Technology, greater accessibility to information, and global connectivity has improved the overall experience of the end consumer. However, for companies this has caused increased expectations and an even more complicated supply chain. Living up to these expectations and configuring an efficient and smooth running logistics operation can be extremely costly and even impossible without high level resources.
Now, you may be a Purchasing Manager, Logistics Manager, Executive, or simply someone who is responsible for making sure your products get from one place to another efficiently and cost effectively. We understand that doing so is not so easy which is why we have created this guide to help you assess where you are and how to get where you want to be.
- PLAN YOUR SUPPLY CHAIN
- MANAGE YOUR SUPPLY CHAIN
- FULLY UTILIZE LOGISTICS TECHNOLOGY
- BE PREPARED FOR REGULATION CHANGES
- CONSIDER OUTSOURCING TO A 3PL
- KEEP UPDATED WITH INDUSTRY TRENDS
- DESIGN AND ENGINEER A LOGISTICS PLAN
- DEVELOPING A STRONG PROCUREMENT STRATEGY
- CREATE ADVANTAGES THROUGH A STRATEGIC NETWORK
Logistics engineering and design is vital to any supply chain. The individuals who perform these tasks are responsible for analyzing and interpreting a company’s past business actions, current strengths/weaknesses/opportunities/threats, and develop models for future business. They are like the mechanics who build and maintain the supply chain machine. These individuals can be full-time engineers or an upper management function for a company. Either way, this team is responsible for interfacing with a wide variety of logistics professionals in order to better grasp the full framework of a company’s business model and determine what works and what does not. Depending on what part of the supply chain these engineers operate in, their focus will be either customer or supplier facing. Both will manage relationships with the customer/supplier, design pricing for new business, manage costs, and complete other processes to meet internal or external stakeholder needs.
Logistics engineers spend a significant amount of time working with their customer or their supplier to ensure that the needs are being met.
When they are the customer working with a supplier (such as a 3PL), they will-
• Be responsible to specify what services they need to effectively move their company’s freight.
• Propose data reports, create schedules, or distribute information like part numbers, so that the supplier can create a manageable solution for them.
• Determine what vendors or suppliers the companies will use to ensure maximum effectiveness. This is either as a part of management or under management direction.
Logistics engineers working for a supplier with a customer will-
• Interface with the customer to ensure that the customer’s service, data, and network requirements are met.
• Look at historical, current, and projected data to determine cost savings opportunities for internal and external stakeholders.
• Analyze potential customer network changes to facilitate optimal service and will present these analyses to both internal stakeholders and the customer.
• Coordinate with supply chain managers to ensure the correct data is being collected and that the management system network reflects it.
No matter what stage in the supply chain they are in, logistics engineers rely on managing relationships. Customers look for effective and efficient vendors or suppliers, and suppliers try to keep their customers satisfied. They are both responsible for finding the right options to handle the freight and to consistently improve the supply chains. Both need to work with their corresponding parties to establish the customer requirements and ensure that those requirements are being met. Once the customer is satisfied, companies can look at expanding their business.
Design New Business Pricing
For companies to expand, both customer and supplier facing logistics engineers review data to determine new price models.
Designing new business pricing is often determined by management professionals for supplier-facing engineering, but various aspects are handled by specially designated engineering teams. These engineers will –
• Analyze the marketplace to determine how to bring their products to new markets.
• Work with salesmen to hear and receive price and service quotes on shipping methods and lanes and compile that data into price/service models.
• Present their analysis to higher management for review. Management will then determine the optimal service providers.
• Analyze profitability of accounts by services provided.
Customer-facing logistics engineers will perform similar tasks to supplier-facing logistics engineers, but with a few differences. They will –
• Focus on data as well to determine what they will pay their vendors as well as charge their customers.
• Identify and propose cost savings options to management and their customers, as well as review the customer’s shipping network to ensure they run lean and cost effective.
• Work with internal and external salesmen to deliver and receive current prices and shipping method options and create new pricing strategies.
• Analyze the profitability of accounts by service type and review accounting invoices to ensure accuracy.
Logistics markets are constantly changing, and it is the logistics engineer’s job to analyze the markets to help management determine what changes companies should make to grow. Logistics engineers will look at data from the past and present, as well as the future projections, to determine what it would cost to undertake more business and what prices to charge customers. They work alongside sales and procurement to find carriers for more loads on more lanes, and compile the data into readable presentations. They give management the tools they need to make an informed decision on how to proceed.
The cost management function is vital to keep a company in business. Both supplier-facing and customer-facing engineers are responsible for reviewing cost/benefit analyses and determine what is best for their companies.
Supplier-facing engineers/Customer-facing engineers both will –
• Review historic data, current data, and future projections to determine what price they will spend on logistics solutions.
• Analyze cost data from operations to identify opportunities to increase margins.
• Analyze the impact of price increases or adjustments from suppliers.
Logistics engineers are responsible for finding ways to save their company, and their customers, money on supply chains without sacrificing service. When management promises certain price points to their customers, logistics engineers find ways to help them meet those points. Also, if their customer is considering a change in their logistics process, these engineers can assess the changes and give the customer a cost/benefit analysis to help them make informed decisions as well.
In addition to focusing on costs and logistics solutions, logistics engineers will take on other projects as well.
Supplier-facing engineers will –
• Maintain their own information databases.
• Interface with suppliers to ensure data integrity.
• Communicate to supply chain any necessary changes or preferences.
Customer-facing engineers will –
• Work with IT and supply chain managers to ensure the correct data is being collected and stored.
• Update internal systems for correct billing.
• Implement continual improvement initiatives to better serve their internal and external stakeholders.
Logistics engineering and design is a vital part of any company that can be performed by a specific team or as part of the management function. These engineers are responsible for analyzing past, present, and future processes to provide quality service and optimal solutions to their internal and external stakeholders. They manage current costs and develop pricing models for future business by compiling, interpreting, and presenting data to their management team and to their customers. Logistics engineers use precision and analysis to keep the supply chain machine running.
Having a strong procurement strategy is vital for supply chain management. Procurement teams working for 3PLs or independent shippers are tasked with finding and contracting carriers for specific loads or lanes. Companies that are not currently utilizing procurement teams, or that may be underutilizing them, can benefit from developing a strong procurement strategy. Here are some ideas for getting started:
How to Find Carriers
The logistics manager or carrier development manager can start looking for carriers in a few ways. Often, they will:
• Attend trade shows
• Make cold calls
• Perform internet searches
• Network within the industry
• Stake out pickup and delivery locations
• Work with established carriers for more business opportunities
Once they find the carriers, they will reach out and inquire if the carriers would be interested in the business.
How to Find the Right Carriers
Companies need to be discerning on who runs their freight. The criteria that each company requires for their carriers will differ from company to company, but most companies refer to safety scores or past performance metrics to determine if the carrier is a good fit. To find these scores, there are several online databases with carrier scorecards available, such as Carrier411. Other companies reference safety and security certifications like CTPAT or ISO9001:2015. Other qualities to look for are honesty, helpful, communicative, and fair prices.
Pairing Carriers to Lanes
There are a few ways to pair carriers to lanes. One is to bid out the entire customer route list with carriers and pair carriers to routes according to cost and availability. Another way is for carriers to reach out on lanes they are interested in and CDMs or logistics managers pair them to what fits well. A final way is to work by customer request or recommendation and pair the carrier the customer wants to the lanes.
Most carriers are only interested in lanes that pair well with other lanes they currently run or can be run for the right price. So, it is important to note what lanes the carrier currently runs and find matching origins and destination. Also have a fixed budget on each lane to know if the customer can afford the carrier rates.
Contracting Carriers on Lanes
Once the carriers have been found and qualified to run the freight, procurement teams will contract the carriers on lanes. The procurement manager will often lead the negotiations of terms and the CDMs or logistics managers will act as intermediaries between the carriers and procurement teams.
Procurement teams are not able to remain complacent if they want to keep their customers satisfied. They need to track carrier metrics and lane progress to identify areas that require improvement. One useful tool for this is an internal carrier scorecard.
If a carrier is not meeting the customer standards, procurement teams can look for alternate solutions. CDMs can put lanes out for bid or negotiate with already contracted carriers for better rates. If a more suitable solution is available, procurement teams can restructure the hierarchy and replace carriers as needed.
Developing a strong procurement strategy can be challenging. Finding and qualifying the right carriers to run customer freight is only the first step. CDMs and logistics managers must always be on the lookout for more carriers or more lanes for carriers to handle, as well as continually improve the supply chain. Having the right carriers is vital to every supply chain and a strong procurement strategy ensures customers receive the very best.
Supply chain management, today, thrives on connectivity and a robust network of interrelated businesses working toward a similar goal. Companies working alone, today, struggle and often miss out on the synergistic advantages that a strategic logistics network provides. Advantages like cost savings, greater opportunity and success, and a symbiotic relationship can give companies the edge they need to succeed in the modern business climate.
One of the top advantages a company can achieve through a strategic logistics network is cost savings. Some simple ways to save money are:
Contract the Suppliers
Adding dedicated options to one’s strategic network is a win-win; a dedicated supplier can be cheaper and easier for the customer, and it is also beneficial for the supplier. One of the chief suppliers in supply chain management are the carriers. Contracting carriers can:
• Guarantee certain rates for a certain time and market fluctuations are not as impactful.
• Can help ensure availability, especially when there are fewer carriers working. This is a benefit for carrier and customer alike: Customers are able to move their freight, and carriers are guaranteed work.
• Make repeating business simpler. Carriers can forecast upcoming load schedules, plan advantageous round trips, and can save themselves and their customers time and money.
It Is Cheaper to Buy in Bulk
Hiring a carrier one time can be expensive, but once the carrier and customer get familiar with one another, loads are easier to replicate. Doing repeat business can:
• Help establish trust between both groups.
• Build social capital in a way unfamiliar carriers cannot.
