By Inbound Logistics Staff, January 2014, Inboundlogistics.com
Illustrations: ©iStock.com/Frank Ramspott
Supply chain gone stale? Inbound Logistics compiled these actionable tips to help revitalize your warehousing, 3PL, trucking, and global logistics operations.
Managing imports and exports, overseas manufacturing, and international shipping policies is complex, and involves details such as documentation, customs clearance, compliance, and regulations. These tips will help you operate a flawless global supply chain.
1. Make help accessible 24/7. Crossing borders may mean crossing time zones, and problems don’t always occur during office hours. Have a staff member at your company ready 24/7 to deal with problems as they happen. A fast response can save you days.
2. Learn the lingo. FAST, C-TPAT, CSI—you almost need a PhD from MIT to understand government agency programs. Being patient and learning which programs suit your company and industry can go a long way toward speeding shipments and communicating clearly with transport providers.
3. Collect data about your products. Understanding product composition is vital to correct classification, which, in turn, drives many aspects of import/export compliance. Work with product managers, engineers, and scientists to understand the components and functions of the items you plan to import or export.
4. Understand dual-use implications. Look beyond the obvious uses of your product to anticipate any extra compliance responsibilities. Seemingly innocuous items could have potentially dangerous or nefarious dual uses, and require export licenses.
5. Screen your trade partners. Most countries maintain lists of individuals, businesses, and governments that are ineligible to participate in trade. It is your responsibility to ensure your trade partners don’t appear on any of these lists.
6. Understand total landed cost. Understanding the true landed cost of your products—including duties, taxes, and other fees—informs your pricing strategy. Don’t forget to factor in the cost of shipping, insurance, and payments to your logistics providers.
7. Maintain comprehensive audit trails. Mistakes happen, and even the most experienced global shippers may incur violations. Documenting actions, decisions, classifications, and filings go a long way toward mitigating potential fines and penalties.
8. Know your government agencies. Some imports are subject to specific government agency requirements. In most countries, each agency establishes its own import regulations. In almost every case, customs will not release your shipment until you fulfill all government agency requirements. Make sure you submit that information with your customs entry.
9. Provide correct information. Get comfortable with global trade terminology and provide the correct information, including harmonized tariff numbers, export commodity control numbers, country of origin, Incoterms, and units of measure. Supplying your customs broker with correct data increases the likelihood of an accurate customs declaration.
10. Focus on what you can control. When you ship globally, you can’t control every link in the chain. So designate one person in-house to create your company’s customs compliance procedures. Write them down and communicate them well. It’s a big job, but failing to account for even small details can lead to delays and extra costs.
11. Know what documents each country requires. Provide suppliers with a document guide based on each shipment’s destination. Many order management systems allow suppliers to interface with their orders and print documents generated by your system. Leaving document preparation to your service providers increases costs and results in shipment delays.
12. Localize your documents. Creating documents in the importing country’s language significantly helps customs brokers and local customs authorities review and accept your paperwork. In addition to language translation, localization includes the use of local currency and units of measure. Localizing your documents also helps avoid transaction or currency errors.
13. Use electronic communication. Communicate your documents electronically over the Internet. This delivery method allows supply chain partners to integrate your documentation data with their systems, eliminating manual data entry errors and delays.
14. Audit your documents. Implement a program for routinely editing your customs brokers’ entries. Make sure brokers are complying with your policies and accurately using your documents and their content. You can also measure cycle time to ensure brokers are processing your documents quickly and efficiently.
While expedited shipping can be expensive, it doesn’t have to break the bank. With a little thought and planning, shippers can control the factors driving expedited shipping costs by following these tips.
16. Hire the right people. Employing a staff experienced in logistics management ensures that you can proficiently assess shipments to determine the most economical transportation mode. Your logistics team must be able to effortlessly evaluate a shipment and convert it to the most cost-effective—but expeditious—mode.
20. Share the metrics. Make sure senior management understands how much money is spent on expedited transportation. Approach them with solutions. For example, “If we improve forecasting, we can cut transportation expenses in half.”
21. Improve sales forecasting. Although you may not have a crystal ball that will predict sales demand with 100-percent accuracy, you can strive to get as close as possible and reduce the need for expedited freight.
22. Eliminate padding. Everyone along the logistics chain—from the person placing the order to the production team to the transportation manager—sometimes adds “safety” time to ensure on-time delivery. Pretty soon, a shipment that is required by 9 a.m. becomes required by 5 a.m. and needs a more expensive transportation mode. Stick to the original delivery time.
23. Choose the right expedited mode. Utilizing the wrong mode costs shippers the most when they make premium transportation decisions. Choosing air charter over exclusive-use trucks, or same-day air rather than next-day air, quickly increases unnecessary costs.
24. Ask the right questions and provide accurate information. Inaccurate information relating to shipment weight, dimensions, and timing can cost thousands of dollars. For example, a shipper might request a pickup of a six-piece shipment weighing 2,000 pounds, but when the van arrives the pieces are too long or too heavy to fit on a van, and a truck needs to be dispatched. Logistics specialists encounter these scenarios every day.
25. Buy quality expedited services. Failure to deliver on time is costly and can cause production stoppages, failed customer commitments, and lost business. Using a sub-standard or inconsistent carrier costs more in the long run.
