcel Shipping: Does a TMS Alone Make the Grade? It’s no surprise that shipping as a whole has become more efficient with transportation management systems (TMS). TMS software was developed for planning freight movement and freight rating, load planning, inbound shipping and a laundry list of other features. But what if you’re looking to specifically optimize your small parcel shipping operation? More often than not, a TMS will fall short in this category, and that could mean added pain points, competitive disadvantage and buyer’s remorse. Many times, companies believe a TMS is the answer to their shipping problems, but with e-commerce orders rising 17-28% each year through 2021, TMS-only shipping houses may be in a world of hurt. Why? Because TMS is overkill for parcel. The primary capabilities of a TMS may work well for freight shipping, but they are often too broad to handle the finer nuances of parcel shipping. It’s a big investment and could be a major mistake if your main focus is creating an efficient and cost-effective parcel shipping strategy. Since most TMS providers lack the features unique to parcel shipping that many retailers, manufacturers, third-party logistics and healthcare companies need, they may miss out on providing their customers with gold-standard delivery expectations to stay competitive. Enter multi-carrier shipping software, a platform designed for high volume parcel shipping (think of it as a TMS built specifically for small parcel). This unique solution can be used on its own or integrates with a TMS to create a full shipping strategy - from freight to small parcels. In addition to offering multiple shipping methods, multi-carrier shipping software also offers a variety of benefits for companies shipping parcel. Increases sales: Multi-carrier shipping software offers more shipping options at checkout, which 86% of retailers agree boosts profits. Enforces the shipping expectation given to the customer in the cart: There are many things in the fulfillment process that could disrupt the delivery time. Shipping software is capable of selecting the lowest cost service that will enforce that customer’s expectation.
Expands the shipper’s carrier portfolio for cost-reducing rate shopping: Shippers can take advantage of the software vendor’s relationships with major and regional carriers to ensure the best cost and type of carrier for any parcel. TMS platforms don’t offer a ton of carriers, carrier services or have the flexibility to add them seamlessly. Ensures carrier compliance: Shipping software allows shippers to generate carrier compliant labels, manifests and other required documentation to avoid additional fees, delays and returned deliveries (no matter the location shipped from). Shippers can also better manage complex import tariffs, packaging specifications, customs rules and regulations for international markets. Supports an omnichannel distribution model: Shippers can implement ship-from-store functionality and onboard carriers to support same-day delivery models. TMS solutions alone cannot keep up with increased parcel volume and the need for specific features such as same-day delivery, especially with peak shipping season in the mix. Shippers must stay ahead of these shipping challenges, turn to multi-carrier shipping software and avoid TMS-only buyer’s remorse.
www.proshipinc.com firstname.lastname@example.org 800.353.7774
CHANGE IS THE ONLY CONSTANT IN TRANSPORTATION By Joe Wilkinson
e are living through the most dynamic transportation environment in recent memory. The parcel carriers, in particular, are in a state of flux, with large shifts in service offerings, strategic alliances, and rating logic. Change is the byword of the day. This shifting environment means both opportunity and risk, depending on shippers’ ability to develop and implement strategies in response to this change. However, change doesn’t just happen. You, as a transportation leader, are responsible for driving it. Whether it’s in your title or job description or not, you own at least some of the responsibility, and the more ownership you take, the more valuable you will be to your organizational leadership. This topic is obviously bigger than a single article can encompass. Therefore, my goal today will be to leave you
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with a handful of actionable, simple, yet critical components of driving change. Regardless of the initiative at hand, all required changes have one thing in common: people. Today’s project management and change management methodologies focus almost exclusively on tools. Spreadsheets, timelines, budgets, and other project management devices are necessary components, prerequisites if you will, to effective project management. Without them, tasks will be overlooked, timelines will slip, and chaos will reign. However, in my years of implementing change in large organizations, I have never seen a Gantt chart implement a change, drive acceptance, or change a company’s culture. Albert Einstein said, “The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.” Thinking implies people, which means your organization’s people are the key to effective change. Leadership Top-down directives are a typical avenue for driving change. And they’re necessary; stakeholders need direction. However, prescriptive directives don’t drive cultural change. The metaphor, “You can’t push a string” is a common saying for a reason. You, as the change leader, need to take ownership of the cultural shift(s) that must take place. Positive attitude, selling the value, and consistent
communication can go a long way in moving the needle of cultural acceptance. Stakeholders Most project teams are made up of a project manager, one or more executive sponsors, mechanics (those who implement change), and a handful of stakeholders. Therein lies the problem where transportation projects are concerned. Transportation touches nearly every function within an organization. Sales, customer support, operations, production, finance; all of these (and more) have a vested interest in the way transportation works. Yet, too many times, project managers focus exclusively on the defined members of the team. Again, solid mechanics and executive directions are prerequisites, but they cannot and will not drive acceptance and maximize project velocity and value. To truly get the most out of your initiatives: Identify key formal stakeholders; those that will realize significant change due to the initiative. Establish an informal communication channel with these stakeholders. Convey the changes to come. Sell the value not only to the organization, but to the individual and his/ her area of responsibility. Acceptance is not the goal; rather, embracing change is the optimal path. The only way to get there is to show personal advantage to your formal stakeholders.
Identify and engage informal cultural leaders. Influence does not come from title alone. In every organization, there are individuals whose influence in their subdomains exceeds their formal title. These are your cultural leaders. They are the people who can move an entire workforce past grudging acceptance (and the challenges and complications that come along with that) to full-on endorsement and advocacy. Cynicism is contagious, but so is confidence. Make sure you’re infecting the best carriers early and often. Process The use of informal communications is fine; it can even be preferable as you attempt to strike the right tone. But follow this up with documented communications to ensure accountability. As the change becomes imminent, it is natural for you to get pulled deeper into the mechanics. Maintain your situational awareness. You are not the only one feeling nervous and unsure. Stay detached and cast your vision. Throughout the process, you will be challenged by objections disguised as constraints. Know how to properly
classify these constraints into three buckets: real, fabricated, and malleable, and champion flexibility where and when appropriate. Timelines Set aggressive, but achievable, timelines. Lost time means lost value. If pushed to accept an unachievable timeline, fight like you’re the third monkey on the ark and it’s starting to rain. It will never be easier to re-set expectations than it is before they’re written in ink. Communicate delays to all stakeholders as early and quickly as possible. Bad news is like fish; it doesn’t get better with age.
Push for performance from project mechanics, but don’t swap quality for time. This is one of the best (and most common) ways to lose time and money. Obviously, there is a lot more to change management than I’ve covered here. But if there’s one thing I hope you take away from this, it is that tools track change, people implement change. And it’s not always the people you think. Be aware of the influence and impact of hidden stakeholders.
Joe Wilkinson is Vice President, Transportation Consulting, enVista.
