Business People Sitting in an Office Building Chatting

Is Blockchain The New Supply Chain?

Blockchain!  The new hip and technical term everyone is hearing more about; what is it exactly and how will it affect your Supply Chain in the very near future?

Throughout modern history, the majority of anything involving the sale/transfer of goods and services between two or more parties was recorded on some form of a physical ledger. With the development of the computer and the internet over the last several decades, technology has proven that the use of a physical ledger is no longer efficient and can be highly risky for business.

Technology dictates how we buy and sell and keeping records of that has become increasingly more complex and leaves too much room for inaccurate data and in some cases, even fraud.

Take for example, a widget manufacturer; the company’s supply chain can be vast.  Sourcing materials from multiple vendors, assembling products lines and having third party logistics providers transport product direct to customers. Without Blockchain technology, a company is forced to rely on transactional data from multiple intermediaries who own and control their data.  This is inefficient as parts of the data can be changed by various owners and therefore, visibility for the manufacturer and other parties in the supply chain is highly limited.

And here’s where Blockchain technology can be a game-changer– as every transaction or data input occurs, it would be placed into its own “Block.”  When another Block of data is created it is then linked to the previous Block.  All parties have permission to see the data Blocks and once they are created, they cannot be changed, moved or deleted unless all parties involved review and agree to the changes. This is HUGE for transparency. Who doesn’t love transparency? Especially with your own business – honesty is the best policy, I always say.

As technology continues to develop there will be more and more room for error and fraud.  Blockchain is a simple and efficient solution to provide value and security for companies, consumers and logistics providers to ensure that the data they operate off of is correct and tamper proof.

Tesla

Can Tesla’s New Semi-Truck Pave the Way for an Entire Industry?

The commercial trucking industry is integral to our daily lives.  In the United States approximately 70% of all freight is moved by commercial trucks; the figures are higher for food, agricultural and pharmaceutical products. Essentially, nearly everything you come in contact with on a daily basis has at some point, been on a commercial truck.

Interestingly enough, these goods/products are moved across the country by trucks that have gone virtually unchanged for nearly 50 years; what has changed is the technology utilized to organize and move goods more efficiently.  The core problem for the commercial trucking industry remains that freight is moved by energy/fuel that may not be available or will become too expensive in the near future.

This is where Tesla comes in.

Tesla has been breaking barriers in the automotive industry with the success of their fully electric fleet of vehicles for consumers.  Now Tesla is going to try to change the hearts and minds of the commercial trucking industry with the unveiling of their fully electric Semi-Truck come September, 2017.

Manufacturers for the commercial trucking industry today seem more worried about driver shortages than what their trucks will run on in the next 5 to 10 years.  But they need to also be concerned about fuel prices and that’s where Tesla has the answer.

As electric vehicle technologies become more common and less expensive, trucking companies will quickly see the benefit of operating those vehicles over fossil fuel.  The cost of electricity will also be managed with companies creating their own electricity through solar, wind, water, etc.  Not to mention the significant federal and state tax credits that these vehicles will allow companies to apply for.

Tesla is the ONLY Company to successfully bring to market a fully electric and non-polluting vehicle fleet and the same will be true with their new semi-truck.

The trucking industry in the US alone operates over 15 million gasoline powered vehicles and economists are predicting that this ‘cheap gas phase’ we have had for the last two years is going to be short lived.  Fuel prices are expected to increase by 75% by 2020 and the cost for charging electric vehicles will be significantly less than it is today.

One thing is for sure, significant change in the commercial trucking industry is coming.  Whether it is using other forms of alternative fuel rather than electric; the fact remains that in our lifetime gasoline and diesel will be a thing of the past because it simply is inefficient and costs too much.

iccblog

Grocery Giants Feeling Pinch of Online Grocery Sales

Ever heard the expression, “If you can’t beat them, join them.”  Well that’s exactly what is happening at large grocery firms, Wal-Mart, Kroger and Meijers.  Each of these grocery giants are feeling the pinch of the large dollar volume of on-line grocery sales that is currently “owned” by Amazon; and they’re “not going to take it anymore.”

According to a recent Nielsen Survey, on-line grocery shopping has increased from 16% to 20%, but what’s more revealing is that 50% of those on-line grocery shoppers shop on Amazon.  So these large grocery retailers really have no choice but to seriously look at ways to enter the grocery delivery marketplace to compete head on with Amazon.  To get these programs moving, they are currently utilizing several Last Mile delivery partners, such as Shipt and Instacart as a start.  How well these Third Party delivery firms perform at the customer delivery level will either spell success or failure of this program; we suspect it will be the former.

This new approach to holding onto current customers is a “no-brainer” as far as we are concerned.  It would behoove other grocery retailers to jump on the bandwagon as well and make the same decision before it’s too late.

Here is something from WSJ.com that might interest you:

Grocery heavyweights expand delivery services
http://www.wsj.com/articles/grocery-heavyweights-expand-delivery-services-1489062780

Success concept

When Auditing Isn’t Enough

–What a Comprehensive Audit Looks Like and the Profit Leaks You’re Likely Missing–

Whether a company ships small packages via parcel carriers, larger items in LTL or Truckload quantities, or imports and exports products via ocean and air carriers, creating a comprehensive invoice audit function is critical to ensure the company only pays what it should pay.  Sounds logical enough-but there is much more to auditing a company’s transportation and logistics expenses that very often is overlooked.

