Here are some easy ways you can save as much as 40% on your inbound freight expenses:

• Develop a program to have your vendors that ship to you, or directly to your customers, “forcing” them to use your carrier account numbers.
• Provide a “rate shopping” tool for your purchasing and sourcing departments so when they are placing orders they can choose the best carrier and service level and make it part of the Purchase Order you issue.
• Post an inbound routing guide on your companies website. These routing guides can be as simple as a one page table, or as complicated as many pages. Some large retailers even have interactive on line routing guides.
• Work with your carrier reps, letting then know about your planned increase revenue for them, ask them to give you an increased incentive if your volume increases.

I do 20-40 meetings a month with companies that want to reduce freight, and over the last several months their questions have focused almost exclusively on inbound. 

Good luck on this, and if you need any help with it, please contact me or another professional who you are comfortable with.

Ship Better Save Money

Transportation providers are typically a bellwether of the economy, due to the role they play in moving goods across our nation. News yesterday from YRC (Yellow Roadway Corporation) casts doubt that a full recovery is really underway.

YRC shares fell 29%, due to a debt for equity swap that increases the number of outstanding shares by more than 2 billion.  In exchange, investors will provide YRC with $70 million in new liquidity.  Once the swap is complete, bondholders holding more than $470 million in YRC debt will control 94% of the company.

The hope is that these moves will keep the company solvent as it continues to seek further financing.  We can only hope.

Economic recovery?  Maybe if you ask the our President – just don’t ask YRC!

Scene:  Executive conference room.  CEO and management team huddled around a table evaluating a Transportation Management System proposal presented by VP of Operations: “… so in conclusion, by investing $2.5m in an enterprise TMS system, we will reduce our overall transportation spend by $6m over the next 5 years.  Savings will go straight to the bottom line and we’ll meet the threats by global competitors more effectively”.   Golf claps by the management team.  Except for the CFO and VP of IT who exchange nervous looks like Patriots fans during the 4^th quarter of a Colts game.

CFO:  “Aren’t we still waiting for the return on investment from the ERP project, now 6 months delayed?  Have you factored in the risks associated with changes to our procurement model?  What happens if we go through with the acquisition we have planned for next year?  How will the TMS system adapt?”

VP of IT:  “You guys keep adding systems like I have secret integration sauce stashed in my data center.  After last year’s staff reduction, I have fewer people and they are burning out and barely able to manage the hodge-podge of 35 mission critical systems we’ve accumulated over the years. Now you want to add another!?  Get real.”

The VP of IT didn’t actually say anything, but he thought it.   Instead, he knew the project could be tragically scuttled during the technical due diligence phase.   System incompatibility, security issues or something like that. He’d think of something if the CFO couldn’t.  Otherwise: hello monster.com.

Composite TMS Applications Reduce Total Cost of Ownership and Risks

The above scenario plays out in corporate environments on a Groundhog Daily basis.   Plopping evermore complex layers of technology on top of old technology and expecting it to all sorta-kinda work is unsustainable as an IT strategy (or as an IT management career path).  Everybody knows it, but the same everybodies are being chased by global competition every day.  A new approach is required.

Composite Application technology meets the challenge head on.  Leading industry consultancy Gartner Group defines a composite application as “a software assembly that implements a set of independent but related functions – each meant to be perceived by users as indivisible – and where the component parts are heterogeneous in their information architecture”.   As we would say in Boston: “Those boys from Gahtnah are wicked smaht”.  

Another way to think about:  Do I really need to buy and install a mapping, email, search engine, or sales automation, or should I just ping mapquest, Google, and Salesforce.com?  What if users could access all of those sources of information but within a business context?  Imagine: Sally in sales brings up a customer in salesforce.com, up pops the street view of the headquarters, the latest financial news articles, a summary of billings from the legacy accounting system, and all associated emails to the contact.   What if she could do that without the IT manager having to develop everything from scratch? Now you understand Composite Application technology.

Now imagine you need to more effectively manage transportation costs.  Why not grab data from your order management system, let a managed routing web service figure out the best carriers services to use, ping the carrier for compliant labels and bills of lading, let a trade management web service validate export regulatory requirements,  let a carrier network service provider update your supply chain partners with in-transit status, and access carrier invoices from an auditing service for settlement.  Now you understand Composite TMS Applications.

