Best Practices for Strategic Planning- 2nd Posting

Posted on October 3rd, 2016 by Ed Blickstein

By: Edward Blickstein, Managing Partner at TSC

After posting the first article a few days ago I heard from a colleague and we discussed strategic planning which led to this 2nd posting on this subject.  So here is the posting again with the influence of that discussion.

As previously stated, one of least satisfying corporate processes is strategic planning. We have observed this and heard about it from many of our clients. Senior as well as mid-level executives are often disappointed and criticize the planning process as extremely time consuming although sometimes very necessary, bureaucratic, and not all business and market issues are addressed with insight and the right attention particularly in regard to rapid changes brought on by technology, changes in customer buying factors (i.e. one order, one delivery) and necessity for high satisfaction levels. The takeaway from this is that strategic planning needs to be done with market intelligence (customers, key suppliers, market research) continuous collection and analysis of their own big data and supported by the right technology and business leaders that pay very close attention to what change and challenge their customers face in their markets.  But, what about the supply chain?

Now, much more than “yesterday”, companies need to devote time to supply chain strategy and recognize the overall importance of this element in corporate strategic planning. Companies succeed or fail based upon supply chain performance. This is more evident than ever when looking at a company’s financial performance.

Key to achieving strategic preparedness takes a structured, organized thought process to define and consider possible threats, disruptions, as well as opportunities—which is, for want of a better definition, traditional strategic planning.  In short, the problem isn’t the strategic planning exercise itself, it is that most companies lack an effective strategic-planning process that is deep enough instead of mostly a high level approach and often focused on procurement alone.

Although there is no one-size-fits-all approach to strategic planning, we have found that the companies that get the most benefit from their strategic-planning activities have these things in common:

  • They assess their past performance with detail, what they have learned from their customers supported by interviews, surveys and indirect feedback, what their customers’ forecast and plans are for the next 3-6 years.
  • The above point also applies to suppliers and contract manufacturers who have their own set of challenges and issues that could cause significant disruption.
  • Then they explore-develop their strategy at distinct time horizons shown in a high level detailed timeline.
  • They constantly challenge their business units, the corporate supporting staff, engage in creative exercise and research and stimulate the strategic discourse.
  • They engage the broad organization and not just the business unit leaders to develop the strategic plan.
  • They invest in execution, detailed measurement, analysis and continual snapshot monitoring.
  • They remain inquisitive in discussions with customers and key suppliers and pass on insights and notes to the strategic planning team.
  •  They make modifications to the strategic plan annually or as often as needed.

Best Practices for Strategic Planning

Posted on September 28th, 2016 by Ed Blickstein

By: Edward Blickstein, Managing Partner at TSC

One of least satisfying corporate processes is strategic planning. We have observed this and heard about it from many of our clients. Senior as well as mid-level executives are often disappointed and criticize the planning process as extremely time consuming, bureaucratic, and not all business and market issues are addressed with insight and the right attention particularly in regard to rapid changes brought on by technology, changes in customer buying factors and necessity for high satisfaction levels. The takeaway from this is that strategic planning needs to be done with market intelligence, continuous collection and analysis of big data supported by agile technology and business leaders that pay very close attention to what change and challenge their customers face in their markets.

Now, much more than “yesterday”, companies need to devote time to supply chain strategy and recognize the overall importance of this element in corporate strategic planning. Companies succeed or fail based upon supply chain performance. This is more evident than ever when looking at public company’s financial performance.

Key to achieving strategic preparedness takes a structured, organized thought process to identify and consider potential threats, disruptions, and opportunities—which is, for want of a better term, strategic planning.  In short, the problem isn’t strategic planning. It’s that most companies lack an effective strategic-planning process that is deep enough instead of mostly a high level approach.

Although there is no one-size-fits-all approach to strategic planning, we have found that the companies that get the most benefit from their strategic-planning activities have four things in common:

  • They assess their past performance, what they have learned from their customers, what their customers’ forecast and plans are for the next 3-6 years and then explore-develop their strategy at distinct time horizons.
  • They constantly challenge their business units, the corporate supporting staff, engage in creative exercise and research and stimulate the strategic discourse.
  • They engage the broad organization and not just the business unit leaders.
  • They invest in execution, detailed measurement, analysis and continual snapshot monitoring.

best-practices

TSC – From Basic to Complex Distribution/Fulfillment

Posted on June 14th, 2016 by Ed Blickstein

Michael R. Blouch, Sr. Consultant-Sr. Project Manager for Distribution & Fulfillment, outlines our basic approach to an engineered distribution- fulfillment design (this will be the first in a series from Michael):