• Incentivize discounts and superior customer service. Carriers can afford to win and lose a few times on loads and they can make up the difference in the long term. If there is no long term, they will have to be firm in their pricing.
Do Not Put All the Eggs in One Basket
Especially in logistics, strategic networks provide options. Even with contracts, suppliers can fail to perform; so it is a good idea to find backup options. Find a few carriers and build a hierarchy of similarly priced providers that can help meet demand if needed. Especially for overflow or emergency situations.
Better Success and Greater Opportunity
Having a strong strategic logistics network offers companies better chances for success and more opportunities for growth. These networks can grow and assume more challenges because they have the right people in the right place at the right time – consistently.
The right people:
• Outwork others – In supply chain management, carriers might outwork each other by taking more loads.
• Meets needs – A supplier may meet a customer’s needs by manufacturing and shipping more product last minute.
• Have the right connections – 3PLs have access to carriers and customers and can connect the two groups to benefit them both.
The right people benefit strategic logistics networks because they act like puzzle pieces that seamlessly form a successful overall layout. Having the right people can make a strategic network successful, however, having the right people out of place can still cause failure.
The right place:
• Can be literal and mean physically (e.g. shipping or receiving location, drivers are nearby, etc.)
• Can be more figurative and mean the size, focus, and speed of a company.
Both are very important for a strategic logistics network.
The right time:
• Have the right infrastructure in place when needed.
Most importantly, strategic networks need its components to consistently perform well to be most effective. Companies that succeed every once in a while, are not going to be able to grow. But those that consistently outperform will be able to grow and add other key pieces to the network.
The strategic logistics network is a symbiotic relationship between two or more companies built on trust between them. Working with one another can produce a synergy that helps them all achieve more. Companies working without a strategic network will not get to benefit from the reliability, personal care, and favor companies can gain from each other in a strategic network.
• Customers and suppliers need to be able to count on one another to succeed.
• Customers need to know that suppliers can handle projects when needed – especially in supply chains with limited resources, last minute requests, and difficult orders.
• Suppliers also rely on customers to purchase goods and services in slow times.
Strategic logistics networks are made of strong teams that come through during both critical and non-critical times.
• Companies working together consistently get to know one another and can go the extra mile to meet each other’s needs.
• Customers will award more loads to carriers that they know and trust.
• Carriers will often prefer loads for customers they know as well.
Interconnectivity is key to making businesses thrive today. Companies working together in a strategic logistics network provides many benefits that lone wolf operations cannot match. These networks provide cost savings, more opportunities for growth, and symbiotic relationships that drive success. These are serious advantages and are a way to stay ahead in modern business climate. The old saying is correct, “it’s not what you know, it’s who you know,” and strategic networks are who companies know.
A company’s supply chain is an integral part of bringing their goods or materials to market. Supply chains are the complex network of hundreds of tiny variables of shippers, carriers, warehouses, receivers, and information working together to move a product from the manufacturing floor to the customer’s door. Supply chain management professionals (supply chain managers) oversee these variables and help them achieve success by mediating between supply chain stakeholders, facilitating shipments, and helping reduce supply chain costs to keep their customer’s shipments going.
Mediating Between Stakeholders
The term Supply Chain Management is used broadly for many logistics professionals’ positions, but, most commonly, it refers to a person who mediates between different supply chain stakeholders. For instance:
SCMs offer their customers a wide variety of services.
• Point of contact: SCMs are account- specific, are trained on their customer’s accounts and contract, can communicate those requirements to other stakeholders, and are who the customer reaches out to for service or feedback.
• Customer advocate: SCMs often work for a third party but will represent their customer and the customer’s wishes to other stakeholders in the supply chain.
• Gatekeeper: SCMs are usually the first contact outside stakeholders make when trying to receive information from the customer and can handle the majority of questions and minor issues.
3PLs & Carriers
It is most common for SCMs to work for 3PLs and have specific customer accounts they service, but sometimes SCMs work with carriers themselves.
• Point of Contact: SCMs are the direct point of contact a 3PL or carrier will have with a customer.
• 3PL/Carrier Advocate: SCMs represent their employer to their customers. They are able to voice questions and concerns to the customer and also represent or defend the 3PL/Carrier’s actions for various situations.
Takeaway: SCMs work in the interest of multiple parties and aid the supply chain by being the bridge between the various parties.
SCMs are vital to the supply chain because they facilitate loads for their customers. Customers submit load requests into the transportation management system or to the SCM directly, and the SCM is responsible for seeing that it is done.
They operate by working with both day-to-day issues like
• Creating load tenders
• Distributing information up and down the supply chain
• Answering routine load questions
and big picture issues like
• Developing planned routes
• Working with customers on budgeting and compliance issues
• Developing necessary corrective action plans
Takeaway: SCMs are vital to the supply chain since they inform their stakeholders of what needs done and make sure it is done the right way.
Reduce Supply Chain Costs
SCMs can help reduce supply chain costs in several ways. They can:
• Monitor historic load rates and current market trends to determine if loads are priced correctly
• Review assessorial charges and determine if the charges are merited
• Reduce production downtime for their customers by properly planning loads and thoroughly following the loads’ progresses
• Assist other teams in developing cost savings network of contracted carriers, carrier hierarchies, planned routes, and efficient shipping plans
• Mediate between their customer and their company for budgeted lanes
Takeaway: SCMs are vital to the supply chain by saving their customers money by thoroughly monitoring and eliminated costly disruptions from individual loads as well as monitoring individual lanes as a whole and comparing it to set budgets.
A company’s supply chain is integral for bringing products and materials to market, but supply chain managers are vital to operating supply chains. SCMs mediate between various stakeholders to bridge the professional gap and ensure the correct information is passed up and down the chain. They facilitate their customer’s instructions to their teams and follow the shipments through to ensure they are completed as instructed. Where possible, SCMs reduce costs to their customers’ supply chains. Without SCMs, customer supply chains grow exponentially more complicated and the complex network of facilities, carriers, and information would face constant gridlock – preventing them from going.
- EFFECTIVELY MANAGING YOUR SUPPLY CHAIN
- CONTINUOUSLY IMPROVE THROUGH LEAN MANAGEMENT AND SIX SIGMA PRINCIPLES
According to US Bureau of Economic Analysis, the United States logistics market spends almost $1.2 trillion per year in transportation, warehousing, and administrative tasks; and that number is growing annually. Hundreds of thousands of logistics managers are tasked with daily managing these warehouses and supply chains, and it can be a daunting task. Companies today face higher demands for full capacity output and Just-in-Time (JIT) lean shipping principles while still remaining flexible to face freight deviations. To stay relevant, effective logistics managers need to understand what each of these demands are and understand ways to balance them to meet all of their stakeholders’ needs.
Today’s market is rigorous and demands that manufacturers and logistics managers achieve full capacity to keep up with the competition. To achieve full capacity, logistics managers need to know what it is and what it looks like. Capacity can be defined as the maximum output that can be generated from a company in terms of their physical assets like people, machines, or factories, or in terms of their actions like services or processes.
It is essential for manufacturers and logistics managers to work together to find a solution to achieve capacity and effectively meet customer needs. Some things they can do to be successful include:
Management Must Invest in Their Employees:
• Companies must make sure their employees can correctly do the jobs that need done.
• These employees need to be well-trained experts in their jobs.
• Management needs to take an active role in their employees’ training to ensure it is done thoroughly and correctly.
Employees Need the Necessary Equipment:
• These could be operational machinery, the correct computer software, or higher quality components.
• Using broken or outdated equipment can be dangerous and costly for companies.
Have the Correct Facilities to Do the Job:
• Companies require the correct facilities to complete manufacturing a product in or storing the equipment to complete services.
• Manufacturing plants require enough space to make the products, move the products around, and ship them out.
To have all of these components together requires a plan.
The popular adage, “Failure to plan is planning to fail,” exactly sums up the importance of planning in business. Planning is arguably one of the most essential functions to a company’s success as nearly every aspect of business must be planned before work is to be undertaken in order to eliminate waste and confusion.
What must be planned:
• Nearly every aspect of an operation must be planned in order to succeed – who, what, when, where, why, and how of each operation to make sure that each task has all of the requirements needed to succeed.
• Planning allows management to budget and allocate all of the resources necessary so that the work can be completed the way the customer needs it to be done.
When must planning take place:
Plans can be made for:
• Large scale operations – often require months of planning before undertaking a project
• Day to day processes – often made during a process
Plans to either refine a process or to have it continue it the way it is, often take place after launching the process.
Some operations are more crucial to plan than others. Customers have different requirements for different products, and that can dictate how the plan is developed and implemented. In logistics, each product has its own particular challenges and supply chain management professionals must account for each of them. One of the strictest planning types for logistics is Just-in-Time shipping.
Just-in-Time is a lean-theory shipping method that produces products just in time for when the receiver needs them. Neither raw materials nor finished products are warehoused for long and time is of the essence when shipping. It is highly efficient, but is also very challenging. Planning is vital and all of the functions that make up a supply chain need to be synchronized to be successful. Planned correctly, JIT saves considerable amounts of money from storage and warehousing as well as assessorial charges like detention. There are a few things that shippers and receivers need to do to be successful with JIT shipping.
Plan the Product Ahead:
• Forecast the product replenishment – Suppliers need to know when their customers are running low on a product or component.
• Have the product ready to ship – Once shippers are aware of when their customers need products, they need to be sure those products are ready to ship.
• Have the carrier in place – Shippers need to get a carrier in place and have the freight ready to ship when the carrier arrives.
• Have the loaders in place – Shippers also need to have the staff prepared to load the freight on the truck when it arrives.
Plan the Transit Ahead:
• Often, JIT threatens down-time and non-operational manufacturing lines.
• Shippers need to be aware of how hot the freight will be and know how much “cushion” or flexibility to provide – so that the freight does not arrive too soon and sit on the dock, nor arrive too late and cause a line-down.
