3PL Outsourcing
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3PL Outsourcing – Strategic Considerations

Third-party logistics or 3PL Outsourcing, is an option exercised by a business, wherein parts of its distribution and fulfilment services are outsourced to a third party. This can occur for a number of reasons including outdated facilities and warehousing systems, as the business does not have the internal capabilities internally and could be experiencing a reduction in efficiency, an increase in time and costs, as well as a decline in customer satisfaction.

Such ramifications could lead to the competitive advantage of the business, its market share, brand reputation, or profitability being diminished. Thus, to stem the tide, businesses have had to look for external solutions.

In other cases, businesses may have set-up in foreign markets and need to globalise their supply chains to better serve their customers. However, in such instances, being able to completely owning their own supply chain could be prohibitive and an entry barrier into certain global markets. Here, businesses require 3PL support to bridge the gap.

However, businesses do not always have to outsource parts of their elements to third parties. Another method could be that of vertical integration, wherein a business invests in developing and owning some of the sections of the supply chain. This can be exemplified by the Ford Motor Company, which owns forests and steel mills. Another option businesses could use is to franchise the supply chain, which provides relatively tight control and integration over the system rather than outsourcing it entirely.

3PL vendors typically provide services such as contract warehousing, packing and distribution services, transportation management, and freight and inventory management. Here, it is up to the business to analyse the areas where vendors are required and plug the holes as they best see fit.

There is also the relationship between businesses and vendors as many businesses are keen to look to vendors who can align with their goals and objectives, processes, standards and performance, and quality parameters. Such parameters can even be in the form of an economic contract or agreement between the two businesses though it has the risk of allowing vendors to exit the contract as they deem fit.

Thus, depending on the business, its health, performance, market positioning, services, and many other factors, the decision to outsource to third party vendors almost always remains a strategic one. In this regard, there are a number of considerations that businesses must address before entering into such a strategic decision.

Transaction costs are always at the heart of the decision to ‘buy’ or to ‘make’. Here, costs can boost overall, long-term growth or help entry into a new market.

Performance and predictability of performance is another criteria. Businesses are likely to choose those 3PL vendors who offer efficiency in planning, adapting, and monitoring, i.e. where performance is predictable and risk is minimised.

Value addition is another consideration. Businesses are keen to partner with those vendors who add value through embedded knowledge such as competitor behaviour, deep-domain expertise, and market understanding as well as certain unique capabilities. However, such capabilities or value additions are only ‘order getters’ and not ‘qualifiers’. The day-to-day ‘qualifiers’ for 3PL vendors still remain delivery reliability, speed, and price.

However, price may not always be an incentive for businesses. A sudden price drop could arouse doubts and reveal larger problems within a vendor’s functional area or core capabilities.

Further, a 3PL vendor’s IT capability is another significant area that businesses may examine within their own decision-making process. As IT is seen as an enabler to reducing costs, supporting innovation and service quality, it is a core area of scrutiny.

Another area for businesses is the ease of interaction or customer relationship. It is evident that positive and trustworthy customer interaction goes a long way and businesses tend to stay away from vendors who have been known to be ‘difficult to deal with’. Positive dealings could include taking responsibility for notifications about likely delays or identifying parcels that were late, or informing customers in advance along with the reasons for the delay. In today’s highly competitive market, customer satisfaction is paramount and businesses require a vendor who will ensure that delays are minimal, are clearly stated, and can even go the extra mile when systems break-down.

Of course, vendor size is also important. Here the capacity, scale, and reputation come into play. Depending on the nature of the business, companies may opt to choose larger or smaller players within certain markets. This, once again, depends on the business’ own situation within its growth and development cycle.

Finally, there is also the capability for innovation as another option for the selection of vendors by businesses. Innovation is seen as a significant value add and a great customer satisfaction elevator. Here, vendors known to be flexible, unique, or standing out within markets may well be viewed positively, especially where there is less freely open information.

However, despite these factors there are still challenges in the strategic decision-making process for businesses looking to partner with third parties. Some of these include unreasonable and unrealistic expectations from a buyer. For instance, customers may have unrealistic (and unreasonable) expectations that 3PL providers may have the effect of reducing their annual transportation expenditures by 50 percent. Though this is factually incorrect this perception must be addressed before a deal is struck. Not doing so could lead to severe consequences going forward.

In the end business must internally decide whether to opt to use 3PLs. This depends on their own growth strategy, vision, functionality, costs and market forces. Once a decision has been made however, there may space to nurture the partnership given that the right-fit provider has been sourced. To do this there must be clear and transparent communication between both parties, an assessment of ground market realities, and a clear understanding of each other’s capabilities. Of course, the relationship is key and businesses function best with both sides working together and collaborating closely – and in the area of logistics, distribution, and fulfilment, this requires even closer examination.

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Drones and the future of logistics

It’s a bird, it’s a plane…no, it’s an unmanned aerial vehicle (UAV) commonly known as a drone!

Though drones were initially conceived and have been used as a part of modern warfare in the past, they are now increasingly being looked at by businesses to reduce costs, save time and improve customer service.In fact, one of the world’s largest companies, Amazon, is their most famous use-case through its recent public testing of drones with Amazon Air. And given its global influence, it’s no wonder Amazon forced other companies to stand up and take note of the potential uses of drones within businesses.