  • Facility design based on current and future needs, size/population of office and warehouse spaces interior and exterior, configure changes through effective site design.
  • Alternative material handling methods should be considered, mechanization to automation.
  • Be designed with fire protection capacity to accommodate storage of materials and content.
  • Maximize utilization of space providing aisles for personnel and material handling equipment.
  • Assess the feasibility of using higher bays, take advantage of height allowances.
  • Optimize layout and configuration for the warehouse operation, including efficient circulation and material handling and storage processes.
  • Relate interior and exterior receiving and shipping operations to the process flow of goods through the warehouse. Receiving and shipping are best separated to avoid congestion at the loading dock areas.

Risks at US Ports Don’t Go Away!

Posted on March 1st, 2015 by Ed Blickstein

US Port Issues – Risk (February 23, 2015)

  • The 9 month stalemate has ended at the US West Coast ports, agreement still requires ratification by the workers but what we’re hearing is this shouldn’t be a problem.

  • Importers will likely see port delays and service interruptions for 3 to 4 months.

  • Many ocean carriers are avoiding the port of Oakland, dropping containers in Los Angeles just to keep their vessels moving. This is causing further congestion issues, changes in costs as the importer will then be responsible for getting that container from LA to its final destination unless it’s moving inland via the rail. If your shipment is for a location around Oakland or San Francisco area you will bear the cost for the movement from LA.

  • Once cargo is off-loaded, in the US, likely will see a 7-15 day delay depending on the ocean carrier.

  • Ocean carriers are also avoiding certain ports in Asia in order to lessen the issues at some of the highly congested origin ports in countries there.

  • Importers should work with suppliers to pre-book 3-4 weeks in advance to ensure space when the shipment becomes available.

  • The air market has been surging lately, likely due to the factory shut downs because of the Chinese Holiday. Airlines are predicting a bump for several weeks, air rates have up from about 10-30%.

  • Congestion at US West Coast ports is likely to continue for many months due to problems handling the huge capacities of mega-ships and navigating the timetables of new shipping alliances, a US Federal Maritime Commission regulator has warned.

  • If not started, importers should look at incorporating additional ports, gulf and East Coast, as part of their overall strategy.

 

Are You Prepared for 2015 FedEx and UPS Rate Hikes?

Posted on November 17th, 2014 by Ed Blickstein

 11/17/2014

Is Your Company Ready for the FedEx and UPS Rate Hikes and the Dimensional Pricing Changes?

By Jim Bisaha, Senior Logistics & Supply Chain Consultant for TSC

Both FedEx and UPS have announced a general rate increase of 4.9% for ground packages in 2015. In addition, FedEx and UPS are implementing dimensional pricing for all ground shipments.  The impact of these changes will significantly increase shipping costs.  It is estimated that 55% to 60% of ecommerce shipments less than 5 lbs could be impacted if there is no change in packaging and 30% of all shipments could be impacted

Small and mid-size shippers will be impacted as they do not have volume to negotiate or the resources to review and analyze their shipment data.

Listed below is a table that summarizes the impact of the changes on packages from one to fifteen pounds.

Sample Package  Zone  Actual Weight  DIM Weight  DIM Price Increase 
 A  3  1  2  9.3%
 B  4  1  3  20.2%
 C  6  1  4  24.5%
 D  8  1  5  38.3%

As you can see from the chart the heavier the package and the larger the zone numbers the greater the price increase.  It is extremely important that shippers understand the impact of dimensional pricing changes.

Parcel companies are cubing out not weighing out their trailers.  Dimensional pricing has been utilized by FedEx and UPS for air shipments and for shipments over 3 cubic feet.  The dimensional pricing changes are now for all shipment sizes.   Dimensional pricing is calculated by measuring the box by height, length, width and dividing by a factor of 166 to derive the dimensional weight.  The greater of the two weights actual or dimensional weight will be utilized to calculate the billing charges.

Listed below are some example illustrations of shipments and the impact that dimensional pricing will have to the monthly shipping costs. The examples are based upon 50 shipments a day.  The monthly costs will quickly add up and impact the shipper’s bottom line.