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LEARNING FROM YOUR PEERS By Susan Rider
he 2019 PARCEL Forum conference just concluded, and once again, I was impressed by the quality and diversity of the distribution center tours offered. First up was Saddle Creek Corporation, a highly ranked 3PF/3PL. With all of the diverse clients who utilize this DC, attendees were able to see a lot of different automation, process flows, and technologies. One of the things that stood out in this facility was the cleanliness. To help associates maintain this, Saddle Creek has implemented the Lean concept of shadow boards for mops, brooms, dust pans, trash cans, and other tools. The shadow boards help associates easily discern where the items are and where they need to be returned. Saddle Creek managers are also big proponents of communication with the associates. There were information boards stationed around functional areas to keep associates updated on information including key performance indicators (KPIs) and production rates. Corporate news and human resource happenings were also featured. Next up was a tour of Neiman Marcus. This iconic retailer has perfected their processes and shipments over
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the years. Neiman Marcus prides itself on customer service and taking care of its distinguished customers. The company strives to make the arrival of a package a pleasant experience; therefore, presentation is emphasized. It was amazing to see how little time the packers needed to put together a first-class presentation. The team at The company was also constantly assessing their practices to see if something needed to be tweaked or changed. For example, the loss prevention team explained that the boxes once had the name of the retailer plastered on the box, but the company felt that increased the attractiveness for thieves. Therefore, the boxes are now plain corrugate. Additionally, the tape used to seal the boxes is the old paper and water tape, which has a two-fold benefit. Carpel tunnel claims decreased, and the paper tape cannot be resealed, which also prevents theft. The last DC we visited was Game Stop. With their ever-popular games and now their collectables, security was naturally a concern for the management team. The loss prevention team wanted to implement metal detectors for security but desired to avoid the negative feedback others have experienced regarding the wait time entering and exiting access doors. Management decided to require all the associates wear metal-free clothing, but they eased the transition by giving each associate a
gift card for their new work clothes. Now, employees can enter and exit the metal detectors with ease, no longer feeling as if they are losing some of their personal time waiting to leave their shift. Another creative idea deployed by Game Stop was the balance of labor. Because their peak is in the fall and they are slower in spring and summer, managers partnered with HR to come up with a solution. They allowed associates to volunteer for fewer hours in the slow season (which allowed them more time for family and vacations) with the knowledge that they would make up for the lost time in Q4. Associates’ yearly W2 income was the same (or even slightly higher, given the overtime they earned in Q4), and the DC avoided having to let go seasoned, trained associates in slow times. Thank you to all the tour managers and their teams. It was fabulous to see such cooperation at each facility, and it’s always refreshing to see distribution at its finest. You won’t want to miss out on next year’s conference tours. Make sure you register for them when they are first announced because the tours sell out quickly. See you all in Nashville in 2020!
Susan Rider, President of Rider & Associates, Supply Chain Consultant, and Executive Life Coach can be reached at email@example.com.
NEW PARCEL SOLUTIONS CATER TO SMBS’ SMALL-PACKAGE NEEDS By John Haber
he battle for small- to medium-sized businesses (SMBs) is underway as logistics providers, including FedEx and UPS, introduce new services to attract this segment. Combined, these businesses make up 99% of all US businesses, 47.5% of all US employees, and generate 33% of US total exports. Thanks to cloud-based technology, many SMBs have been able to compete against larger competitors on a more leveled playing field — inventory and transportation management, booking and tracking freight movements, payments, and more can all be done online and at a lower cost compared to several years ago when one had to pay for licenses and software updates every six to 12 months. Fulfillment Solutions for SMBs In 2017, FedEx Supply Chain introduced FedEx Fulfill-
ment, which is an e-commerce solution that offers warehousing, fulfillment, packaging, transportation, and reverse logistics to support multiple channels, including websites and online marketplaces. UPS answered back by introducing its Where to Go solution, a nationwide turnkey fulfillment service that partners with various warehouse operators to provide fulfillment services closer to the final customer. In addition, UPS eFulfillment was launched in 2019 and offers SMBs worldwide fulfillment and shipping services to consumers in the US and Canada. This online platform supports purchases and orders from 21 different marketplaces and web stores, such as eBay, Walmart, Etsy, and Amazon, including Prime. Both UPS and FedEx have also established partnerships with various digital platforms, but UPS has taken it a step further by establishing its UPS Digital Access Program. Through this program, UPS is establishing preferred relationships with digital platforms such as Stamps.com and Shopify and providing discounted UPS shipping rates and other shipping and logistics solutions to their merchant customers. Transportation Programs Flat rate shipping was recently introduced by UPS, which enables SMBs to ship by UPS 2nd Day Air, UPS 3 Day Select, and UPS Ground services to anywhere in the US for a flat rate. According to UPS, SMBs can accurately predict
and manage their shipping costs and bill their customers without incurring unexpected fees. With the UPS Simple Rate, SMBs are able to use their own boxes and packaging sized to fit their products. FedEx’s Flat Rate program, which was rolled out before the UPS Simple Rate service, has been recently modified and now offers its customers the ability to use their own boxes and packaging as well. With expectations of cross-border e-commerce making up 20% of e-commerce by 2022, UPS also introduced UPS Worldwide Economy a few months ago and recently expanded the service to Europe. UPS Worldwide Economy transports low-weight, low-value international shipments from the United States to select destination countries with final delivery through either the i-parcel, LLC network or the UPS Expedited Mail Services, Inc. depending on needs of the customer. Numerous Options The SMB market is an important one to many logistics and transportation providers particularly as e-commerce grows and Amazon’s influence spreads. An increasing number of solutions are now available, and SMBs will need to compare options wisely in order to save on costs while keeping their customers happy.
John Haber is the Founder and CEO of Spend Management Experts and can be reached at firstname.lastname@example.org.
NOVEMBER-DECEMBER 2019 PARCELindustry.com 11
WHY CUSTOMER EXPERIENCE MUST BE A PRIORITY IN TRANSPORTATION TECHNOLOGY By Oscar Sanchez Duran
hen Gartner conducts its annual Supply Chain Technology User Wants and Needs Survey, we ask respondents to state their top three external challenges that affect their organization’s supply chain goals and objectives. One of the top spots: Customer priorities, demands, and expectations. The fact that the wellbeing of the customer is one of the key priorities of supply chain executives might seem unusual at first, but when you look at the numbers — especially in transportation — it makes sense. Amid drums of economic recession, transportation volumes have decreased or decelerated. Organizations are looking for ways to stand
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out and remain enticing to their customers. An improved customer experience (CX) in transportation is the perfect opportunity to do so. Gartner defines customer experience as the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty, and advocacy. The B2C sector has been a pioneer in this field — but B2B also is now considering workers of other organizations as consumers. B2B organizations and their supply chains already started to mirror the simplified and user-friendly processes that we know from online marketplaces or travel sites. The increase in e-commerce has been one key factor in the rise of the importance of customer experience in transportation technology. Company workers are also B2C consumers in their free time and will naturally compare their experiences with the processes they follow at work and outside the workplace. And while e-commerce brings simplicity and convenience to consumers when accessing an almost infinite range of items and options, it also adds complexity and constraints to global supply chains. Some of us still remember the early days of e-commerce when it was common and accepted to wait a week or even longer for goods to be delivered. Those times are over. Today, some retailers offer same-day delivery among other options, expanding the
available shipping options as consumers now want to have a say in when their goods are being delivered. Apart from lead times, there are many other transportation factors that influence the CX, e.g. poor visibility when tracking a shipment, difficulties on communicating changes on the delivery, or a complicated return process. When you consider all these factors, another finding of the survey comes as no surprise. Supply chain leaders have identified customer expectations or demands as one of the top three reasons to invest in supply chain technology. To improve CX in transportation, decision makers should look at four key areas. Analytics & predictive capabilities: There are several transportation technology vendors that aim to provide more accurate lead times by using artificial intelligence and machine learning to analyze data from a variety of sources: satellite images, traffic data, weather information, and historical and social media data. There are also efforts to predict and estimate lead times in online purchases by analyzing the customer selection before the check-out stage. Those insights provide shippers with new options to leverage when interacting with their customers. They can, for example, provide a more accurate delivery time window to help prioritize tasks, prepare for receiving the cargo, or indicate which
carriers perform better in certain areas or conditions to ensure the best level of service. Shipment visibility and proactive communication: A lot of customers waiting for their delivery are already more satisfied when they know that itâ€™s on its way. Applications such as transport management systems or vehicle routing and scheduling applications can leverage data from real-time visibility providers or the telematic devices that are already installed on most commercial cargo vehicles and always know the exact location of the cargo. This, in combination with geofencing capabilities, allows organizations to send personalized notifications with real-time data based on driver proximity. Customers can either check the location of their delivery via an app or receive personalized notifications. This gives them a sense of control and they will have a better CX, even when the delivery is late. Engagement options: Promoting engagement with the recipient of the cargo can help increase CX in transportation. Applications allowing customers to rate their delivery experience can provide valuable insights to help organizations improve service levels. Also, giving delivery
options like the possibility to redirect a delivery already in transit or to select a specific delivery time window offers convenience to consumers and can translate into a large bump in CX. They can change their plans without worrying about their parcel â€” which is sometimes more important than a fast delivery. Simple return policies: A clear and structured reverse logistics and return management process is key to increase CX in this area. The goal is to make the return as easy as possible for the consumer. Some technology providers include the return label in their shipment,
others provide access to web portals to process and track the returns or offer drop-off locations. Capabilities like this not only increase the CX during the return process but also facilitate and digitize the return process of the goods for the retailer. With e-commerce, mobile shopping, and customer returns on the rise, transportation technology is starting to play a crucial role in providing more CX to customers in an effective and economic way.