Regardless, many companies have already been looking into the technology and are already testing drones and using them, albeit in a limited manner. More recently, the buzz around drones has been (due to Amazon) around delivery, wherein customers are delivered products and goods via drones. However, though they can be used in delivering food, small items and products, drones can also be used within development, recovery, and search and rescue missions. Given that there is potential for drones within development, reconstruction, and retail, it is also true that drones can have a huge and untapped potential within the logistics sector.

In fact, as per a new market research report Drone Logistics and Transportation Market by Solution (Warehousing, Shipping, Infrastructure, Software), Sector (Commercial, Military), Drone (Freight Drones, Passenger Drones, Ambulance Drones), and Region – Global Forecast to 2027, “the market is estimated to reach USD 11.20 Billion in 2022 and is projected to reach USD 29.06 Billion by 2027, at a CAGR of 21.01% from 2022 to 2027.” Thus, with such impressive growth figures predicted it is no wonder more players within the logistics sector are closely examining the future potential of drones.

So what exactly is a drone and why is it so important? In technical terms, a drone “is an unmanned aircraft” or “a flying robot.” It may be “remotely controlled or fly autonomously through software-controlled flight plans in their embedded systems working in conjunction with on-board sensors and GPS.”

As earlier mentioned, drones were first associated with the military for intelligence, anti-aircraft, and target practice. However, they now are more commonly used by civilians recreationally, by cinematographers in film, for weather monitoring, agriculture, surveillance, and even traffic assessment.

Within logistics and distribution there are two main types of drone delivery being explored – home drone delivery and supply chain delivery. Home drone delivery in more popular though supply chain delivery can be very important in saving time, costs and streamlining processes.

For warehouses, drones can be used to “randomize picking routes.” In order to improve utilization within warehouses, and where there aren’t fixed palletizers, by changing the “programming of aerial drones, pallets can be set-up as and when required.” Drones can also help replace conveyor systems in places where there are configuration problems.

Given the vast amounts of stock and inventory within the logistics sector, there is potential for drones to work as possible alternatives to trucks or other surface transport options. Here, they could be deployed between warehouses to ensure demand within a local or regional area is met and to balance and manage inventory levels.

One of the biggest issues facing businesses is claims/returns. Here, drones could be used to pick-up faulty products from customers and drop them to be replaced/fixed. Large retailers could benefit from having their logistics save time given the benefits of no road traffic or congestion as well as reduce efforts of human labor and save on fuel prices.

Going further, there is also scope for end customers within a limited and finite range to be served by drones. However, given the current restrictions on weight and package type only certain goods can be transported. Nevertheless there is still an untapped potential for companies looking at the last mile (when a package reaches a customer’s door) delivery and can help remove the need for humans, reduce cost of transport, labor, and save time.

Also, within a warehouses drones can help with safety issues such as being able to reach places where employees may face danger or accidents. In the event an accident has taken place drones can be sent to take pictures of accident-prone sites or, where there is a problem, can be deployed to help review/solve problems.

Further, as has been mentioned, there is even greater scope for drones to “offer the potential to increase flexibility and combine the speed of automated handling equipment with the scalability of a manual warehouse workforce.” Thus, a combination of a human-drone workforce can greatly improve efficiencies with warehouses. This can also be complemented by RFID-reading drones, which can “pinpoint and count tagged inventory stowed inside stand-trailers, making them invaluable for large distribution centers with outdoor goods-yards,” saving precious time and costs.

In terms of the future, there is a great deal of potential for drones to be used within the logistics sector. However, one of the biggest hurdles is their limited weight. At present, packages weighing more than 5 kg are hard to hold and there is a risk attached to them. For now, larger drones are more expensive and need more testing. Given this their range is also limited as is their speed and they can only embark on short trips.

There is also the issue of government regulation and the need for several licenses and procedures to be followed for commercial usage of drones. Here there are several grey areas and issues of security, surveillance, safety and risk need to be addressed. Thus, at present, only large players such as Amazon, Walmart, DHL, and UPS (among others) are actively using drones.

However, given the rapid pace of technology, innovation by businesses, and competition for increased customer loyalty, the future looks bright and it seems only a matter of time before drones, as part of the technology revolution, which includes AI, robotics, IoT, etc., will enter the mainstream and will inevitably become commonplace within the logistics sector.

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Use 3PL services for a growing business

More and more businesses are using third-party logistics service providers. Building an in-house supply chain is expensive, slow and a learning process riddled with mistakes. On the other hand, outsourcing the supply chain is efficient, quick and adaptable. The benefits of using 3PL are more than just reduced initial capital outflow or getting expertise. With ever-increasing competition, businesses need to focus more and more on their core activity and reduce or divert resources from non-core activities while extracting the best out of them. Managing supply chain is one such activity that can be efficiently outsourced. In fact outsourcing such non-core activity can be strategically beneficial in the long run for a business. Here are a few advantages that a growing business can get from outsourcing its logistics.

 

Scalability – Building a supply chain requires time and investment. Underutilized supply chain represents locked capital which is bad for a growing business. On the other hand, peak utilization limits the growth that operations can achieve. However, with outsourcing, the supply chain capacity can quickly increased or reduced without much impact on scale. Quick scalability is one of the biggest advantages an outsourced supply chain can offer to a growing business. Third-party providers are geared to scale their operations depending on their client’s requirements. They invest their capital in spare capacity and clients don’t need to make any capital investment. Further, if the scale of operations reduces for a client, the extra capacity is simply sold to another customer with no impact on the first client.