Women’s Shoulder Bag                                         

Video Game Controller                           Small/Medium Pet Bed
 Dimensions:  19x15x5  Dimensions:  12x8x8  Dimensions:  23x18x3
 Actual Weight: 2 lbs.  Actual Weight: 1 lb.  Actual Weight: 1 lb.
 DIM Weight: 9 lbs.  DIM Weight:     5 lbs.  DIM Weight:     8 lbs.
 Avg. Rate Impact: +28.3% Avg. Rate Impact: +29.7%  Avg. Rate Impact: +40.1%
Avg. Monthly Impact at 50 Packages/Day: +$2,311.43  Avg. Monthly Impact at 50 Packages/Day: +$4300.00 Avg. Monthly Impact at 50 Packages/Day:+$5,777.14

Prior to meeting with your parcel carrier representative, here are four areas to focus on so that your firm is prepared: parcel contracts, packaging, data analysis and processes/procedures.

Parcel Contracts.  It is important to review and understand your parcel contract.  Do you know your annual small package spend? What is spent by particular shipping product line: express, ground and international? What are the shipping patterns and what is the volume and spend by zones?  What is the percentage of discount off the base rate?  How much is spent on accessorial charges?

Packaging.  Most companies utilize seven or eight different box types.  Companies need to conduct an in-depth review of their packaging. Flat boxes or envelopes may need to be utilized for small light weight products. You may also want to consider a dimensional scanner.

Data Analysis. It is important to understand your shipment history and the products that your firm is shipping.  A detailed analysis of the shipment history by product type, zone, charges, dimensions and weights is a requirement. It is important for shippers to know their data better than the carriers.  If you don’t have accurate shipment history information ask your carrier to provide to you.

Processes and Procedures. Having documented processes and procedures for the shipping department is critical utilizing the right box for the right shipment will reduce costs. Process and procedures need to be documented and the staff trained on the package changes.

Other items for consideration are regional parcel carriers which constitute less 3% of the parcel market. Regional parcel carriers are located in specific geographic areas:

  • OnTrac is a west coast based parcel carrier
  • LSO (Lone Star Overnight) is a south-west carrier
  • Eastern Connection is an eastern and mid-west regional
  • Spee Dee Delivery is a mid-west carrier
  • Pitt Ohio Express serves the mid-west and northeast.

USPS could be an attractive alternative. USPS has recently implemented a price reduction.  They also have announced a rate reduction for Priority Mail Commercial (-2.3%) and Commercial Base Services (-0.9). This could result in a 30-50% decline in rates in the 6-20 pound range.

Transolutions Consulting can help your firm evaluate and develop a strategy to help your company contain raising parcel rates and costs.

Contact me at … jbisaha@transconsulting.com or call: (770) 639-2230

Jim Bisaha, Senior Consultant – Logistics & Supply Chain

TranSolutions Consulting LLC (TSC)

Use of Spot Pricing vs. Contracts in Freight Management

Posted on September 29th, 2014 by Ed Blickstein

Is There a Case for Using Spot Pricing vs. Contracts?

This article was written by an old friend and colleague who actually was my mentor as well for my partner, Bob Schaffer, in the field of consulting over 20 years ago, his name is Tom Moore. Article submitted by Ed Blickstein with Tom’s permission.

Yes to spot pricing – No to contracts:

  • Generates higher probability of getting equipment – carriers want price
  • Will cost less in bad times (contracts never time the “bottom” of the market perfectly)
  • Allows carriers to increase their wages, for example, to get more drivers
  • Keeps carriers in business as price > cost

No to spot pricing – Yes to contracts:

  • How do we determine the spot price – is that for brokers to do?  If so, we know we’ll pay more
  • Contracts provide base business and a feeling of commitment/partnership and price certainty (for a year – but equipment is bought with a 3-7 year life)
  • Carriers want guarantees
  • Price certainty

 

New Carrier Internet Tool for Shippers Launched

Posted on September 23rd, 2014 by Ed Blickstein

New Carrier Internet Tool for Shippers Launched

Logistadvise is designed to enable shippers in North American to identify and contact what shippers may decide, after reviewing the information provided, to be their best carriers for specific lanes.

By Edward Blickstein, September 22, 2014

This month a new carrier information platform was launched enabling users to search North American carriers’ information resident on the website to help these shippers to better and easier identify carriers that they should contact for the purposes of improving service and lowering cost. Reducing costs in this tight capacity market is a challenge for most shippers, however one of the key benefits is the identification of new carriers to secure quotes from that shippers were not aware of whose network could potentially offer opportunity.

