You may not spend much time thinking about logistics, Your New Logistics Challenge:

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1 INC. BRANDED CONTENT / LOGISTICS Your New Logistics Challenge: GLOBALIZATION Whether you know it or not, logistics is a vital part of your business. As it becomes more complex, look for partners who can solve the problems you may not even see coming. You may not spend much time thinking about logistics, but it s all around you. That s because logistics is a catchall term that covers a vast range of services and capabilities so vast that the total amount of money devoted to all things logistical was nearly $1.5 trillion in the U.S. last year, equivalent to 8.3 percent of the nation s gross domestic product (GDP), according to the Council of Supply Chain Management Professionals. That demonstrates the degree to which companies of all sizes and in all industries rely on some aspect of logistics in their business models, and making the right decisions in this area can determine the success or failure of an organization, says Paul Myerson, professor of supply chain management at Lehigh University s College of Business and Economics. These decisions have a huge impact, not only on cost and service, but also on revenue, since poor service can result in lost sales and damage to a business s reputation. And with more and more companies expanding into global markets, the stakes become even higher. Transportation and inventory carrying costs account for more than 95 percent of the enormous sum U.S. businesses spend on logistics each year, while shipper-related costs and logistics administration account for less than 5 percent. But what s significant about the latter two categories is that they present real opportunities to cut costs, boost efficiency, and improve ROI and bottom-line performance, especially for small and medium-sized businesses. If you re wondering where to start, Myerson says the most important advances for SMBs in this area in recent years are the development of readily available, low-cost, sophisticated technology, and the growth and accessibility of third-party logistics providers (3PLs). These developments give SMBs access to the same capabilities as their larger competitors, he notes. S1

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3 INC. BRANDED CONTENT / LOGISTICS Growth Can Pose Problems When Inbound Logistics, an industry trade publication, asked shippers of all sizes about the greatest challenges they faced last year, cutting transport costs topped the list, at 63 percent. Business process improvement (32 percent) and improving customer service (31 percent) also emerged as high priorities. SMBs share those same concerns, of course, but they also face additional challenges. One common challenge a great one to have is rapid growth, says Jason Roberts, managing director of Freightview, which provides revolutionary technology solutions to help shippers streamline their freight quoting, booking, tracking, and reporting. Poor visibility across carriers, competing against larger competitors with warehouses closer to customers, capitalizing on emerging global opportunities, and navigating a morass of rules and regulations especially in international markets are others. Enterprise organizations have been harnessing technology to meet their logistics challenges for many years, especially transportation management system (TMS) software. A TMS typically manages four key logistics processes: planning and decision-making to achieve the most efficient and economical transportation solutions; plan execution; follow-up, including shipment tracing, customs clearance, invoicing, and other administrative duties; and measurement of key performance indicators (KPIs). The Price Is Right Most TMS solutions rely on electronic data interchange (EDI), an aging technology, and they require significant capital investment and in-house IT resources. That puts TMS solutions out of reach for many SMBs, especially those doing five to 25 shipments a day of less-than-truckload (LTL) size. A new generation of cloud-based technology solutions that rely on application programming interfaces (APIs) rather than EDI are making it possible for many SMBs to achieve the kind of cost and productivity benefits that enterprise organizations have been getting from EDIbased TMS for years. Roberts calls out three primary benefits cloud-based solutions like Freightview can provide to SMBs: Shippers can access all their freightshipping rates from all their carriers and brokers in one place. Instead of going to their carrier websites one at a time, they can instantly compare all their different costs, servicing options, and transit times. That makes it easy for them to identify the right way to move each shipment with the right balance of low cost and quick delivery, he explains. By scheduling pickups and tracking shipments in one place, a shipper s visibility isn t diffused across multiple websites. When shippers need to track a shipment or double-check a carrier invoice, there s one source for all of their information. When it comes time to negotiate with carriers, shippers have the information they need to get the best deal. They have data about their shipment characteristics, lanes, and spending, Roberts points out. They are well positioned to collaborate with their carriers to get the best possible rates based on facts rather than assumptions. Big companies with TMS software already have those advantages, Roberts acknowledges, but until now, they ve been out of reach for SMBs. The costs were too high, the implementations took too long, and the software was too hard to use, he says. Freightview brings these features to SMBs via the cloud with a low price point, quick implementation often the same day and the right set of features to help without getting in the way. S3