 

Optimization – Logistics is frequently about optimization of the resources such as packaging, transportation, route and delivery time for most efficient use of resources with minimum time. This planning and coordination requires special skills that are expensive and hard to find. Further using the skilled and costly planners only for one business may not be the cost-efficient. 3PLs bring in planning and optimization as their core skill. They plan for most optimal warehouse locations, delivery modes and routes and club cargo from multiple clients to bring the costs down. High priority deliveries are also clubbed together to bring down their costs (as compared to individual high priority delivery). This degree of optimization is difficult to achieve for a small business without significant investment and dedication of resources, which can burn quite a hole in the pocket, as the company grows.

 

Constant innovation – Supply chain requires continuous innovation in terms of packaging, equipment, processes and even transportation vehicles. For example, newer material for pallets keeps making them stronger and lighter, new methods of merchandise scanning makes tracking more efficient, more modern robots make stacking and picking of products much faster and more comfortable. Similarly, new transport vehicles (newer trucks) keep reducing the cost of transportation. The problem is that all such innovation requires an upfront investment and business cannot make any new investment until ROI from the previous investment is realized. But with higher utilization, 3PL have faster ROI cycles and can bring in capital-intensive innovation much quicker. Besides logistics being their core business, 3PLs thrive on constant innovation in supply chain to reduce costs and improve service.

 

Quick movement between supplier – While it is a good idea to maintain long relationships, business realities sometimes require to change the vendors. This need for change could be for many reasons such as better rates, larger scale of operations, wider network spread, or simply a kind of service that is not being offered by current supplier (even today many 3PL suppliers do not offer cold storage chains). As the business grows, the supply chain requirements will also change. The scale of material handling will increase. The variety of products being sold will also increase, and this will need different logistics skills. In house logistics department will need time to change and may even put up resistance to change. Improving the skill set of the whole department is not possible in a matter of few days (or even few weeks). But changing supplier is just a matter of negotiation (apart from identification of-course). The business operations are not vastly disrupted while the change of supplier happens. As is well known, changing or upgrading a department of the business is extremely slow and tiresome process, but changing a vendor is easier.

 

Lowering of Costs – Development of supply chain needs space, warehouses, packing machines, moving and stacking machines and vehicles (as large as up to trucks and lorries) making them capital intensive investments. Also, logistic operations are equally expensive, if not more. Many times, the supply chain capacity is not fully utilized leading to a high wastage of money. The 3PL absorbs the capital investment and can depreciate the equipment much faster owing to its higher utilization. The capital cycle (for supply chain) is much more efficient for 3PL as compared to in-house supply chain investment. There is no doubt that unless the volumes are huge, 3PL makes a lot more sense regarding costs and investment for any business.

Further, as the product moves through regions, various agencies or external companies come in picture. A product moving across the border will interact with customs, excise, clearance house, export regulators. Businesses need working relationships with all of them for its cargo to move quickly and efficiently through these agencies. Developing and maintaining these relationships needs resources which cost money. As business volumes grow, the interactions with agencies also increase and need more resources. A 3PL maintains these relationships for its customers so that the businesses do not have to it themselves, and they do it more efficiently.

 

Developing supply chain is a slow and costly process and often requires changes that are expensive. As the business grows, the inefficiencies of the supply chain start to glare out. The growth phase is precisely the time when companies need an efficient supply chain. An outsourced, third party supply chain will not only eliminate the inefficiencies, but it will also bring in innovation to handle the large volumes of growing business, that may provide the edge, that a growing business needs.

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A general logistics service provider or a specialized one- What to choose?

The number of 3PL service providers is growing rapidly. There are many small and big specialized logistics service providers for almost every specific need and then there are providers who will meet all generic requirements. The challenge is which one should you pick for your business? The one who provides every kind (or many kinds) of service or a one who offers a specific type (or just a few kinds) of service. A wrong 3PL will either fall short of the requirement or eat into the capital eroding the margins of the business. Choosing the right sort of 3PL can make or break a business. So, the question comes: How does one select the right type of 3PL provider for his company. We will run through some parameters that can be used to decide the type of 3PL that a company should hire.

 

Services required – Before selecting any 3PL provider, one must understand the services that are needed for one’s business. While it is not complicated, many new companies don’t fully understand the supply chain of their own business. They make mistakes while defining what kind of services they need for their supply chain operations. For example, the grocery startups may typically think that they will be served better with cold delivery chain (for vegetables, milk, meat and other similar products). They often overestimate the amount of cold food that needs to be delivered as part of a grocery order (for delivery- based grocery). In another kind of business, such as apparel business, ease of return of merchandise could be far more critical than other parameters. If a 3PL who specializes in delivery only (and not return pickups) is selected for such business, the logistics alone can eat into all the margins of the company. Some businesses hugely overestimate the volumes they will achieve and end up overpaying for specialized 3PL service providers (think of utilizing only 50% of the contracted capacity of cold storage chain and paying for 100% of it)

Many times, new businesses don’t really understand their customers and end up with under-utilized resources at disposal and thus decrease their capital and cost efficiency. It may be wise for new businesses to start with generalized service providers and gradually move onto specialized ones as they grow their volumes and develop better insights into their requirements.

