Transportfolio

Fresh Procurement Insights from Stale Rates Study

Wed, 02 Jan 2013 11:58:03 -0500

Editor’s Note: In 2012, Kevin McCarthy and Chris Brady wrote a post for the TMC Blog . We’re sharing their original post here on Transportfolio because procurement and cost savings are always relevant topics. Please share your thoughts and read Kevin and Chris’s blog post, Fresh Procurement Insights from Stale Rates Study. Should your freight business be put out to bid regularly or on an ad hoc basis? There are arguments for and against both approaches but not much in the way of hard data – until now.

Some new market research provides much needed facts and figures on this long running industry debate, and the findings clearly favor the “regular” strategy in the form of significant cost savings and network efficiencies. Sponsored by C. H. Robinson and carried out by the Department of Supply Chain and Information Systems, Iowa State University, Iowa, the research is described in a white paper published this month by C.H. Robinson*. We have argued for some time in this blog that shippers should perform regular (often annual) procurement exercises, where carriers bid for their loads in a lane or set of lanes. In addition to updating contract rates, these events offer an opportunity to realign respective networks, which have almost certainly drifted out of alignment since the last adjustment (see Avoiding the Two Year Carrier Pitfall). At the same time, we recognize that some shippers prefer to stage these bidding events sporadically or not at all. They argue that it is difficult to recoup the cost of frequent procurement exercises. Also, rebidding freight at regular intervals is not needed because contract rates are continuously being adjusted in line with changing market conditions. Key to deciding which of these views has the most merit is what happens to freight rates between procurement exercises; to what extent are they influenced by regularly staged rebids as opposed to day-to-day, market-driven changes? To find out, the Iowa State researchers carried out a detailed analysis of U.S. domestic truckload (TL) shipments. The research team looked at rate information on contract TL loads hauled 250 miles or more and tendered during the years 2008 to 2010. The data cover about 700,000 records in all. Every move was processed by the same transportation management system (TMS) to ensure an apples-to-apples comparison in the analysis. The results are striking. Shippers in the study that regularly rebid their freight (once a year) achieved a rate reduction of about $25.17 per load compared to those that seldom or never use this buying method. The average rate for an individual load in the data was roughly $907.00, so this rate decrease represented a 2.78% saving in transportation costs (See Figure 1 below). Click Here to View Larger Version of Figure 1In addition, the findings suggest that shippers can capture lower rates by virtue of a procurement exercise – regardless of how frequent these events are. The researchers calculated the benefit as $15.27 per load. These two savings add up to $40.44 per load, as noted in Figure 1 above. Again, if the average load price is $907.00, shippers in the study that consistently repeat procurement events can expect to lower their freight costs by 4.46%, a sizeable gain. Other important takeaways from the study include:

Shippers that support regular procurement exercises tend to adjust their rates more often than infrequent procurers, and this helps them to maintain alignment with provider networks.
Following a procurement event, effective lane costs tend to increase in response to depth of tender and load acceptance issues for a period of 328 days, and then moderate. The result underlines the need to keep an eye on freight rate movements.
The assumption that procuring transportation sporadically is less work than a more regular, systematic approach appears to be flawed. Regardless of which approach you take, contracts still have to be renegotiated and there is less certainty when this process is ad hoc.
The argument in favor of regular rebids could become even more convincing, because the researchers suggest that it is possible to derive even more benefits from this approach by pinpointing the optimum frequency of these events.

In light of this important research you may want to review the commonly accepted pros and cons of regular rebids, and revisit your transportation procurement strategy. *The Stale Rates Research: Benefits of Frequent Transportation Bids white paper can be downloaded here.

Guest Post: Is Your Intermodal Perception Reality?

Tue, 04 Dec 2012 13:19:00 -0500

Intermodal rail has experienced tremendous growth as a transportation solution of choice, with volume increasing more than fourfold since 1980, to over 14 million units moved last year. *Several factors in the transportation industry, such as changing shipper perspectives and the macroeconomic environment support the continued projected growth of intermodal rail, including:

Highway congestion
Truck driver shortages
More stringent trucking regulation
Pressure to reduce transportation spend
Greater focus on environmental responsibility
Rising fuel costs
Organic freight growth from a recovering economy

In addition, investment by Class 1 railroads into fluid and high-performing regional and interconnected national intermodal networks has improved the competitiveness of the intermodal product offering. Efficiency gains – both on the rail and at the terminal – have enabled railroads to meet growing intermodal demand from a more diverse base of shippers, reflecting a broad range of supply chain requirements in an ever-complex transportation landscape. For instance, investment in intermodal terminal coverage and service offerings across rail networks have enabled viable intermodal solutions in nearly all major manufacturing and consumption markets throughout North America, including Canada and Mexico. In the Eastern United States, intermodal service has expanded aggressively in multiple lanes with lengths of haul just over 500 miles to provide cost and sustainability alternatives to shippers who move freight extensively into and across the East to reach dense population markets. To make these shorter distances work intermodally, CSX Transportation (CSXT) has pioneered the hub-and-spoke network in the railroad space, which creates the most connectivity and offers substantially more service lanes, utilizing its hub in Northwest Ohio. Enhanced intermodal facilities, such as the above, enable faster operations, with more automation, in a more environmentally responsible way than ever before – all of which benefit the communities we operate in, our customers and other users of intermodal rail. Given all the challenges facing the trucking industry, we anticipate continued substantial highway to intermodal rail (H2R) conversion by shippers looking to take greater advantage of the value of intermodal rail. Intermodal rail offers shippers:

Scalable Capacity – Intermodal solutions provide access to a large and growing fleet of both rail-owned and carrier-owned containers, easing shippers’ capacity concerns year-round, including peak seasons. Intermodal scales to meet shipping needs efficiently, with the ability to move the load of 280 trucks on one train.
Sustainable Savings – Intermodal benefits, such as lower fuel consumption and freight density through double stacking of containers, produce cost savings for shippers and their customers. And the environmental favorability of intermodal rail provides a responsible growth engine for sustainable freight transport.

Are you considering increasing your use of intermodal? Have you recently increased your usage? Please let me know your thoughts on how intermodal aids your supply chain and meets market needs

*American Association of Railroads

Guest Blog: Medical Devices: Does Supply Chain Trump Innovation?

Fri, 30 Nov 2012 14:42:38 -0500

At first glance, when considering the production of medical devices, the key driver should be innovation, at least in theory. However, with recent changes and amendments to taxes and regulations, the key driver has changed. Today, the entire chain of patient care must be considered as key factors in decision-making.