Oscar Sanchez Duran is Senior Principal Analyst, Gartner.
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INCREASE EFFICIENCY WITH A TMS FOR YOUR PARCEL SHIPPING One common theme throughout this issue is the importance of managing your transportation operation. Whatever your needs or upcoming strategy may be, it is certain that a solid TMS can help set you apart from your competitors. Here is a quick look at five of the leading solution partners in this space. Take a look at their brief profiles, and when you’re ready, reach out for their help in implementing a top-notch TMS for your operation.
CT Logistics is celebrating 96 years of supply chain management services in 2019. Since 1923, companies have leveraged CT for freight audit, payment, TMS solutions worldwide. CT customizes all solutions for our clients to support all modes, including parcel. CT's services will reduce your costs and save your company money. CT audits every shipment to recover money from your total parcel, package, and freight expenditures. All rates and cost items are calculated, including bundled pricing, hundred weight, and dimensional pricing. All shipments are reviewed for address, account number, COD, dangerous or restricted goods, declared value, and oversize. All shipments, including third-party, are reviewed for inside, residential, Saturday pickup or delivery, as
well as GSRs (Guaranteed Service Recoveries). CT's services also include supply chain management, TMS solutions, LTL and Full Truckload shipment execution. bid management, shipment planning and execution software, as well as professional services for consulting and advising. CT's business intelligent platform provides global supply chain visibility for benchmarking and trending, with graphical dashboards for management information. CT is SOCII and ISO 9001:2015 certified. www.ctlogistics.com email@example.com 216.267.2000, ext. 2190
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Logistyx Technologies simplifies the complexity of cross-border, multi-carrier parcel shipping so manufacturers, retailers, and 3PLs can quickly scale and ship high volumes of products profitably to customers worldwide. Our SaaS-Based Transportation Management System (TMS) for parcel shipping features an integrated global carrier network of more than 8,500 carrier services, and Logistyx customers can leverage state-of-the-art rate shopping and simulation tools to determine the ideal combination of carriers in real time, based on factors such as price, capacity, service requirements, and performance. Control tower visibility and userfriendly dashboard reporting enable proactive exception management and carrier performance monitoring. From fulfillment managers to customer service representatives, teams monitor and manage all carriers in one solution. Best suited for shippers seeking a quick implementation and an accelerated ROI, Logistyx specializes in integration with e-commerce, WMS, OMS, TMS, and ERP systems to maximize the value of existing enterprise solutions and avoid fulfillment disruptions. The Logistyx TMS for parcel is easily configured to meet each individual client’s specific carrier network needs, and our current client roster spans multiple verticals worldwide. For more information, visit www. Logistyx.com. www.logistyx.com firstname.lastname@example.org 877.755.2374
Back in 2000, shipping software technology was full of kinks and obstacles causing customer experience and satisfaction to be extremely low. Recognizing this, two US Navy veterans put their heads together to create something better — something to improve satisfaction for both the customer and the shipper; in the end saving everyone time, money, and headaches. The resulting shipping software is now highly regarded in the shipping industry as the gold standard. As the most trusted global provider of automated multi-carrier shipping software, ProShip empowers its customers to ship at lightning speeds, stay carrier compliant 24/7/365 and build strongerthan-ever customer revenue streams. With almost two decades of enterprise experience in the shipping and supply chain industry, ProShip’s time-tested technology and advanced functionality continues to remain unmatched. Retailers, manufacturers, third-party logistics, and healthcare
companies who choose ProShip, choose the number one in speed, compliance, reliability and experience. We’re not like those other guys. We understand that your business is more than boxes and labels — it’s about the customers you serve, the moments you help create and the effort it takes to keep them coming back time and time again. If you’re focused on parcel, a TMS alone will not suffice. Put an emphasis on your parcel shipping success and go beyond the box with ProShip. For more information on how ProShip Multi-Carrier Shipping Software works, the clients we serve, and how you can start shipping with the #1 shipping software on the market, please visit us at www.proshipinc.com.
The disruptive influence of e-commerce stretches beyond retail. Due to customer expectations for ever quicker delivery, enterprises across a variety of industries have reconfigured distribution channels, and parcel shipping is now an increasingly important part of the transportation mix. This creates operational challenges — traditional TMS solutions were not designed to ship high volumes of small packages to thousands of destinations. Parcel shipping TMS or transportation execution solutions help shippers to manage these complexities. First, parcel shipping solutions help control costs in a variety of ways, including consolidating shipments going to the same geographic area and rate-shopping to identify the best value carrier service for a particular shipment. Best-in-class solutions offer configurable routing guides that automatically select a carrier and service level depending on the characteristics of a shipment and a company’s own business rules. Parcel shipping solutions result in operational efficiencies by automatically
creating the documents needed to complete a shipment — from accredited carrier labels to dangerous goods notices. Furthermore, parcel shipping solutions that offer integrated global trade management capabilities automate export processes, including restricted party screening, license determination, and customs reporting. Your parcel shipping solution should also offer access to a global parcel carrier network, and allow you to track any package, with any carrier, from the same portal. Finally, the solution should have automated parcel auditing and freight cost verification capabilities. With a comprehensive parcel shipping solution, enterprises can manage, execute, and gain visibility across all modes of transportation, wherever and whatever they ship.
www.proshipinc.com email@example.com 800.353.7774
For over 30 years, ScanData has served parcel shippers with the highest volumes in the most complex environments. We conform to our shippers’ needs and support a variety of distribution models and system integrations. This experience gives us exposure into the top real-world challenges parcel shippers are facing today: Scale – ScanData has proved it can rate, label, and manifest in under 100 milliseconds per transaction. Rate Shopping – From simple Least-Cost Rating to Multi-Ship Point, Multi-Carrier rate shopping, we make sure you pay the absolute minimum to deliver your packages on time. Expanded Distribution Model – With increasing supply chain costs and the shortening of transit windows, it is important to control your vendors’ shipments. Easily manage hundreds of drop ship vendors or Ship-from-Store with our centralized solution. World Class Support – 24x7x365 on-shore support by tenured ScanData system engineers, not call center reps with a script. On-premise or cloud-based, ScanData systems provide a real-time holistic view of your shipping ecosystem that can be adapted to the ever-changing environment. Quickly implement new carriers, shift rating logic, and update ship methods to account for service disruptions. ScanData has the technology and the expertise to keep your supply chain optimized. www.scandata.com firstname.lastname@example.org 512.358.1585
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SPEED IS THE NAME OF THE SHIPPING GAME As more and more retailers strive to offer same-day delivery, they are implementing some key strategies to close the gap.
peed — consumers want it and businesses need it. Wireless companies are working to improve their cellular speed to meet customers’ demands of faster service. Airlines are working to improve their planes so they can offer nonstop services across the globe for a quicker and more convenient travel experience. Likewise, the retail industry is implementing new tools to offer same-day delivery to its customers in order to provide a better experience and meet demands.