 

Specialized expertise – Businesses today have to carve their niche to stay relevant in the market. Within groceries business, some specialize in fresh food products, while others specialize in quick delivery. In apparel, some may specialize sending multiple items and then return all except what customer wants to buy, while another may concentrate on quick delivery but with no returns. There may be yet another apparel business which may have carved a niche in ‘made to order’ clothing (this is delivered from factory to customer, directly without any warehousing). All these services need specialized 3PL skills that should be in-line with the business’s chosen specialization. One needs to ensure that the right logistics skills – as required by the business and offered by the 3PL are identified and matched to avoid any disaster.

 

Costs – If a business provides an excellent service but incurs massive costs, it may not be able to sustain. Imagine, providing a rush delivery as standard for a $10 item (which has $5 margin ) and absorbing a $5 delivery charge for it. The customers will love it, the volumes will be huge, but this kind of delivery charges will eat up all the margins. Contrary to the popular wisdom, the high volumes will kill this business. Logistics costs are of great importance to any business and must be kept under control at all times. If they cannot be passed onto the customer, they must form a small a part of expenses, as possible. Here again, there is no saying which type of 3PL will be better suited. Spending $5 on the cold delivery of $10 or $15 grocery (e.g., vegetables) may not be sensible. But if you have a truck-full of deliveries of vegetables, then the specialized cold delivery chain will be more cost efficient, and the value proposition will be higher.

 

Volumes – If a business has larger volumes, it makes sense for it go for specialized 3PL provider. With high volumes, it is possible to cut a deal with the specialized 3PL provider for getting good rates. For smaller quantities, one may want to settle with a general service provider. However, today many specialize players club the delivery from multiple vendors to increase their utilization. A new trend is emerging where multiple businesses join hands and negotiate with 3PL providers to get better value for each one of them.

 

The decision to choose a 3PL provider is never straightforward. Multiple factors need to be borne in mind before making a choice. As a general rule of thumb, it is recommended that one should start with general provider and move to the specialized one as the business grows and there is clarity of requirements.

A key advantages of choosing a general service provider from the start is that as the business grows, the service provider’s volumes also grow and he will make investment specifically for your growing needs. This, in turn, makes him specialized provider for your requirements. In fact, he would develop services for your specific needs making it a strategic fit for your business.

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How to Shape up the Future of Trucking?

Although the transportation industry has evolved, trucks continue to play a major role in carrying and delivering freight from one point to another. That said, the emphasis has always been on taking the pressure off the trucks, in order to conserve fuel, maximize overall capacity and even reduce the underlining costs. Even then, the trends have largely been in favor of truckload transportation with these vehicles accounting for almost 81 percent of the entire expenditure module. With truckload transportation and trucking continuing to rule the roost, we actually need to look at what future holds for this industry, regardless of the booming changes. 2018 is already upon us and it’s time we embrace the new changes which are expected to stay with us for the next few years.

Recruiting a more Functional Set of Drivers

Until the trucks start plying by themselves, we would be requiring drivers. However, quite recently the transportation industry has started seeing a dearth of efficient drivers which in turn is raising some important questions. The future of truckload transportation will see the companies’ focus more on exceptional driving skills, especially for the long-hauls. Needless to say, truck drivers will be the limiting factors in the long term and the lack of skills might minimize the overall growth of trucking capacity. Moreover, once the driver conundrum is taken care of, it would be easier for the companies to increase the freight volume at a steady pace.

Growth of Dedicated Trucking Services

In the next few years, industries will witness a massive growth in the adoption of dedicated trucking services. This would involve acceptance towards a host of macro factors including the likes of capacity tightening and dedicated operations. Moreover, this approach will guarantee that customers get the exact product they have signed up for. The companies are eventually realizing the fact that customers are always on the lookout for cost-effective deliveries and that too within a reasonable period of time. Over a period of time, truckload transportation will start concentrating on the same by securing prices and the underlining capacities.

Improved Capacities

Shipping containers which are half-full can lead to higher transportation costs; thereby accentuating worries for the concerned businesses. The future of truckload transportation will make sure that containers are shipped at full capacity by using sophisticated methodologies, higher load efficiencies and cross-docking techniques. Some of the other intuitive strategies include minimizing certain one-way routes and even deploying experienced third-party logistics.

Relying on Technology

Although businesses are already concentrating on technology, it is only a matter of time that supply chains and logistics managers make it their first line of defense. Be it gauging the uncertainties of economy and workforce, technology-driven ideologies and concepts are expected to last way more than the usual ones. Moreover, truckload transportation will see continued adoption of different supply chain technologies, inventory management approaches, consolidated route tracking systems and driver tracking options courtesy the growth of technology. Each one of these techniques can help improve driver safety, performance and even fuel efficiency.

Reliance on 3PL Vendors

Truckload transportation is expected to thrive only if the companies start shifting excess baggage to trusted 3PL services. That said, outsourcing certain tasks can easily increase the overall efficiency as businesses can then concentrate more on productivity and accountability. In addition to that, partnering with certain functional 3PL companies allows businesses to express themselves in a much better way as the former eliminates additional costs and also helps deliver the goods in an efficient manner. Moreover, the 3PL service providers render additional levels of safety to the fleets and concerned commodities.