Why is supply chain management so critical? Although the pharmaceutical industry has some of the most developed supply chains worldwide, operational excellence has not been high on the agenda for the medical device industry until now. And considering that the supply chain includes everything from the multi-million-pound MRI machine right down to scalpels and syringes, it inevitably affects all medical staff and institutions right to the core. Through effective supply chain management, massive benefits can be seen for all parties, on all fronts. As a global economy, we are in the midst of the worst financial crisis in generations. While some countries are starting to recover, many are still hemorrhaging money they do not possess, leaving little opportunity for investment and healthcare expenditures. However, as a general trend, population numbers tend to be inversely proportional to GDP—this means less money for more patients. With less money to spend, governments are forced to opt for patient care solutions that are “good enough.” Despite gains for the patient, it is rare for a new medical innovation to reduce cost, especially when first brought to market, while the investment costs are being recouped. On that basis, paying for new treatments, therapies, and equipment is increasingly becoming a luxury, not a right. Luxury items, of course, sell in fewer numbers. This sends costs virtually uncontrollably upwards, even as diminished volume reduces revenue. In an industry with slashed budgets—and with the rising cost of commodities and ever-increasing regulations to be satisfied (and paid for)—the expense of innovation is becoming increasingly out of line with available funds. Through improved supply chain management, you are focusing on products already available, striving to reduce costs for products that will fit the “good enough” category—the products that require little additional investment, the ones that can drastically improve profit margins because they sell in larger volumes. These are the products that simultaneously bring more affordable healthcare to the patient and increase overall revenue for the supplier. It’s not only the current economic climate that is impacting industry. It’s the current physical and political climates too. In 2011, we had already seen several crises across the globe, from the tsunami in Japan to the uprisings in Libya and many other parts of the Middle East. In other words, two of the main centers for the technology industry (development/manufacturing and petrochemicals, respectively) are in a state of extreme stress. By definition, this stress has been transferred into the supply chain across virtually every industry, across the globe. Through smart supply chain management, robust plans with competitive procurement strategies and fallback plans can be put into place to account for these issues. This drives costs down and causes minimal disruption, which keeps clients happy and, more critically, keeps more patients alive. What do the healthcare providers want? According to a 2010 Eyefortransport (EFT) Healthcare & Life Sciences Supply Chain Study, clinics, hospitals, and healthcare providers highlight “extreme pressure on cost controls” as the primary challenge to the supply of medical devices. Equally important was inadequate forecasting, and to a lesser degree, suppliers unwilling to change operations to match priorities; poor visibility and poor ordering systems were also cited as key issues. Do better business—give them what they want. To tackle these issues is to satisfy, even delight, the customer—the healthcare providers. Taking an agile approach to supply chain management means investing in better tracking systems, routes to market, and ordering systems. Manufacturers can focus on what is already available in catalogs to reduce costs, increase profit margins, provide orders more expeditiously and robustly, make more sales, and care for more patients. It may not have the same glitz as bleeding edge technological development. But with a core foundation in place, the funding required for modern medical device innovation will be there, with the space required to make it bigger and more successful than ever.

6 Strategies for Creating a Successful Technology Brand

Tue, 13 Nov 2012 10:21:01 -0500

If you are like me, the idea of streamlining all of the complex facets of corporate technology into a simple, straightforward brand message is daunting. Managing rapid release cycles, endless acronyms and cross-functional team dynamics, while keeping the needs of the customer front and center, is the recipe for a true challenge. So how do you ensure success? Here are 6 guiding principles that will make your experience creating a new technology brand both impactful and rewarding. [more]

1. Do your homework and ask lots of questions. The best way to figure out where you need to go is to get a good benchmark of where you are today. Start with primary research: what are your customers saying about your technology? What do they like and dislike? Don’t just ask your most loyal customers for their opinions—ask lost accounts, potential buyers, and others in the industry as well. It is also important to listen to your employees, because their experiences listening to customers complain over the years can give insights into obvious gaps and important improvements.

2. Size up the competition and stake your claim. Look closely at the technology solutions and messages of others in your industry. How do they promote their technology and what capabilities do they offer? It is also worthwhile to study best in class technology companies outside your industry to find fresh ideas and monitor popular technology trends. Once you have a feel for what others are doing, perform a SWOT analysis to see how you compare competitively, determine your differentiators, and identify opportunities for change. This analysis will also serve as the foundation for your key messaging strategy.

3. Create a plan, backed by a multidisciplinary core team. Summarize your research findings into a strategic action plan and set goals for delivery. If you aren’t familiar with how to do this, consider partnering with a professional branding agency. It is also important to align the right resources of decision makers who can drive the development, implementation, and communication of the new brand across the organization and to your customers. A small multidisciplinary team made up of IT, marketing, sales, and internal communications resources will ensure that messages and important decisions are considered from both internal and external perspectives. The team will also ensure the messages are technically sound and appropriately communicated.

4. Streamline the technical jargon. If your current technology messages are confusing and filled with excessive technical jargon, you are not alone. Consider starting with a typical elevator speech that a sales person might give. What is the 30 second pitch that summarizes your technology? Use real world terms (not IT lingo) to describe how technology solves your customers’ problems. Brainstorm these messages and use the sales force as a sounding board to see if your messages will resonate. Better yet, ask your customers themselves! They can give you insight into the level of technical language that is appropriate and meaningful for them.

5. Promote the brand internally before you promote it externally. To truly gain adoption by your employees and prepare them to talk to customers, you need a well-executed internal communications plan so your employees understand the vision. Communicate your brand message to employees through as many channels as possible: email, live meetings/webcasts, internal websites, educational summits, handouts, videos, demos, and personal phone calls. Recruit advocates and managers across the organization to use the new brand messaging during their internal presentations. Ask for feedback regularly to see if your messages are getting through. With employees distracted by hundreds of emails, phone calls and other daily tasks, it is easy to have your messages get lost in the noise. Consistent, wide spread internal communication is imperative for success.

6. Plan for the future and keep evolving. So you’ve successfully created and launched a new technology brand—now what? The brilliant ideas that drove your brand today will be old news tomorrow as the needs of your business and your customers continue to change rapidly. To keep the momentum going, it is important to stay aligned organizationally—IT and Marketing need to remain friends! This will ensure that future enhancements to technology are prioritized from a customer perspective and that messaging can continue to reflect the most current technical capabilities.

Based on my experience working on the Navisphere® technology brand for C.H. Robinson, I am amazed at what is possible when you leverage the collective expertise of an organization and its customers. Now that the launch is complete, it is rewarding to see the brand in action and to hear the positive comments from customers and employees. One satisfied customer commented: “I am very impressed by the new look and feel of the website. It is fresh and easy to use, and the new layout helps me find the critical information I need much more quickly.” Discover more about C.H. Robinson’s Navisphere technology.