Plan the Carrier Ahead:
• Shippers need to schedule the freight shipment in advance. (Either with a carrier or 3PL)
• They need to prepare the loads with lead time to account for drive times (with ELD mandates and HOS breaks), inclement weather, heavier traffic, vehicle requirements, and in anticipation for the receiver’s delivery schedule.
• They must give the carrier a chance to plan their drivers. Carriers must plan ahead in order for drivers to arrive at the manufacturer on time.
The more notice the better can help carriers be prepared and offer better shipping rates.
Have Everything Ready for the Driver:
• Have the product and paperwork ready for when a driver arrives.
• Delays in loading and unloading are often some of the largest concerns with JIT shipping.
• Properly staging the freight can help move drivers in and out quickly and relieve backups.
• Having the freight and paperwork ready can help loaders verify the shipments and not incorrectly load the freight or confuse the paperwork.
Once manufacturers have all of these aspects in place they can be successful with JIT shipping. However, no matter how carefully plans are made, they often go awry. Shippers need to account for flexibility for freight deviations, even in JIT shipping.
Flexibility in Freight Deviations
No matter how carefully planned loads are, things can inevitably go wrong. Things that cannot be planned for like heavier traffic, weather, or sudden vehicle maintenance can cause immediate issues that can halt JIT shipping and cause logistics managers to scramble to find solutions. When being lean, shippers need to factor in a little flexibility for setbacks. Shippers should allow for possible delays when forecasting freight needs and scheduling loads. Do not wait until the customer is empty to send more freight, and also have a backup plan if there is an issue.
Backup plans could involve shippers:
• Exclusively booking freight with carriers that have multiple vehicles and drivers. Internal recoveries often work best.
• Making sure the assigned carrier is able to sign an interchange agreement that allows another carrier’s tractor to haul that trailer to its final destination in an extreme situation.
• Having replacement carriers available if the first carrier cannot handle freight.
• Making sure that product can be supplied from another source. Some shippers will have an off-site warehouses or multiple production facilities that can make up the differences in freight deficits.
Even with a backup plan in place, shippers should not plan their shipping with no freight flexibility.
Delays often happen in supply chain management and effective logistics managers try to account for them.
• Drivers are often detained at previous stops
• External factors like Inclement weather or government regulations often cause delays
Shippers should plan for delays when scheduling their shipments. They should budget time in each shipment for delays and budget money for assessorial charges like overtime for their workers. Despite the best laid plans, things inevitably go wrong. That is why flexibility is key.
Effectively managing supply chains can be a daunting task. Hundreds of thousands of dollars are constantly on the line. Logistics managers need to ensure that their companies are working at capacity to keep their customers well supplied and satisfied. Achieving capacity requires proper planning. This planning can be long or short term and must involve shippers’ staffing strategy, manufacturing strategy, and shipping strategy to allow for the highest output while maintaining cost saving measures like JIT shipping. Even with the best planning, issues occur and logistics managers need to allow for flexibility in their supply chains. Logistics managers must be able to overcome these challenges to meet their stakeholders’ needs. If not, the stakeholders will find a provider that will.
Effective logistics managers are always looking for ways to improve their supply chains. In their search, many come across terms like “lean” or “six sigma” and read how these principles saved other companies hundreds of thousands of dollars. They may ask, what are lean management and six sigma principles? or how can I use these principles with my supply chain to make it operate more efficiently as well as save time and money?
What is Lean Management?
Lean management is a set of principles directed to eliminate waste in an organization. Waste, for business, is commonly defined as any activity that does not add value. The American Society for Quality provides a helpful list of eight types of waste businesses most often deal with, using the acronym DOWNTIME: Defects, Overproduction, Waiting, Non-utilized talent, Transportation, Inventory, Motion, and Extra-processing. Each of these aspects are common to business and are areas effective logistics managers can improve their supply chains.
• Defects – These can be flaws in products or mistakes made in other processes.
• Overproduction – Logistics managers do not need too much product on hand, only what the customer needs.
• Waiting – this can affect nearly every step of supply chain management. Logistics managers should work with strict deadlines and operate with other companies that are able to meet them.
• Non-Utilized Talent – these are knowledge, skills, attributes, or services that either company employees or vendors possess that logistics managers are not using that would make the supply chain work more effectively.
• Transportation – In logistics, trailer space is often what is wasted. Not enough product is shipped, or the wrong product is shipped, but the opportunity to move the right product is gone.
• Inventory – much like overproduction, having too much inventory on hand can be an issue.
• Motion – especially in warehouses, is critical.
• Extra-Processing – this is adding more value to a product or service than the customer requires. This could include unnecessary details or features that the customer did not ask for or want, that takes time away from making the product or performing the service the customer wanted.
After a company achieves these lean principles, quality leaders at ASQ and others advise that they must extend this concept through their entire supply chain to reach their full potential.
What is Six Sigma?
Six Sigma principles are a data-driven approach to problem solving and are aimed at eliminating defects in systems. They look to reduce process variation and increase process control, use teams for well-defined projects, and focus on methods like the DMAIC and DMADV processes. Logistics managers can apply these principles to make their supply chains more efficient.
Reduce Process Variation and Increase Process Control:
Making sure everyone is working the same way.
• Standardized TMS – Logistics managers should have a system that can accept their customers’ orders, hire carriers, manage loads, and process follow up (e.g. billing, auditing, and document transfer).
• Each party working in the same system, causes less communication confusion, keeps the system is easier to update and maintain, and ensures the parties work with the same information.
Use Teams for Well-Defined Projects:
Whenever a task, like continuous improvement, is needed, Six Sigma directs is practitioners to develop small, qualified teams to undertake the job.
• They are usually led by a quality professional, like a “Black Belt” certified member
• They can work on the project on a part-time basis (by using the Team Method) or full-time basis (using the Kaizen Event Method) to blitz the project and complete it immediately.
DMAIC and DMADV:
These are common methods used for problem solving or process creation that logistics managers can use to improve their supply chains. DMAIC (Define, Measure, Analyze, Improve, Control) is primarily used for improving existing processes, whereas DMADV (Define, Measure, Analyze, Design, Verify) is most often used for new processes or existing processes requiring major improvement.
The first 3 steps are the same in each method.
• Define is the step where the problem-solving team needs to define the problem.
• Measure is the step where base measurements are taken so the process improvement team knows what gets changed.
• Analyze is the phase where the various process inputs are evaluated.
• Improve, Control – Improve is where solutions are made, tested, and evaluated, and Control is where the changes are fully implemented. Following Control, in the DMAIC process, the process can be repeated if further issues develop.
• Design, Verify – Design is where processes are created, and Verify is where the processes are tested and ultimately implemented.
These methods are extremely useful when dissecting a complex problem and determining the correct solution.
How Can These Principles Save Time and Money?
Lean and Six Sigma principles can save logistics managers time and money in several ways.
• Each element of waste discussed in Lean Management costs money.
• Be proactive in improvements. Logistics managers should constantly check their supply chain health to see if they are developing weaknesses.
• Logistics managers can save time and money using the DMAIC method to determine if their processes are performing correctly or not.
Supply chains are complex, and logistics managers are often looking for ways to improve them. Utilizing principles like lean management and six sigma are excellent ways for logistics managers to measure where their supply chain currently is, and develop strategies to improve it. There is no exact formula that will improve every company, but, following principles like lean management and six sigma can guide effective logistics managers on how to save their companies time and money.
Efficient, effective, sustainable – these are words one might expect to hear describe a hybrid automobile, but could they describe the modern warehouse? Businesses, today, are more concerned than ever about the quality and condition of their suppliers’ storage facilities. Consumers, as well, are pushing for greener initiatives from the companies they purchase from – causing many companies to take a deeper look at their supply chains. What makes a warehouse efficient, effective, or sustainable? And how can logistics managers make changes to their facilities to meet the ever-growing demand for efficiency and environmental responsibility?
Experts describe hundreds of ways to make the modern warehouse more efficient, but most of these ideas fall into four main categories: Organization/Cleanliness, Inventory, Systems, and Technology.
Clean environments are safer and workers can be more productive.
• Reducing clutter and eliminating traffic barriers will reduce safety hazards, product damage, and improve both worker and product mobility as well as help improve inventory accuracy and make the shelving units more accessible.
• Many efficient warehouses will organize their stock keeping units (SKUs) in zones based on pick type, like items, pick frequency, or order profile.
• SKUs should be labeled.
• Warehouse planners should use vertical shelving and storage racks to maximize space.
• They should also provide as much room for shipping and receiving as possible.
• Warehouse performance should be measured to ensure maximum capacity is reached.
Logistics managers need to keep in mind the amount of available storage space, lean inventory practices, managing safety stock, and also having sufficient on-hand products for day to day operations.
• Efficient supply chains stay lean by only keeping the necessary amount of products on-hand.
• They must balance having limited SKUs on hand but enough available to meet customer demands at any time.
• Logistics managers analyze and monitor the numerous factors that determine how much freight to keep on hand and protect against supply chain disruptions.
There are several smaller ways efficiency can be improved through various systems including human systems, inventory systems, and movement systems through small, common-sense measures.
• Implement human systems such as more thoroughly training employees and giving them regular performance reviews with written steps for improvement. Another systems is a vendor compliance program to impose guidelines with consequences depending on vendors’ service evaluations.
• An inventory system involves classifying products and slotting them to make products easier to find and manage.
• Movement systems include walking or travel time for pickers or products on conveyor belts. Finding ways to walk less or to make picking easier to limit trips to a product slot makes warehousing much more efficient.
These advancements in tracking, data collection, and automation can cost time and money in purchasing and implementing the necessary software and hardware devices, but the benefits often outweigh the costs.
• Scanning technology has been around for much of the 21st century, but warehouses are now implementing it more efficiently for purposes like product tracking, warehouse mapping, SKU detailing and inventory, and data reporting.
• Robotic technology is a popular choice for manufacturers and warehouses for efficient product creation, movement, and inventorying.
