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Sharing the Load
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Collaborative Transportation
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With today's focus on reducing costs and protecting the
environment, the time for collaborative transportation
management may be here.
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Canada, the second largest country in the world - about
5,000 km from Vancouver to Conception Bay - is one of
the most challenging, high-cost countries in which to
distribute goods.
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Forty-two percent of the population inhabit five urban
areas where manufacturing and distribution facilities
face common transportation challenges. Meanwhile,
disproportionate shares of transportation resources
are required to service the balance of the population,
scattered over 10 million square kilometers. The
situation dictates a high use of less-than-truckload
delivery, and all-too-frequently, pick-up and delivery
trucks simply aren't full.
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On top of this less-than-efficient system, the cost of
moving goods across Canada is bound to increase. Fuel
prices will inevitably rise. Driver shortages due to an
aging population, attrition, and a lack of new entrants
is already occurring. When the economy picks up we're
going to feel these pressures even more acutely.
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One solution to optimize productivity is collaborative
transportation management (CTM) in which the traditional
one-to-one relationship between a shipper and receiver,
is replaced by a more efficient many-to-many approach.
Shippers, receivers, carriers, and third-party logistics
companies can gain tremendous efficiencies through
cooperative forecasting, order consolidation, optimizing
asset utilization, sharing routes, and streamlining
carrier payment.
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Pooling resources improves the supply chain, reduces
mileage, eliminates unnecessary trips, and increases
load factors - all of which reduces costs. At the same
time, energy consumption is substantially reduced,
resulting in huge benefits to the environment in the
form of reduced carbon expenditure, pollution, and
congestion.
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Need an example of where this is already working? The
Canadian Pharmaceutical Distribution Network involves
21 manufacturers who distribute their products to
hospitals across Canada through a sophisticated
collaboration system. Hospitals order and receive the
products they need from multiple suppliers through a
single order system managed by a third party.
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In order for CTM to work, some key interactions
need to develop between consignors, carriers, and
consignees, as well as any intermediaries that are
involved in managing the process. Collaboration
eliminates inefficiencies and improves supply chain
performances for all, but a degree of transparency
is absolutely critical.
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CTM is not a new concept but it has not been widely
adopted. Senior decision makers are too caught up in
gaining competitive advantage, focusing on marketing
and sales, to set up a collaborative system that will
benefit them in the long term. When orders need to be
delivered they not to think about the bigger picture.
Typically they can't see past individual corporate
objectives.
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That's why logisticians really have to drive CTM.
Their involvement ensures that key operations and
procedures will be analyzed for hidden efficiencies.
Information sharing between organizations is critical
and must be conducted with absolute honesty and openness
- without crossing legal boundaries, of course. The
process will require continual monitoring by committed
champions who will solve problems jointly, rather than
individually. The technology employed must not only be
effective but must allow seamless information interchange.
The billing process must be simple, with costing methods
that ensure all participants pay their fair share. And
most importantly, tangible benefits must be realized by
all parties.
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Change management is going to be critical here,
as companies negotiate roadblocks and move from
single-minded self interest (with the associated
attitudes and practices) to a more cooperative
approach.
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So how can all of this be accomplished? Again,
logistics will have to lead the way, organizing
from within, meeting with company stakeholders,
educating them on the threats on the horizon and
the potential benefits of collaboration. Analysis
will be helpful - particularly of the current ordering
process, size, and cycle, and the efficiency of the
shipping and receiving functions. And a list needs
to be generated of companies that would provide synergy
in collaboration. For this it's always good to reach
outside your organization, gleaning what you can from
discussions at industry functions. Networking is
excellent way to discuss collaboration with like-minded
colleagues. Search the internet for buying groups
coordinating on potential logistics efficiencies.
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Third-party logistics providers who have embraced
collaboration are in a great position to educate
manufacturers, distributors, wholesalers, retailers,
shippers, and receivers on the advantages of CTM.
They can also get the ball rolling, providing essential
services and distributing the savings.
