Comment on LinkedIn article by Adrian Gonzalez :  Is XPO Logistics Biting More Than It Can Chew?

Interesting article. As Adrian points out the industry is consolidating and some 3PL’s are shifting from asset light to asset heavier. Clients would be justified in questioning their 3PL’s objectivity in selection of transportation services where the 3PL owns carriers. If the 3PL is to truly manage the outsourced logistics functions there needs to be a firewall between consulting and LTL services.

According to CBP Customs and Border Protection passing rates for the customs brokers exam average only 3-11% nationwide.

Most people who plan to take the exam opt for some training either in a face to face class or online. I took a great class and supplemented it with my own prep process.  I estimate that I spent about 40-50 hours on weekends leading up to the exam. I used 6 previous exams and a 3 step system. In step 1 I took each test for accuracy, ignoring the clock. In step 2 I took the tests again in the same order, while timing myself to make sure I could finish within 4 hours. I believe that step 3 was the key to my success. For this phase I circled all the questions I had missed in steps 1 and 2 and created a separate mini exam which I took several times until I answered all the questions correctly. This method worked well for me. I would be happy to discuss with anyone. Good luck!

contact mitch@52.91.45.227

From the archives..

Measuring and managing logistics performance is a full time job for logistics professionals. The volume of data can be daunting. Managers in other functions such as finance, marketing, or manufacturing may need a quick view of logistics data as it relates to their responsibilities. Here are a few general measures for the dashboard. Please let me know of others you have used. For help with logistics planning contact mitch@52.91.45.227 .

Absolute Performance- monitor absolute logistics failures rather than averages. For example, 99.5% on time performance appears very good. However, in a high volume operation, it could mean hundreds or thousands of late orders per day.

Inventory Turnover- common measurement in asset mgt.

Order Fill Rate- customer service and warehouse productivity measurement. Can also use item, line, or value fill rate.

Warehouse Utilization %- indicator of good asset mgt.

Warehouse Productivity- measure of units received, stored, picked, packed, and shipped per hour.

Order Cycle – reduced order cycle means less inventory in the system and greater customer satisfaction. Longer order cycle means more inventory in the system and reduced customer satisfaction.

Lost Sales- inverse relationship with inventory. Higher inventory costs, lower risk of lost sales. Lower inventory costs, higher risk of lost sales.

Transportation costs- always a trade off…. bulk shipments can reduce transportation costs but leads to higher inventory levels in system. Higher transportation costs due to mode shift (air vs. ground or air vs. ocean) can reduce inventory in system by shortening the order cycle.

Commodity value- higher dollar value means increased transportation, inventory, and packaging costs.

Density of product- High density (lbs/ cubic ft or kgs/ cubic meter) means lower transportation and inventory costs since the product takes up less space in containers or warehouse.

Loss and Damage- greater susceptibility to loss or damage means higher transportation rates and higher warehousing costs due to special handling.

Location Decision- Distance from sources or markets = relative advantage or disadvantage vs. competitors. This is an upper mgt responsibility.

Checking Lists Isn’t Enough for Export Compliance… Here’s Why

At the end of the academic year this post from the archives is relevant…

In the years that I have taught Supply Chain courses, many students have expressed the desire to start their own importing or exporting business. In some cases they were motivated by an interest in a particular product they encountered on an international trip. Others wanted to turn a hobby into a business. In these early stages the nuts and bolts of international logistics are less important than the product, the markets, the financing, and realistic expectations on the part of the student. As an instructor I always want to provide guidance and assistance along with real world business facts. The attached Twenty Questions are a good way to start the process,

IS THIS BUSINESS FOR YOU

From a previous post…

Reverse logistics programs are fast becoming a major requirement in 3PL and procurement contracts. Not long ago “returns” were considered a nuisance by manufacturers, retailers, and logistics providers. They were handled only as a courtesy to customers. Today, environmental legislation is forcing companies to take responsibility for waste. At the same time consumers expect clear and efficient returns programs when making purchases. The EU is leading the way on reverse logistics with strong legislation and policies. In the US reverse logistics is evolving as progressive companies realize the opportunities to enhance their public image, lower operating costs, and improve productivity. In other words reverse logistics is moving from an added cost “returns” program to a value add process. Here are some recovery options in reverse logistics*

• Reuse– inspect, clean, and use again for identical or similar purpose, value add
• Remanufacturing– dismantle and reassemble or use for parts, value add in remanufacturing w/improvements
• Recycle– sorting process for scrap, no real value add but can recover some costs

While the above  is good business practice it is difficult to plan and execute from a logistics point of view. One reason for this is uncertainty in timing and quantity of returns. Product life cycle and rate of technological innovation play a big role in timing of returns.

