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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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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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Leading companies, on the other hand, are way ahead
of the curve. They know that being proactive on the
environment provides risk mitigation benefits. Why?
Because they see that government legislation may soon
be brought in to regulate CO2 emissions. They understand
that external shocks such as wars, terrorist attacks,
natural disasters, and pandemic outbreaks can have
enormous impacts on supply chains and energy supply.
They recognize that oil prices can only move upward.
They believe that good corporate citizenship attracts
investors and employees. And they see environment
sensitivity as a way to differentiate themselves.
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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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Greening a company requires commitment and support
from the leadership team. Businesses need champions
to lead their environmental initiatives. and
logisticians may be the best people for the job.
Not only are they involved in sourcing, but they
make the critical transportation decisions that
will contribute to the greening of the company.
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Here are just some of the considerations they have to weigh:
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1) Sourcing well - preferably as close as possible to
the customer. We consistently examine the trade-off
between cost of goods and transportation. However
minimizing long-term costs may require us to consider
other factors. What about flexibility - the ability to
react quickly to market changes? What about consumer
preferences? Ultimately if off-shore sourcing is the
best option, the most energy-efficient transportation
will be necessary. That might mean ocean freight rather
than air freight - and this will require a thorough
understanding of lead time.
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2) Making domestic transportation decisions with a clear
understanding of the benefits of rail versus truck, and
what intermodal shipping makes most sense for the company.
And, once again, this means understanding lead time and
communicating time constraints to the customer.
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3) Finding environmental programs like Fleet Smart/Smartway
which certify leading edge trucking companies. Leading
shippers are now incorporating this requirement into
the Request for Proposals.
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4) Sourcing energy-efficient equipment and a transportation
management system that will optimize fleet routing and
scheduling. Driver training will also have a huge impact
in reducing GHG emissions. According to Claude Robert of
Robert Transport, there's a 35% reduction in the fuel
consumption by the best drivers, compared to the worst.
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5) Eliminating idling trucks at the shipping dock.
Monitoring of idling engines can be done while
checking that the wheels are chocked.
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6) Using electric forklifts to load vehicles rather
than propane or diesel.
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7) Taking advantage of collaborative transportation.
As discussed in this column last year, cooperation
with other companies, even competing ones, needs to
gain greater acceptance as a means to cut costs. It
benefits everyone.
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8) Converting large trucks to natural gas. Yes,
capital costs are higher but, in the long run,
there are tremendous fuel savings to be enjoyed
while reducing harmful emissions.
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9) Reducing packaging wherever possible. You'll
increase the density of your shipments, put more
product on the vehicle, and reduce freight rates.
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10) Reducing paper flow. Embrace the electronic
transfer of information. It reduces costs both in
supplies and labour.
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These are just a few ways that logisticians can
green the supply chain. Most important is to take
a baseline of where you are today and track your
progress. I'm sure you'll find that environmentally
friendly business practices definitely improve
profitability.
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Remember, as PricewaterhouseCoopers points out in
its Transportation & Logistics, 2030 study, "He who
focuses on carbon footprinting is stepping on the
right foot."
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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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