Consumers are used to having information at their fingertips, which means their expectations regarding delivery are just as high. Gone are the days of expected twoday shipping. Now, today’s retailers must strive to offer same-day delivery. According to BRP Consulting, the percentage of e-commerce brands already offering this shipping service increased from 16% in 2017 to 51% in 2018. Experts believe this will increase even more to 65% of retailers offering same-day delivery within the next two years. No retailer wants to be part of the last 35% to implement this service, but this
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speedy shipping offering can be difficult to incorporate into a shipping strategy. Fortunately, retailers can use a variety of tools to close the gap between order time and delivery to meet customer demands and boost business. Create more fulfillment centers. It’s all about decreasing the distance to the customer. By utilizing brick and mortar stores, suppliers and manufacturers, and even third-party logistics companies, items are located all across the country and even around the globe in order to reach the customer
By Justin Cramer
faster. For example, GNC, a global health and wellness brand, recently chose multi-carrier shipping software in order to offer ship-from-store capabilities from its 400+ retail locations and plans to offer quicker delivery options to its customers. Other shipping partners, like suppliers and manufacturers, can ship items directly from their facilities to ensure your customers receive their orders even quicker. Third-party logistics companies can also provide additional shipping, especially during the peak shipping season surge. Add a variety of shipping carriers. One size does not fit all. Retailers should use local, regional, and national carriers to create their own unique shipping carrier network in order to get the best shipping rates and times. While national carriers cover a much larger area and offer a variety of services, local and regional carriers provide competitive pricing. These carriers also typically offer a wider schedule of pickup and delivery times. Many retailers shy away
from these carriers, but their delivery areas are larger than you think. In fact, local carriers can typically transport shipments 80 to 100 miles within a specified zone. This is perfect if you have a distribution center in a specific area or a higher concentration of customers in a particular region. Local and regional carriers are also great options during peak shipping season, when some of the national carriers’ lanes are overloaded or unavailable. Another benefit of local and regional carriers is their more personalized, caring service for customers, adding to a superior customer experience.
Your shipping strategy needs to be customized to fit your business and specific customer preferences. Customers want a variety of shipping options and niche experiences, so offer them. Develop your own shipping strategy. The first rule: make it scalable. The easy way out would be to follow the same shipping strategy as your competitor or even a retail giant like Amazon, but your shipping strategy needs to be customized to fit your business and specific customer preferences. Customers want a variety of shipping options and niche experiences, so offer them. It’s also important to remember that the most successful shipping strategies have the ability to adapt to other geographies and expand as your business grows. This
way, your strategy can be implemented into other markets and your customer experience isn’t lost along the way. Incorporate multi-carrier shipping software. You can’t do it all yourself, which is why innovative shipping software can be the tool to set you apart when offering same-day delivery. Multi-carrier shipping software can identify the fastest shipping route by rating hundreds of carriers and their services against each other in seconds, instead of associates doing it manually. It will then produce a carrier-compliant shipping label so no shipment is delayed due to inaccuracies, and customers will receive their orders when they expect them. Even after all of this, retailers must take into account a variety of limitations and restrictions, like labor and inventory. Without the associates or inventory to get the product to the customers, same-day delivery isn’t possible. Once you find the right people, have the inventory on hand, and the warehouse management software to manage this new shipping service, retailers need to identify the cost of the service. Two questions to ask include: What will this cost the customer, and is your customer base willing to spend this amount of money? In order to compete in this world, you need to be fast. If a commercial plane can take you from New York to Sydney in less than a day, why can’t a customer’s order get to their doorstep that fast? By implementing these tools and innovations, you’ll be able to meet your customers’ demands of same-day delivery while creating a superior customer experience. In the end, speed really is the name of the game.
Justin Cramer is Global Project Management Director and Co-Founder at ProShip, Inc, the global provider of today’s #1 multi-carrier shipping software. Throughout his time at ProShip, he has designed shipping solutions responsible for executing more than 1.1 million labels per day and has worked with many small to global shippers on achieving certified carrier labels.
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PREPARING FOR 2020: WHAT IMPACT WILL THE CARRIERS’ RATES HAVE ON YOUR BUDGET?
BY TODD BENGE AND BERNIE REEB t is critical for organizations with any kind of parcel volume to understand the impact of the carriers’ general rate increase (GRI). Yet, while the annual announcement by FedEx and UPS is probably the most significant event that affects a small-package shipper’s transportation budget, the details driving shipping cost changes are not always readily apparent. Not only do you have your standard rate increases, but the past couple of years have seen an increase in fuel surcharge changes, new surcharges, and changes to existing surcharge criteria. To gain a comprehensive awareness of parcel shipping cost changes, small-package shippers must also be
mindful of hidden charges lurking among the details of national carriers’ annual rate announcements. Honing in on off-the-radar cost and service tweaks is integral to effectively planning your budget for 2020. Hidden Changes Affect Cost In addition to the overall rate increase, efforts to uncover hidden changes that occur throughout the calendar year can become a major cost component. Between reviewing contract details closely, pivoting your parcel shipping strategies to minimize cost impact, and then budgeting (or re-budgeting), operational expenses stemming from changes to the parcel carriers’ pricing strategies can be a burden.
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Understanding a national parcel carrier’s techniques for generating additional revenue across its customer base can help you pinpoint how your parcel program is in jeopardy with respect to new or hidden costs. Common areas where small-package shippers experience hidden rate increases include rate service guide changes, fuel surcharges, and language adjustment in the carriers’ terms and conditions. Rate Service Guides Close scrutiny of the rate and service guides published with national carriers throughout the year can reveal significant opportunities to tweak parcel shipping characteristics and avoid costly budget impacts. Changes in the service
guide are common, and they can cause ripples across the entire small-package shipping network. Identifying new specifications quickly is instrumental to budget planning for 2020. Look no further than FedEx’s shift in weight bands for additional handling charges. Increasing additional handling charges by four dollars to $24 will affect shippers, but more importantly, moving the weight down to 50 pounds from 70 pounds will apply that charge to an enormous number of domestic packages. Also factor in the changes in delivery area surcharges as ZIP Codes are redefined and oversized shipment charges (particularly for residential deliveries), are increased. Applying fuel surcharges to more accessorial fees creates additional complexity. When costs are assessed as an additive, the ability to calculate the impact quickly is paramount. Effective management of historical data combined with parcel analysis reveals how your parcel program could be impacted by these types of changes — and it helps you engineer alternative solutions to minimize cost impact. Fuel Surcharges Originally meant to protect parcel carriers when gas and diesel prices were high, fuel surcharges have withstood the test of time and are still being levied (even though fuel prices have since receded). With continued volatility in fuel prices, this is an area to watch. Carriers can implement these fuel charge increases quickly and often with nothing more than a note on their websites. Minimizing the impact of these cost changes requires an awareness of your position in the carriers’ eyes. Algorithm-based modeling that offers insight on possibilities for alternative network design can produce cost-saving opportunities. What is your position in the carrier index table — and is there an opportunity for a strategic change that can move you to another table? Are there opportunities to get around the
Terms and Conditions Terms and conditions are a very big issue for many small-package shippers, especially since every contract stipulates that all charges are dependent on the terms and conditions or based on the service rate guide. This document can be changed multiple times a year, and it requires regular review. Fortunately, these terms and conditions display the date of last revision. While not always the case, the national carriers typically apply changes at every rate change and also mid-year in July. Within the terms and conditions, simple changes in wording can have a significant impact. A notable definition change to UPS additional handling charges is a good example — and this small tweak could affect 2020 parcel shipping costs, especially as e-commerce continues to blossom. Specifically, in 2018, the addition of “hard plastic, soft plastic (e.g. plastics bags), or expanded polystyrene foam (e.g. Styrofoam)” has been included in the definition for additional handling. As the use of polybags escalates, look for these types of changes to continue as carriers face increasing infrastructure costs to manage changing shipper demands. Also, it is important to note that currently, UPS does not apply existing discounts to peak season charges, but in most cases, FedEx does extend these discounts to the peak season period. Again, a difference in wording can make a huge difference in one of your most impactful shipping months.
tion’s ability to analyze those increases and maintain historical awareness of its parcel shipping characteristics also provides ammunition for shippers seeking opportunities to protect their profitability from annual changes in the pricing structures. Often, however, that ammunition is hard to find. Beyond the hidden changes that affect cost, it is important to be aware of stumbling blocks that may slow your ability to quickly complete the analysis required to fully understand your parcel shipping profile. First, if you have to calculate based on package dimensions, remember FedEx typically provides package dimensions in the billing detail. UPS does not provide dimensions unless a dimension-based shipping charge correction is applied. Without visibility to these dimensions, it may be difficult to determine the actual impact of the GRI on your parcel program. Also, many shippers overlook their minimum charge, a cost that is very important to understand. Without awareness of when packages are susceptible to a minimum charge or how a dollar-off discount applies to the minimum charge, it is easy to miss budgeting calculations and jeopardize profitability. Forecasting your business conditions for the year ahead requires a piqued awareness of the intricacies of carriers’ pricing strategies. It is also important to have a grasp not just on your data, but also an understanding of what that data says about your parcel shipping program. Just like mining details from carriers’ GRI announcements provides value, mining the critical data across your transportation program can be impactful if you are able to take that data and quickly recognize how it will apply to your operation — and your profitability.