26. Build a comprehensive coverage network. Many expedited shipments originate outside common carrier lanes. When you get a call from a customer at 2 a.m. for a shipment originating in Smallest Town, U.S.A., be sure you have a plan of action to support that region.
27. Let technology work for you. Leveraging the right technology to manage shipments and link your customers allows you to easily access and implement best practices. Your technology platform should also offer your customers ease of use and configurable options. Harnessing a single control point will help you drive quality assurance and streamline your customers’ entire supply chain process.
28. Ensure visibility. Do your customers have true door-to-door visibility of every shipment? To successfully manage expedited shipments, it is imperative that your system link shippers, suppliers, and carriers. Whether through the Web or some other platform, customers need to see where their freight is every step of the way.
29. Operate 24/7/365. Expedited shipments are often unpredictable, and they certainly don’t keep bankers’ hours. To provide customers with the level of visibility expedited shipments require, have a logistics specialist available at all times to identify and resolve any potential problems that may arise.
Managing labor, technology, and equipment choices can make or break the success of your warehousing operations. These tips will help keep your facility running efficiently and effectively.
30. Analyze each operation and results. Identify areas where your organization is slow. Physically watch the overall flow of a packing process, then a picking process. Are products organized properly? Twenty percent of the total products account for 80 percent of all picking activity. Make sure these products are in the most ergonomically sound locations, and are given ample storage space.
31. Standardize your processes. Reduce potential variation in areas such as unloading, accounts payable, shift scheduling, and facilities management. Standardization saves time and money, and reduces errors.
32. Measure what matters. Gather real-time operations intelligence on warehousing processes, and establish key performance indicators. To support continual warehouse process improvement, and ensure business goals are being met, collect and analyze real-time data from order fulfillment technology and materials handling equipment. Benchmarking performance and analyzing collected data can facilitate more informed decisions about how to respond to changing customer requirements and business goals. If an outcome is not important to customers and shareholders, don’t waste time measuring it.
33. Communicate effectively. Clearly communicating to workers your organizational goals and the processes to achieve them is one key to effective warehousing operations. When managers fail to create an environment of open and clear communication, employee productivity suffers, resulting in high turnover and wasted resources.
34. Offer robust training and reduce turnover. Create training programs that incorporate cross-training. Break a job down and present the operation to new associates. Allow them to test their performance before releasing them to the process. This is more effective than the traditional sink-or-swim method. It costs money to train employees, so you want to keep the ones you have. That means you need to motivate employees to keep them satisfied. This can involve monetary incentives, employee recognition, or special perks for great performance. Employee retention leads to a reduction in costs associated with hiring replacement workers, managing downtime for missing staff, or retraining warehouse employees.
35. Minimize the number of touches. Manual operations slow movement through the warehouse and can introduce errors. Automate picking, packing, and shipping processes to minimize the number of times humans touch products and orders.
36. Offload some processes to a Warehouse Control System (WCS). WCS solutions help manage materials handling equipment in real time, which will maximize system throughput and performance, and provide visibility to potential logjams.
37. Gain end-to-end visibility throughout the facility and processes. Eliminating silos in the warehouse—from the loading dock through delivery and transport operations—removes barriers to growth and innovation. In many organizations, supply chain executives and corporate operations plan independently, often negatively impacting corporate goals. Maximize profits and establish competitive advantage with cross-functional planning.
38. Automate your paper-based and manual processes. It may seem obvious, but many operations still use manual, paper-driven methods for putaway, picking, and gathering shipping information. Manual methods are time consuming and involve a higher risk of error. In addition, the data has to become electronic at some point in the process. Automated data-gathering extends the electronic environment out onto the warehouse floor, with information-gathering tools such as handheld scanners, bar-code readers, and other remote devices. These tools improve accuracy, make personnel more efficient, and help operations run smoothly.
39. Use Lean tools, such as value stream mapping, to create a blueprint for improvement. Value stream mapping is the process of establishing a clear picture of product and information flow. It depicts both current state and desired future state, in ways all team members can understand. The value stream map provides employees an overall view of all warehouse activities, allowing them to suggest improvements in other areas, as well as their own. Display the map in the warehouse so that employees are able to reference improvements and bring the next steps to life.
40. Implement standardized work. Developing detailed and illustrated standard operating procedures (SOPs) and standard work instructions (SWIs) for every job is a crucial step toward the quality goal of repeatable processes. With SOPs and SWIs in hand, new employees walk onto the floor with specific reference material to consult. This results in a shallower learning curve, and makes it easier for managers to monitor and assess performance.
41. Build quality into processes. Accurate quality measurement systems establish quantitative baselines and enable the organization to monitor the current status at all times. When a variance or mistake occurs, the team focuses on the process, not the person involved. Utilize a “Five Why’s” investigation, where team members ask “why?” not once, but at least five times. For example, if a forklift knocks off a sprinkler head, you don’t simply ask why it happened, but why the forklift was so high, why it was in that location, why the sprinkler head was placed there, and so on. Drilling down to root causes allows the team to collaboratively rebuild the process to prevent recurrence.
