Independent agents are partners in growth for logistics providers

Agents act in much the same way as manufacturers reps. They represent logistics providers and are deeply ingrained in the industry, using their experience and knowledge to help their clients grow their operations.

“Logistics agents are recruited when a logistics provider is looking to grow into new markets or otherwise expand their business,” says Kevin McLaughlin, vice president of sales and business development at AMWARE Companies.

“Agents can be productive partners if logistics providers work with them in identifying the right industries and markets for growth. Two-way partnerships with the right agent are worth their weight in gold.”

Smart Business spoke with McLaughlin about independent agents and how they help logistics providers grow.

Why does a logistics provider typically work with an independent agent?
Typically, providers decide to work with agents when they want to gain access to customers that are outside their current reach, often because those customers are in new geographic or vertical markets.

Agents offer expertise in reaching these targets and have valuable relationships that can be leveraged to make introductions. They provide tremendous return on investment as they are normally compensated solely on their ability to produce results.

What are the two types of independent agents and how does one differ from the other?
The two types of agents are traditional and non-traditional. Both types of agents work closely with logistics providers to grow their businesses, but in slightly different ways.

Most agents would be considered traditional. They have myriad industry relationships, deep industry knowledge and a background of success in business development or sales.

Non-traditional agents may operate their own businesses and use the provider’s service as a platform to add logistics support to their existing suite of services. As an example, a 3PL may physically house and move materials, but not offer a robust logistics solution to its end user.

Acting as an ‘agent,’ that organization increases its value to its customers within a proven model. The types of organizations are endless, and effectively apply to any company selling goods into a specific vertical.

What should a logistics provider consider as it goes through the process of choosing an agent?
Choosing an agent should be done with the same care a company would use to hire an employee. The person should fit culturally and have strong professional integrity, which are important because agents are out in the field representing them in the market, so it’s important to know they’re acting on shared core values.

Experience also matters. Companies should consider agents’ past experience in the vertical they’re looking to enter, as well as their success in sales or business development in that vertical.

But the key is relationships. Agents can only be effective if they’ve developed a network of relationships that enable them to bring a provider into conversations that it hasn’t been in before.

What should logistics providers understand about the agent/client relationship that will help them get the most out of the arrangement?
Regardless of their industry experience, connections or sales ability, agents are only as good as the service and support that their logistics providers give them.

Agents need partners that are working as hard as they are, otherwise they’ll become hesitant to spend the time it takes to grow a business and might be unwilling to put their hard-earned relationships at risk. Providers that can’t or won’t support agents working in the field on their behalf won’t get their full effort, and that can lead to disappointing results.

Insights Logistics is brought to you by Amware

Strategies to cope with a tight warehousing market

The market’s limited warehousing space is a result of the paradigm shift in how products are delivered. 

“The strength and growth in our current economic cycle is because of a shift to a B2C environment,” says Brad Maloof, president of AMWARE Companies. “Couple that shift with global supply chain uncertainty, and available warehouse space falls to historic lows.” 

Inventory levels are increasing because of the need to get product to a customer’s doorstep fast, also known as the Amazon effect, and to reduce volatility in global trade. That’s increased the amount of warehouse space needed. 

“As space tightens and prices increase, it’s imperative for companies to be not only smarter with their warehousing strategies, but find partners capable of efficiently managing changing capacity needs,” he says.

Smart Business spoke with Maloof about how companies can affordably get the warehousing space they need.

How are companies responding to the market’s tighter warehousing conditions?

Shippers are securing any space they can. Sometimes it’s space that’s less desirable than what they’d like, but they’re realizing that if they don’t secure it, there might not be any available to them later.

Other companies are on the sidelines waiting for space to become available, and that can have a negative impact on their business. They may wait too long and either end up settling for a space or a partner that isn’t able to meet their needs, or find they’re locked out of a market entirely.

How are warehousing companies working to accommodate clients?