Inference

The future of truckload transportation will be dictated by how well the organizations make use of the resources in hand. While keeping up with the industrial requirements is a prerequisite, it automatically boils down to how companies express themselves in terms of logistics and fulfillment. At the end, it’s all about delivering the products efficiently to the customers while minimizing overhead costs, associated intricacies and product damages. Needless to say, the quality of drivers and fleet with determine the fate of trucking and truckload transportation and 3PL services will surely play an important role in shaping up the same. Be it outsourcing select services pertaining to transportation or adopting the best technologies for the job, future of trucking will thrive on a proactive approach.

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E-Commerce Fulfillment Trends in 2018

Let’s be honest about the fact that 2017 has been a pretty good year for e-commerce fulfillment. While businesses were pleasantly surprised by the innovation and speed of technological implementations, several startups benefited from these changes. However, it would only be appropriate to take a look at 2018 and what expectations the entire supply chain industry can have from the same. The current year started on a few positive notes and it wouldn’t be wrong to be optimistic regarding the upcoming trends. Moreover, we should take a note of the fact that ecommerce fulfillment trends do not change every year but extrapolate with each passing day. This means, it wouldn’t be advisable to look only at 2018 but to concentrate on a more expansive analysis.

Looking at the E-Commerce Challenges

It wouldn’t be wrong to say that trends also signify the lingering challenges associated with ecommerce fulfillment. Majority of these challenges are inventory and warehouse specific loopholes, ably assisted by a host of other micro effects. Ecommerce fulfillment, therefore, specifically focuses on the aspects of shipping and product deliveries while offering the best possible combinations to the customers.

2018 will see a Change in how Fulfillment is perceived

Ecommerce fulfillment has already started spreading out in multiple directions. The Omnichannel visibility combines the likes of drop shipping, warehousing and other necessary avenues. In addition to that, majority of fulfillment service providers are pairing up with 3PL companies for creating an elite network of clients. What sounds optimistic is that fulfillment partners are increasingly establishing accountability for every supply chain metric. Be it covering the shipping damages, packaging essentials or the last mile considerations; fulfillment partners in 2018 are concentrating on the holistic aspects of supply chain management.

Shipping Costs to Rise

Those who are expecting the shipping costs to cap out are certainly in for a disappointment. While fulfillment service providers will start looking into the basics of retailing and packaging, the shipping costs in 2018 are expected to shoot up. The customer satisfaction levels, therefore, won’t be compromised on.

Warehouses will keep getting Makeovers

Although the sky high prices won’t cease from existing, the concerned warehouses will start getting makeovers they deserve. Majority of fulfillment partners and retailers will start readdressing their warehouses in 2018 for necessary improvements. The emphasis will therefore be on eliminating the inadequacies and identifying the key areas for improving the existing frameworks. Moreover, it’s only fitting that fulfillment centers keep checking the size and spread of the warehouses for accommodating bulky materials.

Better Branding and Customer Experiences

Getting up close and personal with a brand will be easier in 2018 as fulfillment partners will do majority of the work. With online shoppers getting a cohesive platform for comparing prices, delivery rates and discount codes— customers will be getting all the advantages. Brands will start paying heed to customer sentiments and the shipping strategies will be way more user-friendly as compared to the existing ones. The best thing which fulfillment partners are expected to achieve in 2018 is higher degrees of personalization. This concept will include better at-home deliveries and even higher levels of packaging.

Intensified Labor Pressure

This variable is likely to get squeezed between other fulfillment metrics. While the requirements are amplifying at an alarming rate, there is definitely a lack of skilled labor. Although companies are setting up warehouses with scalable automation at the fore, the pressure for procuring skilled labor is intensifying with each passing day.

Better Delivery Options

While shipping and packaging are some of the important facets leading towards product fulfillment, it’s actually the delivery options that determine the efficacy of the last mile solutions. In 2018, fulfillment partners will start focusing more rural deliveries and innovations concerning in-home deliveries. Newer techniques for delivering products will start showing up in 2018 with the focus being on customer satisfaction and readiness. While the concept of nominated deliveries is fast catching up, it needs to improve further in order to make some more sense. Majority of retailers with dedicated fulfillment services are slowly but steadily concentrating on delayed shipping options for allowing the customer to save money.

E-commerce fulfillment solutions will keep evolving with time. However, 2018 is only a stepping stone for the service providers to achieve fulfillment perfection. Customers must understand that prices might go up in certain cases but the overall satisfaction levels will keep improving.

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Best Ideas for Formulating an Excellent Logistics Optimization Process

When it comes to handling logistics, management is certainly the key. Moreover, an efficient supply chain management framework thrives on perfect coordination and automation— arguably the most prior aspects of logistics management. Apart from that, businesses are increasingly concentrating on network optimization alongside logistics management and following certain tried and tested strategies for achieving desired results. Last but not the least, most of these strategies are aimed towards streamlining the entire process of logistics planning and improvising the associated processes.

Proper Planning is Important

Businesses must understand that initial planning encapsulates every other factor associated with logistics management. Be it looking at the product procurement, product deliveries or storage facilities; planning covers every industrial parameter and helps organizations devise concerned flowcharts. Moreover, the entire purpose of planning is to improve productivity and therefore the former can be considered as an essential logistical tool. The entire hierarchy of a pre-planned approach involves the products, organizational issues, and even transportation worries. In addition to all that, planning also encompasses the contingencies in case of logistics failure.