Stumbling Blocks The history of general rate increases gives us a roadmap to what carriers are doing and why they are doing it. It also grants shippers insight on how to predict future changes. An organiza-
Todd Benge is Vice President – Parcel Operations, Transportation Insight. Bernie Reeb is Senior Parcel Operations Consultant, Transportation Insight.
constraints of your contract? By assembling alternative and information-backed arguments, shippers position themselves to work with carrier partners to achieve redefinitions for how fuel surcharges are applied.
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By Amanda Armendariz
he 17th annual PARCEL Forum returned to the Lone Star state and certainly lived up to the saying, “Everything’s bigger in Texas!” The Forum boasted its largest-attended conference and largest-ever exhibit hall with 117 exhibitors, including a record 32 first-timers. This annual conference offers a wealth of knowledge and networking to both newbies and veterans in the small-package industry, and we at PARCEL are delighted to be the publication partner for this show. This year’s theme was “Saddle Up,” and boy, they weren’t kidding. With three days of great educational content, 11 different networking events, and an exhibit floor that featured an expanded Material Handling/Warehousing Ops and Regional/ Final Mile Carrier pavilions, attendees definitely had to saddle up if they wanted to take in all that was offered. On Monday, first-time attendees got
an in-depth introduction to the show at the aptly named First-Timers Breakfast, sponsored by Transportation Insight, where they heard from some of our advisory board members (who shared the knowledge and takeaways they received as first-timers at the show, which kept them coming back year after year). After the breakfast, some headed off to workshops while others boarded the bus for some fantastic tours of various distribution centers (for more on that, please see Susan Rider’s Operational Efficiencies column on page 10). The day wrapped up with a poolside reception, and despite the unseasonably cool weather and rain, much networking and fun was had by all. Tuesday morning started bright and early with another networking breakfast for all attendees, where they were segmented by nametags denoting either Transportation, Operations, or Technology, which allowed them to better
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network with those in similar positions. After the breakfast, attendees headed to the educational sessions. Much of the discussions, both during the sessions and in the hallways between them, focused on the Big Two, which isn’t surprising given the changes that 2019 has seen. For many years now, both FedEx and UPS have utilized the United States Postal Service to complete the final mile of the delivery process, which helps keep costs down due to the fact that the packages are inducted deep into the Postal Service’s network. Earlier this year, however, FedEx announced a plan to shift all of its SurePost parcels — about two million per day — into its own ground network by the end of next year, while UPS said it would actually increase its usage of the USPS in order to coincide with the beginning of its seven-day delivery schedule in January of 2020. Given that the two carriers usually follow each other’s steps, for the most
part, this divergence generated a lot of talk among our speakers and attendees. As of now, it’s not entirely clear what this means for shippers’ bottom lines, but it’s certainly something to keep an eye on as we head into the new year. The keynote luncheon on Tuesday featured another hot topic in the small-package industry: Amazon and its foray into the transportation sphere. Ravi Shanker, Executive Director, Morgan Stanley, gave attendees a fascinating look at how the logistical giant is shaking things up in the parcel sphere. Ever since 2015, industry experts have been speculating with regards to what Amazon would do when it comes to creating its own logistics network. Now, just four years later, we are seeing that network shift into an even higher gear, and with Amazon and FedEx parting ways earlier this year, Shanker explored what it would mean if Amazon truly does fully develop itself into a viable player in the final-mile sphere. A packed exhibit hall followed the keynote luncheon, and after that, attendees enjoyed an entertaining Grand Reception, sponsored by the United States Postal Service, at the Riverwalk Cantina. Wednesday morning provided attendees
with more session opportunities, and with our 14 learning pods showcasing some of the most prevalent topics in the small-package industry, from warehouse innovations to pricing strategies, the only problem faced by attendees was narrowing down which session to attend. We took a break from the sessions for a couple hours to once again provide our attendees with non-compete exhibit hall hours, and once the exhibit hall closed, attendees were able to squeeze in a couple more sessions before catching their flights home. One of the most common sayings I heard from those I spoke with over the course of the three days was, “I have so much concrete information and actionable steps to take back to my organization!” PARCEL Forum ’20 will be in Nashville, September 28-30, at the Gaylord Opryland Resort. To request information on attending, exhibiting, or speaking, please email info@EventEvolution.com. We look forward to seeing you there. We would also like to extend a special thank you to our 2019 Corporate Partners: The United States Postal Service, Automotion, BluJay Solutions, MercuryGate, Hy-Tek Material Handling, and Visible Supply Chain Management.
TOP 20 TAKEAWAYS FROM THE FORUM
For the past few years, we’ve asked our attendees to submit their best tips from each session they attend via our PARCEL Forum mobile app. Our conference directors then choose the top 20 most relevant tips, and we share them in our closing session of the conference. Below are the top takeaways from this year’s show. 1.
When negotiating, the best practices are: Be respectful Be prepared Find influence Have a strategy Know when to stop talking Got SALT in your distribution center? If not, you could have an issue fulfilling orders quickly and efficiently. (Salt = Space, Accuracy, Labor, and Throughput) Compare FedEx and UPS net cost per package, not just incentives and discounts off list price Get creative when scheduling your associates; not every shift in your warehouse needs to be a standard first, second, or third shift if a little creativity means getting good workers! Make sure you check the gap between contract terms and actual usage. There’s no point in getting a discount for a service you don’t actually utilize. Recognize your operations associates as the rock stars they are, and make sure you incentivize them to work better, rather than demanding they do.
Find ways to reduce the accessorial charges you can control (such as bad addresses). Some accessorials are out of your control, but for those you can influence, you could greatly cut costs. 8. When it comes to paper picking, take a look at your pick lists. Something as simple as increasing the font size could greatly improve your workers’ accuracy. 9. Look at your delivery attempts to help negotiate your signature-required surcharges. 10. Use the power of real-time knowledge to reduce firefighting in your facility by becoming proactive instead of reactive. 11. If your stop density is greater than or equal to two, try to negotiate one charge for DAS and residential delivery per stop. 12. Track your key performance indicators; an important KPI is logistics costs as a percent of net sales. 13. If you are not monitoring carrier websites on a regular basis, you are missing changes to surcharges and accessorial fees.
15. 16. 17.
If you need to closely monitor loss prevention in your facility and wish to implement required, metal-free clothing to make passing through the metal detector easier, consider giving each employee a gift card to purchase the necessary clothes. TMS integration is key for full visibility and cost optimization. When it comes to project success, daily scheduling and communication are needed for on-time, on-budget success. When holding a quarterly business review, make sure to give each other a grade. That helps you honestly see how everyone is performing and where they can improve. When it comes to change management, remember that leadership is about people! When it comes to being an early adopter of parcel innovation, don’t be afraid to jump in. After all, there are many benefits, including the benefit of time, potential cost savings, and positive brand perception. If you are in a leadership position, introduce the concept of “three up, three down” to your team. Each week, or month, or whatever works for your operation, ask your team members to share three things that went well and three things that could have gone better (or three things that didn’t go as expected). This helps everyone feel comfortable with sharing honest feedback.
