Category Archives: Logistics

The management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers. Logistics involves the integration of information, transportation, inventory, warehousing, material-handling, and packaging, and occasionally security. Logistics is a channel of the supply chain.

Improving Your Freight Costs 1 – Prepare for task/project

Posted on by

The first phase of any project is to gather and consolidate the data you have already, the same goes when reviewing your freight costs.

Having previous costs and your freight profile allows you to identify patterns which will form the foundation of your cost review.

To have the right type, quality and volume of information is critical. This information should be at a consignment level and include: date, destination suburb, post-code, actual weight (this is different to charged weight) and volume as well as the number of pieces in the consignment and the total cost per consignment. Extra data that will help is the type of customer/delivery e.g. residential, commercial or industrial locations.  If you do not have this data already, contact your current freight provider(s), they should be able to give you all this information in a spreadsheet – and at no charge.

You will also need to have the rate tables from your current providers. These ‘tables’ will show you the Cubic Conversion, Fuel Surcharge and kg charge (within each weight break if they have variable charges). I will explain these terms and how they affect you in a later blog.

As you can see there is nothing in this data that is commercially sensitive, confidential or will contravene any privacy requirements. But it will allow you to complete the task with confidence.

As for time period covered, it depends on the cycles. It is best to have enough data to cover 1.5 to 2 cycles. This will usually mean 18-24 months of history. If you do not have seasonal/annual cycles a lessor range would be suitable. Let’s say your cycle is 1 month, then 2 months history would suffice, although it would still be just as easy to consolidate 6 months’ worth.

Other information that you should acquire includes the current performance of your freight provider, how many consignments do they lose, damage or just misplace. How many other functions are impacted by the performance of your freight provider, for example accounts receivables/payables, customer service, sales, etc, what issues do they have? All this will help as you go through the project.

Gathering all this information will help you during the next phases. Phase-2&3 will be to build a history table for quoting against and formulating services that are important to your business, eg: a high DIFOT %- Delivered In Full On Time.

* Supply Chain Trends – just how many are there?

Posted on by

The Supply Chain continues to change at an ever increasing rate.  This is primarily due to the advances in technology and the availability of massive amounts of information.

To keep up with current issues and the impending changes, all those associated with the supply chain need to keep abreast of the “trends” as the saying goes, forewarned is forearmed.  But, there is a fundamental problem that any forecaster of sales, demand, usage or even the weather can tell you, it is all a calculated guess.  The ‘guesses’ get better with the more history and validated algorithms you have.

The supply chain at this level is changing so rapidly history becomes redundant and there are no algorithms.  Plus there is a plethora of opinions, some of which in reality are just a marketing tool. I wanted to see if there were overarching trends across the supply chain so did some research across a wide range of companies and organisations.

I have found there is a trend to the trends, with some particular ones floating to the top, although the individual weighting/ranking of these is hard to define. But the 15 top trends based on my research are:

  • Technology: Technology is having a major effect on the total supply chain, from cloud computing to mobile solutions and smart phones to artificial intelligence.
  • Information/Communications: The volume and types of software along with the proliferation of data has changed the way the Supply Chain is managed, even viewed.  There are better processing systems as well as automated performance reporting and even supply chain simulation software.  And because of the web, the cloud, and the number of software developers, companies of all sizes can operate with the same tools, cost is no longer the barrier it was.
  • Collaboration: This is all about collaborative relationships and closer integration between supplier-&-customer and supplier-&-supplier as well as intra-company relationships.  A common theme stated is to “build the relationship and trust between and within, companies”. This is not a “nice to have”, it is all about building strategic alliances, its importance can be shown by the number of positions now advertised with “…. Alliance Manager” within the position title (although there are a lot that are technically sales positions)
  • Outsourcing: Companies are divesting themselves of the tasks they do not excel in. We are all aware of the growth of the 3PLs over the last 20+ years but 4PLs are also now a standard business arrangement.  This trend is also obvious with call centres (on- or off-shore) as well as other back-room functions. The use of contractors is also gaining momentum.
  • Flexibility: Companies must be able to tailor their supply chains and processes to accommodate 1- increasingly demanding customer requirements 2- needs of different customer segments (or diversification of sales channels) 3- current unpredictability of the supply chain (due to market, regulatory and geographical changes/problems)
  • Sourcing: This trend had multiple options; some suggest regional and local sourcing whilst others are suggesting global sources. There is also densification of products, decentralisation of production and greater focus on Total Cost in Supplier Selection.  This area has a lot of inherent risk and all companies should be continually reviewing their sources with an eye on the risks with each.
  • Reporting and responsibility: Governments are now better able to ensure adherence to regulations and as the world grows smaller, companies must comply with an ever increasing number of regulations and requirements. Investors are also requiring better, clearer and more visibility in company reporting.
  • Environment: This is a double edged sword. There is a ground swell of customers and governments requiring companies to be more environmentally responsible.  But there is a growing need to use all available resources more effectively to contain costs for example utilising or selling waste product.
  • Strategy: Companies need to reassess their all strategies from the emergence of control towers to proliferation of product types and re-alignment of the supply chain architecture/structure. But even more critical, the Supply Chain must be acknowledged as a major strategic asset.

Once the trends are known, it is imperative companies have strategies in place to manage these trends. This will not be an easy task as each industry and each company within that industry will need to define its own appropriate strategy.

Click here,  to see a sample of the sources I used along with their own summarised list of trends. Included are Hyper-links to the relevant sites or PDFs giving a detailed perspective.