Automation is the Key

When it comes to enlisting the nooks and crannies of a logistics management plan, automation comes across as an indispensable tool. While automation improves the efficiency of the entire organization, it also plays a vital role in the optimizing the business processes. Deploying an automated strategy helps enterprises keep a track of dispatched goods, warehouse storage options, and even delivery options. This, in turn, saves a lot of time and money while improving the accuracy associated with logistics management.

Managing the Warehouse

Logistics management feels incomplete without discussing about warehouse management. However, the way organizations plan out the latter entirely depends on the type of inventory. While perishable goods require drier warehouses, dairy and similar entities can be stored best in warehouses with excellent refrigeration facilities. Another warehouse-specific strategy would be to increase the overall storage capacity by adding columns, if necessary. Businesses can further automate the inventory storage process by opting for smart warehousing options. Last but not the least, training the warehouse staff is also a prerequisite.

Concentrating on Transportation

An efficient transportation strategy is essential when it comes to drafting a functional logistics management plan. Businesses must look to improve the transportation facilities; thereby decreasing the hassles associated with untimely deliveries. Additionally, an efficient transportation strategy helps determine the best route for product delivery followed by cost-effective and viable packaging options.

Valuing Relationships

Every logistics management plan needs a team to function properly. However, a synergized approach to team building is possible only if companies invest properly in employee training and workshops. Apart from that, logistics management also requires excellent interpersonal skills within the organization followed by higher levels of employee satisfaction. All these factors are taken into consideration if businesses value their relationships with employees and the concerned staff.

Measuring and Improvising Options

Integrating measurement is essential while drafting a logistics management plan. Measuring the extent of network optimization is important when it comes to analyzing the state of improvement. This helps the organization gather valuable feedbacks. Companies must get hold of excellent software and measurement tools for determining the genuineness of the available information. Once the information is leveraged for improvising the existing strategies, it all comes down to planning the subsequent logistics management steps. This involves analyzing service, cost and cycle metrics while keeping the eyes open for genuine feedbacks.

Inference

Trumping over the competitors isn’t easy and it would take an excellent logistics management plan to achieve extraordinary results. Firstly, organizations must adopt latest technological innovations, going into the future. In addition to that, they must aim towards increasing efficiency of their operations thereby ensuring higher levels of customer satisfaction. Moreover, it is the process optimization that helps companies draft efficient logistics management plans in this extremely competitive arena. Adding to all these, it is a well-known fact that majority of organizations are actually struggling when it comes to incorporating the mentioned strategies for the purpose of creating an efficient logistics management plan. However, the enlisted ideas are quite easy to implement and must assist any organization when it comes to the logistical network optimization.

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Retaining Top Talent in the Trucking Industry

When it comes to recruiting the top talent in the field of transportation, enterprises need to be intuitive and smart. The concerned department involving transportation and logistics is actually facing trucker shortage and unless quality talent gets tapped— the situation is only expected to worsen. While the American contingent is already smarting under a massive trucker shortfall, the predicament is fast spreading across the globe with a host of qualified workforce retiring, prematurely.

 

It is therefore important for the Gen Z enterprises to be more vigilant regarding the future of the trucking industry. As we have been able to foresee and presume the concerning trucking issues, it is only appropriate to fix them in the long run. Moreover, there are a host of problems leading to this global trucker shortfall:

 

  1. Most drivers keep facing constant pressure when it comes to meeting deadlines and working beyond the predefined hours.
  2. Fighting off fatigue and dealing with customer requirements are some of the lingering challenges— concerning trucker deployment.
  3. This is one extremely taxing area of work and therefore frequent burnouts after days on the road aren’t uncommon.
  4. Young drivers, below the age group of 21, find it hard to acquire a CDL license— which then hinders their willingness to continue in the same industry.

 

While we have already enlisted the issues related to the trucking industry, it is actually important to nip the problems in the bud by putting measures in place. Lately, there has been an inclination towards last-mile transportation as customers prefer home deliveries, more than anything else. Although this puts a bit more pressure on the concerned employees, the last-mile approach actually helps with employee engagement. Clearly, it’s all about proper work distribution when it comes to keeping the employees motivated and retaining the top talent.

 

Working with Millennials

 

As the trucking industry needs a timely revival, the focus is now on the millennials for saving the day. Most of the mentioned challenges can be dealt with if enterprises can target the millennials. As per reports, millennials are the largest working generation and getting them on-board is probably a miracle every transportation firm needs.

 

Employers can readily tap this fresh pool of talent for shaping up the trucking industry as millennials can be best enticed by the new skill sets, newest set of technologies and abundant chances of growth— traits which only the trucking industry can offer.

 

Every organization has to attract the prospective employees in order to keep the working hierarchy intact. That said, offering new skills to learn is something that goes a long way when employee satisfaction is concerned. Based on surveys, it can be inferred that most individuals commit to new professions mainly for the attractive skill sets and opportunities to adopt newer technical prowess. Then again, monotony is considered to be the most popular reason for individuals letting go of their existing jobs.