First and foremost, transportation and logistics invoice auditing requires specialized skills that many companies do not possess within their own organizations.  The accounts payable department usually has the responsibility to ensure the invoices are correct before processing those invoices for payment. However, they usually do not have access to the service provider’s base rates, discounts and incentives and the technical expertise to know when various accessorial fees apply and when they are not applicable.

Verifying the charges to be paid on transportation and logistics bills is only part of the audit process companies must consider before paying any invoice.  The first step in the invoice audit process is to make sure the company is actually responsible for paying an invoice in the first place.  A complete understanding of the terms of sale, or terms of purchase is most critical.  It doesn’t matter what charges the carrier or service provider assesses, if the invoice is not the company’s responsibility to pay in the first place.  And yet, we are amazed at how often companies actually pay invoices they are not responsible for paying in the first place.

Comprehensive transportation and logistics invoice auditing should actually be a multi-step process.  The first step is to ensure the invoice being audited should in fact be paid.  The second step in the audit process is to ensure the charges are 100% accurate.  The third and final step in the invoice audit process is to make sure the company is not experiencing any “profit leaks” which can increase a company’s transportation and logistics costs by as much as 30%.

What do we mean by profit leaks; here are some examples.

  • Sometimes, corporate purchasing departments will purchase goods on a delivered basis with the inbound freight costs included in the actual merchandise cost. In these cases, unless a comprehensive analysis has been performed that guarantees the portion of the product cost which represents the freight cost is actually less than the company would be able to negotiate on their own, a company could be losing significant dollars.
  • In some cases inbound freight costs are detailed as a separate line item on the merchandise invoice. Often times in these cases it is impossible for the accounts payable department to discern if the freight charges included on the supplier invoice are in fact as competitive as they should be.  In many cases the supplier will add a “little extra” to the invoice to cover their costs of prepaying the freight costs and waiting for their customer to pay the merchandise invoice.
  • Some companies have waived their right to file claims for refunds for late delivered packages with their parcel carriers. Sometimes parcel carriers will put this waiver into a recently negotiated contract without ever pointing it out to their shipper customer.  In these cases, the parcel shipper could lose tens of thousands of dollars in missed refunds annually they were previously receiving when no waiver was in place.
  • In some instances parcel carriers will offer an additional incentive to the shipper for agreeing to the late delivery refund waiver. The real question for shippers receiving this additional incentive is the need to absolutely be assured the additional incentive meets and hopefully exceeds the refunds the parcel shipper previously received.
  • Profit leaks also come about when shippers fail to properly describe their freight on a bill of lading, especially when the freight classifications are dependent on value or density ratings. Oftentimes when the proper density or value of the goods are not stated properly on the bill of lading, the shipper will be charged the highest rate for that freight classification category.
  • Shippers also suffer profit leaks when they fail to negotiate increased discounts and incentives on a fairly regular basis, especially since almost all freight carriers increase their rates annually. Profit leaks also occur when shippers fail to benchmark the rates they are paying against other shippers with like shipping characteristics.  And, if the shipper does not have the resources in house tom perform those benchmark studies, Third Party Logistics Consultants can provide those resources.
  • Shippers also endure profit leaks when they double insure their shipments by paying the carriers for added insurance while at the same time carrying a corporate transportation liability policy. You would be amazed at how often this actually occurs
  • Shippers that fail to “test the market” through the use of Competitive Bid Processes are also subject to significant profit leaks. And, very often those profit leaks represent substantial lost freight dollars.

Finally, shippers should always entertain outsourcing their transportation and logistics invoice auditing to Third Parties that specialize in providing these services.  Both Pre-Audit and Post-Payment audits are available.  Pre-Audit fees are typically based on a small transaction charge per invoice, while Post-Payment audit fees are almost always provided on a shared contingency basis, so there are no fees if no refunds are received.  It’s a great way to ensure a company never overpays for shipping again.

WSJ

No longer your father’s supply chain!

It’s obviously no longer your father’s supply chain!  We have all been witnesses of what we consider significant changes to traditional supply chains.  The Wall Street Journal is now reporting that Kellogg Company will remove the leg of actual store deliveries from its traditional supply chain to retail grocery stores and just deliver their sought after goods directly to the grocery store warehouses.  This means the grocery chains will now have the responsibility to handle the actual store deliveries.

So what’s the impact here, well for Kellogg, they intend to close 39 distribution centers and will eliminate approximately 1000 jobs.  So for Kellogg workers this is certainly a major blow.  For the grocery chains, this means more goods moving through their distribution centers for actual store delivery; obviously at additional costs.  We also wonder if the reduced costs Kellogg will benefit from by making these changes will be passed onto their customers in terms of reduced prices for the “delivered” goods.  Somehow we don’t think that will be the case however.

Here is a link to the full article.