42. Aim for a just-in-time (JIT) strategy. Just-in-time warehouse management strives to eliminate the waiting, storing, and unnecessary movement of product, materials, or information. The goal is to establish as close to continuous flow as possible without constant movement and the need for intermediate steps. Stagnation in the movement of parts, people, process, or communication within the warehouse—for example, an email that sits in someone’s in-box for three days—interrupts proper flow and can lead to process errors.
43. Understand the differences between wood and plastic pallets. Wood pallets are recyclable, can be repaired, are less costly, and can hold more weight than plastic. But they also give off moisture, splinter, harbor bugs, and contain fasteners that can damage products. Plastic pallets are durable, clean, bug-free, weather-resistant, and contain no fasteners. They also cost three times the price of wood, are not easily repaired, are not as stiff, and have fire safety ratings.
44. Recognize the environmental impact of your pallets. Plastic pallets have a longer shelf life and go back into the system, but if damaged they cannot be repaired; they are made from oil and must be melted down to be recycled. Wood pallets, however, are made from a sustainable natural resource and are easily repaired and recycled.
45. Examine pallet trade-off costs. If you move fragile products, weigh the cost trade-off. Is the cost of a pricier pallet higher than the cost of damaged products, shipment delays, and disgruntled customers?
46. When choosing a materials handling system, consider the products you manufacture and/or warehouse. Some solutions are more suitable than others for products requiring tight security, such as pharmaceuticals and biomedical shipments, or climate control, such as frozen goods; and uniform/stable loads that do not require frequent operator attention.
47. When purchasing lift trucks, factor in total lifecycle costs. Variable costs such as maintenance and repairs, energy or fuel, downtime, and rental costs to replace down trucks account for a large portion of total ownership costs.
49. Select a lift truck with safety features. Lift truck manufacturers continuously develop new technologies and ergonomic features to help reduce the likelihood of accidents and injuries. Look for trucks with features such as adjustable seats, rear assist grips with horn button, and tilting steering columns.
50. Look for a lift truck dealer with ample support. Make sure your dealer has enough technicians, parts inventory, and service vans available to service your trucks as quickly as possible, and factor the dealer’s location into your purchase decision. Dealers should help you manage work orders, track repairs, and alert you to trucks that are overdue for general maintenance repairs. Also ask about aftermarket support, including warranty coverage, rental, fleet management, and complimentary products and services, such as battery fast-charging systems.
51. Make lift truck ease of maintenance a priority. Routine maintenance areas should be easily accessible, with features such as one-touch fuel tank brackets, no-tool floorboards that lift out quickly to expedite daily operator checks, and hydraulic filters located outside the hydraulic tank for easier service.
52. Calculate your investment. You can gain significant labor savings by implementing automated storage and retrieval systems, but a trained maintenance staff is required to manage these solutions. Determine return on investment by calculating what you can save on additional leased space compared to conventional storage methods.
53. Consider total ROI. Benefits of upgrading materials handling systems may include traceability, inventory control, and accuracy improvements; safer, gentler product handling; tighter security; and possible elimination of physical inventories.
Multiple factors go into choosing the best less-than-truckload (LTL) and truckload carrier partners for your business. Here are some tips to keep you on the right road.
55. When obtaining price quotes, accurate information is key. When getting price quotes or bidding out future business, know how much weight you will be shipping and the number of pallets your product will move on. Having this information will save you money and help you stay one step ahead of your competition.
56. Understand the pricing structure. If price is your primary criteria for picking or evaluating carriers, then you must be aware of all factors affecting your net transportation cost. When reviewing each carrier’s pricing, compare key factors such as tariff base rate, discounts, and applicable or waived accessorial charges. Using carriers who allow you to base all pricing on a single or common rate structure may create some benefits, such as one basis for carrier pricing comparison, simplified audit technology/automation, a benchmark for negotiating and compliance, and control over cost variations when general rate increases occur.
57. Carefully select RFP questions and set reasonable deadlines. Shippers structure a successful RFP when they align themselves with carriers that fit their shipping profile. Shippers should collect information on carriers’ financial performance, customer service, IT quality and capabilities, exact fleet size, type of equipment used, and CSA scores. Carriers need a clear review period and realistic deadlines to assess their own capabilities, post questions, and provide detailed, effective RFP responses. Snap decisions can be costly to all parties.
58. Ship out of areas close to major cities. Metropolitan areas such as Chicago, Los Angeles, and Philadelphia have a substantial concentration of LTL trucking firms and terminals. Generally, the farther you are from urban areas, the more expensive your freight charges will be. The likelihood that your freight will be delayed also increases.
59. Consolidate orders. If you know you will have multiple orders going to the same location, try shipping them at the same time. Brokers can pass savings on to their customers when they ship multiple orders to the same general location, even if you cannot put them on one bill of lading (BOL). Standard common carriers sometimes bill customers on each BOL even if the freight is destined for the same place.
61. Evaluate flexibility. Transit times are important, but a carrier’s ability to accommodate change is also essential. If you require late pickups or early delivery times, find out if the potential carrier can accommodate those requests. It also helps to prepare a list of questions about flexibility, such as: Can the trucker’s workforce handle extraordinary requests? Can the carrier quickly assign staff and equipment to handle additional capacity?