The most effective warehousing companies will meet and/or exceed their customers’ expectations by completing customers’ sales orders, processing orders quickly and correctly, and partnering with the right logistics companies to deliver the products to the customers using the efficiency principles from before.
Effective warehouses will keep the right amount of stock on-hand – enough to meet customer request and sufficient safety stock in case of disruption.
• Warehouse managers need to forecast their customers’ orders and review previous loads to know exactly what they need to have on hand to not waste money or space with unnecessary product.
• The optimum stock level may change by season or by year, so it is imperative that warehouse managers constantly monitor and review the necessary stock level requirements.
Processing Orders Quickly:
This can be accomplished by utilizing the efficiency principles stated before combined with order fulfillment accuracy.
• Quick order processing requires warehouses to be clean and organized.
• They should have the right inventory on hand, the right systems in place to reduce unnecessary movement, and have technology in place to assist these functions.
Partner with the Right Companies:
It is essential for an effective warehouse to pair with an exceptional logistics team to ship their products to their customers.
• They must build or find a logistics team that can handle their supply chain management.
• They will provide options to meet special requirements and provide back-up options if any failures occur.
• The right logistics team will also find the best freight solution for the best cost.
Many companies today are searching for greener options for their supply chains. More and more companies are concerned that their supply chain management efforts minimally impact the environmental and are turning to warehouses that embody the same green spirit. One of the leading certifications for building sustainability is LEED certification.
What is LEED?
It is one of the highest standard sustainability certifications offered corporate structures like warehouses. The most scrutinized sustainable features LEED looks for include location and transportation, sustainable sites, water efficiency, energy and atmosphere, materials and resources, and indoor environmental quality.
Location and Transportation:
Warehouses cannot affect endangered species and must be close to large cities, ports of entry, or their customer base.
This refers to both the construction site and smarter, more energy efficient buildings and focus on preserving natural elements like vegetation and water, incorporating sustainable features into the building, monitoring resource consumption, and generating as much energy as it consumes.
LEED will monitor both indoor and outdoor water usage in areas like landscaping irrigation and restroom facilities.
Energy and Atmosphere:
Energy efficiency can be produced by operating with low voltage usage machines and turning off machines when not in use, and atmosphere efficiency can be produced by using natural lighting, turning off lighting or air conditioning when not in use, or incorporating specialized fan systems for air conditioning.
Materials and Resources:
LEED and other green certifications will investigate whether or not new facilities were built with renewable resources or are repurposing an older building, and whether the warehouses are using recyclable materials in their products or packaging.
Indoor Environmental Quality:
This aspect monitors how comfortable an environment is for the employees in areas like lighting, temperature, air quality, and compatibility with fixtures and resources.
Warehousing, today, is a much larger undertaking than in the past. Modern warehouses need to be clean and organized, have accurate and lean inventory principles, continually improve internal and external systems, and incorporate technology into their business, all while quickly and accurately fulfilling customer requests. Many warehouses today boast of these accomplishments, so customers look further to differentiate the competition by evaluating these warehouses’ sustainability and green initiatives. Not only must the operations be efficient, but the building and work environment must be efficient too. Sustainable practices are a key indicator to many customers that warehouse companies not only care about business, but also the future. It is this type of warehouse company, efficient, effective, and sustainable that customers are looking for today.
- SYSTEMS COMMUNICATE WITH CARRIERS AND SHIPPERS
- GATHER DATA, ORGANIZE, ANALYZE, AND DRIVE
Supply chain management and logistics jobs today make up seven percent of the total employment of the United States; and they are understaffed. Daily, logistic managers are hearing about driver shortages, fewer dispatchers, and reduced warehouse staff. Supply chain management professionals have conferred about possible solutions – reducing CDL licensing ages, offering more incentives, or rebranding; but none of these is bringing in the talent necessary to meet the ever-rising demand.
One promising solution the market is pursuing is technology. Technology can help fill the gaps in the workforce, ease the burden on the most strained segments of today’s supply chain, and even improve the performance of current employees. Automating mundane tasks can free up workers for bigger picture ideas and help companies meet the ever-growing demand of the marketplace. The question remains: where can automation technology step up today and assist shippers, logistics providers, and customers?
One of the most widespread technologies used by logistics professionals today is automated tracking. Created in the late 1970s, logistics carriers have been using GPS tracking for many years. Early technology was large, clunky, and expensive – making it out of reach from most users. That is not the same today. Today, the technology has become more sophisticated and automated tracking an absolute necessity in shipping.
• Often track freight with barcodes or RFID trackers embedded in advanced labels or responding devices.
• Can track parts, products, boxes, or batches through the development process with static or mobile scanners.
• The scanners process data and upload it into the warehouse management system to assist with inventory counts and warehouse mapping.
• Use modern automatic tracking methods to monitor shipments from start to finish.
• Track part numbers, parcels, shipments, or the truck itself.
• Their fleets often have GPS tracking responders in each of their vehicles that automatically notify dispatchers of driver positions.
• Owner-operators and 3PLs have access to other technology through EDI or other tracking programs like Macropoint or FourKites.
• These programs work off a driver’s cell phone to provide dispatchers updates at specified intervals or can provide them on demand.
• Have access today to know where their packages and shipments are 24/7.
• Can receive updates at checkpoints, custom intervals, or on demand.
• Many tracking systems offer general locations, and more sophisticated systems offer greater-detailed positions like city, street, or geographic coordinates.
Transportation Management Systems (TMS)
With the human capital crisis in logistics, many companies are turning to automated TMS systems to handle day-to-day tasks.
• Work with a variety of carrier options including automated TMS systems.
• Can post loads and automatically be paired with nearby logistics options with a quote on standby.
• These automated systems offer direct contact to the carriers, provide smart contracts that must be executed to receive payment, and provide cloud storage for paperwork and load history.
• The apps are easy to set up and use.
• Have automated, online TMS systems, similar to “Techno-brokers”
• Shippers can submit online load requests and be provided a trusted carrier option shortly after.
• These systems manage invoicing, tracking, and paperwork.
• Can use mobile apps that can be utilized anywhere at any time.
• Can submit shipment requests, receive load updates, process invoicing, and plan their logistics
• Have shorter wait times for answers and peace of mind knowing where the freight is and when it will arrive.
• Some logistics providers offer customized solutions that uniquely fit the customer’s personal supply chain management needs.
Robots in logistics – it is no longer science fiction. More and more supply chains are automating today with physical robots to take the place of workers.
• Manufacturers and package handling companies have been using robotic labor to complete repetitive, often precise, tasks for years.
• Now, several large retail warehouses are performing active tests and studies on fully automated, robotic warehouses that use machines to perform many of the mundane tasks workers would perform (e.g. loading and unloading trucks, stocking shelves, picking and packing items, and stacking freight on pallets)
• Robotic facilities can solve the warehouse labor shortages by requiring fewer employees to run and maintain them, produce steady output, and mitigate much of the financial costs that human workers incur for wages and benefits.
• Facing serious driver shortages.
• Increased government regulation combined with a difficult lifestyle makes the driver job less appealing for workers today.
• Automated options like self-driving trucks could be the solution.
• Many logistics providers are looking at drone or small robots for last-mile delivery.
• Instead of current options like USPS or ride-share delivery services, customers are looking for faster, more efficient delivery methods, and robots may be the solution.
• Drones and small robots are perfect for delivering small, personal-natured items – especially over short distances.
• Retailers will dispatch drones from local hubs going short distances to reduce wait times.
• This technology is currently limited, but new strides are being made each day to improve the service.
Logistics professionals in each stage of modern supply chain management are wondering if technology will be the answer to the labor shortage their industry faces, today. The modern logistics market is full of technological advances in areas like scanning, tracking, warehouse management, transportation management, mobile apps, and robotics that can help fill in where workers are not available. With the market constantly expanding, logistics professionals need all the advantages they can get.
Transportation management systems (TMS) are one of the most essential tools for any logistics management team. These systems hold the data that these companies need to plan loads, facilitate freight movements, billing, and document storage. With all that these systems do, it is vital that they communicate with all logistics stakeholders – no matter what role of the supply chain they fill.
TMSs, today, are where different parts of the supply chain meet; the first place they meet is in planning. These systems need to allow shippers, carriers, and intermediaries to plan upcoming loads and help the parties coordinate the loads with each other. Each party is involved in a separate part of load management than the others and each has separate objectives from one another; so, an effective TMS will be able to show the data that each group needs. It should also be equipped to communicate that data to each party in a relevant and meaningful way. Once the load is set up, TMSs need to communicate how the load is being facilitated.
After the load is planned, the TMS needs to communicate different aspects of the load while it is in progress. Before a load is picked up, TMSs should be able to communicate details like load pieces and weight, truck ETAs, pickup information (addresses, numbers, special instructions, etc) and/or driver information. The system should generate tenders that are clear and easy to read to keep from causing confusion.
Once the driver arrives, the TMS should record arrival and departure times to assist in detention and accessorial charge audits.
On the road, these systems should communicate updates like delivery ETAs and current positions. State-of-the-art systems might also track each driver’s hours of service or measure available remaining drive time.
At delivery, these systems should provide important details like delivery information, a document portal to submit proofs of delivery, and record in and out times at the receiver.
After delivery, these systems need to record the load history data for later review, store delivery documents, and provide a reference for load auditing.
Every load does not run perfectly, so an effective TMS should allow authorized users to edit the load details as necessary. However, the system should record these changes and report them to the appropriate stakeholders in order to keep everyone on the same page.
One of the largest points of contention between shippers and carriers comes down to billing and payment; this is why the modern TMSs require functions to communicate billing to both parties. As discussed in Facilitating, TMSs should already be recording crucial load data points such as in and out times, layovers, and other possible assessorial charges. Recording these data points in the TMS is a way for both parties to verify what actually happened with the load. Both stakeholders will have log books on hand to record when the drivers enter and leave, but the TMS should provide the most accurate picture of what went on. Once the charges are verified, they can be paid.