I’m curious about your experiences. What challenges have you faced in communicating your technology solutions to customers? Please comment below.

Is Your Supply Chain "Gangnam Style"?

Tue, 30 Oct 2012 11:39:41 -0400

Can social media really impact the supply chain? Why should you, as a supply chain professional, pay attention to social media? Of course, social media is an important medium for connecting and communicating with suppliers or vendors. But the way consumers use social media can also have a huge impact on product development and demand—and, in the end, on your supply chain. Here’s an example. On July 15, 2012, South Korean rapper, Psy, released a single called “Gangnam Style,” which debuted at number one on the Gason Chart in South Korea. [more]

At this point, most Americans had not seen this video or tried to “horsey dance.” But by August, the video went viral on YouTube, quickly gaining in popularity throughout the world. And the rest, as they say, is history. Psy performed this song in one form or another on Saturday Night Live, The Ellen DeGeneres Show, and the Today show. In September, Guinness World Records recognized “Gangnam Style” as the most “liked” video in YouTube history.

So what does a video gone viral have to do with your supply chain?

Costume manufacturers or retailers that sell costumes can benefit—if they use social media to see what consumers are talking about so they can get a jump on trends or possible products. The Psy tuxedo is expected to be one of the top costumes worn at Halloween parties this year. But only nimble supply chains that can adapt rapidly to this type of demand will be able to capitalize on this trend.

This was a hot topic at CSCMP’s annual conference: a focus on the pressure that supply chains will face, with products evolving more quickly than before. Social media could impact demand planning, sourcing strategies, and transportation capacity.

Psy isn’t the only social media phenomenon to impact Halloween this year. Big Bird was expected to be a hot costume, however most stores have sold out because of the demand. Would this have happened without the 120,000 tweets sent out the minute after Big Bird was mentioned in the first presidential debate?

Social Media will continue to evolve and change. New mediums and channels will come and go. And consumers who use social media channels will drive even more changes that impact supply chains.

Let me know if you’ve experienced social media impacting the supply chain.

How to Create a Truckload Strategy That Works Any Time of Year

Tue, 16 Oct 2012 11:52:00 -0400

Not every surprise is a good one—especially when your customers, shipments, and transportation are concerned. But you can develop a comprehensive truckload plan so you’re prepared to handle just about anything. Here’s a simple formula that many successful shippers already use as a truckload strategy in any market environment. [more]

Core Carrier +1 (or CC+1 for short).

Here’s how it works for companies that prefer to have both asset carriers and 3PLs working in their supply chains. First, they determine the right number of asset providers (the “core carrier” part of the equation) for your business. Then, they add a single third party logistics (3PL) provider (the “+1”—more on that in a moment). With the right balance between asset players and 3PL, they can handle transportation demand.

If you decide this is a good approach for your business, how do you strike the perfect balance between asset players and your chosen 3PL? Here are a few pointers for making CC+1 work for you.

Step 1: Find the right mix of asset providers

The goal is to create a stable network of asset providers (the CC in this formula). You’ll want to identify enough providers to cover lanes, but not so many that your internal team becomes overwhelmed trying to work with them. Also, avoid spreading your lanes over too many carriers. Your volume needs to be meaningful not just to you but your core carrier too.

Consistent volume allows carriers to:

Plan their business over a longer period of time
Create continuous moves by combining multiple shippers’ freight
Capture backhaul freight that aligns with their needs
Eliminate unnecessary empty miles and deadhead expenses
Provide regular schedules and routes for drivers and prevent unproductive time—all of which can help recruit and retain drivers

Make your freight attractive to asset players, and they’ll be eager and willing to take your freight where you need it to go.

Step 2: Select the right 3PL to augment your strategy

You’ve taken care of the CC in our formula. Now comes the +1: choosing one 3PL to work with as part of your transportation strategy.

Why just one? For the same reason you don’t want too many asset players on your bench: you’ll lose the ability to leverage scale, volume, and relationship management to your advantage. Working with multiple 3PLs can artificially alter the balance of supply and demand in a market if the 3PLs start chasing the same carriers.

Your 3PL can provide the capacity of many carriers and expand your equipment options in the desired lane. They can coordinate widely fluctuating freight volumes from day to day and week to week, even as they work with you as part of your routing guide in the lanes that make sense.

When you’re sizing up the capabilities of 3PLs, look for:

Size and diversity of carrier pool. To meet your capacity needs cost effectively and rapidly, the 3PL must work with multiple carriers. Ideally, the 3PL will have national or international capabilities in many types of transportation so you gain more leverage through their aggregated volumes.
Financial stability. Be cautious of a 3PL or freight broker that does not fulfill its financial obligations to carriers. To avoid problems downstream, choose a financially strong 3PL that pays carriers quickly.
Ability to control risk. Your 3PL should have internal controls to monitor carrier service, operational practices, and insurance requirements in near real time to reduce your risk as a beneficial cargo owner.
Intellectual Capital. 3PLs that offer consulting and recommendations add value far beyond capacity. They can share best practices from their work with companies in a wide variety of industries. This can include developing regional calendars in advance of peak shipping weeks with demand forecasts and making commitments to pricing and volumes in advance. They can provide benchmarking information and offer pricing intelligence. That can help your organization develop better planning for a long-term transportation strategy.

A successful CC+1 strategy draws upon the best competencies and expertise of both asset and 3PL providers. It can greatly enhance your ability to execute across your plan and budget. And it can deliver flexibility to your supply chain you haven’t seen in the past—the kind of surprise no transportation professional minds receiving.

This post was originally published on Logistics Viewpoints on April 26th, 2012.

Cloud-Based and Managed Service Solutions Increase Agility and Reduce Spend

Tue, 09 Oct 2012 14:21:11 -0400

If you’re involved in transportation, I’m sure you’ll agree that supply chains continue to evolve and grow more complex and more global. This trend places great importance on increased multi-party interactions, both external and internal, to execute logistics in this new environment. Supply chain visibility, dynamic optimization, service interruption resolution, and technology are all critical to controlling costs, managing change, and minimizing risk. Add in a need for improved efficiency, and it has never been more important to work collaboratively to integrate and impact today’s supply chain. What is the best way to achieve this? [more]

A new series of studies conducted by Aberdeen Group with supply chain and transportation executives explores the adoption of SaaS cloud-based platforms and managed services.The research suggests that current technologies have evolved to make transportation management more agile, “single view”, and offer a truly collaborative environment for shippers, suppliers, 3PLs, carriers, and trading partners.