62. Know the carriers and agents who are handling your shipments. Most LTL carriers do not serve the entire country. They “service” those areas outside the range of their own equipment by securing agents based in those areas. Make sure you know these agents and they know you. If your LTL carrier uses multiple terminals, get contact information and names of those people who are accountable at each facility.
63. Re-evaluate your dock procedures. Get your freight ready prior to the driver’s arrival, and devote one or more dock doors to LTL pickups and deliveries. Coordinate a pickup system with your LTL provider to eliminate delays. LTL carriers assign multiple pickups to each driver, and sometimes instruct drivers to leave after 15 to 20 minutes with or without your freight. An efficient loading system means both parties come out ahead.
64. Supply well-written, universally adopted corporate routing guides.Routing guides optimize freight lanes and remove excess shipping costs. Best practices mean incorporating electronic shipment-level detail from all carriers and routing guide rules into a central database; treating the guide as a company-wide shipping mandate; employing weekly or daily shipment data imports; and cross-referencing shipment data against routing guide rules for reporting.
65. Agree on criteria for performance evaluation. Create a methodology and metrics explicitly stating your expectations, measuring effective carrier performance, and alerting both carriers and shippers if carriers are underperforming. Require your carriers to provide a monthly on-time service performance report. Ask that the report be segregated by lanes or states to identify problem areas.
66. Create a system for claims reporting. Do your carriers provide a monthly claims report to determine the number of claims filed and the amount of time claims stay open before resolution? Ask carriers for an exceptions report to measure the exceptions ratio against total shipments tendered.
67. Evaluate carrier service areas. Do your carriers have service centers in the primary states where your customers or vendors are located? Direct line movement of your goods by a single-line carrier eliminates handling, which reduces the claims risk and protects your pricing. Also consider standard service days. Ask each carrier’s account representative for a service standards matrix or map, and use it to compare service commitments.
68. Understand carrier auditing processes. Auditing carrier invoices should be an ongoing process to ensure compliance to contracted pricing. Do the invoices match the contract and contain all the required data for processing by accounts payable? Many carriers have extensive weight and inspection staffs who reweigh shipments or look for improperly classified freight. While most of these revised charges are valid, some weight and inspection staffs can be overzealous and overlook contracted pricing, which creates unnecessary balance-due billing.
69. Demand equipment maintenance. Know if the trailers are clean and have been swept out before arriving to deliver or pick up your freight. Does the trailer have drainage to protect your freight from water damage? Is your freight picked up on a linehaul trailer and loaded to ride to destination, or is it transferred to another trailer before departing your local service center? Freight that is loaded to ride will require less handling, reducing the claims risk.
70. Monitor driver performance. Observe or consult with your dock personnel to learn if drivers use proper freight handling techniques. Do they have the right equipment to handle your freight? Do they throw your freight? Properly use a hand truck? Brace or stack your freight on the trailer? In addition, determine if drivers arrive on time for appointments or miss pickups. Are drivers courteous, treating your employees like they appreciate them as a customer? Many service center managers tell drivers that the customer is paying their wages.
71. When choosing a regional carrier, look for competitive transit times.Compare each carrier’s service maps to see how many of your shipments they can deliver via next-day and second-day service. If, for example, the majority of your shipments move from Denver to the West Coast, determine what percentage of those shipments will be delivered overnight. Also check to see what lane improvements each carrier has in the works. Choose a carrier that can speed your delivery cycle as much as possible—and will stand behind its service commitment by offering a money-back guarantee.
72. Make sure customer service options are a priority. Ideally, carriers should offer more than one way for you to reach their customer service agents. Look for a carrier that offers several methods to contact its customer service department—through Web chats and text messages, for example. In addition, find out if the LTL carrier offers specially trained customer service agents who can answer questions about international shipping or special services you might require, such as distribution, consolidation, and truckload shipments.
73. Explore real-time technology. Real-time data is essential. Make sure the carrier you select offers real-time tracking technology and can provide shipment notification. Ask carriers to outline the technology they employ for every facet of their operation—from the dock to dispatch operations to drivers. In addition, find out how quickly they make pickup and delivery information available for each shipment.
Companies of all sizes increasingly rely on third-party logistics (3PL) providers to manage logistics, transportation, and supply chain functions, access capacity, and tap technology capabilities. Here are some factors to consider when choosing a 3PL, expanding the value proposition, and growing the relationship.
74. Be selective when sending out 3PL RFPs. If you send out RFPs in a cattle call, your candidates may not participate or respond with their “A” game. Nor will your internal team be able to dedicate the proper time to evaluating each response.
75. Ask what the 3PL does best. Like most companies, many 3PLs excel in certain niches, such as global logistics, transportation, or warehousing. Most service providers started off focusing on one function, then added others along the way. Ask 3PLs about their mode and lane strengths. Depending on office and yard locations, a 3PL can likely guarantee capacity in some areas of the country, while offering substantially lower rates. This knowledge will help you better match your transportation needs to the right 3PL.
76. Focus on operational excellence instead of the procurement process.When companies put out 3PL bids, they often focus time and attention on the bid itself, instead of assessing whether a new logistics service provider can perform to the level of operational excellence they need. Shippers should consider what the optimal scenario looks like once the implementation is complete, and how they can work with their 3PL partner to improve upon it.