Public warehouses can satisfy the need for space on both a temporary and permanent status. Some shippers’ business is cyclical, so they use public warehouses to flex up or down with their cycles because they don’t need the same space year-round. Others may use public warehousing because they have installed production lines where their internal warehouse once was. 

Dedicated warehousing companies have a great deal of space that can accommodate a range of products. They offer their customers the flexibility to use more or less space, depending on the need, and enable companies to defer much of the cost and responsibility of warehousing that they’d bear if they were to build and use their own facility. The right distribution partner can also offer expertise beyond warehousing and distribution. World-class distribution facilities also offer a range of services, including software for freight optimization, trucking, rail and 3PL/4PL services to optimize logistics and supply-chain activities. 

World-class businesses must have a clear distribution strategy. Those strategies can range from fully outsourced to strategic/partial third-party usage, to operating their own distribution network. Unless you have the capital and expertise to be best in class in the warehouse and distribution arena, outsourcing to the right partner often represents the best value proposition.

What is the outlook for the warehousing market in the coming years?

Lease rates in the industrial space are expected to remain high. Shippers should look to gain cost efficiencies through more accurate modeling and budgeting when it comes to product volumes. Work with warehousing partners that have modern spaces built to accommodate today’s needs, and processes that enable them to accurately account for, and efficiently ship, product. 

The better warehousing companies, public or dedicated, work with their customers and are deeply integrated into their supply chains. Key procurement components that can’t be overlooked include contract versus ad hoc and the terms that govern the relationship (both Service Level Agreements and payment terms).

Long-term contracts can play a key role in delivering high levels of service and a significant reduction in longer-term volatility. Public warehouse partners can provide both short-term solutions and long-term engagements that provide the flexibility to meet strategic supply chain needs.  

Given the demands for warehousing space and its limited availability, customers don’t have the luxury they once had of capacity existing whenever they need it. Shippers need to plan to develop optimum distribution solutions, or risk settling for an expensive and unreliable solution.

Insights Logistics is brought to you by Amware

Increase business profitability with parcel-managed services

E-commerce has conditioned consumers to expect that purchased products should be in their hands within a day or two of ordering. That expectation is driving the go-to-market strategies of myriad companies, which has shined a spotlight on the parcel business. 

“Over the past four years, the parcel industry has experienced explosive growth because of the rising popularity of online shopping,” says Kevin McLaughlin, vice president of sales and business development at AMWARE Companies. “As a result, small-package distributors are forming partnerships with the major carriers to make deliveries on their behalf, but are simultaneously experiencing a steep increase in transportation costs.”

McLaughlin says distributors need to think strategically about how to stay competitive when shipping costs pose a threat to margins. Some are enlisting the help of transportation cost management solutions to catch errors such as overcharges, inaccurate accessorials, damaged shipments and invalid Saturday delivery fees. 

Smart Business spoke with McLaughlin about transportation cost management solutions, and how audit and recovery benefits distributors. 

How does a parcel audit help distributors?

When swamped with shipments, sometimes over 1,000 per week, it can be a hassle to manage the daily flow of packages. Manually analyzing all those carrier invoices keeps the process in-house, but often ends in human error and an inefficient allocation of company resources. Fortunately, there is a better way to do business. 

Smart software can perform a comprehensive audit on every single shipment and identify all errors, tag shipments with the billing dispute type, sort by priority of refund amount and automatically file disputes with the carrier. On average, an intelligent audit can recover anywhere from 3 to 6 percent of savings on every carrier invoice. 

Parcel audit and recovery can also benefit companies that have multiple people who ship on behalf of the company. Matching general ledger codes to shipments is an accountant’s nightmare. The software automates the process of general ledger coding and brings precision to the accounting process. The finance department is able to spend less time on data maintenance and more time on transforming that data into actionable items. 

Where else might distributors lose money on parcel shipping?