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EMBARKING ON YOUR MULTI-CARRIER JOURNEY A shipping strategy that utilizes multiple carriers can be a boon to your bottom line, but there are best practices that should be followed in order to maximize your chances of success.
By Steve Beda
n today’s highly competitive retail market, the focus is on getting your product to a customer in the fastest, most convenient way possible. The challenge for most shippers is that consumers have been conditioned to expect near-zero shipping costs. Unfortunately, most shippers don’t have the luxury of an uncapped transportation logistics budget to drive this insatiable consumer demand. Given these market limitations, how does one ship faster while minimizing the total cost of transportation? The answer is a highly optimized supply chain that includes proper inventory management combined with the right carrier and service mix, including national, postal, and regional carriers. If done right, shippers can have their cake and eat it too when it comes to cutting costs and increasing customer satisfaction. If your long-term strategy is to improve delivery time while minimizing costs and reducing peak season risk, a multi-carrier strategy may be the right one for you. Embarking on a multi-carrier strategy is a journey, and the time and effort to get to your destination depends on where you start on the path. Assessing your current technological capabilities, your network distribution strategy, and your shipping profile (by customer ZIP Code)
are all important perspectives. No matter where you are currently, I have found it a safe bet to live by a simple philosophy: Think Smart, Start Small, and Scale Fast. Understanding your as-is state can be categorized into these basic areas: network design and topology, transportation execution strategy (shipment profile), and technological capabilities. To achieve the best result, the journey is best taken with input from IT, supply chain, transportation logistics, finance, and, of course, executive-level support. Network Design and Topology If we start with network design and topology, which is especially important if you’re embarking on an omnichannel strategy, knowing from where you plan to ship product is paramount. While inventory optimization is not a topic for this article, any changes to shipping volume as a result of executing an omnichannel strategy must be planned for and reflected in your choice of carriers and their respective volume commitments. This would include a good understanding of direct shipments from suppliers, from fulfillment centers, from stores, and reverse logistics into stores and/or fulfillment centers. Having a historical perspective of shipment activity and modifying it to reflect future
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network changes will be a key input into your overall strategy. Transportation Execution Strategy (Shipment Profile) Understanding your current transportation execution strategy and shipment profile (including carrier mix, service mix, transit times, and contractual volume and/or spend commitment) is also very important. A rich set of historical data should provide an excellent foundation of shipment activity for all of your delivery channels. This data also enables you to match your shipping characteristics with the proper set of national, postal, and regional carriers (by ZIP Code or postal code). Technological Capabilities Often one of the most compelling constraints is in the area of technological capabilities. Do you have the proper distributed order management (DOM) and/or warehouse management system (WMS) capabilities in all locations to implement a multi-carrier strategy that has the capability to route certain shipments under certain conditions to a specific carrier and service? This is important, as ultimately you will route shipments to certain carriers by a set of criteria — including but not limited to
origin and destination ZIP Code, package size, package weight, and possibly even inputs such as peak/non-peak season and revenue commitment (artificially ensuring a carrier is allocated the minimum amount of packages). Selecting the correct national, postal, and regional carriers is fundamentally an exercise of matching your destination ZIP profile with a carrier’s coverage. A good practice would be to create a heat map overlaying a carrier’s coverage with your package density by ZIP Code. The goal is to ensure the carriers chosen align with your outbound package density and attempt to minimize overlap and/or carriers that cannot serve your market. Additionally (and this could be done in a formal procurement event), it’s critical you understand the carrier’s service levels, on-time performance, technology enablement (track and trace, for example), peak season capacity, and references from existing customers. Contractual pricing could ultimately decide your final selection of carriers, but only after you have confirmed the non-pricing criteria. Forming a strategy around consolidation to terminal or pick-up from location is also important as it impacts cost and transit time. This is usually driven by package density and how well-aligned the carrier’s network is with your network
topology. If the package density permits, using full truck loads to move packages is an excellent method to consolidate and save costs. Be sure to factor the average pro-rated cost per package of the truckload leg into the final costs of delivery by the regional carrier when modeling and performing cost comparatives. Contracting your selected carriers, whether in a formal RFP or a direct procurement event, requires standardization of contractual cost drivers for base rates, fuel surcharges, and permitted accessorial charges (yes, regional carriers can have accessorial charges too). The best method to enable contract consistency is to prescribe the general framework around pricing. Things like weight/zone pricing, dimensional weight and dimensional factors, fuel surcharges, and residential/extended area and oversize/overweight accessorial surcharges all should be clearly defined and considered in contractual terms and factored into the total cost to service for each regional carrier. Ultimately, carriers selected will most likely be chosen by price, time in transit, service, coverage, technology, and your ability to execute a strategy by location (DC, FC, store, etc.). I like to call this constraint modeling, which is going to be the most practical outcome and most
likely to succeed as a planned execution strategy. And, as we all know, nothing goes as planned, so contingencies for unexpected disruptions or issues in or out of your control are always good to have ready and available if the situation warrants. Ongoing monitoring to ensure proper execution to plan will enable you to stay on track and proactively manage exceptions if they occur. Executing a multi-carrier strategy combining national, postal, and regional carriers can seem daunting, especially for those shippers not yet leveraging modern execution platforms and state-of-art business analytics tools. While this strategy is certainly not for everyone, the benefits for those that are ready to implement can be significant in terms of cost savings and delivery time. As consumers continue to push for faster delivery at no or little shipping cost, shippers must look for innovative ways to compete not only in today’s market, but also into the foreseeable future.
Steve Beda is EVP, Customer Solutions, Trax. He has spent the last 25 years working with companies on supply chain automation, execution strategies, compliance strategies, and more recently, spend management strategies.
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By James Reed
STRATEGIES FOR LOWER-VOLUME SHIPPERS While it sometimes seems that a higher shipping volume can open more doors, lower-volume shippers can take some key steps to level the playing field.
o you ever feel that since you’re a low-volume shipper, you can’t get the shipping rates, discounts, and savings your larger competitors do? Although a higher shipping volume can have a positive influence on your shipping costs, it is by no means the keys to the kingdom. What are the keys to the kingdom are those practices that will allow you to access the path to lower rates, better service, and higher profits. For the purpose of this article, low-volume means those commercial shippers who send between 500 and 2,000 shipments a day. However, it should be noted that some of these
strategies may also be appropriate for those who ship much higher volumes, as well. Key #1 First, you must spend the time and do the work to understand your operation and your parcel data. Volume is just the beginning; you must also know your product, weight, packaging, service level agreement (SLA) requirements, and size. The more you know about your shipping profile, the more you will be able articulate your requirements to your potential vendors or partners. I use the word partners because utilizing your carrier, technology, and consulting vendors as partners in conjunction with one another
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will provide the best results. The days of utilizing only one carrier are over. You must get quotes, contracts, and SLAs from multiple carriers (national carriers, regional carriers, and specialty providers) for multiple services. This might seem laborious, but it will pay off in the long run. If you don’t have the time or labor, you can hire a consulting company that will do the negotiating for you. Key #2 Take advantage of rates negotiated by others, such as your customers, fulfillment houses, your trade association, marketplaces, and your technology providers. For example, if you do business with larger companies
and are not trying to make a profit from shipping, your customer will often want you to use their rates when shipping, even if it gets billed to them directly. Of course, if you are drop shipping, it can be aggregated with the company’s other shipments. Utilizing a fulfillment company for pick-and-pack capability can also afford you better rates as they have negotiated their rates based on their volume and business. You must negotiate this up front as part of your deal, as they are out to make a profit from these rates. Key #3 Utilize technology to enable the automatic and correct choice of service, carrier, and price. If you have done the work above and want to take full advantage of that work, then you must employ technology that allows you to automatically rate-shop the multiple carriers, services, and pricing. Multi-carrier rate-shopping engines have
become much more prevalent today than they were even three years ago. They range from cloud- and SaaS-based offerings contracted on a monthly basis and priced on volume, to on-premise full-blown parcel and TMS systems that have software development kits (SDKs) for you to integrate into your own systems. All of these systems are very capable for the audience they serve, and many also have better negotiated rates inside the systems. Putting It All Together A few years ago, I was a consultant for a technology provider. In the course of my time there, I spoke with several low-volume shippers to find out how they were combining the above steps into one streamlined strategy. Most of them had several contracts with national and regional carriers, as well as specific contracts with specialty carriers like DHL eCommerce that took care of specialized needs such as lightweight
postal network delivery products. Many of them had system-provided USPS special rates through a postal third-party partner, as well as pre-negotiated LTL rates in addition to their own. They had their customers’ contracts in the system. All of these rates, services, and prices in the system led to automatically choosing the best option and printing the label in less than a second based on business rules that had been put in the system in a point-and-click environment. Remember, with a little elbow grease, a little negotiation, and a little technology, shippers of any size can reduce their shipping cost, increase customer satisfaction, and increase their company’s profits.