77. Include your performance objectives in the RFP. Solicit input from all the key players in your supply chain about the performance, pricing, and productivity levels they hope to achieve through outsourcing.
78. Ask better RFP questions. Don’t ask the same old tired RFP questions. Weed out the weak ones, refine the keepers, and add some new ones to inspire insightful answers. Two suggestions: “Share a situation with a client that didn’t go as well as you’d hoped and explain how you worked through it” and “Show us a process map of how you’d fulfill a typical order for one of your current clients.”
79. Value corporate compatibility. Finding a 3PL whose corporate values and philosophies are compatible with yours is essential. Build specific questions into your RFP to get to the heart of this issue.
80. Don’t believe everything you read. An RFP is just one step toward finding the 3PL that’s right for your company. Make every effort to conduct at least one thorough site visit and have some face time to make sure the 3PL hype lives up to the reality.
81. To foster long-term partnerships with 3PLs, be honest. When shippers enter a partnership, they should be willing and able to admit their shortcomings. Whether it’s acknowledging pain points and limitations, or recognizing that bid data may be inaccurate, being upfront with service providers from the beginning is an important step toward building a collaborative relationship. Conversely, 3PLs should be equally candid about their capabilities. Such reciprocity builds trust.
82. Conduct a thorough review of the 3PL’s financial history and outlook.Check credit report and bank references, certificates of insurance, vendor ratings for payment history, and financial rating with an independent firm such as Moody’s Investors Service. Also review the 3PL’s customer base for diversity and stability, private funding for impact on available cash, outstanding liens or claims, acquisition costs, or any factors that could overextend financial resources.
83. Recognize what’s in and out of scope. Many procurement-driven companies will push for more from their service providers. The danger of scope creep is that it can slowly erode the relationship. With the understanding that customers have leverage, 3PLs may build walls and become less willing to give more when customers are taking instead of asking. On the other hand, shippers that recognize when they are asking for out-of-scope solutions, and acknowledge it upfront, are likely to find 3PLs more amenable to helping out and investing in the relationship.
84. Consider claims handling. Most 3PLs don’t like to admit it, but accidents do happen—so make sure you’re working with a 3PL who has your best interests in mind. A good 3PL can help facilitate a claim, and act as a liaison between you and the carrier on your behalf. Some 3PLs carry insurance so if the carrier defaults on a claim, the 3PL will step in and cover the cost of the claim—but this is not standard practice.
85. Make sure your 3PL has the legal authority to provide the services it is offering. Federal law requires any company arranging motor carrier transportation for compensation to either have a property broker license from the Federal Motor Carrier Safety Administration and a surety bond, or be registered with that agency as a domestic freight forwarder. This rule applies to warehousing companies and motor carriers that broker shipments to other carriers when short on equipment. If a claim or accident occurs, don’t assume the insurance covering their business assets will cover a brokered shipment.
86. Ask your 3PL how it qualifies carriers. 3PLs utilize other companies’ assets to serve you, and you entrust them to select the appropriate carriers to move your freight. At a minimum, they should verify operating authority and insurance, and assess each carrier’s safety rating. What process do they have to prevent unscrupulous carriers from re-brokering your freight without consent? Make sure they execute a written contract with each carrier that includes clauses to protect you.
87. Execute the correct type of 3PL contract. Many shippers mistakenly use a motor carrier contract with 3PLs. Unfortunately, these contracts include many clauses that are not enforceable with 3PLs, and omit key protections. If you use 3PL services from asset-based providers, make sure your contract with them includes specific language addressing those services. Don’t assume your relationship with the asset side of their business is covered in your contract.
88. Use 3PLs for more than just a back-up plan. Being choosy about 3PLs is wise, but don’t treat them only as a back-up plan for a last-minute load that needs covering. A common misconception is that 3PLs can always move a load at the last second. While 3PLs can often find the capacity needed in a pinch, it’s not a guarantee, and you could be missing out on many benefits 3PLs can offer if you only use them this way.
89. Find out what technology tools the 3PL offers that could help you work smarter, faster, and more efficiently. Information is a 3PL’s greatest asset, and many invest heavily in IT systems designed to streamline information flow and access. Most 3PLs offer online tools ranging from full logistics management outsource platforms to standalone tools for rating, optimization, tracing, and document retrieval. If you have special needs, some will customize an application for you. Choosing the right 3PL can save you costly IT investments of your own.
90. Use your 3PLs as solutions providers. One great thing about 3PLs is that you can use them as much or as little as you want. Use them as you would an asset-based carrier to handle only specific lanes, or treat them as an extension of your supply chain. Many 3PLs can operate as an outsourced traffic department, and can manage as much or as little of the shipping process as you need.
Superior supply chain operations are about tending to the details, ensuring continuous improvement, and adapting to change—whether that means boosting inventory accuracy, establishing leaner processes, or managing seasonal peaks. Fine-tune your supply chain with these tips.
91. Pick a quality program and stick with it. Companies can choose from a variety of inventory quality programs such as ISO, lean manufacturing, Six Sigma, kaizen, and Total Quality Management. Make sure everyone in the company supports the program and uses it.