The website platform, called Logistadvise (www.logistadvise.com) , was founded earlier this year by Eric Spearin and Radek Duda. Spearin, with a background in freight brokerage and logistics, and the son of a well-known Canadian logistics expert Dave Spearin, and Duda, with a background in technology and start-ups, have created a web based tool that would be easy and fast for logistics professionals in small to large companies to use.

Users start the search for their optimal carrier by entering an origin and destination, after which a list of carriers are displayed that offer service between those points. Eighteen different search filters allow the user to narrow their search to find the type of carrier they require based upon equipment, quantity and other service offerings. This short video demonstrates how easy the Logistadvise platform is to use: http://youtu.be/qNa11W3O4Zc

“Logistadvise provides a platform for shippers and carriers to form strategic relationships,” said Spearin. “Many brokers dread using load boards. The industry is relationship-based, and most brokers cover their shipments by viewing the lane history in their network. Logistadvise does exactly that but can look for hundreds, if not thousands, of different carriers that may not be in the shipper’s or a broker’s network.”

Users can sign up online for free to claim their carrier page, or to search for a carrier directly. In order to access the location-based search, Logistadvise offers a $99 per month unlimited-search subscription plan for each user.

The company, operating in a private beta mode for three months, was being used by carriers, brokers, 3PLs and consultants in a variety of ways, ranging from sourcing carriers for an upcoming bid to discovering a new carrier to cover an ad-hoc shipment, Spearin said.

The Logistadvise team adds new carriers and analyzes their networks on a daily basis. New features, such as mass emailing load blasts to particular types of carriers in a user’s network and a fully searchable database of shippers will be rolled out in the coming months.

“We are excited to be bringing this platform to market”, concluded Spearin, “Logistadvise is a smart and simple logistics planning tool that will optimize a user’s transportation network.”

For additional information or to access Logistadvise visit www.logistadvise.com.

For more information:

Eric Spearin

eric@logistadvise.com

650-731-0137

 

Energy & Fuel – Key News Bites

Posted on July 30th, 2014 by Ed Blickstein

Ukraine:  Ukraine has done little to realign oil and gas infrastructure to source supplies from other countries. Russia regards the Ukraine as its own, and it wants them back.  Hence, this situation will continue to be difficult however it has little effect on world oil markets … so far.

Cuba: Putin Pledges to Help Cuba Explore Offshore (By MarEx  7/14/2014)  Vladimir Putin pledged to help revive Cuba’s struggling offshore oil exploration on Friday at the start of a six-day tour of Latin America as Russia aims to reassert its influence on the communist-ruled island.

Putin was joined in Havana by close ally and so-called Russian oil czar Igor Sechin, the chairman of state oil company Rosneft, to finalize a deal to explore for oil off Cuba’s northern coast.

The Russian president also promised to reinvest $3.5 billion of Cuban debt with Russia into development projects on the island, part of a deal in which Russia forgave 90 percent of Cuba’s debt, or almost $32 billion, most of it originating from Soviet loans to a fellow communist state.

Both measures inject much-needed foreign investment into Cuba and demonstrate an act of defiance against the United States, which maintains a 52-year-old economic embargo that effectively shuts out many Western companies from doing business in Cuba.

“We will provide support to our Cuban friends to overcome the illegal blockade of Cuba,” Putin said.

Globally:  crude oil markets are fairly well supplied according to traders and profit margins for refiners in several regions have fallen sharply, reducing demand for crude. This weakness has been reflected in the price structure of the Brent futures market, as contracts for prompt oil have fallen to significant discounts below later contracts.  Crude is soft because demand is soft.

US Diesel Fuel Prices Decline Despite Middle East Turmoil

Posted on July 29th, 2014 by Ed Blickstein

TODAY IN ENERGY: Thursday, July 24, 2014 EIA

U.S. petroleum refineries running at record levels U.S. refineries have been processing record volumes of oil recently. Refinery inputs hit a record-high 16.8 million barrels per day in each of the past two weeks. Refineries in the Midwest and Gulf Coast in particular pushed the total U.S. input volume upward, as these refiners’ access to lower-cost crude oil, expansions of refining capacity, and increases in both domestic demand and exports contributed to higher refinery runs.

TODAY IN ENERGY: Wednesday, July 23, 2014 EIA

Oil and natural gas sales accounted for 68% of Russia’s total export revenues in 2013 Russia is a major exporter of crude oil, petroleum products, and natural gas, and sales of these fuels accounted for 68% of Russia’s total export revenues in 2013, based on data from Russia’s Federal Customs Service. Russia received almost four times as much revenue from exports of crude oil and petroleum products as from natural gas. Crude oil exports alone were greater in value than the value of all non-oil and natural gas exports.