James Reed is Senior Vice President, Strategic Alliances, for Altametrics LLC & Hubworks.com. This article is based on the session he presented at this year’s PARCEL Forum.
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COULD AUTONOMOUS MOBILE ROBOTS SOLVE YOUR DC’S LABOR ISSUES?
By Ed Romaine
his fall, the US unemployment rate fell to near-historic lows of 3.5%. While that’s great news for the economy and for workers, it’s bad news for organizations who find themselves paying higher wages to attract qualified workers. All across the country, retail and order fulfillment operations are struggling to contain rising labor costs triggered by this contracting labor pool. Compounding the issue is the availability of labor. Organizations find themselves constantly recruiting and training, only to have employees move on to another, higher-paid opportunity. Around the country, there are numerous facilities designed for three-shift operations but have never been able to staff them completely. Many warehouses and distribution centers find themselves combatting
labor scarcity and costs by making the switch towards automation within their facilities. One emerging technology in particular — autonomous mobile robots, or AMRs — has the potential to dramatically reduce your dependence on your area’s labor pool. Key Benefits of AMRs Autonomous mobile robots can provide many benefits in today’s distribution centers. Some of the most important include: Increased flexibility: AMRs provide dramatic levels of flexibility in comparison to traditional material handling equipment. Whatever application being accomplished today can be easily modified tomorrow. Scalability can often be accomplished in a few hours, and it’s a fairly simple task to relocate AMR systems to
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different zones, buildings, or states within a day or two. Increased accuracy: Because AMRs and robots can automatically scan verify that the correct product has been picked, the correct destination container, and the correct location, the end result is often a much higher order accuracy rate within your operation, which provides a much higher level of customer satisfaction. Higher throughputs: Because AMRs rely on both a robotic control system (RCS) and either your warehouse execution system (WES) or warehouse management system (WMS), they can automatically generate the shortest routes to each destination. This increased efficiency will enable an operation to be more productive in many of its processes and workflows. Lower risk of single point of failure:
Because AMRs typically work in fleets, there is a layer of redundancy that is not typically available with other solutions like conveyors, sorters, and automated storage & retrieval systems (AS/RS). If an element of traditional material handling systems goes down, the entire system is down. This cascades, making the entire zone and facility come to a standstill. If an AMR goes down, the system can deploy a different AMR automatically and throughput is never affected. This allows the operations to continue seamlessly. AMRs reduce labor costs and staff: It is not uncommon for operations embracing AMRs and human operation to see a 30% reduction in labor costs — and that is the low end. AMRs and robotic systems can realize up to 100% reductions. The level of automation and return on investment often dictate the final decision.
9 AMR Applications to Reduce Your Labor Requirements High-Speed Parcel or Order Sortation and Consolidation — Manual Induction In this scenario, an AMR is used to sort parcels, products, or orders, removing the need for miles of expensive cross belt and tilt tray conveyor. Product is manually inducted onto the top of the AMR bot. The scanner above reads the barcode and immediately sends the bot to its destination chute. The bot then moves parallel to its order position and tilts its contents down the chute. Once all the parcels or items are collected down a chute, another AMR will come and take the bag or gaylord to shipping, and the process is repeated.
Robotic Induction High-Speed Parcel or Order Sortation and Consolidation This process works virtually the same as described above, except parcels or
products are inducted onto the AMR via robotic arms. Likewise, induction can use robotics, conveyors, and other, automated technology to complete the entire process labor-free. Order Picking — Goods-to-Person Method A: AMRs eliminate all the walk and search time often associated with order picking. Operators are in their shelving/rack zones. Open orders are staged on the bottom shelf levels. Operators using radio frequency (RF) are directed which items to pick from the stock keeping units (SKUs) in their zone or aisle. They scan the location and then the item picked to verify the correct SKU before scanning the tote’s identification barcode to verify the destination. Once all the items have been placed in the order, the AMR automatically comes to retrieve it and brings it to its next zone or to shipping. Another
3 & 4.
WHO ARE THE 2019-20 HOT PARCEL SOLUTION COMPANIES?
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AMR automatically brings the next tote/ order. This method allows the AMRs and humans to work independently with no wait and dwell time. Method B: In this instance, shelving with optimized shelf levels and dividers hold the inventory. These shelves are stored on the warehouse floor. Pick-andplace bots move down aisles and under the sections of shelving until they select the exact SKUs required. They gently lift the shelving and rotate towards the shortest path to the desired pick station. The bots queue in line and present the shelving to the operator-run pick station. Pick-to-light is used to identify the active shelf, cell, and quantity to pick. The operator picks the items and puts them in the active order tote beside them. When the last item has been picked from that section of shelving, the AMR automatically takes the shelving section back to the buffer storage area and the next shelf moves into position automatically. This methodology eliminates operator wait and dwell time. These methods improve not only throughput by reducing worker travel time and allowing the worker to pick more orders in a shorter amount of time, but can also lead to up to a 20% decrease in space required for storage because it enables high-density storage solutions. Replenishing Robotic Picking Goods-to-Person To reduce more labor for the above methods, cases or totes of inventory are delivered to a robotic pick arm, which then places the inventory on one of the shelves described above. An AMR pick and place bot delivers the section of shelving to the robotic arm. Once the last tote or case has been loaded on the shelving, the AMR delivers it to buffer storage or pick station. This process is constantly repeated to replenish the order picking activities.
AMR Automated Storage & Retrieval System (AS/RS) This AMR can move vertically within a rack structure as well as on the floor as a traditional AMR. This dual capability allows it to become an AS/RS with remote picking stations. This AS/RS system
maximizes vertical cube to create a high-density storage system with the ability to create as many picking stations as throughput and labor requires. When product is required for an order, an AMR moves on the floor into the storage rack system to retrieve the product. When it reaches the correct floor location, it engages the rack, and the bot will then rapidly move vertically. When it reaches the correct SKU, it uses its inserter/extractor device to retrieve the tote and then move down the rack to the floor. When the AMR reaches the ground, it will then shuttle the product to its designated pick station. An operator will make the pick and place the SKU into the open order. The AMR then automatically delivers the SKU to the next pick station requiring the item or stores it back into the rack system. Order Picking — Person-to-Goods In this scenario, an AMR might travel to a zone or aisle where a worker is waiting (or where a worker will meet). At that time, the worker will locate the required inventory and pick the required number of units, often enabled by a pick-to-light system. Once the required items have been picked, the bot will then automatically find the next worker in the next required aisle or zone. In some cases, particularly in smaller operations, a single worker might accompany the AMR the entire time, picking items as they go.