Distributors have agreements with major shippers that are renewed on a regular basis. The carriers are notorious for promising distributors big savings, but there is normally a catch. For instance, a distributor might be offered a discount in an area that doesn’t fit its shipping profile or the discount might be attached to a minimum charge that the distributor rarely reaches. It’s important to know your shipping profile and review these agreements carefully to ensure the savings promised will actually materialize. This is where consulting services for carrier agreement negotiation can give you the upper hand in negotiations. 

Working with an expert transportation consultant can save a distributor up to 20 percent on shipping costs. The consultant uses cost-modeling software to evaluate agreements from multiple carriers in a real-time, side-by-side comparison. This level of analysis identifies areas of savings by cost component and prevents any money from being left on the negotiation table.

Companies that rely on e-commerce parcel fulfillment as a significant aspect of their business model — whether big or little, operating out of a basement or through a giant fulfillment center — can benefit from parcel auditing. 

What does it take to get started?

Distributors don’t have to accept shipping overages, inadequate pricing agreements, and inefficient accounting processes as a cost of doing business. The software is simple to install and cost efficient to employ. To set up the program, distributors create an account within minutes and the system immediately begins to audit shipments and generate savings without disrupting daily workflow. There’s no upfront cost to the distributor, only a split of the savings recovered. 

Parcel audit and recovery software is a cost-efficient way for companies to ensure they’re maximizing savings and time.

Insights Logistics is brought to you by Amware

What to consider when looking for a warehousing and logistics provider

It’s an unprecedented time for the warehousing industry. Demand is up, which means space is very limited. That has had a tightening effect in the market.

“Companies are hesitant to invest in and build warehousing infrastructure, so instead they’re leasing and signing long-term contracts,” says Brad Mullins, COO at AMWARE Companies. “This has led to manufacturers and distributors paying a premium for warehousing space.”

Given that prices are rising, it’s important that manufacturers and distributors get what they need from their warehousing and logistics service provider.

Smart Business spoke with Mullins about what to look for when shopping for a warehousing and logistics provider.

What should be the primary concerns when exploring warehouse space?

Many clients are asking the warehouse and logistics provider to pick and ship product orders to their customers. They want their partner to have a strong warehouse management system to manage orders so they can be confident orders are being sent out correctly. It’s ideal if the provider’s inventory management system integrates with the client’s system. That allows clients to keep an eye on their inventory and know when products roll out to customers. 

How the product is shipped is a factor when choosing a warehouse. For example, some products move across the country by railcar, so to load and unload those products securely a warehouse needs a rail spur as well as special equipment to load and unload products. Some warehouses are built to bring train cars inside or at least under cover so that they can be loaded and unloaded while keeping the products out of the elements.

Not every warehouse can accommodate every client. Sometimes, in general warehouse space, certain products can’t be kept near others, so clients need to be assured that a warehouse can effectively cordon certain products off. Other products require a temperature-controlled environment that can be regulated for temperature-sensitive items. 

Generally, clients want dry warehouse space that’s secure, meaning the grounds are fenced off and there’s a security system in place, and that the warehouse has a proper fire suppression system installed. Whatever the need, it’s a must to inspect the facility before agreeing to store products in it. 

What services should prospective clients consider as they choose a warehouse? 

Many manufacturers and distributors aren’t experts on fulfillment or inventory management. Companies that have trouble managing those processes efficiently would benefit from partnering with a warehousing and logistics company that has that expertise.

Full-service third-party logistics providers can provide unloading, palletizing, shrink-wrapping, picking — all the services necessary to get a client’s product out to its customers safely and efficiently.

These services are performed as an extension of the client. The warehousing and logistics partner is working directly with its clients’ customers, making sure the product is wrapped correctly for delivery and that billing is accurate. On-time delivery and proper inventory management processes are necessary so clients can trust that products will be delivered to client customers on time and in excellent condition.

Everything the warehousing partner does on a client’s behalf represents the client, and that’s an important consideration when choosing between warehouse providers.

What’s the significance of building a strong relationship with the provider? 