92. Examine your entire supply chain. Create and measure a “perfect order” metric from point of origin to final destination. This allows you to track inventory performance across your entire network and improve accuracy throughout the supply chain. Duplicate these successes and share improvement strategies so all areas of the organization can benefit. Also, hone your forecasting skills and help business partners, vendors, and customers do so as well.
93. Know what you are up against. What is your current inventory accuracy rate? You can’t improve what you don’t know. Once you establish a benchmark, set an improvement goal—aim either for a specific percentage or dollar figure. Check your results often to ensure you achieve and sustain improvements.
94. Establish product traceability during the distribution lifecycle. Include your entire inventory pipeline—inbound and outbound shipments as well as inventory in the DC. Never move product unless the action is authorized and recorded.
95. Implement a continuous cycle-counting program. Using cycle counting to maintain high levels of accuracy is one of the best ways to identify problem areas. An effective cycle-counting program eliminates the need for physical inventory expenses.
97. Choose supply chain partners who offer systems that interface with your inventory system. Many inventory issues stem from data and transmission failures. Working with capable supply chain partners and using compatible systems helps improve end-user delivery accuracy and customer service.
98. Make inventory accuracy everyone’s job. All employees throughout the organization own inventory accuracy. Every business unit within the company should understand how it impacts that accuracy. Many companies overlook the simple truth: managing inventory effectively is a key to business success.
99. Make your supply chain more compact. Optimize the flow of goods and information through the supply chain. Implement plant and warehouse layouts and designs that streamline inbound and outbound flows.
100. Reduce stock at point-of-use. To support a flexible production schedule, keep a variety of part numbers on hand in the warehouse. By executing Lean logistics techniques such as sequencing and sub-assembly, you can avoid large inventory stocks and their associated costs.
101. Balance the receipt and delivery of goods. Matching the incoming and outgoing flow of material to customer demands minimizes the amount of material stored in the supply chain, resulting in lower costs.
103. Balance the work so your cycle time hits close to Takt Time. Every task performed by an operator needs to fall close to Takt Time—the pace of production in each process that is necessary to satisfy customer demand. This scheduling will help ensure minimal waiting time and maximum productivity.
104. Reduce capital expenditures by closely managing your empty container flow. The reverse logistics process of handling empty containers can be complex, so it needs to be well-managed to guarantee reliable supply and the lowest level of damage. At the same time, a well-managed empty container flow can significantly reduce maintenance and container replacement costs.
105. Optimize transportation routes. Employ recognized transportation best practices to improve the efficiency of moving goods off the production line and into delivery. By applying concepts such as segregating flows into small and large lots, direct dock-to-line feeding, and combining cycles (one full against one empty), you can avoid wasteful internal transportation processes and optimize available resources.
106. Standardize warehouse processes. Implement stable and repeatable processes, and standardize the time it takes to perform tasks such as picking, packing, and putaway. Standardization helps the warehouse interface more accurately and efficiently with operations outside the four walls, such as transportation.
107. Use visual management aids for information flow. Visual aids are an important part of tracking the physical flow of materials in a plant or warehouse. If everyone on the shop floor can “see” the current production status, they can more easily react to peaks and valleys.
108. End and correct line stoppages. Stopping the production line is costly and often unnecessary. When a problem arises, don’t let it go and plan to fix it later. Stop and correct the problem now. You might temporarily slow productivity, but in the long run, recurring problems should end.
109. Redefine your facility boundaries. It’s not unusual to exceed a facility’s standard capacity during peak season. Take stock both inside and out to determine areas you could temporarily repurpose for product storage. Queue up trailers and use your secure truck yard for overflow space, or temporarily use some aisle space to process products.
110. Streamline space via a 5S, Lean, or other quality initiative. Continuous improvement tools aren’t just for eliminating waste in business processes. If your company has a Lean team, tackle a detailed space utilization project several months before peak season. This could significantly minimize or eliminate the need for overflow space.
111. Verify and clarify your seasonal labor needs with staffing providers.Whether you use one temporary staffing firm or many, don’t assume they will provide all the personnel you need when you need them. Confirm your anticipated requirements and iron out the particulars of your working arrangement in advance.
112. Initiate abbreviated training programs. Well-established, quick-hit training can rapidly acquaint short-term personnel with your facility’s most important safety, layout, and process flow information.
114. Divide and conquer. For maximum efficiency and minimum stress, leave complex and essential warehousing tasks to your long-term personnel. Use temporary workers for assignments that are simple and/or confined to a small area, such as labeling items.
115. Tune up equipment. Before the peak season, assess the working condition of every significant piece of equipment at your facility. Repair, recharge, and purchase spare parts as necessary. Perform a gap analysis to determine whether you’ll need to buy or lease additional items to handle the volumes expected.
116. Consider crossdocking or deconsolidation. Establish crossdocking within your facility so you can unload, stage, and reload hot products without having to wait for receiving and putaway. Or work with a deconsolidation center near your port of entry so certain products can go directly to their final destinations instead of spending time moving to and from your facility.
118. Refresh your knowledge about expedited transportation options.Inventory emergencies or lapses tend to occur during the peak season. Avoid disruptions by learning your expedited service options, such as time-definite ocean transportation, air-sea, sea-air, and team-driver trucking services. Explore these options now, so you can deploy them when activity heats up.