”The results confirmed several benefits of cloud-based platforms and optimization, including cost savings through improved shipment execution and optimization, improved accuracy of freight budgets, and improved access to transportation capacity.”

According to the research, top performers maintained a 97% perfect order rate and did so while reducing per-unit transportation costs by 4% in the last year. They are considered best-in-class and early adopters of collaborative supply chain technologies that are more likely to use visibility platform processes, managed services, and dynamic optimization tools.

Also revealed is that best-in-class companies are up to 3.5 times more likely to have adopted these sorts of systems.

29% of best-in-class companies use a SaaS/on-demand/cloud-based platform compared to 8% of other companies.
27% of best-in-class firms are using a managed (outsourced) service compared to 22% of other companies.

As is the case with any successful supply chain program, having a cloud-based platform and/or control tower processes are not enough—managed services and optimization automation tools are essential to improving performance and reducing costs. In order to better execute dynamically in real time, automation and optimization features are key.

According to the results, best-in-class companies are leveraging command center decision support capabilities at a higher rate than others. They are more likely to have the ability to:

Respond in near real time to events across multiple channels.
Make supplier-distribution network realignments.
Support DC bypass (orders pre-labeled and shipped straight to store, consumer, or via crossdock).

Additionally, best-in-class companies are more than twice as likely to use support for ocean or air procurement with Container Load Planning; 72% more likely to do multi-origin to multi-destination routing and consolidation; and 43% more likely to optimally select inbound and outbound modes and carriers. Freight consolidation through a multi-party TMS managed platform offers a significant opportunity for shippers. According to Aberdeen, consolidations and load optimization have resulted in double-digit freight cost reductions for some companies.

Where should you start your efforts to emulate these best-in-class companies? How can you step up your performance in today’s complex, global supply chain environment? Aberdeen suggests starting with collaboration and automation of contract procurement or freight audit and payment. Also, work to close the loop on planning and execution using automation tools.

For more recommendations and discussion on collaborative execution, the visibility and management concept, and quantified benefits of these approaches, click here to request your free copy of this research.

This research is sponsored by C.H. Robinson and the results are complimentary available through November 2, 2012.

Why You Care About Who Owns Your Technology Platform

Tue, 02 Oct 2012 10:57:37 -0400

I am often asked why we invest a substantial amount of capital in technology. It’s a good question. This is why: we believe that the best way to efficiently support our customers’ supply chains is to own the platform. And this is one of the most critical technology questions you can ask before settling on a potential logistics service provider (LSP) or 3PL. Who owns the software they will use to help run your supply chain? The answer can either set you up for an easier life as your company grows or for potential problems down the road. [more]

Does the LSP or 3PL own the technology? Or (as is more often the case), does your provider license the technology from a software company? It’s an important distinction. Listen to how their technology automates processes and paperwork. Find out about the level of visibility you’ll get, along with tracking and reporting. It all sounds good, right? But many technology vendors allow their technology to be re-branded by providers, and even a name that you recognize is not a clear sign of ownership. So be sure to ask who controls the technology and if it truly can be customized to meet your needs.

This chart is one way to highlight the differences between owned and licensed technology.

Benefit Owned Technology Licensed Technology Ability to Change Flexible and open to requested improvements Less flexible Easy to incorporate feedback from you and other customers Dependent on software company’s appetite for tailoring the system to your requirements Accountability Directly accountable to you for system/platform changes Gap between you and the software company can result in less direct accountability Speed of ChangeCan quickly accommodate customization requests and execute major upgradesUpdates and changes may be slowed by contractual obligations (e.g., licensing agreements)

The first time you experience a business change, you’ll care about who owns the technology. For example, say you identify a service gap that can only be resolved by tweaking an existing software feature. Or, you acquire a company on a new continent, and you need reporting to directly compare transportation costs in Shreveport and Shanghai, irrespective of differing languages and currencies. Or, your company needs to incorporate totally new products and services, but that requires a software upgrade.

Flexibility is what you need at such times. You will turn first to your LSP or 3PL because they have direct accountability to you, work with you every day, and understand what you’re trying to accomplish. If they own the technology and are a good provider, they can aggregate your suggestions with ideas for improvement from other customers. They can develop solutions more quickly that will evolve with your business. And because many problems from many businesses are being solved at once, you get improvements faster, even if you’re a very small company.

A logistics provider that can execute with its own technology will be able to perform well for you with a high level of accountability. They can incorporate changes quickly and issue more frequent updates. They have clear, direct accountability to you, and it’s likely that you can sit down with them, discuss your problems, and get fast solutions. By contrast, an LSP or 3PL who relies on an outside technology vendor leaves you with a dependency on a third party who can have no direct accountability to your firm.

This is why C.H. Robinson is committed to investing in, developing, and maintaining a proprietary technology platform called Navisphere^®: because our customers need a comprehensive, global technology solution that adapts to their needs and doesn’t hold their business back. So your needs are met whether you are a global customer with a need to connect with suppliers across continents in multiple languages, or a small customer who just needs the scale and visibility that technology brings.

What you’re really after is technology that grows with your company. If your LSP or 3PL does not own their transportation technology, they might not be able to evolve fast enough to accommodate your business requirements in the future. When the LSP or 3PL owns the software, you get flexibility, along with a competitive advantage, because you can more rapidly adapt to changing business conditions.

Ultimately, a company that owns its technology can make continuous changes that directly address its users’ needs. When this happens, you get technology with aggregated improvements.

Please comment below with any questions on technology investment. I look forward to hearing from you.

How Green Freight Europe is Mapping a Route to Sustainable Transport

Tue, 11 Sep 2012 11:43:34 -0400

In Europe, any discussion that concerns the efficiency of logistics operations will almost certainly touch on sustainability. Despite the importance of green supply chains, however, most companies struggle to measure the environmental efficiency of their own, and their providers’, transportation networks. A new initiative will help to change this by giving freight managers the means to evaluate environmental performance and exchange green best practices.[more]

One of the main issues for European transportation buyers is a lack of common and comparable sustainability metrics. It is difficult to quantify the greenhouse gas emissions associated with subcontracted freight, for example. And the proliferation of measurement methods, reporting formats, and data requirements adds another layer of complexity to the task. How have you as a shipper tried to overcome these issues?

In addition to impeding initiatives to improve the environmental performance of freight networks, these hindrances also complicate carriers’ and shippers’ efforts to comply with their customers’ reporting requirements. Increasingly, companies expect suppliers to provide reliable data on their greenhouse gas emissions levels.