From both perspectives, a strong relationship is about good communication. A free and open exchange of information means each party knows what’s going on with the customers, products and inventory mix. Communicating effectively also means making expectations clear so that goals and objectives can be met. 

What else should companies know as they search for partners in the distribution chain? 

Choose a provider that has the experience to handle specific products correctly and in compliance with any applicable laws. If a product is warehoused in a way that conflicts with the applicable regulations, an inspector could shut down the warehouse, which means the products don’t ship and customers and clients alike are negatively affected.

Insights Logistics is brought to you by Amware

As shipping costs project upward, some tips on lowering expenses

Generally, the expectation is that transportation rates will continue to increase this year. 

“Shippers can expect a 5 to 7 percent increase in freight rates for 2019,” says Matthew Fink, vice president of logistics at AMWARE Companies. “Some will see higher increases and some lower, but very few should see double-digit increases. Even fewer will be in the 2 to 3 percent range.”

A key driver in the capacity shortage is the sustainability and pace of ongoing economic growth. Continued 3 to 4 percent GDP growth is great for most shippers, but will come with increased logistics costs. 

“It is a great issue to wrestle with,” he says. “But certainly the byproduct of increased shipping costs has to be dealt with.”

Smart Business spoke with Fink about how companies can lower their shipping expenses even as costs rise.

What are the market trends that are creating tightened capacity?

General market volatility should be muted as the marketplace has integrated the Electronic Logging Device (ELD) mandate. The ELD mandate effectively reset the normal amount of available capacity and that learning curve has largely subsided. 

Capacity is expected to remain tight and rates will continue to increase as there just aren’t enough new drivers entering the vocation to replace those that are retiring. An aging workforce, lack of new entrants, economic growth and an already low unemployment rate mean there are few prospects for relief in calendar year 2019. 

What can companies do to lower their shipping costs?

Companies should work to be a shipper of choice. That means making their freight attractive to motor carriers. Doing so means it’s more likely that their products get moved by carriers when they’re faced with a choice of which shipment they are going to accept. 

Make sure procurement activities are addressing relationships in the carrier networks and their transactions are as efficient as possible for all stakeholders. 

Some of this can be done by taking steps to increase lead time. By giving planners and carrier partners more notice, and some leeway on delivery times, companies will get a higher acceptance rate and keep their shipping rates down. 

Companies can also significantly lower their costs by fully utilizing each outbound load. This may involve discussions with customers, but they’re likely to be receptive if some of that benefit is shared with them. Ask them to increase their order size and offer to pass a portion of the freight savings on to them in exchange. 

Often overlooked are opportunities with inbound transportation. Too often shippers allow their vendors to select the transport options for raw materials or inbound freight. There typically is no incentive for inbound suppliers to pick the most cost-effective option, so they choose the one that is most convenient for them, which passes the costs back to the shipper.

Additionally, the acceptable practice is to add margin on top of freight costs, so that supplier is likely marking up an option that is already not the best. The leakage in inbound is hard to see directly as the buyer doesn’t see the freight bill. But once the company starts controlling the freight on inbound freight, it can realize a 15 to 20 percent reduction in transportation costs on those shipments.

Plus, the company may be able to match up those inbound shipments with those already shipping outbound to create more cost-effective round trips. For companies that operate a private fleet, this is a must. For those that outsource their transportation, their freight just became very attractive.  

How can companies better manage their shipping to realize greater cost savings?

The better third-party logistics providers teach and coach as much as anything else. A really good supply chain partner should be asking their partners some tough questions. If they are truly operating in the company’s best interests, they should be an integral part of operations, not just a vendor.

A quality third-party logistics provider can create a return on investment that is greater than their expense. That requires effort and commitment on the part of both parties, but companies can outpace the competition by using that expertise to their advantage.

Insights Logistics is brought to you by AMWARE

Low price doesn’t mean greatest savings with LTL shipping

When it comes to less-than-truckload shipping (LTL), companies are looking for the right carrier with the best transit times, rates and services.