Not only should accessorial charges be reviewable, but the load invoice should be able to be processed in the TMS as well. Shippers should be able to upload their tender/BOL/invoice and the shipper can review it. The TMS should have clear, concise data to help each party audit the load and the two can agree to payment. Then, shippers can issue checks to the carriers.
Once loads are closed out and paid, they should keep the data in the TMS history for further review. Shippers, intermediaries, and carriers can look back on previous loads to see rate trends and compare those previous trends to current market analysis. In addition to rate history, TMSs need to keep document history on file.
One of the often overlooked, but also important, functions of effective TMSs is that they allow for document storage. Each load will have numerous documents involved with it – tenders, BOLs, PODs, invoices, proof of insurance, carrier packets, etc. Effective TMSs will be able to contain these documents and communicate them to each party as needed. Once a load is created in the TMS, the shipper or intermediary can send the carrier the load tender. A copy of that tender will need to be on file for review and auditing purposes later. Carriers receive the BOLs from the shipper and often have them signed at the receiver as a “Proof of Delivery (POD).” Shippers also need a copy of this to release payment to the carrier. Effective TMSs need to file all these documents in case of future audit or complaint from customers.
Communication is one of the most important functions in business, and the TMS is the essential communication tool for logistics managers today. Effective management systems need to have a wide range of communication to reach all parties of a vast supply chain to keep them all working with the same information. These systems require free-flowing, understandable data in order to plan loads, facilitate them, operate payment functions for the loads, and record necessary documents for future review. No matter what role in the supply chain, each user needs to be able to understand the vital management system.
Logistics managers are always trying to improve their supply chains, but sometimes wonder how. One of the best ways is to look at the load data. Companies may only ship or receive one or two loads a day or it could be hundreds. Each load is a single data point in a long trend line that needs to be recorded for analysis. Efficient and effective logistics managers will use these trend lines to discover strengths and weaknesses in their supply chains and use this data to improve. To establish these trends, though, logistics managers need to utilize their technology to gather and organize the data so it can be analyzed and drive the supply chain.
Technology today is sophisticated enough make collecting data simple – especially for logistics managers. Managers today can use tools like transportation management systems, EDI, and user input to collect their data.
• TMS – Modern transportation management systems automatically records transaction data and stores the data in their servers. These could involve load origins, destinations, carrier info, rates, etc.
• EDI – Electronic data interchange (EDI) gathers data, often automatically, like arrival and departure times, check calls, document transfers, load acceptance or rejection, on time pick up or delivery, and load counts.
• User input – Data analysts input data into the system in the form of notes, location updates, or carrier complaints as well as compiling that data into organized reports.
Once the logistics manager has compiled the data in the management system, they need to organize it. These reports are an effective tool that logistics manager need in their TMSs to help them evaluate their supply chains. Effective TMSs should include:
• Historic and Current Data
• Upcoming load information
• Sorting functions for data reports (origin, destination, dates, etc.)
These systems can compound their effectiveness by adding a visual component. Organizing data by graphs is a helpful way to display data and is useful when trying to determine long term trends. Like other data reports, these graphs should be customizable to show the data in which the user is interested.
Another useful function for logistics managers is the carrier scorecard. This is a program that:
• Compiles data for each carrier and establishes a grade to aid in carrier evaluations
• Often includes number of loads offered, number of loads accepted/rejected, on time pickup/delivery, total amount paid to the carrier, and carrier complaint index (how many, how many in a certain category, etc.).
• Can define data points by individual date, or time frame to help give a particular snapshot of a certain time.
Analyzing & Driving
After the data has been compiled and organized for use, it can be analyzed and evaluated. Data sheets can present information in a clear and easily analyzed way so users can identify or explain certain phenomena. These phenomena are trends. Trends are a pattern formed by the individual data points that indicate that status of a situation. Logistics managers often analyze data sheets looking for trends that define their supply chain management strengths and weaknesses. One way they identify and sort out these strengths and weaknesses is by establishing goals, expectations, and tolerances for each load.
• Load goals typically come from the logistics managing company and could be simple (e.g. deliver on time) or complex (e.g. use a particular carrier, at a certain cost, to deliver on time and under budget), but, they need to be clear and measurable.
• Expectations often come as a customer demand and offer little or no flexibility (e.g. customer budget on a load is “x” and any other costs will be covered by the logistics provider).
• Tolerances are concessions providers make to their goals to meet customer expectations (e.g. paying the difference of a higher cost carrier to meet customer demand and to build the business) or are the failures to customer expectations that are allowed before the customer finds a new provider.
After these standards are established, the logistics manager can evaluate load or carrier performance based on these standards as individual data points. Then, combining the data points and observing a trend, logistics managers can drive the supply chain to improve by making decisions that capitalize on the strengths and minimize or eliminate the weaknesses.
Discovering trends that improve the supply chain is a constant challenge for logistics managers. Whether a company gets one load a day or hundreds – each load counts. To make the decisions that drive the improvement, logistics managers need to look at each of these loads individually and all of the loads together as a trend. Each load is a valuable data point that can help managers make the complicated decisions, and the data must be gathered and organized into a readable format so it can be analyzed and interpreted. Then, these managers can make improvements.
Technology has revolutionized the way customers manage freight. Products can be ordered and purchased online, and the customer can follow the products from the shipper to their own doorway. Modern transportation management systems (TMSs) allow shippers, customers, and carriers both visibility and control of their shipments from Point “A” to Point “B” with active and automated functions, interactive portals, and auditing.
Active and Automated Functions
Modern TMSs provide visibility and control to customers, shippers, and carriers with the efficiency of automation and the personal touch of active teams. Today, automated features, like tracking, are nearly standard for shipments. [See AUTOMATION for more details] Not only can customers see where their freight is, but they can also receive other metrics in real time. They can see load prices, carrier information, weather, road conditions, seasonal information, volume trends, part numbers, and more – all from one interactive dashboard. Carriers can see load statistics including on-time percentages, accepted/rejected load statuses, and carrier scorecards. Many modern TMSs provide these data reports on-demand, so companies can review their service quality for commendation or improvement.
Most modern TMSs can automate many of their functions, but they still require staff support for total visibility and control. Active teams often help with:
• Finding or scheduling loads
• Answering direct supply chain management questions
• Finding up-to-the-minute data like truck position or status.
• Procuring documents
• Providing customer service
Customers can view and monitor both the automated systems and the support team through interactive portals in the TMS.
Many transportation management systems include various interactive portals for shippers, customers, and carriers to view and manage their loads. Customers and shippers can use these portals to:
• Submit load requests
• View current loads, future load plans, or load histories
• Make active changes to current loads
• Monitor a load’s progress through check calls
Carriers can also use these tools to:
• View their current load schedules
• Accept/Reject load tenders
• Update carrier information
• Submit check calls
• Look up other pertinent load information like pick up numbers, addresses, or load details
Each party can use these portals for interactive inquiries about their loads.
In addition to load management features, some portals also include logistics plan management or dock planning functions for customers to manage the freight on their docks. They can use the logistics plans to view and control pickup and delivery times and locations and the dock management to control the part numbers and pallets being assigned to each truck. They can actively manipulate order and ship lists as well.
Modern TMSs allow customers and carriers to manage and control documents directly on these sites as well. They can maintain vital documents like carrier contracts, updated insurance, or proofs of delivery. Also, carriers can submit load invoices to be reviewed and paid. Customers can review these invoices against their own internal billing sheets to audit the loads before paying.
TMSs today allow users to access and audit loads conveniently online. Auditing is necessary as approximately one in four freight invoices have errors. Common freight invoice errors include:
• Incorrect shipper or receiver location
• Incorrect mileage
• Incorrect weight
• Incorrect BOL number
• Unapplied discounts
• Wrong rate (often from incorrect detention or accessorial charges).
With modern software, customers can easily access these load details to match with invoices to make sure they are paying the correct amount to their logistics provider. They can also view historic loads to track booking progression, monitor the planners who worked on the load, monitor actual pickup and delivery times, and review rate details. Carriers can also use auditing functions to ensure their invoices match and also to see what they were paid on previous loads.
Technology has made it simple for shippers, customers, and carriers to view and control their freight. Modern TMSs make it easy for users to access them and get the exact information users need. Some systems have automatic processes that can manage each function of the TMS and others have active human support ready on standby at any time their stakeholders require. Most have interactive management portals for customers and carriers to maintain and update their load schedules and also to audit their invoices. Each individual transportation management system is unique, but technology has allowed them all to make it easier to follow loads from Point “A” to Point “B” and manage them afterwards.
Knowing the regulatory requirements for freight movement is more than just knowing the rules to a game. It is an understanding of and commitment to safety, security, and commercial measures while operating in the United States. These regulations can change frequently so it is important that shippers, carriers, and customers know them and be ready for them in order to not be in violation.
First, according to the FMCSA (Federal Motor Carrier Safety Administration), the overwhelming majority of rules and regulations regarding highway conduct for carriers and other service vehicles are designed for safety purposes. Laws like hours of service mandates, electronic logging devices, or commercial truck speed limits are meant to protect freight drivers and single-vehicle drivers as well. In 2016, approximately 475,000 large truck crashes were reported to the police. Of those reported, 3,864 of those crashes were fatal. Laws to limit large truck speeds to 60 mph are reported to help prevent over 500 crashes per year.
Knowing the regulations is crucial to safe and legal truck operation. When drivers know the regulations for hours of service, they will be more cautious to uphold them and not take chances of becoming over-tired or losing control of the wheel in their sleep. ELD mandates try to accomplish the same goals with electronic proof of compliance. Other regulations, like speed limits, are also necessary safety precautions to protect merging traffic or ensure trucks have adequate braking ability.