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Collaborated distribution is an opportunity whose time
has come. We will all win with cost reductions and a
better environment.
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Rate and Wrong
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Consumption Based Fuel Surcharge
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Fuel needs to be a flow-through consumption-based charge
- a system that would fair for everyone.
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Fuel costs are the largest ongoing financial concern
for both carriers and shippers. Fluctuating fuel costs
create challenges for companies to remain on budget,
which ultimately impacts bottom lines.
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The current recession has tempered the volatility we've
seen creating chaos in previous years. Rack fuel prices
this year have been trending between $0.692/litre and
$0.792/litre, according to Freight Carriers Association
(FCA) data. The truckload rate for fuel surcharges ranges
from 16% to a recent high of 21.4%. Compare this to July
2008 when fuel peaked at a rack price of $1.33/litre with
the truckloads surcharged at 49.9%.
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Finding The Win Win Deal
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Freight Negotiations
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Freight negotiations don't need to be like poker games,
where only one side can win the pot.
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Negotiation is something logistics professionals will
be called upon to conduct many times throughout their
careers. It comes with the territory. Successful
negotiation is essential in business - especially when
the economy is struggling. Everyone strives for the
best value and the lowest costs when obtaining the best
service possible.
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Unfortunately, however, when it comes to freight
negotiations, many companies specialize in the
"win-lose" approach - a positional or distributive
negotiation whereby one party's gain is another
party's loss.
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Fuelling Your Supply Chain
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Inbound Freight Programs
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When purchasing and transportation come together
they are not only helping to improve operations, they
are also contributing to the bottom line.
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One of the hottest trends in business by large
corporations is Inbound Freight Programs. Most
perceive this program as a means to reduce costs
by capturing the transportation component included
in the line item price by receiving a discount or
refund from the vendor which creates a revenue stream.
The revenue stream is then applied to the costs of
transportation for the goods which returns a margin
due to their buying power with their carrier(s) of
choice. At Aptitude4 our perception of an "Inbound
Freight Program" has more opportunities then the
transportation savings.
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Green Your Logistics
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Reducing Emissions
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GHG emission reductions must be tackled the same
way you achieve safety in the workplace. You need
to implement a strategic plan and stick to it.
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10 ways to reduce your environmental footprint and
improve profitability.
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Many companies talk about reducing greenhouse gas (GHG)
emissions, but too often there's a large gap between
words and action. Most companies seem to be holding off
on taking any real steps to reduce their environmental
footprint because they believe the investment cost is
too high.
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Out Of The Woods
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Lean Logistics
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Lean logistics will help any company - during hard
times and hay-days alike.
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Recent business reports indicate that the recession is
over. This may be the case for some leading companies,
but not all. Many businesses are still just barely
holding their own. Others are in obvious distress.
They'd take great exception to overstated optimism.
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The true sign that we've come out of the recession is
when businesses begin adding full-time jobs again. This
will restore consumer confidence and spending. But even
then, we will have to continue applying lean principles
to our logistics operations.
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Putting Out the Call
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Request for Proposals
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Requests for proposals and quotations show suppliers
that you're organized, impartial. and growing.
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Generally speaking, logisticians at small- to mid-size
logistics firms make too little use of standard Requests
for Proposals (RFPs) and Requests for Quotations (RFQs).
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Both are important parts of the logistics buying process,
allowing potential suppliers to join the competition to
provide a business with goods or services. The issuer
makes available the specifications and requirements to
several candidates, and then waits for the competitive
responses to be submitted.
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Affordable Supply Chain Technology
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Transportion Management Systems
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Transportation Management Systems (TMS) over the
internet allows any company, regardless of size,
to obtain the benefits of a good transportation
management system.
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Not long ago the high cost of Transportation
Management Systems meant they were used almost
exclusively by large shippers and carriers.
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Well, things have certainly changed - especially
with the advent of "software as a service" or
SaaS as it is commonly called.
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