A new program called Green Freight Europe aims to address these issues by using market incentives to encourage companies across the supply chain to develop green transportation procurement practices. Launched in March 2012, the program was welcomed recently by representatives of the European Parliament and the European Commission. A working group of 70-plus companies that includes multinational shippers, carriers, and associations is in place, and the plan is to recruit 250 members by the end of 2012. C. H. Robinson is a member of the program’s steering committee and is leading one of the key working groups.

The initiative is inspired by the successful Smart Way® program. SmartWay was launched by the U.S. Environmental Protection Agency in 2004, and helps the country’s logistics community to improve fuel efficiency and lower costs. This is achieved by enabling carriers to reduce emissions levels and lower fuel bills, and to demonstrate these methods to supply chain partners. Shippers and logistics service providers can then select the carriers and mix of freight services that best helps them to shrink the carbon footprint of their freight operations.

Using European methodologies to meet its goals, Green Freight Europe is implementing the following strategies.

Establish a platform for the monitoring and reporting of carbon emission to assist the procurement of transportation services based on existing standards.
Promote collaboration between carriers and shippers, drive improvement actions, and enable the participants to monitor progress.
Establish a certification system to reward shippers and carriers that fully participate in the program.
Share best practices, promote innovations, communicate road freight sustainability improvements in Europe, and connect carriers with service providers and technologies.

Shippers, carriers, and logistics service providers that join the Green Freight Europe program will gain a competitive advantage from reductions in fuel costs, a smaller carbon footprint, and the ability to supply environmental performance data to their customers. Moreover, these enterprises will enhance their brands at a time when consumers are keenly aware and environmentally conscious.

From an industry viewpoint, perhaps the most important benefit of all is that for the first time European logistics managers will have the information they need to make sustainable decisions that reduce the environmental impact of their freight operations.

Interested? Take a look at the Green Freight Europe website. We would love to hear what you are currently doing or planning on doing in the future.

What’s Missing in Your Total Landed Cost

Tue, 21 Aug 2012 10:09:00 -0400

From what we’ve seen, it is rare that a company knows their true total landed cost (TLC) for each item they produce and deliver. There’s a reason for this. For most companies, there are many costs in hiding. And unless you hunt down and include those hidden costs in your TLC calculations, you’re basing supply chain decisions on incomplete data. [more]

So if it’s the norm for companies to not measure some of the elements that contribute to total landed costs, how do you become the exception?

The key is to bring those missing costs out in the open.

Start with the baseline. Capture SKU details for every product you have, to the most granular level you can. Develop robust cube, dimension, and weight data for all of your products and keep it up to date. That will bring deeper insights into your total landed cost. Yes, capturing SKU-level data can be labor intensive, but EDI helps automate this, and lends a great degree of data accuracy.

What can you do with dimensional data? Most companies generically assign lots per SKU to a truckload, container, etc. But when you have dimensional information on each product that you ship, along with its packaging, you can build better pallets. You can more accurately optimize and consolidate those into full shipments.

What’s more, you get data back so you can make more accurate allocations. Say a truck has 15 different SKUs on it. To what extent did SKU #1—toothpaste, let’s say—fill up that truck or ocean container? If you have good dimension information, you will know that it consumed one-fifth of the equipment’s space, but represented 25% of the weight on the truck. Knowing the cost to deliver, you can attribute total landed cost based on the weight or cube that the SKU occupied.

You can also analyze what a specific SKU is costing you. Is one SKU more frequently damaged? Is it more expensive to deliver? Do you have receivers who have a particular problem with that SKU at delivery, and does that present a cost or accessorial reduction opportunity?

Transportation accessorials can represent another type of gap in your total landed cost calculation. These are costs for supplementary services that are provided in connection with transportation; they are not always included in the freight charge.

Here’s what can happen. Say that a Transportation Department has decided that it will pay a maximum of $100 for detention, and that Transportation pays the carrier’s invoice. And in this company, the Shipping Department controls the loading process. Perhaps Shipping loads inefficiently, so the driver is regularly detained. And in the end, the carrier’s cost for that detention is usually $150. Since the carrier can’t recoup enough of their costs to make a profit, they could build the extra $50 into their line haul rate.

In the example above, the shipper still pays $150 for detention, but they aren’t measuring the full cost. Shipping certainly isn’t tracking it, because accessorials don’t directly affect their compensation and goals. And yet, the costs are significant to the company overall.

Accurate identification of all costs affords visibility to your total costs, and allows you to understand and influence total cost elements. Without it, you have missing links in your TLC calculation.

What you really want are meaningful metrics. When you only measure things like cost per mile or cost per pound, the closest you can get to total landed costs is to say, “This is my true cost to deliver nationwide.” But when you have deeper metrics, you can say, “This is my true cost to deliver this SKU to this customer.”

And that’s where it gets really powerful.

When you have SKU-level data, you can determine whether you are charging customers appropriately for their products. When you can accurately identify cost drivers at the item level, you have greater visibility to your total transportation costs—just one component of Total Landed Cost. You can enhance budgeting and auditing capabilities, support cash flow projections, and better understand cost variances.

With visibility, you can understand the true expense and influence total cost elements. You gain optimization opportunities, and better analytics on what a specific SKU is costing you.

Additionally, such insight can lead to changes in the price of your product. It’s quite possible you have a highly efficient product in terms of total delivered cost, which is mixed in with other products. But that information never makes it back to your marketing and sales team because you didn’t have a good way to measure it.

But if you can gather a broad universe of information and gaps, and pull SKU-level data and analyze it—you can interpret the findings and arrive at the true TLC. You have the whole picture. You know the cost of returns, damages, customs, and imports by SKU. You can make market-based decisions on that product. It’s not mixed in with other things that could be distorting your analysis.

You don’t have to let hidden transportation costs affect your TLC—if you know what to measure and have the technology to do it.

Outstanding Customer Service As a Self Fulfilling Prophecy

Wed, 08 Aug 2012 14:40:57 -0400

Anyone earnestly involved in supply chain thinks a lot about customer service, but it’s been on my mind even more since the release of the Inbound Logistics July issue. In that issue, C.H. Robinson was honored as the #1 Top 3PL for the second year in a row. [more]

Two things make the Inbound Logistics ranking especially meaningful to me. First, customers do the ranking. They vote based on their experiences with their providers’ customer service and execution.

Day to day, I’ve seen how hard our employees work to understand customer initiatives at a deeper level, and to support their customer’s goals effectively. I’ve also noticed that becoming the Top 3PL motivates us to work ever harder for the customer. It’s an amazing self-fulfilling phenomenon.