Reduce Transportation Costs and Improve Supply Chain Collaboration

Composite Application technology and methods are possible because the Internet has forced participants to standardize how information is transmitted and exchanged.  No more systems integration duct tape with proprietary formats.   Web services make it possible to access and consume information when you need it without getting locked in to any specific information source. 

This means that Composite TMS Application platforms are vendor neutral.  You can integrate, rather than buy or develop, capabilities offered by other companies (whether SaaS applications or portals) whose expertise you can “rent” or in some cases get for free.  When your needs change, plug in a different service.  New and more powerful logistics web services are launched every day.  Why not tap into the ones that are useful to your business, as you need them, and unplug them when you don’t?  

Think: are you locked into a proprietary carrier system?  Don’t be (for reasons I now hope are obvious).  Instead ask them to feed you web services that you can use within a Composite TMS Application that includes your business rules, order data, and role-specific contexts  that suits your objectives, not theirs.

In addition, Composite TMS Applications extend the value of your legacy IT investments.  The days of trying to build everything from the ground up or acquire from a single vendor are over.   There is too much valuable information to manage, and that should be a blessing and not a curse.

Best of all, because Composite TMS Application platforms are built on a service oriented architecture, they can be delivered to your trading partners and customers via the Internet in role-specific contexts.  Got a browser?  Connect, collaborate, and communicate, without the costs and risks associated with traditional TMS applications.

Or go visit monster.com.

I don’t know how you felt but when UPS released their earnings yesterday I was shocked.  I literally had to take a Xanax to calm my nerves. Every one of my customers believes it is getting the best deal but guess what? None of them really know for sure! Read on.

How Was Your Profit?

During Q4, 2009 UPS stated how important the across the board 4.9% increase that went into effect on January 2, 2010 was to its company’s profitability. Your rates went up, some as high as 8%. How was your profit? Well my friends if you are not angry about this, then I can’t help.  Why not just offer to pay them 20% more?  But, if you want to fight back, here are five simple steps that will lower your transportation costs…immediately:

Benchmark:  Check with a professional to be absolutely certain the assurances you receive from your carrier rep. are accurate and you in fact have the lowest rates available to you. 

Compare Shipping Rates: When carriers compete, you win.  In real estate valuation is often measured by location, location, location!  I say, compare, compare, compare!  What Brown, Purple, Black and Blue can do for you is based on your ability to negotiate.  You have options! Get an expert if you need help.

Carrier Routes: Make sure every package you send uses the least costly service provided by your preferred carrier.

Hygiene: (Yeah shipping hygiene!): Make sure every carton is addressed perfectly and is placed in the smallest possible carton with the least amount of packing material. BTW, there are foolproof ways to check all your addresses, zip codes and carrier zones.

Freight Bill Audits: Examine your invoice for post-shipment charges and question them when you find them.  Last October at the Parcel Show in Chicago over 50% of the attendees were desperate for ways to control these costs. Why? They needed absolute assurance that their customers were being charged back properly.  They still need it. There are lots of ways to help.

From the Transportation Spend Assassin, I hope this helps your company Ship Better and Save Money℠!

Jim LeRose

What does this have to with UPS, you ask?

UPS, a great company, is caught between the rock of needing to lower its expenses (to the tune of letting almost 2,000 middle managers go even though its Q4 profits for 2009 are apparently higher than expected — note the key word “profits”, not losses); and the rock of lowering its reputation for excellent service at a time when new competitors, most of them not yet household names, abound and new technologies are changing the face of shipping… just as they are upsetting/adding value to everything else we do.

Why? Because Wall St. will kill UPS if it doesn’t. Well, “kill” may be overkill here but “damage” is not.

Whaddyah mean?

In a rising stock market that’s rewarding increasing earnings, many of which are based on lowering costs rather than increasing revenues, Wall St. will feast on the bones of UPS if it doesn’t step up and play the short term game. It will drive their stock price down and that has a real dampening effect on any company no matter how big or dominant it is in its space.

What does all this mean to you?

If you’re a corporate shipper, evaluate your options. Take a good, long look at the newer technologies, the kinds that save you money, from lower, aggregated rates to proof of on time delivery; from the newer OnDemand models that lower or cut out completely your initial Cap X outlays to seeking better rates with LTL, regional carriers… and more.