“It’s a challenge to find the best carrier because there are so many running the same routes,” says Brad Mullins, COO at AMWARE Companies.

When searching for an LTL shipping provider — of which there are many — companies tend to spend a lot of time online visiting carriers’ websites, typing in the same information over and over to get their rates and transit times.

“Shippers that have 100 orders a day are often getting three to five quotes per shipment. The time it takes to do that becomes a challenge,” he says.

Given the consolidation that’s happened in many companies’ traffic departments, finding a third-party logistics provider (3PL) that can not only find competitive rates, but offer other time-savings services, can bring real bottom-line value.

Smart Business spoke with Mullins about how the right 3PL can make shopping for the best LTL carrier easier.

What challenges do companies typically face when it comes to finding an LTL carrier?
Not every shipment is built the same. There are myriad product types under many National Motor Freight Classification designations, all of which are factors when negotiating shipping costs with carriers. And only when carriers have been contacted and specific rates have been negotiated can rates be compared against all others to find the best price and transit time for a particular shipment.

Because the traffic departments of a lot of companies have been consolidated, there’s no longer multiple personnel available to deal individually with all the aspects of the department — loading trucks, finding and comparing shipping rates, scheduling production, etc. It’s often the case that one person is loading trucks and negotiating rates with carriers. This is why 3PLs have become such a key partner in recent years.

How can 3PL companies help with LTL shipping?
Having a shipping partner that has the experience needed to compare shipping costs among LTL carriers is important, and it’s a service that can be found in some 3PL companies. These companies can gather the information and find the best quotes for each LTL shipment, eliminating the time burden while quickly finding the best prices. They’re a partner and a consultant that has the technology combined with an understanding of shipping characteristics to narrow down the choice of carriers.

Some 3PL companies have a full team of dispatchers who can help move freight. They will find the best LTL carrier for the job, schedule the pickup and complete all of the paperwork that goes along with the delivery and deal with any discrepancies to ensure the price quoted is the price charged. They’ll even handle the billing.

Not all 3PLs have a team. Some just have software tied to their websites that traffic department personnel can use to manually search rates.

Companies can also find 3PLs that are able to integrate their shipping software with a company’s existing Enterprise Resource Planning systems. That enables the provider to populate shipping characteristics the moment an order is received, and begins the routing process.

What benefits can companies realize by partnering with a 3PL to handle their LTL shipping?
Partnering with a full-service 3PL company offers relief to a company’s traffic manager, enabling them to get back the time needed to make sure the right product gets on the right trucks rather than managing carriers.
There’s also a bottom-line benefit to working with a 3PL.

For instance, some traffic managers can spend three hours every day trying to find the right carrier for every shipment. By working with a 3PL, those three hours can be deployed elsewhere. It means consistently getting the best shipping prices while lowering the time spent finding them, which brings down overhead costs.

Not every 3PL is the same. Full-service 3PLs offer deeper services to manage all of a company’s LTL shipping. Find a company that can be partner and consultant. Working off of price alone will not help companies achieve the savings they’re looking for.

Insights Logistics is brought to you by Amware

Reduce your parcel shipping expenses through software

Parcel delivery is more than shipping packages on time. There are elements of auditing and contract negotiation that when applied diligently can recover hidden savings.

“Say you ship a package through one of the major carriers using next day air so it arrives at 10 a.m. If it gets there at 10:01 a.m., it’s late, which is not uncommon, and you could be due a refund. However, if no one at the company is auditing shipments, there’s no way to know a refund is due. Companies that make hundreds of thousands of shipments are leaving a lot of unclaimed money out there,” says George W. Reyes, executive vice president at AMWARE Companies.

Companies can also find savings through contract engineering, which is a process of comparing rates to identify discounts that can be applied to pricing agreements.

Fortunately, in both cases, that work can be done through time-saving software. Unfortunately, most companies don’t realize that such software exists.