Second, it tells me how important feedback is—positive or negative—as we strive to offer a better customer experience. This is in part related to the principle, “Seek first to understand, then to be understood,” articulated in the Seven Principles of Highly Effective People by Stephen Covey, who unfortunately passed away recently. Customers are logical and rational, and generally have reasonable expectations. We often need to take the time to understand what a customer really wants, beyond what they may simply be asking for at that moment. When we ask questions, customers are quite willing to tell us where we stand, how we’re doing, and how things are going. And that kind of healthy communication is essential as we work toward more effective business relationships.

Many of our best customers today admit they were once skeptical that we could be an important resource for them. Amazingly, some even doubted our basic ability to perform initially. But all it takes is one or two sharp minds in an organization to make a decision and set great things in motion. It inspires me to hear someone say, “This is the right thing to do, and we’re going to get it done,” and then, they take action. And many of these people receive recognition, acclaim, and promotions within their organizations. They take a calculated risk that pays off for their company—and for them personally. That’s my favorite type of customer story. We’re proud to work hard and support that kind of success.

I believe that perhaps the most important thing our employees understand is this: customer service isn’t done by companies. It’s accomplished by people helping other people, and truly caring about the results. In other words, what we really want is to have our customers enjoy interacting with us, and to feel—and actually be—better off for having done business with us.

If you voted for us, thank you! Rest assured, we are listening to your feedback, good and bad, and taking it to heart. It’s the only way we know to improve and continually deliver exceptional value, every single day.

Where Do You Get Your Industry Info?

Wed, 25 Jul 2012 11:19:25 -0400

On a recent flight from Miami to Minneapolis, I had an interesting conversation with the passenger seated next to me. It started out with the usual (Where do you live? Do you have kids? What were you doing in Miami?). But it was after I mentioned that I’d just attended the Transportation Marketing & Sales Association’s annual conference that my conversation became more than idle chitchat. [more]

I explained that I work for a logistics company in Minneapolis, managing our social media strategy.

“You mean, a company like C.H. Robinson?” he asked.

“Actually, that’s my company,” I replied.

“I use you guys for my transportation,” he said.

What an opportunity! Who needed a customer survey when I could talk to a customer in a non-business setting and get his honest opinion on our service, relationship, value, etc.

I soon learned we coordinated both his domestic and international transportation. He’s been using us for many years, and as the president and owner of the company, he appreciates our people and service offerings.

He inquired about his options with ocean transit times. I shared what I’d learned at the TMSA Conference There, a trade expert said that ocean liners have seen the benefit of reduced fuel consumption by slowing down their ships, and that 30 to 45 day transits might soon become the norm.

“That’s the type of information that you, as a logistics company, can provide to me,” he said. “It helps me to make more strategic decisions.”

We talked about China. He’s imported consumer electronics from the country for many years and has visited multiple times. I asked him what he thought about the near shoring debate.

“Some back-end manufacturing and assembly might take place in the U.S. and in Mexico,” he predicted, “but the main manufacturing of goods such as electronics will never move back to the U.S.” This surprised me. He acknowledged that as parts of coastal China become more developed, the costs of goods are increasing. But he explained that with such an enormous, relatively inexpensive labor pool, most manufacturing for the foreseeable future will likely remain in China.

As we started our descent and our conversation wound down, he made one final point. He understands most of the rules and regulations that are important to shippers, and even how to deal with some of the large retailers and their process. But in his industry, he frequently talks with new shippers that struggle with transportation.

“Why isn’t there an open space or forum that allows customers, carriers, and suppliers to communicate better, something that gives people the ability to see past responses and posts?” he asked.

My response was short and sweet. “Social Media.”

This is why experts like Adrian Gonzalez keep pushing social media in the supply chain as a way to stay informed. Shippers want information. They just aren’t always sure where to look. Already, much of this information is more widely available and sharable through social media. Many expect that trend to continue as more and more people discover the value of this growing resource.

While the TMSA Conference was interesting, in some ways, the in-flight conversation was even more valuable. Conversations with your customers—the best way to learn what you’re really doing right and wrong—are a real gift. So next time you’re on a flight put down the book or iPad, and start talking. I was really happy I did.

Transportation Bill Summary

Tue, 03 Jul 2012 13:57:00 -0400

On Friday, June 29, 2012, the House and Senate passed a transportation bill after 9 short term extensions. This version of the bill will likely be referred to as MAP-21 (Moving Ahead for Progress in the 21^st Century). While the headlines in trade publications will report the important top line figures and financing sources that will fund roads and bridges through September 2014, there were a number of policy issues that shippers and carriers were watching closely. Here is a summary of some of the other provisions in the transportation bill that may not make the press headlines: [more]

Increasing Truck Weights: The bill directs the DOT to perform a study comparing the safety data of trucks operating above 80,000 lbs to those operating at or below 80,000 lbs. This study must be completed in 2 years. Essentially this provision means that no actions will be taken to raise truck weights for at least 2 years.

Hours of Service: The bill requires DOT to perform a field study on the effects of the 2011 restart rule changes by March 2013. This appears to be timed to be released just prior to the scheduled implementation date of July 2013 for the new restart rules. This indicates that the debate around hours of service will likely increase in volume next spring as implementation gets close.

EOBR’s (Electronic On Board Recorders): The bill requires the DOT to issue a rule requiring electronic logging devices for all commercial motor vehicles. It clarifies that electronic logging devices can only be used to enforce federal regulations around hours of service. We still anticipate that a requirement which mandates electronic logging devices for all trucks is still at least 3-5 years from implementation because FMCSA has indicated a desire for a longer implementation timeline in order to give smaller carriers enough time to comply. Look for the term “electronic logging device” to be used alongside EOBR.

Broker Bond: The required broker bond amount was raised from $10,000 to $75,000. Additionally, the provision clarifies that a motor carrier must maintain a broker authority and broker bond if they are brokering freight to other carriers. Implementation will be around July 2013.

Truck Parking: The bill allows federal funds to be used more widely for truck parking projects. The original effort to address the parking shortage was called “Jason’s Law” and it was largely included in MAP-21.

“Chameleon carriers”: There are a number of provisions that increase the authority of FMCSA to shutdown suspected “chameleon” or “reincarnated” motor carriers. Similarly, the bill grants FMCSA more authority in fining and punishing carriers who operate without valid authority or who ignore orders by FMCSA to stop operating once they have been placed out-of-service as an “imminent hazard”. It is important for shippers to understand the various enforcement powers granted to FMCSA by Congress so shippers can include any adjustments to their carrier qualification procedures.

Detention Time Study: A provision to study the impacts of detention time on driver fatigue was removed from the bill. We still anticipate that detention time will be an area of growing discussion across the industry in the coming years.