You will still use UPS throughout this whole ordeal. They’ll ride this out and may even emerge stronger — short term thinking notwithstanding. But as for you, avoid short term thinking. Take the more rational Wall St. view, the longer term approach for your business, while watching out for any and all of your suppliers, business partners or vendors that are laying off a lot of their expenses (that’s what they call it) while cutting back or out huge amounts of service you’ve come to depend on. Whatever they choose to call it, that should be what you’re looking out for. No one else will do it for you.

Joe Mulready is Executive Chairman of the Agile Network, LLC

Shipping Demand Slows Months Before Market Meltdown

Spring 2008. Irrational exuberance still prevails. Dow Jones down but still hovering around 13,000. I talked to a friend of mine at a major parcel carrier. I asked him how the economy looked from a carrier’s perspective:

“Bad.”
“Bad as in time to reconsider tax shelters?”
“No. Bad as in time to reconsider bomb shelters. Looks like no back to school rush, no Christmas rush, no shipping. Economic activity at a standstill. The abyss. Cannibalism. Bad.”
“You really gotta stop following the Cubs and cheer up.”

At a corporate level, FedEx and UPS began to signal weakening freight demand during the Fall of 2007, right at the height of the market. Turns out the carriers could see with their own eyes at their hubs and terminals what would not become apparent to economists for months: businesses were not shipping as much.   The economy was slowing down.  Only unprecedented Federal intervention brought the economy back from the precipice.

DEC Stops Shipping

Those of us in the shipping system business have seen the same dynamic at work at a micro-economic level. I can recall implementing UPS manifest software at DEC warehouses that sprung up around the metro Boston area in the mid-1980’s. At the time, DEC was still the darling of Wall Street, even as they continued to dismiss the idea that PCs could replace mini-computers as serious business machines.

One day we implemented some custom reports for the Traffic Manager and I noticed for the first time that their monthly shipping volumes were declining at the same time the media continued to paint a rosy picture of DEC’s prospects. Shipping didn’t lie. The canary soon assumed room temperature. Compaq swallowed DEC, HP swallowed Compaq. Massachusetts miracle ended. Bush beat Dukakis.

Shipping Outlook 2010

What is the economic outlook for 2010? Mixed, but cautiously optimistic. FedEx CFO Alan Graf Chief sees “some uncertainty regarding the sustainability of current demand trends after our peak shipping season.”, but international, air and group shipments all increased between 3-6%.  Coming from carrier known for conservative financial forecasts, he might as well have sung “Happy Days Are Here Again”.

UPS gave a more optimistic outlook in early January 2010.  UPS CEO Kurt Kuehn announced better than expected Q4 results, anticipating “a gradual economic recovery with improvement more evident as 2010 progresses.”   Cue balloons.

So pay attention to UPS and FedEx volumes in early 2010. They’ll tell us a lot about how we can expect the economy to perform throughout the rest of the year.

Why is poor project management so frequent in the IT implementation world? Because too often project managers forget that their sole function is to bring the project to “go live” on time and on budget. As such they are the drivers of the implementation and it is their job to ensure that all parties to the process perform as expected.

If failure is recognized at such a high rate, where do these project managers fall down? There are several points at which this may happen. They are listed here:

1. Failure to insist upon a detailed, comprehensive project plan that everyone agrees upon– call it a blueprint;
2. Failure to craft along with the entire implementation plan a realistic project schedule and to set up guidelines to manage to it – also part of the plan;
3. Inadequate testing of the project, at various, specified stages, in a reconstructed buyer’s environment by the seller/implementer and, equally as important, by the buyer in its  own environment on a full test platform before implementation and go live;
4. Failure to document all change orders, even the smallest ones (including pricing and schedule changes); and,
5. Failure to drive all parties, all the time, to fulfill all their obligations, especially the plan and timelines.

Any or all of these deficiencies listed above constitute a recipe for upset, even disaster, which usually means a frustrated and unhappy customer, a distressed sales and implementation team, an inability on the part of the sales team to get paid, damage to reputations on all sides, the lack of a referenceable customer and the threat of lawsuits back and forth on both sides.

So, if planning, scheduling, testing etc are so important and everyone agrees with that, the next question is: who should be a project manager? More specifically, what skills and what training should a PM have? Said another way, how much technical ability, training and experience with the product(s) and what in the way of management skills should he have?