The best way to maximize ocean freight efficiencies is effective planning. Use these tips to get a clear understanding of your shipments’ scope, frequency, and quantity. Then cement relationships with carriers to better plan your containers, and take advantage of the intermodal connections, capacity, and distribution facilities at ports around the country vying to be shippers’ first choice.
121. Bypass U.S. distribution centers. Ship directly to stores instead. When buying from several vendors in Asia, for example, don’t ship the containers to a U.S. distribution center to be stored as inventory until orders are picked and packed. Avoid warehousing and DC costs by consolidating shipments in Asia with other shippers, then delivering directly to retail outlets.
122. Transload operations to inland U.S. destinations. Once shipments arrive in the United States, send them to a transload facility to be repacked and loaded on trucks for delivery to inland destinations. This helps reduce costs and expedite shipments.
123. Forecast to the volumes by lane for your carrier base. Forecasting starts at a high level, usually annually, but should be fine-tuned to a monthly or weekly forecast so carriers can update their allocation models. Providing lane and equipment information helps carriers align on a finite level and builds your credibility and reliability.
124. Make round-trip opportunities available. Balance is key to maximizing efficiency. Providing inbound and outbound flows from a location allows carriers to make optimal use of equipment. If a carrier has to reposition empty equipment back to its destination, it could lose revenue. Providing round-trip opportunities is a strategic way to increase efficiency.
125. Know the market. Assess current market prices, fuel costs, capacity, and demand. Your company will achieve best pricing by setting reasonable targets. Plenty of data is available to help build your knowledge of how the market is moving.
126. Evaluate your transportation needs. How do you ship your product? Do you use rail, road, water, air, or a combination? See if the ports are well-connected to these transportation modes. For instance, consider how far the port is from the airport or railway. Align your needs with the port’s location.
127. Consider proximity. You can cut transportation costs by using a port located near your trading partners. Also be sure there are warehouse, distribution, and transload facilities nearby that can accommodate your containers and other cargo loads.
128. Evaluate the port’s investment in its infrastructure. The port should be taking steps such as enhancing its navigation channel access, reducing landside congestion, expanding terminal capacity, and working on better intermodal options for improved goods movement. It should also have a plan for handling periodic increased ocean and intermodal volume.
129. Examine workforce availability. The port should have access to an experienced workforce with a reputation for reliability. Don’t just shop price—reliability and good service are equally, if not more, important. Make sure port management has a good relationship with its existing labor force.
130. Know the port’s restrictions. Weight limits for various cargoes vary by city and region. Overhead obstructions (bridges, tunnels, pedestrian walkways) and dimensional restrictions (vehicle/trailer length, width, and height) can hinder port access, while routes into and out of ports might require trucks to encounter multiple traffic lights or drive through light commercial or residential areas.
132. Look for a stable, predictable regulatory environment. Consider a port that has a strong relationship with, and proven record of, collaborating with industry, regulators, and legislators—including on environmental issues—to benefit shippers. Make sure the port is compliant with federal security initiatives.
133. Note Foreign Trade Zone (FTZ) access. If you are involved in zone-to-zone transfers, exporting, international returns, or quality control inspections, select a port that has an approved and active FTZ to take advantage of the cost reductions associated with these activities.
134. Prepare for the unexpected. Consider a port that can easily respond to supply chain disruptions by offering alternative services to container transport, and easy access to other modes. Ask how they will help you ensure your shipments keep moving in the event of a natural disaster.
135. Investigate the port’s container and vessel tracking tools. What kind of technology capabilities does it have? Can you also use those tracking tools for Internet access, email, and text messages? Does the port provide a toll-free number?
136. Calculate the port’s savings potential. Determine if the port has processes in place to reduce overall transportation costs. For example, is there adequate capacity to eliminate congestion? Are procedures streamlined to reduce loading/unloading times and prevent delays? Ports with facilities for transferring fuel, food, water, waste materials, and supplies all in one place can shave hours off a vessel’s time—and costs—at dock.
138. Examine the companies currently operating at the port. Are they satisfied with the port and its operations? Note which companies could complement your business, and vice versa. Having a location in a port, which is often an industrial maritime development park, could serve as a catalyst for your company.
139. Consider inland ports. Perform a transportation analysis to calculate what you spend now, then project what it would cost to use barge in an inland port system. Moving inland and shipping via barge could save money in the long run. Check out the carrier service offered at the inland port, and determine whether you have contracts with those carriers, and if they can meet your freight handling needs.
Security breaches in the United States cost industry tens of billions of dollars each year. If you manufacture, distribute, or ship high-value items, your company’s security could be at risk. Follow these tips to secure your facilities and cargo.
140. Put in place physical access and employee/visitor controls. Ensure employees always wear photo ID badges, and that visitors display clearly visible badges that document their identity, date and time of visit, and the person they are seeing. Always escort visitors, and never compromise controlled access to sensitive areas.
141. Make pre-employment verification a priority. Thoroughly interview and screen potential employees. In addition to asking applicants to submit a resume, employment history, and references, have them sign a release form authorizing your company to perform a background check.
142. Protect against malicious behavior by former employees. If an individual is terminated, ensure that all company property, identification badges, passwords, and other documents are returned, then escort the individual from company premises.