While there are many other important provisions and funding authorizations in the transportation bill, the ones described above have been of keen interest to those within the shipper community. If you have specific questions regarding any of the topics above, please contact me in the CHR government affairs department.

5 Ways Reusable Cargo Drives Sustainability

Tue, 26 Jun 2012 11:32:00 -0400

As C.H. Robinson continues to develop Reverse Logistics solutions for our client base, I see a wide range of client needs and capability requirements. There has been a strong trend in recent years to take a closer look at efficiently managing reverse logistics flows as shippers realize the positive impact a best-in-class process can have on their bottom line. Additionally, shippers are turning to Reverse Logistics programs to drive their sustainability initiatives forward. [more]

Recently, a custom manufacturer of cargo protections systems and reusable dunnage (packing material that protects cargo) asked me to model their reverse logistics program. Reusable shipping units—dunnage, crates, totes, drums, kegs, reels, pallets, etc.—have been in use for many years and are particularly effective in closed-loop scenarios. The company showed me their product’s fiscal and sustainability benefits as well as the impressive reduction in cargo damage. While these benefits were promising, it became clear to me that the shipper (like many other companies) had one major challenge: How can businesses effectively keep track of their pool of reusable cargo and reposition it appropriately?

As more shippers evaluate the benefit of purchasing reusable shipping units, they are forced to develop collection programs for complex supply chain scenarios. The key to any effective reusable program is to create a cost effective collection strategy that eliminates lost units and ensures accurate refunds for returns.

If you are considering using reusable cargo, use these 5 ideas to build a more strategic retrieval process.

Plan your pool effectively. Eliminate the stress of not having enough equipment on hand to meet supply by identifying the optimal quantity for the pool of equipment. This will require a detailed assessment of forecasted volumes, estimated lag time, receivers’ staging space, and return cycle time.
Build a partnership with receivers. Receivers will see the benefits of a reusable program, but don’t overlook the fact that it will create some complications for them. For example, they will need to comply with collection and account for units. Find ways to incent receivers for their collaboration. Clearly define expectations to ensure a seamless recovery process and clean financial adjustments (if applicable).
Create a structured sweep process. Efficient collection of units can make or break the fiscal viability of a reusable cargo program. While volume and density drive efficiency, it is possible to design sweeps and pool collection programs on smaller volume returns. As annual volumes ebb and flow, seek out a logistics partner with flexible, transportation services that can dynamically execute retrievals based on a variety of scenarios.
Implement a communications hub. It is critical to create a centralized location for processing and granting authorizations to return reusable units. Whether the location is internal or outsourced, EDI, web-based or a call-center, this process enables receivers to request the collection of units when minimum thresholds are met. As a control mechanism, this authorization creates alignment with your return expectations, while adding visibility of the reusable cargo on the return journey.
Create visibility. Knowing where your units are in the supply chain at any given time will help you sleep at night. Develop inventory visibility at four stages of your network: 1) on hand at the shipping facility, 2) in transit to receivers, 3) staged at receiver, and 4) in transit returns. Whether in your ERP or through a third-party website, creating visibility allows you to evaluate if additional sweeps or dynamic routings are needed. It also provides concise information to quickly validate any return credits involved in your programs.

In the end, it’s important to have a concrete plan in place to make the most out of your reusable cargo. This will help make sure the program is effective and has a positive impact on your bottom line. For more information on the financial benefits of reusable programs, check out this link.

Are you using reusable cargo? What challenges are you dealing with?

Please comment below with any comments or questions.

Think Small for Big Supply Chain Collaboration

Fri, 22 Jun 2012 10:58:00 -0400

We’ve all heard about the concept of collaborative shipping in the logistics world. To many shippers and logistics providers, collaboration conjures images of ambitious initiatives that take a lot of time, cost, and effort to pull off. These include continuous moves involving multiple companies, and optimization of partial truckloads across multiple shippers to squeeze efficiencies out of the supply chain in a big way. [more]

But by thinking small, there are easier ways to collaborate that ultimately benefit the shipper in the form of lower rates. I had the opportunity to hear a few fresh collaboration ideas at the recent Council of Supply Chain Management Professionals (CSCMP) Chicago Roundtable conference. Consider these ways to “think small” about collaborative supply chain practices:

Think within the box. It all starts within the organization. As a shipper, what can you offer your carriers and 3PLs? For example, at the CSCMP conference, a large shipper of paper goods mentioned their carriers appreciated simple things like making sure drivers have access to a bathroom or a lounge, even Wi-Fi access while their truck is loaded or unloaded. These things just make your freight more desirable and encourage carriers to give your freight priority and better rates.
Provide longer lead times. Our research, based on careful analysis of more than one million truckload transactions, indicates that giving your carriers more lead time reduced transportation costs by decreasing routing guide substitution. For more ways to reduce transportation costs through the load tendering process, download and read this white paper: Increase Lead Time, Decrease Costs .
Longer DC hours. A motor carrier at the CSCMP conference noted many shippers can’t even coordinate the timing of loading and unloading between their shipping and receiving docks at the same plant for streamlined inbound and outbound tendering. But offering longer hours and weekend unloading at your distribution centers (DCs) does make a difference. Especially for large DCs, expanding your hours or staying open more days of the week gives carriers efficiencies, sends drivers on their way, and helps avoid the pile up of freight on Monday mornings.

All of these examples show how thinking small in supply chain collaboration can ultimately make a big difference in the service and rates shippers receive. These tips support the principles of continuous improvement—often referred to as Kaizen—and illustrate how small, incremental changes over time contribute to steady, long-term gains in supply chain performance.

What do you think? How do you think small? Please comment below. I look forward to hearing from you.

Get Ready for the World’s Largest Charity Kickball Tournament

Mon, 11 Jun 2012 10:40:38 -0400

In just one month Chicago’s Grant Park with be filled with over 1,500 kickball fanatics taking over all 15 fields on Chicago’s lakefront for the 9^th annual Kicks for a Cure. If you’re not familiar with the event, it’s the world’s largest charity kickball tournament hosted by TMC , a C.H. Robinson division. Since 2003, enthusiastic kickballers have gathered in downtown Chicago to raise funds. This will be the 3^rd year in a row we have worked with Receptions for Research, Carolina Panthers’ tight end Greg Olsen’s foundation. The foundation raises money to fight cancer in honor of Greg’s mother, Susan, an eleven-year breast cancer survivor. [more]

We love this tournament because it’s an outrageous amount of fun for a great cause. The event is always a blast, and 100 percent of the proceeds go directly to the charity. It’s great to know that we—and the big-hearted people on the 60 kickball teams—are making a difference year after year.

Watch these videos to see the Kicks for a Cure event in action.