Successful reverse logistics implementation involves both external and internal factors. External factors include legislation, customer demand, and incentive. Internal factors include environmental concerns, strategic cost/benefits, volume and quality of returns, resources utilized, and integration and coordination.

• Customer demand– environmental responsibility is becoming a competitive necessity
• Incentive– companies need to make returns worth it for end users
• Environmental concerns– growing trend, not optional going forward
• Strategic cost/benefit– can help increase sales and asset utilization but will increase costs. Benefit is mostly long run after initial investments in equipment, design, process, and labor.
• Volume and quality– returns must be managed to avoid scrap as much as possible
• Resources– use available resources and assets as much as possible
• Integration and coordination– must use info systems to gain competencies in recovery so reverse logistics does not become a profit drain but a profit center
• Performance measures– forward logistics measures are not adequate for return logistics. Need to develop different metrics for return logistics. Ex: time required for product recovery, % recyclable/reusable at end of product life, core return rate, % product weight or volume disposed in landfills

*Global Logistics and Supply Chain Mgt by Mangan, Lalwani, Butcher, and Javadpour, 2nd Ed, John Wiley & Sons, 2012

In my SNHU class this week we discussed logistics KPI’s and customer service offered by logistics service providers. KPI’s are essential to the management of logistics providers as well as to their clients. Some customer service functions, however, are not as easy to measure. Clients of logistics providers include shippers, consignees, importers, and exporters. Whether your logistics provider is a motor carrier, freight forwarder, customs broker, or warehouse company, you will need customer service assistance from time to time. Let’s differentiate:

Request for Information– shipment status, tracking and tracing, claims status, rate requests, invoice balance. This type of customer service is best obtained on line. Take the time to become familiar with your providers’ info systems so you don’t waste time on the phone or waiting for a call back. If your provider does not offer this type of info on line they are either inefficient or very small. To avoid frustration ask yourself if you just need information or action by your provider. Information is easier to get than action.

Action Needed- This level of customer service most likely requires human intervention. Examples include customs or regulatory delays, stopping or diverting shipments, credit issues, special pricing, or real emergencies. While no one likes calling an 800 number, it is a good idea to get your request into the provider’s system as soon as possible as a first step. The difficulty is in reaching the right contact and getting the action you need. If you use a 3PL you may be able to delegate the problem for their handling and have them provide timely updates. If you do not use a 3PL, then you need to manage the issue on your own. One mistake clients make is to rely on their  account rep for all customer service. Account reps are usually on the road and in meetings so this causes delays in action. Another mistake is to depend on the super efficient Mary, Debbie, Tom, or Bill in your provider’s office. Everyone takes vacations and sick days so don’t rely on one person for your customer service needs. A better way to get good customer service is to establish protocols with the help of your providers.

Protocols- Day to day logistics consists of planning, execution, and problem solving. Good planning is essential but not foolproof. Logistics managers deal with changing schedules, equipment failures, weather delays, regulatory issues, and miscommunication on a daily basis. Most problems, however, are not new. The same situations tend to repeat themselves so they can be anticipated. I suggest developing a set of problem solving protocols for the most common issues in your supply chain. This approach will save you time since you will not be starting from scratch when a problem arises. It will also enable your colleagues to act in your absence. A basic protocol defines the problem and lists steps to be followed as well as the resources involved. Your logistics providers can help by providing resources. They should be willing and able to give you relevant operations contacts along with phone and e mail info for your identified problem areas. Your account rep may be surprised when you ask for help developing protocols but they should welcome the opportunity. This method can be a big time saver for them as well. Get commitment from your providers to respond to your requests in an agreed to amount of time. You can update the protocols as needed. Make protocols a part of your meetings with your account reps and you will get better customer service.

Finally, if your account rep says “Just call me”, don’t accept this response.

We help small and medium sized companies stay compliant with Customs and export regulations and manage logistics. Contact mitch@52.91.45.227

Outsource Logistics & Supply Chain Functions: Gain a Competitive Edge

Mitch Kostoulakos CTL,LCB