 

Understanding the HCM Technology

 

There is a specific way of dealing with stuffs when distribution and trucking are considered. While it is important to take a note of the engagement quotient, hiring principles and employee retention— the concept of human capital management is something that can help enterprises sort each one of the following.

 

The HCM technology isn’t a new kid on the block and has been around for quite a while now. For starters, human capital management helps companies with employee engagement and overall retention. In addition to that, the advanced concepts of HCM technology actually assist truckers by offering them with predefined schedules, shift preferences and a host of other benefits.

 

Apart from that, HCM technology is also useful when it comes to attracting the millennials as prospective employees. Some of the immediate advantages include:

 

  1. Creating decent job titles and targeting the concerned demographic
  2. Highlighting technical opportunities alongside better training and skill-building programs
  3. Promoting newer technologies with transferrable skills on-board
  4. Describing key benefits of the employee value system while addressing techniques that minimize overall stress and daily pressures.

 

Bottom-Line

 

The main aim of the transportation industry is to be the most functional part of supply chain management. In the following quest, it is desirable for the concerned enterprises to tighten the talent gap by addressing newer strategies. Moreover, it is important for the trucking industry to attract newer talents which would help them with sustainability, automation and better results.

/ By Karan Mudliar / Blog • Uncategorized/ • • • • • • • / 7 Comments

Explaining Micro-Reduction and Processing

Seeds are great food. They are great additives to salads and other food items. They are not only a great source of nutrition; they also add a great flavour and crunchy texture to the food they are added to. But seeds are difficult to process from supply chain point of view. They are live. They are the source of life of new plant and contain the essentials for growth and nutrition of seedlings. They are designed by nature to sustain harsh conditions and yet grow into a plant when conditions are right.  However, this very advantage of theirs is the reason that they are favourite of bacteria (such as salmonella) and fungus as well. Seeds can develop pathogens at any time during their transportation and storage. The long duration of storage before they are consumed, makes them susceptible to develop pathogens at any time during their journey from the plant to the table. Not only that, during their journey there is a risk that the seed may die, losing essential enzymes and proteins and thus changing its taste. Because of these reasons seed processing and packaging requires a special setup for their supply chain management. An experienced 3PL would have a separate processing for seeds and grains to ensure high yield and high viability of the seeds, when it reaches to the table of the end consumer.

 

Seeds are grown and transported across thousands of kilometres. They move from the places where nature intended them to reproduce to places where human intend to consume them. The transportation to the place of consumption and place of consumption itself are harsh for the seeds and full of pathogens that seeds are not designed to sustain. Not only that, seeds collect waste, stones and sometimes metal pieces while being processed by machines. The net effect is that the yield of useful, edible, high quality seed is very low. There are numerous incidents when the whole batch of seeds has been rejected due to health considerations. The sterilization process controls the pathogens in the seed and enables the batch to meet the health and safety standards by following the below mentioned steps.

 

Large screening: The heavy contamination particles (stones, metal, droppings) are easier to remove. Filtering the seed through right mesh size and passing through a metal screen usual does a great work of removing these. However, for finer contamination, such as bird droppings, feathers, light weed seeds etc. the process is little tricky. The blow air technique is used to filter these. The seeds are passed through of flow of air. The air pressure is just right so that everything except the seed is blown away and just the seeds drop in the collection bin or for very light seeds, just the seeds are blown and collected and everything else drops in the waste collection.

 

Sterilization: There are various processes that reduce the bacteria, mould and general infectious substances in the seed. For example, fumigation is passing antibacterial fumes through the seed. While it kills the bacteria, it leaves small amount of chemical on the seed. These can be cleaned with water, but that brings its own challenges.  Dry heat processing kills the germs very effectively. Process the seed through very high heat for little time. However, this process is known to alter the taste of the seed. The seeds tend to retain the heat and get cooked (even if by a very small amount). Some seeds even die and change the texture completely due to heat. Dry steam processing is another technique that claims to give good results, but suffers from drawback of exposing the seed to very high temperatures and it also leaves some residual water on the seed. Though all the techniques are excellent, none of them offer high yield assurance with little or no change to the flavour and texture of the seed. Pasteurization, fumigation, irradiation etc. have not really met the expectation that customers have from a sterilization process.

 

A newer technique of organic micro reduction which involves using oxygen to kill bacteria like salmonella has much higher yield. The seed is coated with a liquid solution. The solution harnesses the power of oxygen to neutralize the pathogens and provides total coverage. The liquid then biodegrades leaving the seed unaltered. The seed is completely safe, sterilized, organic, raw and viable, just as nature intended it to be. The validated intervention system ensures application to every individual seed. The complete commercial system such as NEO PURE also includes the option of a dryer, where the seeds are coated with solutions that dry off faster to ensure completely dry consistent seeds, leaving a completely dry and viable seed. The process is used by many suppliers for almost any kind of non-sprouted grain and non-sprouted seed.

 

Repackaging and screening: The processed seeds are then packed into small quantity packing as required for retail. The care must be taken that the packing material is itself sterilized and free of all micro bacterial culture, and does not allow any water or air to pass into the packing, to the seeds during shipping and storage. The retail packs are then passed through a final metal screening to ensure that there is no metal piece that has escaped into the final outgoing product. This screening is usually done using x-ray technique which is harmless to the seeds.

