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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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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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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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But while RFPs and RFQs have similar structures,
they are used in slightly differently ways.
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The objective of RFQs is to set pricing, terms and
conditions for a well-defined and quantifiable service
or goods. For example, companies may be invited to
bid on specific lane transportation services, or the
leasing or purchases of equipment.
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RFPs, on the other hand, are issued when there is
complexity to the business requirement, such as in
constraint-based complicated distributions requiring
various services or in the total outsourcing of
services to a third party. The RFP process is more
time consuming, from preparation, through final
selection, to the signing of a contract. It should
be used for longer term relationships, beginning
with a strategy, incorporating a needs assessment,
and ending with a deliverable. Effective RFPs reflect
long-term business objectives, and provide detailed
insight into a business.
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Both RFPs and RFQs are excellent methods for leveraging
a company's negotiating ability and purchasing power
with suppliers, no matter how large the purchase or
size of company issuing them. There are many key benefits
to issuing them.
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They provide you with a template to fully map out
your requirements and specifications, so crucial
in the preplanning process. They bring structure
to the logistics buying decision. And they generate
a healthy "buzz" about you in the industry.
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They also let potential candidates know you're serious,
so they'll provide their best pricing and solutions.
Furthermore, it reassures them that you've set a
structured response analysis and selection procedure
demonstrating your impartiality. This is absolutely
crucial in today's business environment for corporate
governance and credibility.
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There are many templates available out there to develop
a proper RFP or RFQ. All should begin with a letter that
invites responses and spells out the objectives. You'll
also want to include a statement of confidentiality that
needs to be returned by candidates within a specified time.
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Make sure there's no misunderstanding about the process.
Instructions for responding to the proposal (including
number of copies, who to direct the response to, and
the deadline date) should be clearly stated, and the
ramifications of missing the deadline should be set
out in this section. Typically, all responses are
accepted at the discretion of the analysis team.
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Once the process is underway, candidate questions
should be directed to all participants, with a cut-off
date for further questions.
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The detailed services requirement - including data
or specifications of the equipment - must be part
of the information provided. The better the quality
of information provided or the more complete the
specifications, the better the chances that the
proposal will have a proper response.
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When it comes to the information you get back from
respondents, of course you'll want things like company
history, company financials (including bank references),
insurances and guarantees, their business continuance
plan, a detailed implementation plan, and references.
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One of the most important parts of the process is
candidate qualification. RFPs and RFQs should be
sent only to companies that can provide the services
and equipment required. Find your targets using the
Internet, and through discussions with colleagues and
your own business network. Remember, if you spread the
word, candidates will find you. Have frank discussions
with potential suppliers. Candidates will let you know
if they're able to fulfill the requirements, as the
effort to respond is very time consuming.
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Once the responses are in, it is up to you to analyze
them in a consistent manner, to ensure the right outcome.
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RFQs are easier to analyze, as they tend to be price
and terms-oriented. A simple Excel spreadsheet will
suffice with a matrix of respondents down one side
and pricing and terms on the other.
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RFPs, on the other hand, are challenging to evaluate.
You'll want to set up the criteria in advance, as part
of the process, and then review the services portion
separate from pricing. Use a weighted point system to
compare the candidate offering against specific service
requirement criteria.
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When it comes time to review the short-list candidates,
invite them to make a presentation to your response
analysis team in a boardroom session. A one-hour
presentation, with a half hour question-and-answer
period, ought to suffice. Limit the number of people
from the respondents, typically three. Who attends the
meeting is crucial. I know of at least one respondent in
a recent session who did not bring the senior operations
person. That demonstrated a clear lack of understanding
of the requirements.
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RFQs and RFPs are an excellent way to acquire the
services and equipment that are so important in the
logistics process. Large companies use them on an
ongoing basis. And small- to mid-size companies can
definitely benefit from learning the process.
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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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