Next, knowing regulatory requirements can help promote freight network security. It is common in border areas for trailers to be used to move illegal persons or substances across the border or to transload illegal freight to a trailer while in the US. Law enforcement entities, like the border patrol agency and state police offices, are trained to spot vehicles that are not in compliance with freight regulations. Regulations like:
• Unlocked trailer doors
• Damaged trailers
• Low riding trailers
These are telltale signs that the freight has been compromised. By following security regulations, such as locked and sealed trailers, shippers and carriers have far less chance of their freight being compromised.
Following regulations can build a reputation for companies. Those Companies that promote regulation adherence and supply chain security can be given freight security certifications. Freight security certifications, like CTPAT (Customs Trade Partnership Against Terrorism) are partnership agreements between logistics companies and the U.S. government to protect supply chains and uphold regulations. Companies with these certifications have many benefits that companies without them do not.
Not following regulations can build a negative reputation for companies. Each MC number is associated with a safety score that other companies can check and review for hiring purposes. Companies that ignore security regulations are given negative scores that reflect on that safety score. Many companies have standards that prevent hiring companies to move freight if they are below a safety score threshold.
Lastly, some commercial benefits of knowing regulatory requirements include:
• Having stronger safety scores – many shippers and 3PLs have standard safety score requirements that must be met for employment. If carriers are found in violation of those requirements, it limits their work opportunities.
• Retaining a commercial driver’s license or MC number – drivers in serious regulatory violation are in jeopardy of losing their licensure.
• Having access to specialized certifications – certifications like ISO 9001 or CTPAT require specific regulatory adherence and can involve extremely thorough vetting for approval. However, when a company has met these requirements, they are offered privileges other companies are not. CTPAT certified carriers have perks of fewer US Customs and Border Patrol searches, front of the line inspections, shorter border wait times, and access to FAST (Free and Secure Trade) lanes. Companies without these types of qualifications are subject to much more intense investigations during border crossings.
Being Ready for Changes
Regulation changes do not happen overnight. They often come as a result of a long study and are implemented after an extensive roll-out period. For instance, the ELD mandate was passed in December 2015 with final implementation required by December 2019. This time frame gives shippers and carriers time to prepare how they will ship and run their freight.
Other changes are on the horizon. Some of the major changes for 2019 include:
• Full ELD Implementation
• Hours of Service Reform
• New Minimum Wage Rules
• New Drug Test Rules
• California-specific Rules
Federal organizations, like FMCSA or USBP, can provide email updates for policy changes and other more in-depth information can be found on their websites. Being aware of changes allows companies to prepare for changes.
Some changes, like the ELD mandate, affect the entire supply chain. Transit times have increased, fewer drivers are available, and prices increased. Knowing the changes and when they are implemented are important to make sure shippers and carriers are not operating illegally and are not liable for fines or license suspension.
It is important for logistics companies to know the regulatory requirements. Companies that operate according to the regulations are safer and more secure; and their actions support trust in the commercial environment. Knowing and being ready for regulation changes is not a game – it allows companies to operate more smoothly with one another, within the confines of the law, and prevents those companies from incurring fines or losing their license.
Supply chain strength is a constant challenge for logistics managers. With limited drivers, customer demand constantly changing, and federal mandates being implemented, logistics managers need a way to safeguard against growing supply chain threats. One of the best safeguards is supply chain flexibility. Supply chain flexibility most often refers to a way in which a shipper meets their customers’ demands. Flexible supply chains can meet their customers’ ever-changing needs and is able to use multiple options meet those needs. Flexibility is a blanket term that logistics managers use to cover both macro flexibility and micro flexibility.
Macro flexibility is the ability to make large changes to a supply chain in an overall, big picture type of way. These changes typically affect the entire supply chain and involve supply chain components like:
• Carrier contracts
• Logistics plans
• Federal Regulations
Effective logistics managers need macro flexibility to make significant changes that eliminate threats throughout the entire supply chain. Significant threats often include:
• Contracted carriers or 3PLs who are consistently not meeting on-time-delivery
• Costs rising significantly
• Consistently not meeting production schedules
• Any other large-scale problems occurring that cannot be tolerated for long
Shippers must monitor these components for weaknesses and be ready and able to make changes when necessary. Upper management must develop protocols for logistics managers to follow to when it is evident that there is a weakness in the supply chain that must be fixed.
Protocols are established process guides that workers can use to define problems and develop solutions. They could be standards that must be met in order to maintain a contract with the shipper (certain number of loads accepted, on time delivery percentage, carrier scorecard score, etc.), output capacity standards, or procedures for implementing or replacing vendors (suppliers, carriers, 3PLS, etc.).
These protocols are the blueprint for how upper management expects logistics managers to operate to keep the supply chain running efficiently. If a portion of the supply chain is not meeting the set standard, macro flexibility protocol calls that that portion be evaluated and changed. These changes could be to find better carriers, more cost effective routes, or develop better contracts with existing carriers to improve overall service.
Macro flexibility is not only response to poor service but could also be a solution for rapidly expanding or contracting supply chains. Customers often change demand and shippers cannot always anticipate those changes- especially as the market increases in size and scale. Shippers must be ready to adapt their supply chain management practices to meet those changes. That could be making more or less of a product or change the way it is shipped to the customer. The key to macro flexibility is to be proactive. Effective logistics managers study the marketplace of their customers to gauge demand and quickly adapt to supply it. They continually workshop better route or carrier to handle the freight. Being ready for change, even large change, makes logistics managers effective and flexible.
Unlike macro, micro flexibility is flexibility for logistics managers in small, day to day, actions. Micro flexibility allows supply chains to handle small or short-term conditions that affect the supply chain. These conditions could include:
• Late Carriers
• Price spikes
• Lack of available carriers
• Anything that temporarily disrupts the supply chain
Effective logistics managers should have the flexibility to find another option at late notice, or plan for sudden issues.
Sudden disruptions are sometimes unavoidable, but having options gives logistics managers flexibility to resolve the disruptions with rapid solutions and still meet customer expectations. These solutions require a proactive approach to be successful. Proactive supply chain management protocols will often involve:
• Backup carrier solutions
• Backup freight solutions
• PU/Delivery flexibility
These solutions will not be able to solve every problem but having solution protocols in place should relieve the majority of the issues. They allow logistics managers to not focus on the supply chain disruptions but on customer satisfaction.
Since they were announced in December 2015, ELD mandates have been at the forefront of many logistics managers’ minds. The new regulations fundamentally changed the US logistics landscape and require significant flexibility and protocol to keep costs low and remain efficient.
What are ELDs?
• ELDs, short for Electronic Logging Devices, are small computers that each over-the-road truck is outfitted with and automatically log drivers’ hours of service.
• These logs are stored digitally and cannot be manipulated.
• This type of federal oversight has changed the way drivers drive, load freight, and more importantly rest.
What is the big deal?
Before the mandate, drivers would often quote drive times that exceeded their hours of service in order to make on-time-delivery. This was often unsafe as drivers were not getting the rest they needed. Logistics planners based their shipments off these times and there was a ripple effect through the entire supply chain.
What has changed since the regulations have been implemented?
Since 2015, with the new logs, everything must remain above board or drivers face heavy penalties from law enforcement.
• When the new regulations were implemented in December 2017, the restrictions meant more law enforcement inspections of log books and higher penalties for drivers in violation.
• Many drivers left the industry rather than change.
• Freight transit times increased.
Now, with a strong economy, more shipping, and fewer drivers, logistics managers are being forced to be flexible and change how they operate their supply chains.
What can logistics managers do?
Logistics managers need to be proactive to resolve ELD conflicts by establishing macro flexibility protocols that prepare them for the changes. Protocols like improved communications can fix many supply chain management weaknesses ELDs caused. This communication includes:
• Product planning – Products need to be ready sooner to compensate for the extended transit time.
• Shipment planning – Plan shipments in advance to give shippers time to prepare the freight.
• Carrier planning – Allow planners time to find carriers, give them notice of upcoming loads.
• Dock management – Give workers specific processes and standards to move freight on and off the docks quickly to maximize carrier drive time and to protect the freight.
Not only do logistics managers need macro flexibility protocols, they need micro flexibility protocols as well. Some protocols involve:
• Having back-up options available that can meet new transit times or have more drivers that can run the freight.
• Work with communicative carriers or 3PLs.
• Evaluating the amount of safety stock on hand to make sure they can meet the necessary demand.
Both types of flexibility did not develop overnight. Protocols take time and planning to be created and implemented to make sure the best options are in place. With the ELDs, and fewer drivers available, more companies are looking to dedicated options instead of looking for single carriers loads. Plans need to be made on where products are made and shipped from to make it to the customers on time. Once the plans are made, they should be recorded and trained to the logistics planners so they are able to follow the set protocol and make the supply chain run efficiently.
Higher product demand and lower carrier supply coupled with more regulation has cemented the necessity for supply chain flexibility. Shippers can no longer ship at historic levels, but now must be proactive to study what their customer wants, and tailor their supply chain to meet the demand. They need to have macro flexibility with various carrier contracts, routes, and logistics plans so the big picture is well executed. But – they cannot forget the small day to day operations that make up the big picture, and micro flexibility is necessary to keep these running smooth. Customer demands are constantly changing and flexibility is key to meeting these needs.
Now is an exciting, but challenging, time to be in logistics. Production and shipments are up, but at the same time, driver numbers are falling. There are not enough workers to meet the demand. Companies looking to move their freight are starting to realize that they may need help. That is where 3PLs can assist. Companies working independently of 3PLs will expend higher amounts of time and money operating their supply chains than those who pair with 3PLs. Modern supply chains are a vast network of shippers, carriers, warehouses, routes, and customers and many companies do not have the resources to maintain that network in-house. 3PLs do.
3PLs are a customer service industry. They operate according to what the customer needs, and can offer the customer greater capacity than what the customer can for themselves. For instance, 3PLs offer a wide network of carriers. 3PLs have a nationwide database of trusted carriers that can meet customers’ specific needs. They have a tribal knowledge of carriers and have developed relationships with them. They know where carriers are and where they want to go; so the right carriers can be paired with the freight the shippers need moved. 3PLs know where to find specialized options as well so customers can receive exactly what they want.