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The Three Biggest Mistakes Parcel Shippers Make!

Several key factors in today’s fast-paced business world are driving the explosive growth of online shopping.  These factors, such as millennials, (and others for that matter),desire to shop on line, rather than in physical stores; the growth of entrepreneurs starting new businesses to sell just about anything online; and manufacturers needing to sell at the wholesale as well as at the retail level.

The net result of these factors and others, is more and more companies are utilizing parcel carriers to deliver their products to the ultimate consumer.  With this growth comes a need and responsibility to clearly and thoroughly understand all of the rules, regulations, rates, shipping options and legal ramifications of dealing with the parcel industry as a whole.  Today, we’d like to explain what we believe are the Three Biggest Mistakes Parcel Shippers Make.

  1. Not Benchmarking Competing Carrier’s Rates and Services– The first mistake we believe parcel shipper’s make is not understanding all of the options available to them from the ever-growing list of parcel carrier service providers.  Time and time again we witness shippers who never step outside their comfort zone to interview, review and analyze various competing carrier services to benchmark whether they have a good deal or not.  The reality is, if a shipper does not continually benchmark their services and rates they are paying, by default, they accept the status quo and oftentimes that means paying much more for transportation services than they really need to.

Yes, we thoroughly understand that switching volumes of business from a long time preferred parcel carrier may come with some implementation pain.  However, if a parcel shipper does not test the competitive waters they may be boxing themselves into paying higher rates year after year.  Another key point to take into consideration is service level comparisons.  Oftentimes, regional parcel carriers can deliver products faster in certain lanes compared to some national carriers.  What about USPS as an alternative?  This is not your father’s Post Office any longer.

Some additional food for thought; do cable companies, home alarm companies, mobile phone service providers, and other service companies charge their longtime customers more for services than they charge their new customers?  You bet they do and unless a parcel shipper analyzes all of the options available to them on an on-going basis, they will probably pay more year after year as well.  If a parcel carrier feels they have a “lock” on a shippers business, (primarily because the shipper has never utilized a bid process to evaluate the benefits of competing carriers), what incentive would that carrier have to publish lower rates?  That’s correct, absolutely none.  The fact is the incumbent carrier may turn out to be the best choice for a particular shipper, but unless that shipper benchmarks services and rates of competing carriers, they will never ever really be sure.

  1. Read The Fine Print, and More– Most parcel carriers provide their shipper customers with a pricing agreement or contract which outlines the various services to be provided and the associated rates and charges they have agreed to assess for those services.  Warning to parcel shippers!  Don’t just sign the agreement without reading it thoroughly to make sure all of the terms and conditions are EXACTLY as you and the carrier agreed to.  Here are several questions we would ask every parcel shipper who has recently negotiated a new pricing agreement or re-negotiated a contract with a parcel carrier.
  • Did you agree to a Guaranteed Service Refund Waiver with your parcel carrier sales representative?  No, then why is it now in your contract?
  • What Dimensional Weight Divisor did you and the parcel carrier agree would be published?  Is that the Divisor that is now published in your new contract?
  • Do you understand that many parcel carriers make their contracts subject to provisions of a service guide that is not a physical part of the transportation contract you are signing?
  • Do you know the parcel carriers can change the provisions of those service guides at will and do not need to specifically notify each and every one of the customers when they do?
  • Parcel carriers typically provide differing pricing incentives for various service levels, are you sure all of the discounts and incentives have in fact been published exactly as you and the parcel carrier agreed to in your negotiation sessions

Why ask these questions?  Precisely because for some parcel shippers these exact issues have arisen and many of these companies never identified them until it was too late; so our advice to all parcel and freight shippers for that matter is; Caveat Emptor, let the buyer beware!

And, one final point, a very important point; we strongly recommend that each and every parcel carrier contract, or any transportation or logistics services contract for that matter, should be reviewed by a                 qualified Transportation Attorney, before any of those contracts are signed.

  1. Continually Audit Parcel Carrier Invoices– Once the contract has been signed, all parcel shippers should ensure they have a qualified third party audit firm auditing each and every invoice to make sure the rates being charged are the rates the shipper agreed to in its pricing agreement or contract.  The auditors will also be able to file for refunds for Guaranteed Late Delivered packages, as long as the shipper has not waived their right to file such claims.

Parcel Audit firms also provide on-line access to their client’s pertinent shipping data and can even report results based on specific Key Performance Indicators (KPI’s) their shipper customers agree to.  They also provide continuous and meaningful reports on a variety of different metrics so the parcel shipper always has their finger on the pulse of what’s going on with their parcel shipping expenses.  We’ve all heard the statement, “you can’t manage what you can’t measure” and unless your firm has the technical expertise to generate this critical shipping data in-house, outsourced parcel audit firms have all the reporting power a parcel shipper would ever need.

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Parcel shipping experts especially convenient to New York,including Long Island (Nassau County, Suffolk County), NYC, New Jersey (NJ), Pennsylvania (PA), North Carolina (NC), South Carolina (SC), Georgia (GA), Florida (FL), Virginia (VA), Connecticut (CT), Delaware (DE).