143. Stay up-to-date on security regulations. The global supply chain is at risk from terrorists who will exploit any weakness. Make sure you understand and conform to known World Customs Organization/U.S. Customs and Border Protection regulations.
144. Protect your facility with proper security fences. Install perimeter fencing around container and truck yards, and inspect the fencing regularly. Guard security gates continually, and closely monitor access to terminal locations.
146. Increase security awareness among employees. Workers can minimize the potential for cargo theft by knowing how to respond to unexpected situations involving intruder entries and terminal incidents. Provide annual training, at a minimum. Better yet are quarterly training sessions on topics such as customs and law enforcement; how to identify and report suspicious activities; recognizing internal collusion; and the promotion and maintenance of sound security procedures within the supply chain.
147. Protect your IT/data center. IT personnel are especially vulnerable to security breaches, so access should be limited to authorized personnel. The IT center should be set apart from other operations, and have a separate source of non-interruptible power, as well as a firewall device to restrict users to pre-determined content. Password-protect desktop access, and maintain a fully secured data structure with appropriate backups at regular intervals.
148. Test your security program. Testing can be done at little or no expense. You can, for example, park an unmarked vehicle in an area that is off-limits to through-traffic, plant a person with a visitor’s badge in a sensitive area of your facility, or deliberately change some aspect of a container’s identification, such as its bill of lading, container ID, or seal sequence number. Then monitor, observe, and critique how employees and gate personnel react to these scenarios.
149. Apply for C-TPAT certification. What better way for your company to identify its true strengths and vulnerabilities than through a thorough self-assessment? Any company that qualifies for C-TPAT status should immediately contact U.S. Customs and Border Protection to obtain an application. C-TPAT eligibility requires a vulnerability assessment conducted via a customs-supplied questionnaire. This initiative alone should expose most security weaknesses within a company’s supply chain.
150. Conduct random container/trailer inspections to help identify irregularities. Drivers should surrender their identification to your guard, who verifies the information. The guard should record the container number, license plate of the rig, seal number, date, and time. Random spot checks of containers are always beneficial, and should be done in the presence of more than one security officer.
151. Apply high-security seals. As identified by ISO 17712, high-security seals conform to all current and upcoming sealing mandates and regulations. Train all users to recognize compliant, high-security seals, and to identify indications that suggest theft or pilferage. Make sure that test documents proving compliance to ISO 17712 exist, that the test facility is A2LA-certified and independent, and that the manufacturer has been audited by a certified entity.
Most companies know supply chain vulnerability poses a threat to their operations, yet few perform analysis or plan strategies to minimize risk to the bottom line. These tips can keep your supply chain flowing during any disruptions.
152. Identify and assess current risk. Quantify and prioritize risk, then develop a mitigation strategy. Start backward from the customer and gauge the revenue impact of supply chain disruptions. Follow that trail through the manufacturing cycle to the potential sourcing or logistics constraining factors.
153. Do rigorous “what-if” analysis. Identify situations that could disrupt operations and develop contingencies to overcome these scenarios. Ask questions such as “What if we lose this supplier?” to create a strategic supply chain design that is optimally hardened against disruptions and serves as a cornerstone for a comprehensive business continuity plan.
154. Ensure you have multiple transportation plans in place. Ruptured transportation means products and parts face delays in getting to customers. You can continue shipping products to customers—if you have alternative transport plans.
155. Update plans regularly. Factors such as new government regulations or suppliers can cause fluctuations in your company’s vulnerability levels. It’s vital to put in place consistent programs for updating your supply chain’s resilience by reevaluating its design and instituting a corporate culture of security.
156. Create a balance between supply chain network efficiency and operations resilience. Take a holistic view of your supply chain to determine optimal network designs that ensure products are manufactured in the right location at the right time and will ship to the right customers.
157. Compare the cost of stockpiling inventory against the risk of losing sales and customers, and creating a negative impact on bottom-line profitability.Too much inventory at the wrong location adds to bottom-line costs. Determine optimal inventory policies and levels to sustain your company.
159. Select vendors in different geographic regions who supply through secondary ports. Maintaining a diverse base of suppliers—even when equivalent materials are available from suppliers in the same region—will help if one country experiences a disruption.
160. Fully engage in supplier relationships. Because you will need to rely on them for help if disruptions arise, monitor suppliers for any potential problems. This includes knowing the suppliers’ risk factors: financial strength, regulatory compliance, risk management practices, and the political stability of their countries.
161. Take control of logistics processes. Instead of abdicating to the suppliers’ delivery, bring items closer to home where it makes economic sense, and globally source where savings are balanced by assurance of supply. It is crucial to take ownership of both the supply and delivery processes to understand the inherent risk, regardless of who has economic responsibility for delivery according to the terms of the sales contract.
162. Jointly plan for and collaborate about potential supply chain disruptions.Include suppliers, logistics service providers, and customers in your collaboration plans. Drive toward mutually available risk plans for each link in your supply chain.
163. Build flexibility into processes so you can promptly adapt to changes with minimum impact. Share forecast and demand information with trading partners so you can be more responsive to customer demand fluctuations. Develop a corporate culture of agility, rather than reactivity. Agile companies can respond rapidly and effectively to manage supply or demand changes.