Not only can 3PLs find carriers, they can manage the shipments as well. Before the shipment, 3PLs can:
• Take load requests
• Create shipments
• Build load tenders
• Assign carriers
• Follow the loads through pickup
During the shipment, 3PLs:
• Have superior tracking ability
• Can follow a truck from accepting the load until it is delivered
• Offer customized update options for their customers depending on each customer preference.
After the shipment is complete, 3PLs:
• Handle document processing
• Handle payment
Another service many 3PLs offer is user-friendly, innovative technology that can be personalized for each customer. Tools like advanced transportation management systems can be tailored to meet customers’ specific needs depending on how hands-on they want to be. The most sophisticated systems offer online dashboards for customers to input load requests, manage any updates or changes to their loads, monitor tracking updates, manage invoices, and store documents. Customers can manage these loads themselves or can work with a customer service professional to manage these for them. Other tools 3PLs provide are automatic updates through tracking software, and electronic data interchange (EDI) for data transfer. These tools help keep the customer informed of their load’s location and gives them the ability to facilitate their loads quickly and easily.
Lastly, 3PLs provide their customers the supply chain flexibility that they need to function properly. Supply chain flexibility can be viewed in two ways: macro and micro. Macro flexibility for supply chains are the big picture changes needed to operate a supply chain and micro flexibility deals with day-to-day functions. Each type is important and both can be supplied to the customer by 3PLs. [For more details see ESTABLISH FLEXIBILITY AND PROTOCOL]
3PLs can save their customers time and money; and one of the largest savings opportunities is procuring carriers. They save their customers time by:
• Utilizing deep carrier networks
• Pairing carriers on favorable lanes
• Finding options for both single and contracted loads
3PLs can save their customers money by:
• Matching carriers with loads that are beneficial for them
• Contracting carriers on various lanes
• Finding the best option available
• Offering service specific to the customer’s needs
Not only will customers save time and money with integrated carriers; they can also take advantage of 3PL’s established logistics networks and services. Customers can take advantage of state-of-the-art facilities and firmly established services using 3PL cross docks, warehouses, and freight hubs. They allow customers to save money by only paying for the space they use. They offer similar services for transit, such as LTL, that only charges customers for the place in a truck their freight occupies and not the entire trailer. For greater efficiency, most 3PLs offer full truckload, expedite, and air charter options.
Lastly, customers do not need to spend time or money developing the technology they need to run their supply chains. Top 3PLs have already spent the resources needed to build and develop transportation management systems, and they are constantly performing research and development to improve them. They also look for and integrate upcoming technologies like automated tracking and advanced scanning methods to help customers pinpoint their shipments at any time.
Working with a 3PL makes shipping safer for customers for several reasons.
• Risk management for the customer – 3PLs assume responsibility for the carriers they assign to the shipments.
• Insurance – 3PLs operate with the necessary insurance to protect their customers’ freight, and only work with carriers who are likewise insured.
• 3PL safety certifications – Certifications like C-TPAT are strong indicators that 3PLs take safety and border security seriously.
• Continued improvement for their supply chains – 3PLs are constantly working with lean management and Six Sigma principles to improve their customers’ supply chains.
Customers can have confidence that when they partner with a 3PL, they are getting the help they need. 3PLs provide top of the line logistics services, easing customer supply chain tensions. They look out for their customers’ time and financial interests, as well as provide their customers with much needed safety nets. If a shipper or receiver is working independently of a 3PL, there has never been a better time to investigate all 3PLs have to offer.
Shippers and manufacturers face many challenges today when it comes to logistics. There are fewer drivers and greater product demand than before, making it difficult for these logistics managers to find reasonable options to bring their goods to market. Many companies plan their logistics services in-house and take time and resources away from making their products – making shipping that much more difficult. But, many other companies have found a way to simplify their logistics by outsourcing these responsibilities to third party providers, or 3PLs. The decision to switch to a 3PL may not be an easy one, but here are some steps to help logistics managers with the switch.
Analyze the Current Supply Chain and Logistics Operation
Be critical. Getting to where an organization wants to be, begins with discovering where they are. Logistics managers should take time to evaluate how their company is doing with their logistics operation. They should look at all aspects including:
• Shipping costs – Most organizations spend more money than they need to ship their products because they are working with only the options they have available.
• Value – Are the shippers getting what they pay for? Do the high cost carriers provide better service?
• On-time pickup and delivery percentages – Are the carriers arriving on schedule for pickup and delivery? Shippers should have tolerance standards and record carrier performance for review against those standards.
• Time invested – How much time does it take internal logistics managers to manage the supply chain? Is it the best use of their time?
• Other resources invested – How much money is invested in developing transportation management software, warehousing space, purchasing vehicles, or hiring numerous individual companies to do the same job.
• Opportunity costs – Would the time and money needed to internally run a supply chain be better spent elsewhere?
These are only a few questions logistics managers should be analyzing with their current supply chain. Every supply chain could use improvement, but logistics managers need to first develop a baseline so accurate improvement can be tracked.
Identify Issues and the Source of Each Issue
After logistics managers take the time to analyze their supply chains, they should identify any weaknesses in the chain and perform a root cause analysis of them. Supply chains are intricate, and a single weakness can disrupt the entire chain. Logistics managers should investigate each weakness they find and determine the root cause so it can be corrected.
Six Sigma training recommends that logistics managers use tools like “5-Why” for this type of investigation. “5-Why” is a root cause analysis tool that asks why something happened five times, and through that reveals the cause. But, there are many other root cause analysis tools that can be used.
Once the causes of each weakness are established, logistics managers will need to determine if they are something that can be fixed in-house. Some weaknesses are internal and logistics managers can create solutions to resolve them. Other issues lay beyond logistics managers’ control. Issues like fewer drivers are difficult for logistics managers to resolve on their own. For these issues, logistics managers should consider outsourcing options.
Consider Outsourcing Options
Another section [3PL Advantages] went into greater detail on all of the advantages 3PLs had to offer shippers. The advantages can be summarized with service, savings, and safety.
3PLs offer their customers:
• Expert customer service
• Wide array of carriers
• Top-of-the-line technology for tracking and management
• Round-the-clock professional staffing to answer questions or provide service and supply chain management
Logistics managers can be as hands-on as they like, while the 3PLs do the heavy lifting. They will find trucks, offer cost effective solutions, design and build customized lane networks, and manage more difficult administrative tasks like document management and invoicing.
3PLs save their customers:
• Time and money by having the technology, staffing, and connections available for the customers’ use.
• They have tribal knowledge with a deep, nationwide carrier network that can provide exceptional service in the leanest times.
3PLs assure their customers:
• On-time guarantees
• Sophisticated insurance
• Nationally recognized safety and efficiency certifications
All of these benefits can be difficult for shippers to assemble on their own, all while managing their own sophisticated production systems. That is why logistics managers should consider outsourcing these supply chain responsibilities to trusted 3PLs.
After an organization decides it needs to partner with a 3PL, finding the right one is crucial. They will need to meet with 3PL salespeople, perform site visits, and hear their bid proposals. Then, once the bids are collected, the shipper’s management must decide which options will work best for them and begin negotiations with the 3PLs that best meet their needs. After needs are developed, contracts can be formed and the 3PLs will begin sourcing carriers for the loads. Then, customers can input loads and 3PLs will begin to manage the supply chains.
KPIs and Continuous Improvement
Once the 3PL has been operating for a while, logistics managers can review the 3PL’s performance against the customer’s key performance indicators (KPIs) and work with the 3PLs on continuous improvement. KPIs are quantifiable, easily obtained, measurements that logistics managers can perform to evaluate how service compares to established company goals. Each indicator is unique to each company, so management will need to establish these standards in order to gauge 3PL performance. If a 3PL is not operating to customer standards, the 3PL can instigate continuous improvement measures or the customer can pull the contract and find another option.
Organizations that manage their supply chain in-house often deal with many complex challenges. Often, these are challenges that can be overcome with the assistance of a reliable 3PL. 3PLs offer many benefits and solutions to the complex problems supply chains face and can relieve customers from doing the work themselves and taking time and money away from other important operations.
The logistics market is constantly changing, and to be successful, logistics managers need to be able to change as well. To not be left behind, they need to innovate their supply chain management practices and look for new opportunities, such as technology, that they can develop. One-way logistics managers can do this is by adopting an innovation process model and applying it to their supply chains.
What is an Innovation Process Model?
An innovation process model is a way to develop and review ideas concerning the creation and implementation of new goods, services, markets, suppliers, or industries. These ideas are usually complex in nature and can take time to create, analyze, and implement. Since these ideas are complex, companies often form teams to produce these ideas. Process models help guide the teams in idea stimulation, creates an urgency for the idea implementation, helps teams perform more effectively, and attempts to help the team avoid groupthink in brainstorming sessions.
There are many different types of Innovation Process Models to choose from. Some models depend on market influence or research and development, and other models come from technological discoveries. Each method has its merits and shortcomings, so it is important for innovation teams to review several methods and determine which one best fits their situation. One of the models that is widely used in the quality assurance portion of the logistics industry is the ASQ Innovation Process Model.
What is the ASQ Innovation Process Model?
This model was developed by the American Society for Quality to help stimulate creativity and assist in process creation. ASQ refers to Innovation as “using applied creativity” for problem solving and continuous improvement. The model is broken into four steps:
• Find the opportunity
• Connect it to a solution
• Make it user-friendly
• Get it to market
This method can be used for most problem-solving situations and can be particularly useful in logistics.
• Find the opportunity – this can be finding a problem to correct (e.g. carrier constantly delivers late or numerous trucks are loaded with the wrong freight) or continuously improving a system (e.g. finding a cheaper carrier). This step might be obvious or require root-cause analysis to determine an issue, but once the opportunity is identified solutions can be made.