Smart Business spoke with Reyes about how parcel auditing and contract engineering software can be deployed to save money on shipping.

What challenges come with parcel audits?
Companies often skip parcel audits because the manual process is time-consuming and laborious. Carriers send shipping invoices weekly, each of which can be hundreds of pages.

Most companies don’t have parcel auditing software in house. Instead, someone in the accounting department spends a considerable amount of time thumbing through shipping invoices to find any incorrect charges. And there’s a lot to look at.

Among the issues to review are shipping times, which should be checked against the guaranteed delivery times to see if a refund is due for late delivery. Also, the major carriers assume a package’s weight through its dimensions. There are enough instances of incorrect weight assumptions that companies that don’t catch the error will overpay for a shipment.

Why scrutinize pricing agreements?
Pricing agreements for parcel shipping are designed to be confusing. To untangle the language, companies use contract engineering, which is another method of ensuring parcel shipping costs are kept as low as possible. Many companies are unaware of what can be negotiated in an agreement.

Much like parcel auditing, contract engineering is done through software, instantly comparing levels of service with thousands of other shippers to find appropriate discounts and improve pricing agreements with carriers.

How is parcel auditing and contract engineering software implemented?
Adopting the auditing software is easy. Not much about companies’ shipping processes change — they will still get invoices from their carriers and still pay them directly. Companies just set up an online account and the software automatically does the rest.

Contract engineering is a little more involved. It uses data captured though the auditing software to analyze better pricing agreements. The process typically takes one month, largely because the new agreement needs to be negotiated with and changed by the carrier.

What does the software cost?
Typically there are no costs. Whatever savings are found through an audit  — companies typically save 5 to 6 percent on shipping — is split evenly between the software provider and the company. That means the software doesn’t have to be a budgeted line item because it’s paid for exclusively through found money. That money was already spent on shipping, and now some of it is coming back just by uncovering errors.

It’s the same with contract engineering — it’s paid for entirely through found money. If a discount can be found on shipping, part of that savings comes back to the company, offsetting its shipping costs, while the other part pays for the software.

Don’t be taken advantage of by the only two major parcel carriers in the market. Find a partner that has the technology and software to ease the pain of auditing and negotiating parcel agreements.

Insights Logistics is brought to you by Amware

How to cost-effectively navigate the tightening logistics market

The logistics industry is being affected by two divergent trends: a driver shortage and growth in the U.S. economy. The confluence of factors has greatly reduced capacity, leaving shippers with the uncomfortable choice to either take an expensive option or to have their materials sit.

“Shippers of all types are feeling the effects of these trends in increased freight rates,” says Matthew Fink, vice president of transportation at AMWARE Companies. “However, there are tactics that can save companies from absorbing the additional freight expenses or having to pass them along to their customers.”

Smart Business spoke with Fink about strategies to cost-effectively navigate today’s shipping challenges.

What is a shipper of choice?
Shipper of choice is a term that delineates companies that build quality relationships with their logistics suppliers. It can make a company’s freight more likely to be hauled quicker and at reasonable pricing, something that’s important as logistics capacity tightens.

Most of the components of a good shipper of choice program are fairly inexpensive to implement, and in some cases are free — paying invoices early or consistently on time, treating drivers well. What remains can be difficult, but follow best-in-class sourcing and procurement activities.

For years, trucking has been treated like a commodity, and shippers did not develop durable relationships with their transportation suppliers. Transportation companies have to be treated like any other material supplier. Preferential treatment regarding capacity, commitments and payment terms, however, requires a partnership.

What are dedicated solutions in logistics?
Dedicated solutions can vary in depth, scope and formality. At a basic level, there can be a noncontracted commitment to scheduled movements where a carrier dedicates a specific amount of capacity to a customer.

More formal arrangements can include service-level agreements, performance incentives and the sharing of risk for damaged or late materials.

The misperception is that only big companies can install an effective, dedicated program, or that dedicated programs are inflexible and more expensive than a traditional network design. Rather, when proper care is used in scoping the needs and determining the value of a dedicated program, companies can realize value without having enormous volumes or signing an unfair agreement.