 

 

So, as we see that seeds and grains are gaining popularity as food toppings, right from breads to salads; it is imperative that vendors adapt to newer sterilization techniques for better business results. With newer techniques of sterilization, the vendor can ensure that his seeds are safe, healthy and nutritious, when they reach the consumer and we all know that Happy Customers mean Happy Business!

Supply chain management
/ By Karan Mudliar / Blog • Uncategorized/ • • • / 4 Comments

The Future of Supply Chain, Logistics & Manufacturing: How Technology Is Transforming Industries

Technology is changing fast. It is evolving at breakneck speed. There is no aspect of business that technology has not impacted. However, so far we have used technology for just a little more that some fancy automation. That is just scratching the surface when it comes to use of technology. With the pace at which the technology is progressing, we are going to see some major advances in the way whole business, right from production to delivery, is done. The new technologies will lead to faster, cheaper, more reliable business practices that will look very different from the practices of today. Let’s take a look at a few advances that have the potential to completely change the way we do the business.

  1. 3D Manufacturing: 3D manufacturing is not new. It’s been around for more than 2 decades. However it has really picked up in last few years. While it is still confined to mostly prototyping shops, 3D manufacturing offers a lot of agility to production process for many kinds of products. 3D manufacturing will shift the point of production to the very end of supply chain, just before the last mile delivery. If fact, with 3D manufacturing, the whole supply chain will become just a raw material supply chain. As 3D printing is customizable, the 3PL providers will offer it as a service, with product owners supplying the designs and preferred raw material sources. this will make them more lean and capital efficient.
  2. RFID use is set to proliferate in big way: It allows the manufacturer to track each and every unit of product and in many cases even the components of product, at any point in whole cycle, without intervention of any human with the system. RFIDs are being used in manufacturing and in Logistics as well, to track the movement of the product. So far the RFID use is still in early stages. They will be used for many other things such as validating the order, to ensure order has all the correct items and anomalies in the order are corrected as soon as they occur. They will help in improving the quality of products, and increase the effectiveness of whole supply chain and not just track and trace products.
  3. Delivery Drones: Few companies such as Amazon are experimenting with delivery drones right now. There are still some legal hurdles before drones are cleared to fly and make commercial deliveries. However once they take to the skies, the last mile delivery will change completely. The deliveries will be faster, more cost effective and less prone to error. The largest benefit will be seen in deliveries to remote, rural areas where the cost of single delivery by motor vehicle compared to the product being delivered, is quite high. Drones will also add to security and reduce the damage to the product as there is no human interaction involved in carrying the product.
  4. Self driving vehicles/Smart Vehicles: While self driving vehicles are yet to arrive, they are just around the corner. There is little doubt about the benefits they will offer. Benefits such as increased overall speed of delivery (with no mandatory breaks for drivers), increased reliability and efficiency of the vehicle will have positive changes to the supply chain and logistics. For example, the JIT manufacturing may get a whole new meaning. Smart vehicles are already here and are being used by logistics providers. Technologies such as tyre pressure sensors help the company in determining the fuel efficiency of the vehicle and make necessary adjustments not only to the load and vehicle but also to their cost calculations. GPS tracking provides exact location of the trucks and estimated time to reach the pickup location, providing the time remaining to have their shipment ready at the loading bay.
  5. Internet of Things (IoT): with IoT everything connects to everything. That’s what internet of things promises to be. In fact Industrial Internet of Things (IIoT) is where the excitement for businesses is high. Through simple IoT, the customer’s equipment places an order, which runs down the chain and enter manufacturer’s system. The system automatically checks for inventory , which is all tracked and verified by RFID and places the order for components that are not available in inventory. It gets the expected delivery date of these sub components for vendors, calculates the production times and delivery times and gives a rather accurate date of delivery to customer. The system schedules the production run and schedules the vehicles for delivery, which are tracked by GPS. If there is delay in arrival of components, the system triggers the alarm to the human user and to the vendor. All the while, the product is tracked and traced using RFID and order status updated to the customer, along with exact location of the product, if required. Once on board the truck, again exact location of the delivery is tracked. The traffic delays, if any, are adjust in delivery schedule and made available to the customer on his mobile phone. Get the picture?
  6. Big Data: With so much tracking, tracing and sensing, there will be a huge amount of data available for business scientist to play and come up with better solutions to business problems. Two key areas where this huge amount of data will be analyzed and used in business are maintenance and business analytics.
    1. Predictive maintenance. With so much of data available from the sensors, it will be possible to predict the time and point of failure of machine. The machine learning algorithms are already developed to use the sensor data and predict when the machine or component will fail. Add this with IoT, when the system will order the component just before its predicted failure, so that it is available just when the machine fails. This will reduce the machine downtime to bare minimum time required for replacement, while extracting maximum value from the failing component.
    2. When does the business expect large order volumes? What are the main causes of returns? Which warehouse gets most returns? Which shipper provides best value for every dollar of product delivered? These just few basic questions that big data can answer. Add to this all the information from social media, which is unstructured and advancements in machine learning and cognitive analytics. Pretty soon, you will be asking your computer “how much of my product will sell during this Christmas” and it will reply with a number with high level of confidence. It will speak to you just like Siri does today.

We have just touched upon a few technologies that will change the game when it comes to business of manufacturing and logistics. There are more technologies that will continue to deliver efficiencies and cost savings. The technology assisted future of business world looks very different and very exciting.