Although team registration is sold out, people can still come out and participate by buying a spectator day pass. Even if you’re not in the Chicago area, you can get involved by sponsoring a player or making a general donation. To date, Kicks for a Cure has raised nearly $1 million. This past year we were able to help support a family room at the world’s largest Ronald McDonald House. For complete details or to get involved, please visit the Kicks for a Cure website.

Thanks for reading and be sure to check back in July when we post pictures and new fundraising totals.

Guest Blog: Why the Chemical Industry Cares About Supply Chain Costs and Innovation

Thu, 31 May 2012 13:57:43 -0400

Just a couple months ago, Kristopher Glotzbach highlighted some of the key factors in serving the chemical industry. Taking an even higher level view, I’d say that what the chemical industry cares about most from its supply chain are safety (including regulatory compliance), security, cost efficiencies, and innovation. I’d like to share some thoughts on the last two priorities—cost efficiencies and innovation, starting with cost. [more]

You might be thinking, “isn’t everyone concerned about cost in their supply chain?” Yes, that’s true. In a 2012 IDC Manufacturing Insights survey , we found that 53% of North American manufacturers of all kinds, shapes, and sizes pick reducing overall supply chain costs as their top supply chain priority. But only a few manufacturing industry segments characterize the primary focus of their supply chain as cost, and the chemical industry is one of those. (Most others pick product quality as the focus of their supply chain.)

Viewing Supply Chain Costs in the Chemical Industry as Controllable Costs

I think that this laser focus on cost for the chemical industry supply chain has to do with the fact that these companies see the supply chain as a cost they can manage closely (i.e controllable). This contrasts with the cost of feedstocks and energy, which they’d like to manage just as closely but often can’t (i.e uncontrollable). So how do chemical manufacturers expect to reduce their supply chain costs? Most told us through reducing procurement costs, followed by reducing transportation costs. That means that evaluating a global third party logistics provider (3PL) should include some due diligence understanding of how they can help you manage contract compliance in addition to reviewing the actual transportation costs. When your employees procure transportation services, do they use the company that you have under contract? If the answer is no, or not always: why not? Is there something the 3PL can do to make it easier or more desirable for your employees to use your contracted carrier? Follow through on that conversation as you’re reviewing your relationship with your 3PL.

Translating Innovation into Flexibility in the Supply Chain

Back to innovation: We’re increasingly seeing signs that companies in the chemical value chain are prioritizing demand planning/forecasting and production scheduling over supply chain execution challenges like warehouse management and transportation management. Some of this has to do with the industry’s need to manage processes and complex assets; we think it’s also related to a more customer service focus. Their customers want more product options, new products, and more environmentally friendly products, and on schedule—even if there’s a plant fire that limits the availability of a major ingredient or a major hurricane that stops supply for days or longer. That means that this industry is always evaluating new ingredients and potential substitutes. Consequently, the chemical industry is usually adapting or building new supply chains. Translating innovation into 3PL services means flexible capacity and extensive reach—when and where you need it. So while you might be tempted to look at a 3PL for cost savings, don’t forget to consider how they can also help with contract compliance and the flexibility to change as your company ‘innovates’ your products, processes, and most importantly, your supply chains.

How Global Companies Maximize Transportation Technology

Wed, 23 May 2012 12:45:00 -0400

I frequently talk to companies about problems they experience with their transportation network. The transportation pain points usually get serious when their supply chain starts to go global. The operational processes grow more complicated, more people get involved, and the number of diverse language and cultural requirements increase. Further, it gets harder to track currencies, local shipping rules, and tax regulations. That’s when many companies find that their transportation management system (TMS) can no longer fulfill their business requirements and serve customers. [more]

I spoke on this topic at the recent ARC World Forum. SupplyChainBrain created a video, Tracking and Tracing: New Thoughts on a Supply Chain Basic, from my interview with Steve Banker from the ARC Advisory Group .

The video covers:

Basic requirements for supply chain tracking and traceability
What traceability programs can do for companies
How TMS can help with recalls
What happens when a company decides to outsource a part of their transportation services
How to think about transportation on a global scale
Making your TMS accessible to a global audience to overcome language, currency, and trade barriers

Here are 4 ways to turn potential global supply chain pitfalls into advantages.

Ignoring your supply chain’s global nature. I find that when companies and IT managers think about transportation, they typically think and act regionally. But most companies’ supply chains have a global aspect. And that’s why it’s critical to make the distinction between A) managing a supply chain that’s global with operations in a few different regions, each managed regionally vs. B) managing a global supply chain. It’s my hope that every company can aspire towards the latter—managing their global supply chain.
Trying to reconcile disparate data and reports from separate systems. The synchronization of data between multiple systems is a killer when it comes to doing real traceability and risk management. For example, say a company has a TMS in Europe and a TMS in North America. Each night the two systems merge data overnight to create reporting. That means in the morning, their employees are looking at a great report of everything that went wrong yesterday and it’s too late to do anything about it. Your TMS should be a single instance system. You need one copy of the data in one place for all of your operations around the world.
Forgetting that a global transportation network involves people—a lot of people. It’s not uncommon for global shipments to touch many people, each with a distinct set of regulations, business customs, and IT capabilities. The carriers and suppliers all have their own roles, languages, and customs. For this reason, accessibility for a global audience is critical. English is a universal language for global business, but maybe not necessarily at the shipping docks. To overcome these challenges, you need a TMS that can be accessed in a language that is used in the regions where you do business. It should have numbers, currencies, and dates that are formatted in the way used in that region. This will help you avoid basic mistakes that happen when your trading partners around the world are using a system that is not culturally familiar to them. For instance, a request for goods to arrive on “4/3/2012” indicates two very different days depending on whether the reader is in Germany (March 4) or the United States (April 3).
Missing the boat on global business rules. International shipping involves currency exchanges, navigating local shipping rules, and understanding the various tax regulations. If your TMS doesn’t account for these differences you will run into problems. For example, a document you might use to tender a shipment to a carrier in the U.S. is very different than one for Singapore or for Europe. Your TMS needs to be able to manage and conform to all those rules, like Incoterms®, so that you can define a global shipping process and global transportation strategy that then gets localized for the markets where you do business. For more information on global shipping—calculating total landed costs and real-time, dynamic routing—read Going Global: Building a Sustainable Logistics Model in the Age of Globalization.

Ultimately, a streamlined, efficient global network is important. When your logistics are on a global scale it greatly magnifies the inefficiencies of spending too much time on tactical or low-value tasks.

But what about you? Do you agree that the industry is entering an era where a world view of freight movements is becoming a competitive necessity?

Thank you for reading and I look forward to your comments.