What should companies look for in a request for quotation from logistics companies?
Extreme care should be used when crafting a request for quotation (RFQ). Too many constraints will dissuade carriers from participating, and too loose of a program won’t ensure supplier accountability.

The keys to a great sourcing event are to ensure the data returned is comparable and doesn’t require reassembly to make an apples-to-apples comparison. That could affect the integrity of the data and assumptions can be made that result in future billings not matching expectations.

While consistency is helpful, companies should allow suppliers to present alternative and creative solutions. Ask respondents to adhere to the RFQ template, but give them room to put their expertise on display.

How can companies leverage their logistics provider to drive value in their supply chain?
The right logistics partner will be able to leverage all aspects of its network to optimize and provide efficient and flexible solutions. Ideally, your logistics partner will be able to provide a balanced solution as both an asset-based provider and leveraging a robust 3PL network.

The work companies put into their logistics network can be shared with their customers. That transparency and collaboration from order to cash will enable all stakeholders to reap the benefits of network optimization.

Supply chains are maturing at an incredibly rapid pace. The proper resources and business plans have to be installed to stay in front of the competition. Embrace the value in the supply chain, leverage the expertise of partners and work in a collaborative fashion with customers and suppliers.

Shippers are not at the mercy of the market. There are levers they can pull to optimize and protect their business.

Insights Logistics is brought to you by Amware

How your products are delivered is a reflection upon you

Third-party logistics (3PL) companies have to deliver freight to their customers on time and undamaged. Finding a logistics company that is capable of consistently executing and safely warehousing products requires due diligence.

Warehousing is critical because customers are judging the companies from which they purchase goods based on the condition and timely delivery of those goods. Damages or delays reflect poorly on the manufacturer.

“A product manufacturer’s customers have no idea a third-party is involved with the storage and shipping of their order,” said George W. Reyes, executive vice president of AMWARE Companies.

Smart Business spoke with Reyes about how to find a 3PL that will uphold a company’s reputation for quality and attention to detail.

What troubles do companies tend to have with warehousing and logistics?
Product manufacturers, for example, rely on third-party warehousing and logistics partners to get the right product, the right lot number, and the right quantity — with the right labeling — to their customers on time.

It’s a very fast-paced business that requires a high degree of organization and accuracy to execute correctly and consistently. If the third-party provider makes mistakes, it reflects poorly on the customer because it’s their name on the product being shipped.

When executed correctly, 3PLs add value to the supply chain by labeling and prepping the products to be shipped. Regardless of those extras, it all needs to be done just-in-time and without error.

More and more, companies forego having their own asset-based warehouses because they’d rather invest that money in improved or additional manufacturing space. That’s why it has become increasingly popular to outsource warehousing and logistics to a third party. Outsourcing places the responsibility of product distribution to the third party, saving companies the huge costs associated with running a warehouse.

What should businesses consider as they look for outside warehousing help?
The condition of the warehouse (structure) is often overlooked by companies conducting due diligence to find the best 3PL provider. Businesses seeking to partner with a 3PL should look for a company that has a well-constructed, modern building.

The geographical location of the warehouse is another often overlooked component. Companies looking for a warehouse would be well-served to partner with one in a favorable geography to its client base. Cleveland is a fantastic market because products sent from the city can reach 70 percent of the U.S. population in one day or less.

Technology also plays a significant role in warehousing. For instance, does the warehouse use RF scanners for lot control, accountability and accuracy? There should be a sophisticated inventory management system that can handle the type of inventory needed for the product being warehoused.

Some manufacturers need a logistics provider that can accommodate a first-in-first-out process. That system needs to be fail-safe when it comes to picking the correct lot number and date of manufacturing. Sending the wrong batch can create a host of costly problems the manufacturer will be forced to reconcile.