The answer: some and lots; some technical aptitude and product specific knowledge and lots and lots of management ability. That is, very good skills at working with people and moving projects along in expeditious fashion. The problem is that far too often project managers are techies who sort of morph into their new roles because of their product knowledge and not because they have good planning and management skills.

This is a mistake. The PM must assume that there are techies on both teams whom he can rely on while at the same time he has enough knowledge on the various subjects before him that he can’t be easily steamrolled by them. And if he senses that he is being played for a sucker, he must be able to know where and when to go for expertise to validate his suspicions.

It’s the other part of the equation, the management side, where he must have a high degree of knowledge and skills because that’s where the consequences are most severe if the project and he fail.

Consider an example from the commercial construction industry, which, I believe, is relevant. Whether the project is a home remodeling assignment, a development of multi-million dollar show houses or a new, 50 storey commercial office building, the issues are the same. Time and money matters drive the deal. Often, almost always in bigger projects, there is construction financing with an interest meter ticking feverishly away and the pressures on the contractor and the subcontractors are relentless to get the job done. Bad planning, delays on the part of delivery of materials or a subcontractor’s lack of availability when he’s supposed to be or whimsical, poorly documented change orders cause delays and inflated costs.

What skills must the PM on such a project bring to his job? Construction knowledge, to be sure; the order in which certain events must happen, absolutely; a recognition that framing the outside of the building must happen before winter, of course. But most of all he must make sure that the project was minutely and accurately planned and agreed to and that execution remains on schedule. Otherwise someone has to pay for the overage, which can run from tens of thousands of dollars to hundreds of thousands or more, and that someone has to be identified and documented every step of the way. That’s the project manager’s primary job and in such situations he is often not the most popular person on the project when he starts exercising his authority. And he can’t accept excuses in a world where everyone about him is inventing them at the speed of light.

What’s so different about a typical IT installation? Oftentimes the size of the job — both financial and the time involved — seems to blind seller and customer alike to the pitfalls of inadequate planning and project management. While the dollars may be smaller than in a $50 million commercial skyscraper, the significance to all the parties may be equally important.

Bad planning and poor execution on a $250K project may be as painful to a couple of small businesses as $3 million or more is to a large contractor or subcontractor in real estate development. As they say in that industry (and others), “Nothing changes but the zeroes; certainly not the pain.”  In the long run, a talented and dedicated PM pays for himself and saves both parties to each transaction lots of time and heartburn.

AgileElite supports the following Purolator rates:

• Air
• Air 9:00 am
• Air 10:30 am
• Ground
• Ground 9:00 am
• Ground 10:30 am
• International Air to US
• International Ground to US
• International
• Billing Services: Prepaid, Freight Collect, Third Party
• Special Services: Declared Value, Saturday Delivery, Saturday Pickup, Dangerous Goods, Hold for Pickup

Other Features:

• Certified Purolator labels
• End of day paper manifest
• Electronic manifest transmission
• Canadian address validation
• Canadian transit times
• Multi-piece shipment processing
• E returns management
• Commercial invoice printing

To help consumers make informed purchasing decisions there are several organizations that publish wholesale auto prices on-line and in magazines.  For a small fee these companies will deliver a fact sheet showing exactly what the dealer’s cost is for the car along with each individual option.  In this instance a small investment could save the consumer a ton of money so that when they visit the dealer, they are armed and dangerous in an attempt to save every penny.  Similarly, when making airline reservations millions of travelers visit Expedia, Orbitz, Priceline among others, to save every penny on airfare.  Put in your origin, destination and travel dates and voila, multiple choices are displayed, many that can save you money.  Imagine if only one choice from one airline came up every time?  The fact is Consumers are using every resource available including advancements in technology to save money, but is your company smart enough to do the same thing when it comes to saving on transportation costs?    

Would you want your employees to visit five different websites and place multiple phone calls to find the cheapest airfare or visit one site?  Would you buy a car without being informed?  Of course not.  So why would you accept a free carrier shipping systems and build your shipping policies around it?  The main reason is because third party multi-carrier shipping software costs money while carrier provided systems are “free”.  It’s easier to say “I’ll take a free system and save the money”.  What you probably don’t know is “free” shipping system’s can cost you big!  The carriers design them to increase their profits and most people don’t understand that by accepting a free system, their weekly invoice can be 15 – 30% higher vs. someone who is using a multi-carrier 3^rd party system.  A multi-carrier shipping system is an investment that may yield huge profits for your company.