GREATER RISK TO OIL SUPPLY IN THE MIDDLE EAST

Libya: Libyan oil production consisting of light crude has been rising despite fighting but the latest turmoil has become more widespread and now likely to negatively impact production and export from that country. As the increased internal war has become very intense the US has closed its embassy in Tripoli. Libya has an oil production capacity of well over 1 million bpd and could increase output significantly if the government establishes control over key facilities.

Iraq: The North Sea benchmark peaked above $115 last month as an Islamist insurgency swept across western Iraq, taking control of large parts of the oil-producing country including its biggest refinery. The insurgency now holds large swathes of Iraq but is hundreds of kilometers from the country’s main oil-producing and exporting centers in the south and the fighting have had little impact on oil supplies.

Iran: Iran’s oil supplies have been restricted by sanctions for several years and agreement at talks in Vienna could lead to a softening or lifting of those limits.  Negotiators had set a July 20 deadline for a deal but diplomats say the two sides are deeply divided and assume the talks will be given another six months to seek a deal.

GLOBALLY

Global crude oil markets are fairly well supplied, traders and analysts say, and profit margins for refiners in several regions have fallen sharply, reducing demand for crude.

UNITED STATES

US ON-Highway Diesel Fuel Prices declined from $3.894 (2 weeks ago) to $3.858 and $0.57 lower from a year ago.  Central Atlanta region is at the same price as last year while the Midwest and Gulf Coast regions recorded the biggest drop from last year, same period, at $0.85 and $0.78 respectively.  Recent US crude oil production growth has consisted of lighter, sweet crude from tight resource formations.  Currently, US petroleum refineries are running at record levels.

 

TSC Consultant James Bisaha on Parcel Shipping

Posted on June 25th, 2014 by Ed Blickstein

Strategies for Managing the FedEx Dimensional Weight Change Federal Express recently announced that it would be implementing dimensional weight pricing on its ground shipments effective January 1st, 2015.    What is dimensional weight pricing?  Dimensional weight pricing takes the space of the package and converts into pounds. Shippers are charged the higher of the actual weight of the package or the implied DIM weight of the package.  Dimensional weight pricing has been a standard for air shipments and international shipments.  UPS and FedEx rolled out dimensional weight pricing in 2007 for ground shipments over 3 cubic feet or 5184 cubic inches.  In addition, both companies apply a large package surcharge for shipments greater than 165 inches.  UPS is expected to change dimensional weight pricing as well.  The US Postal Service also utilizes dimensional pricing; however, it is based upon zones and is more complicated. If you are a FedEx customer, here are some steps that you can take to prepare your firm for the upcoming changes. More to follow this when UPS announces its approach to dimensional pricing.

Parcel Contracts:  Review and understand your parcel contract.  Do you have an in-depth knowledge of the terms and conditions of the contract?  Do you know your annual small package spend?  What is spent by individual each of your product lines: express, ground and international?  What are the shipping patterns and what is the volume by zones? You may want to consider zone skipping?  Knowledge is power and your firm needs to understand what it ships and where it ships.  What is your current package discount and is it tied to specific volumes? Be mindful of accessorial charges, last count FedEx and UPS had 44 different types of accessorial charges.  Examples of accessorial charges that can add up quickly are oversized package charges and rural delivery surcharges.

Packaging:  Conduct an in-depth review of your packaging. Many companies utilize seven or eight different size boxes.  You may need to change your packaging by utilizing flat boxes or envelopes for small light weight products and get rid of dead space after allowing for protection.  Accurate product dimensions are extremely important.  It is important to have accurate product dimensions stored in your warehouse management system.

Data Analysis:  Information is power.  It is extremely important that your firm have a shipment history with product type, zone, charges, dimensions and weights.  If you don’t have your shipment history, ask your parcel carrier to provide this information.

Processes and Procedures:   Shipping Manual with documented processes and procedures on how to package and ship products should be a requirement for your business.   With the dimensional weight changes, small light weight items packaged in large boxes will incur a dimensional weight charge. Your firm will be spending additional money.  In addition, your firm may want to review and see if some express shipments can be sent via ground reducing costs.  Training of the shipping team is extremely important to keep costs in check

By James Bisaha, Senior Consultant – Supply & Logistics June 12, 2014 www.transconsulting.com