• Connect it to a solution – determine solutions for the problem (e.g. find a new carrier or train dock personnel more thoroughly).
• Make it user friendly – This step is a testing phase for solutions. (e.g. try new carriers and train the dock personnel) If one idea does not work, try another solution (e.g. give carriers more transit time and develop new loading protocols with more quality checks)
• Get it to market – Implement the solution that works best.
How to Come Up with Innovative Ideas
Often in problem solving scenarios, teams can hit a wall and struggle to come up with solutions to their problems. The ASQ Innovation Process Model has a support process to help teams develop creative solutions. This process is an acronym called BOSSA NOVA – Brain, Others, Search, Scenarios, Automate, NOVA.
• Brain – Innovation comes from both sides of the brain, logic and artistic; and creative solutions can be found from either. First, determine what solution is needed and ask questions focused on that in the form of an action and a trigger. The action is the what needs done and the trigger is the to who(m), to what , when, and where. (e.g. Buy new software, hire a 3PL, sell a new product). After the action and trigger are determined, create goals and determine the necessary steps needed to reach those goals.
• Others – Problem solving should be a team activity. Brainstorming is often a useful process to determine new ideas. However, teams can often develop groupthink, so diversity of ideas are needed.
• Search – New ideas can come from established ideas in other places. Some logistics ideas could come from other industries. (e.g. UPC barcodes were first made as product labels in supermarkets before being the standard scanning label in logistics and other industries). Problem solvers should not be afraid to look to sources like databases, developed processes, surveys, or other industry standards for ideas.
• Scenarios – Use cause-effect tools to help find solutions.
• Automate – Use tools like the TRIZ contradiction matrix to come up with solutions. TRIZ says every need comes from conflicts, physical or technical, and can be resolved by pairing contradicting ideas together. Many of the physical conflicts can be solved by separating the ideas (space, time, scale, or condition) and many technical conflicts can be solved with matrices like Nine Windows. Using these principles will help teams think differently (or will outline bias to help identify how to think differently) and create new ideas.
• NOVA – refers to exploding stars and is a metaphor for when a good idea emerges.
One of the best opportunities logistics managers are given to differentiate themselves from their competition is the technology they offer their customers. Modern technology can assist logistics managers with information collection and distribution, internal management, and with the current shortage of skilled and unskilled labor in the logistics market.
Competitive advantages such as efficiency, effectiveness, and ease of use are all driving factors for customer satisfaction in the modern logistics market. Even with a reduced workforce in the logistics market, innovative technology can help logistics managers provide these benefits to their customers. Some of the best modern developments include:
• Automated TMS – These are easy to use and make scheduling loads quick and efficient.
• Automated tracking – These are effective as they do not rely on a dispatcher or driver for information. This information can be gathered anywhere 24/7.
• EDI – This technology is easy to use and an efficient way to transmit data.
These are helpful tools to collect and process information to update systems and pass on information to customers.
Not only should logistics managers look at information technology for their customers, they should operate with the best internal technology as well. Computer programs like task management software or state-of-the-art TMS software make managing workloads easier for employees. Work that is easier to manage often has fewer mistakes and draws fewer customer complaints.
The technology referenced in AUTOMATION can aid the reduced workforce, so logistics managers should invest in their research and development.
Successful supply chain management practices keep logistics managers constantly innovating and looking ways to improve. They may need to find new carriers or suppliers, open up new lanes in new markets, or change how they ship their products. Another possibility is investing in technology to help improve the processes they have in place. Whatever the solution, they must always be on the lookout for opportunities that can be improved, find ways to create and test user-friendly ideas, and get them to market – if they do not want to be left behind.
Traditionally, logistics managers have been challenged by the lack of options offered to them in their supply chains – they often had to take what was available. No more. New technology offers logistics managers choices today that they never had before. These choices drive down freight costs and open opportunities to more workers globally. Many of the ideas are not new – but simply utilize what is available in a new way. Effective logistics managers need to look at these trends, innovate, and use them to keep their supply chain strong.
Virtual Logistics Teams:
Virtual logistics teams are not as sci-fi as they sound, rather the idea refers to remotely based operators. In the past, companies would reserve space in their warehouse for day-to-day operations staff and these teams would work out of a centralized location. They would also limit the staff to the workers that were on hand in any given area. So, when finding operational space, upper management would need to develop their warehouse with office space in mind. Back then, it was necessary for each part of the team to be near one another to keep contact and efficiently deliver and store information. That is not essential today.
Today, with the internet – companies do not need centralized operations to keep their workflow going. Day to day supply chain management operations can easily be done from off-site, remote locations. Most efficient manufacturing or logistics companies work with a cloud-based transportation management system in which the workers have access. They can do their work from home and store the data on a central server. Local IT teams maintain the servers and the network and can troubleshoot specific technical issues with workers over the phone or internet.
Today, tools like email, cell phones, and instant messaging make communication efficient and constant as well. Workers can IM or video chat their manager or co-worker to have meetings or relay information. Other handheld devices, in the internet of things trend, makes it easy to send documents to drivers’ personal devices or to a warehouse printer.
Having workers off-site can have several advantages:
• Warehouse planners can fully utilize the warehouse for storage and operational space.
• Yard space would also be less congested with parked cars and other vehicles as well.
• Companies can also save money with climate control costs. Overhead costs like lighting, heating and air conditioning, electricity, and facility maintenance are scaled back to only what the warehouse requires and not specially regulated for office personnel.
• Offices can be more environmentally friendly by having workers operate from home and save on emissions.
• Companies have access to a global talent pool. By having workers operate from home, companies can find the best workers, regardless of location.
Many jobs will need to remain in-house, but one trend is to have more workers off-site.
Merging Service and Technology
More often, manufacturing and logistics companies, today, are trending towards firms that integrate technology into their service. Techno-brokers and other similar companies are on the rise, while traditional brokers are downsizing. Companies are taking advantage of available customer service technology as a solution to the minimized labor force entering logistics.
Often referred to nowadays as “Uberisation,” manufacturers and logistics companies are looking to app-based service providers to step in where traditional brokers once were.
• These apps mirror passenger ride-sharing technology and act as an “instant freight” service that pairs carriers to freight with a few strokes of a button.
• Trends show more customers are moving away from pairing with traditional brokers because of the convenience and instant feedback these apps provide.
• The technology is new, so not as many carriers have adopted it.
• These apps do not offer as many trucks.
• The freight cost can be higher.
But – more carriers are adopting this technology and these apps are working out the bugs. With these apps on the rise, and traditional brokers need to integrate and adapt.
Other modern technologies are working to replace less-than-truckload planners as well. Modern apps can allow carriers to run LTL shipments to central hubs and forward the freight to larger interchange stations. Companies can complete “Last Mile” delivery themselves or hire additional carriers to deliver to them – all with the touch of a button.
Another emerging warehouse technology is warehouse sharing. The idea is that if a warehouse is particularly lean, it can sublet storage space out to other nearby companies. Not only will these companies store overflow products, they can also help manage fulfillment or distribution as well. New apps are providing these locations in a compiled, one-stop-shop location for users to view and compare needs.
These types of technologies – the techno-broker and storage apps – succeed because they give the customer a sense of control that they may not otherwise possess. This is a positive attribute for the customer and a very negative one to logistics providers. Logistics providers, if they want to remain relevant, will need to give customers that same sensation of control if they want to succeed. One way is to innovate and integrate similar technologies into their own transportation management systems. They should make the software feel hands-on but not overwhelming. Also, these systems should provide instant or near instant feedback to let the customer know their request is being handled. Customers should look for logistics providers that offer these types of services as well.
Robotic automation is another logistics technology on the horizon. Modern warehouses are taking advantage of robot technology for many operations.
• Many warehouses will utilize individual robots to transfer products around the warehouse.
• Others use automated systems of conveyor belts and robotic arms to move or place packages.
• These robots can load and unload trucks, stack and store freight, pick freight, package the freight, and ship it out again.
• The technology is sophisticated enough that they can stack pallets in a way to not damage more sensitive freight.
These robots keep better inventory records and are generally more precise than traditional workers. They can be more cost effective than workers as well.
Another popular robotic advance is self-driving trucks.
• This technology is still in its early stage, but it is receiving considerable research and development.
• These trucks will operate on interstate highways alongside current vehicles.
• They will be programmed to operate longer and more safely than human drivers.
Full automation is still years away, but there are significant advances in drone piloting vehicles.
In 2017, Rolls Royce demonstrated they could remotely pilot a commercial cargo ship through a narrow channel in Denmark, making several tight maneuvers. Costas Paris says they have a fully automated cargo vessel ready to sail in 2020 – so the technology is not far away. Soon, over-the-road vehicles will have similar capabilities, driving down labor costs and making shipping more affordable.
Speaking of drones, many retail giants like Amazon are operating with delivery drones in their last mile delivery services. These drones are not fully developed yet for widespread use but show a good deal of promise.
One of the biggest things technology provides to logistics managers today is choice. They now have their choice of the best workers when they use virtual logistics teams and are not limited by location or local talent pools. They can better choose what carriers to use for their freight – whether they want to use techno-broker apps for “instant freight” or implementing other automated technology in traditional brokers. Also, they will soon be able to choose to work with more efficient options like robotic or drone technology for their warehouses and freight deliveries. These choices help give logistics managers control of their supply chains and can help them drive down costs, enhance their strengths, and minimize the weaknesses their previously limited options forced them to accept.
As a Logistics Manager, you know supply chain management can be complicated. This extensive guide simplifies the process by showing the benefits of planning a supply chain with a strategic network and managing it with capacity, flexibility, continuous improvement and efficient warehousing. It highlights upcoming technology trends and shows the importance of utilizing that technology. It offers solutions for regulation issues and features modern logistics trends. Most importantly, it helps logistics managers identify their current shipping situation and outlines a path to success they can achieve. If you need help simplifying your supply chain, or want to learn more about the benefits of outsourcing your logistics needs to a 3PL, click here.