Two other aspects to consider are quality control and inbound/outbound processes. Ask about inventory accuracy rate — some companies maintain rates as high as 99 percent. Also consider the hours of operation. Some warehouses keep standard business hours while other companies adjust to their customers’ hours of service.

How does price factor into the decision?
Price alone should not drive the decision to work with one logistics provider over another. It’s critical to conduct a background check on the warehouse provider. Companies looking to partner with a 3PL or warehouse should make sure they have quality facilities and experienced and knowledgeable staff capable of handling the distribution of specific products.

It can be surprising to some companies when they compare potential providers against their current provider and find out how little they were getting for what they were paying. Find a good partner that has your and your clients’ needs in mind, because if it’s a one-way street, the relationship is doomed.

Insights Logistics is brought to you by Amware

Low price doesn’t mean greatest savings with LTL shipping

When it comes to less-than-truckload shipping (LTL), companies are looking for the right carrier with the best transit times, rates and services.

“It’s a challenge to find the best carrier because there are so many running the same routes,” says Brad Mullins, COO at AMWARE Companies.

When searching for an LTL shipping provider — of which there are many — companies tend to spend a lot of time online visiting carriers’ websites, typing in the same information over and over to get their rates and transit times.

“Shippers that have 100 orders a day are often getting three to five quotes per shipment. The time it takes to do that becomes a challenge,” he says.

Given the consolidation that’s happened in many companies’ traffic departments, finding a third-party logistics provider (3PL) that can not only find competitive rates, but offer other time-savings services, can bring real bottom-line value.

Smart Business spoke with Mullins about how the right 3PL can make shopping for the best LTL carrier easier.

What challenges do companies typically face when it comes to finding an LTL carrier?
Not every shipment is built the same. There are myriad product types under many National Motor Freight Classification designations, all of which are factors when negotiating shipping costs with carriers. And only when carriers have been contacted and specific rates have been negotiated can rates be compared against all others to find the best price and transit time for a particular shipment.

Because the traffic departments of a lot of companies have been consolidated, there’s no longer multiple personnel available to deal individually with all the aspects of the department — loading trucks, finding and comparing shipping rates, scheduling production, etc. It’s often the case that one person is loading trucks and negotiating rates with carriers. This is why 3PLs have become such a key partner in recent years.

How can 3PL companies help with LTL shipping?
Having a shipping partner that has the experience needed to compare shipping costs among LTL carriers is important, and it’s a service that can be found in some 3PL companies. These companies can gather the information and find the best quotes for each LTL shipment, eliminating the time burden while quickly finding the best prices. They’re a partner and a consultant that has the technology combined with an understanding of shipping characteristics to narrow down the choice of carriers.

Some 3PL companies have a full team of dispatchers who can help move freight. They will find the best LTL carrier for the job, schedule the pickup and complete all of the paperwork that goes along with the delivery and deal with any discrepancies to ensure the price quoted is the price charged. They’ll even handle the billing.

Not all 3PLs have a team. Some just have software tied to their websites that traffic department personnel can use to manually search rates.

Companies can also find 3PLs that are able to integrate their shipping software with a company’s existing Enterprise Resource Planning systems. That enables the provider to populate shipping characteristics the moment an order is received, and begins the routing process.

What benefits can companies realize by partnering with a 3PL to handle their LTL shipping?
Partnering with a full-service 3PL company offers relief to a company’s traffic manager, enabling them to get back the time needed to make sure the right product gets on the right trucks rather than managing carriers. There’s also a bottom-line benefit to working with a 3PL.

For instance, some traffic managers can spend three hours every day trying to find the right carrier for every shipment. By working with a 3PL, those three hours can be deployed elsewhere. It means consistently getting the best shipping prices while lowering the time spent finding them, which brings down overhead costs.

Not every 3PL is the same. Full-service 3PLs offer deeper services to manage all of a company’s LTL shipping. Find a company that can be partner and consultant. Working off of price alone will not help companies achieve the savings they’re looking for.

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