Replenishment — Shelving & Flow Rack AMRs can also be used for automating the replenishment process within your operation, freeing up laborers to perform higher-value tasks aside from simply moving inventory. There are several ways that AMRs can be used for this application, but a simple one is using an AMR that can utilize its fork or gripper system to retrieve and store up to five cases or totes on its internal shelves. It then moves via the shortest path to the shelving or rack position and places it in the correct position. This process is constantly repeated and eliminates human labor in
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the replenishment process. The AMR can induct its inventory and discharge empty totes from conveyor, vertical lift modules (VLMs), AS/RS systems, shelving, etc. Replenishment — Retail Store For retail stores that feature extensive on-site storage, AMRs can be used to retrieve items from storage in order to replenish the main floor. This is often achieved by a bot picking items and then depositing them in a cart or cage, which is then picked up by a worker for final restocking. The same process can also happen in reverse, allowing an AMR to return and stow inventory back to storage as necessary, or to break down deliveries upon receipt.
Charting Your Path Forward Whatever your unique challenges or goals, it’s important to understand that you have many options at your disposal when it comes to leveraging AMRs within your operation to reduce labor costs and realize other benefits. The list of scenarios outlined above is by no means exhaustive — the possibilities are nearly endless. Likewise, applications can be validated by simulation and then create a scaled version of the system for a proof of concept (POC). This methodology allows organizations to implement a smaller version of their system to not only validate but flush out process and technical questions. Doing POCs using AMRs are far more viable than traditional material handling systems, and the material used in a POC is easily integrated into the full system, eliminating waste.
Ed Romaine is VP of Marketing & Business Development, Conveyco (www.conveyco.com). He has over 30 years of experience helping organizations improve their order fulfillment and warehouse systems and processes including order picking, software, and conveyance technologies. He is also the former chairman of the Automated Storage & Retrieval Systems (AS/RS) group, the Supply Chain Execution Group (SCE), and Order Fulfillment Solutions Group (OFS) of America. Ed can be reached at email@example.com or 215.512.2613.
How to Pick the Right Routing Software for Your Fleet? With the parcel volume continuously growing and consumers wanting free shipping, optimizing the last mile of parcel delivery has become more and more crucial. Last mile alone costs upwards of 28% of total delivery cost and can creep up to 50% for residential areas, according to the consulting firm Mckinsey’s study. A last mile routing software can significantly help you bring down that cost and stay competitive. Here are a few key things to consider when picking your routing partner: 1. Core data assets: Routing is a complex problem, and the solution depends on several variables like route length, time windows, capacity, waypoints, expected time at each stop, and so on and so forth. A good chunk of this information would come from your manifests, but what can differentiate a routing engine and the underlying AI behind it is the first party data the SAAS company owns themselves. For instance, can the software predict how much time it would take to make a delivery to a given location? And can the software give you better geocodes to navigate to, than what’s available publicly? These couple of points alone can significantly impact your route. 2. Knowing driver pain points: Hiring top drivers and retaining them has become more difficult with options like Uber, Instacart, or Postmates around for them. They can start earning with just a tap of a button. Therefore, giving them the tools that are intuitive to use and make the job foolproof has become essential. Drivers hate it when their apps crash, when they don’t have enough instructions, or when they are navigated to the furthest building of a 20-building community. We at One Hundred Feet have interviewed over 2,000 drivers to build our product ground up. We reduce their average walking distance by 140m in an apartment or hospital by navigating them to the entrance of the right building and tell them if a building has an elevator.
3. Understanding the address: Delivery is not an address, it’s a process. A quick look at Yelp reviews for any top shipping company will show the biggest problems customers face is failure to adhere to already wide delivery windows. If all you are being provided is an address, there is critical data missing to accurately and swiftly complete that delivery. Is it a business, single family residence, or multifamily dwelling? Does that delivery address go to a locker, doorstep, individual unit, or a doorman? Is the location controlled by an access company or gate, which will slow down the delivery? Routing software has to do more than group addresses, it needs to fully understand where they are in relation to each other, how the stops can be better organized, and prioritize your stops based on preference. For example, do you need to prioritize businesses that close at a particular time, or lockers that may fill up if you aren’t there fast enough? Addresses can be complex, and you need to know that your routing software fully understands them and can use them to their advantage to make your drivers faster. 4. Commoditizing information to become smarter: Whether you have 20 trucks or 400, systematically storing the learnings of delivery best practices for each address from each driver is crucial. Training a new driver takes up a lot of resources, plus it is taxing for the drivers themselves. For each address on their manifest, if they are supplied with more qualifying information, it could significantly reduce the delivery time and improve driver satisfaction. If the routing software lets your drivers add and share data points like access codes, after hour instructions, location of elevators, drop-off location preference etc., it will make all your future deliveries to the address seamless. If you are looking for a solution for your fleet and want to learn more about routing or how you can reduce your cost per delivery, reach out to us. We are happy to help.
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F.O.B. ORIGIN OR F.O.B. DESTINATION: REPORT FROM THE FIELD By Brent Wm. Primus, J.D.
n the last PARCEL Counsel, we looked at several factors to consider when deciding whether an F.O.B. Origin or F.O.B. Destination term of sale is best for your company. Since then, I had the opportunity to participate in a panel discussion addressing this very question at a major industry event for shippers. Also on the panel were a recently retired director of global logistics for a very large shipper and a leading transportation consultant. Although the actual title of the panel was “Prepaid vs. Collect,” from a lawyer’s point of view, this is just one aspect of determining whether to use an F.O.B. Origin or F.O.B. Destination term of sale. To explain, the term “F.O.B. Origin” standing alone means that the purchaser/consignee of the goods being shipped will be paying the carrier its freight charges. Conversely, the term “F.O.B. Destination” standing alone means that the consignor/seller of the goods being shipped will be paying the freight charges.
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The analysis of my fellow panelists focused on the first factor listed in last issue’s PARCEL Counsel, which was, “Do you want to be able to route the freight yourself to reduce congestion by having control over delivery pick-up schedules?” It may be tempting to think that an F.O.B. Origin term of sale with the customer arranging for the carrier and paying the freight charges is the simplest approach; all the seller has to do is get the goods loaded on to the truck and its obligations have ended. However, the realities of the world soon demonstrate that this simple approach is actually not that simple. This is because customer arranged freight is indeed arranged by the customer. While the seller may think that the shipment is scheduled to be picked up on a Wednesday, the customer’s truck might be in the area and arrive on Monday to pick up the shipment… which won’t be on the loading dock; it might not even be assembled or packaged. If the shipment is not ready, then it will not be picked up, and the customer’s truck may not be willing to come back on Wednesday. To this, we interject the issue of “consignee chargebacks.” While it may seem counterintuitive that a seller could be charged for a late delivery for customer-arranged freight, it does indeed happen. With this and other factors in mind, the consensus of the panelists was that for outbound freight, F.O.B.
Destination is preferred over F.O.B. Origin. Furthermore, while F.O.B. Destination means that the seller will be paying the carrier its freight charges, the cost can be passed on by slightly modifying the term of sale to “F.O.B. Destination, Prepaid and Add” (to the seller’s invoice). F.O.B. Destination allows the seller to use its preferred carriers under its own contract. A less obvious benefit is that by managing the freight oneself, it will have the effect of lowering the number of carriers, which in turn enhances dock utilization. Similar considerations apply with regard to inbound shipments. Again, the ability to manage the freight is a paramount consideration. For inbound shipments, one could use the term “F.O.B. Origin, Freight Collect.” Under this term of sale, the customer would be arranging for the freight, i.e., a customer pick-up. And, by adding “Freight Collect & Allowed,” the actual cost of the transportation could be passed through to the supplier even though the customer would be paying the carrier’s invoices. All for now!
Brent Wm. Primus, 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 on the PARCEL website at http://parcelindustry.com/by-author-1130-1. html. Your questions are welcome at email@example.com.
PARCEL November/December 2019