Here’s an example:  Last week I participated with a partner of mine who professionally re-negotiated a UPS contract for one of my customers.  This customer had a fully integrated AgileElite multi-carrier shipping system that printed labels for UPS, FedEx, USPS and bill of ladings for LTL shipments.  Although UPS owned the account with 95% of packages being routed through them, they knew the customer could switch to FedEx in a moment.  The result, UPS made three offers during this negotiation process to keep FedEx out of the account which lowered their cost by $243,000 on a 1.7m spend!  If this customer had a UPS provided Worldhip system integrated to their ERP system then UPS would have known the switch to FedEx would probably not happen and they never would have offered such a robust contract.  The rates they got were equivalent to other customers that spend 10m per year!

There are many more examples.  The ROI on a multi-carrier system is compelling these days as carriers scramble to increase profits.  Shouldn’t you try to increase yours?

After 25 years of helping company’s save money I can usually tell during the first 15 minutes of our meeting if I can help save your company money.  You’ve got nothing to lose and everything to gain so why not take the steps to survive this recession and lower your transportation costs? 

Fifteen minutes can save you 15% or more on Transportation Spend!

By Jim LeRose

Jim LeRose is founder of LeRose Systems LLC / Principal, Agile NYC Metro and has been a transportation industry consultant for 25 years.  Jim’s clients have saved millions on transportation costs.  Agile has helped companies such as JP Morgan, Audiovox, Intuitive Surgical, Audiovox, Panasonic, Petco and over 1,000 others.  Jim welcomes your comments and can be reached at jim.lerose@agile-network.com or Phone # 888.214.1763.

• Ground service will increase 4.9%
• UPS Air and International Services will increase a net 4.9% through a combination of a 6.9% increase in the base rate and a 2% reduction in the Air and International Services fuel surcharge
• More flexible pickup options
• Changes to both the Air & International and the Ground fuel surcharge indexes
• Adjustments to many accessorial charges

Package Rates

An assessment of Ground rates begins with the zone 2, 1 lb. rate that is used to set the absolute minimum charge (AMC.) This rate increases from $4.57 to $4.84, up 5.9%.

The percentage increase in this specific charge is less then last year’s 8.8% but still outpaces the overall announced Ground increase. Shippers of light weight, short zone shipments need to take these chances into consideration when developing their parcel shipping budgets for next year.

Continued appraisal of the Ground rates reveals the percentage increases in 2010 are not as high as the increases taken in 2009. However, the trend toward higher increases in the lighter weight breaks continues.

Moving from Ground to Air, for those of you who have been taking advantage of the no weight limit Express Envelope for Next-Day products you will be impacted by the change that (letter) shipments more than 8 oz. will be billed by weight. This is in line with standard practice at FedEx.

The increases by specific service level differ from the 6.9% announced rate increase. A comprehensive review of all domestic zones, letter through 150 lb shows an average increase by service as follows:

• Next Day Air Early AM 6.64%
• Next Day Air 7.90%
• Next Day Air Saver 8.24%
• 2nd Day Air AM 7.58%
• 2nd Day Air 7.90%
• 3 Day Select 6.90%

The attached Excel Workbook contains detailed breakdowns of the Domestic Air and Ground parcel rate increases.

Fuel Surcharge Changes

There is some restructuring with the Fuel Surcharge (FSC) calculations for both Ground and Air. The changes are illustrated in the Fuel Surcharge Summary PDF link below. First, the fuel price at which the FSC is triggered has been increased for Ground, from $1.50 up to $1.75 and for Air, from $1.30 up to $1.46. The last time the On Highway Diesel Index was below $1.50 was December 2003 at 148.98 while the Gulf Coast Jet Fuel monthly index was below $1.46 in April of this year when it registered 136.93. Expect to see FSC continuing to have a meaningful impact on your total transportation cost in 2010.

Second, in an effort to reduce the volatility of fuel surcharges, UPS has increased the interval levels between FSC rate changes. In 2009 the interval for Ground is $0.08; in 2010 it will increase to 0.12. For Air the interval has been $0.04. In 2010 there are two trigger rate levels that will increase the interval to $0.06 and then $0.08. The wider interval spreads are designed to temper fluctuations in fuel costs.

For more information contact:  noah.ostanik@agile-network.com