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5 INC. BRANDED CONTENT / LOGISTICS Seizing Global Opportunities The Fast Route to Optimization Businesses with more complex shipping needs, such as a mix of LTL and full-truckload shipments, intermodal transportation requirements, and others, or those just looking for greater convenience and flexibility might be better served by a 3PL. This is robust outsourcing of the one-stopshopping variety, as 3PLs provide multiple logistics services (transportation, warehousing, cross-docking, inventory management, packaging, freight forwarding) integrated to best meet their customers needs. Shippers using a 3PL gain access to a vast network of resources and industry expertise that can save them time and money, says Greg West, vice president North America LTL at C.H. Robinson, which was voted the No. 1 3PL by readers of Inbound Logistics for the fifth consecutive year in Using a 3PL gives shippers the flexibility to scale logistics according to inventory needs, which is very important for businesses with significant seasonal swings in volume. At C.H. Robinson, we are continuously improving every link in the supply chain to optimize speed, efficiency, and cost-effectiveness to benefit our clients. C.H. Robinson leverages scalable global technology in its Navisphere platform to help clients doing business internationally bring all aspects of their supply chain together, providing them with end-to-end shipment visibility and reporting across all regions where they do business. It also offers Collaborative Outsourcing as an additive approach to logistics outsourcing, enabling businesses to add the resources and integrated services they need to help drive desired outcomes. This hybrid approach can improve supply chain performance for the same or lower total landed cost, reduce capital investment, increase insight into performance metrics, and speed up response time to changing market conditions. Several major new developments in global trade are expected to play a significant role in logistics in 2016, affecting nearly every business that imports or exports goods, says John LaMancuso, chief sales and marketing officer at Livingston International, North America s leading customs brokerage and trade compliance firm focused on simplifying the movement of goods through international borders for more than 40,000 clients. New trade agreements aim to open markets and simplify trade processes, creating an unprecedented opportunity for North American companies to expand their business, LaMancuso says. One important development is the implementation of a new U.S. Customs and Border Protection (CBP) system known as the Automated Commercial Environment (ACE), which requires every U.S. company conducting international trade to submit forms electronically to a single source. When ACE goes fully into effect in February, it will streamline and automate existing manual processes by providing shippers with a single portal where they can submit forms to CBE. Paper will be eliminated, and the international trade community will be able to comply with U.S. laws and regulations more easily and efficiently, LaMancuso says. Businesses will have better visibility with respect to release and inspection, shipment cycle time will be reduced as mismatched information is identified earlier in the process, and turnaround for customs and agency review will be faster. New trade agreements aim to open markets and simplify trade processes, creating an unprecedented opportunity for North American companies to expand their business. That streamlined process may prove even more beneficial to companies doing business internationally as several pending trade agreements take effect. One is the Trans-Pacific Partnership (TPP), which LaMancuso says is the biggest freetrade deal in history. The 12 countries participating in the TPP account for about 40 percent of global GDP, and they reached an agreement in October after seven years of negotiations. Now it must be ratified by the governments of each country, a process that could start in the U.S. next year. A separate trade and investment agreement, the Transatlantic Trade and Investment Partnership (T-TIP), being negotiated between the U.S. and 28 European Union member countries would increase access to European markets for U.S.-made goods and services. S5

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7 INC. BRANDED CONTENT / LOGISTICS A Crash Course on Logistics Lingo 3PL: A third-party firm to which a variety of logistics services are outsourced, such as purchasing, inventory management and/or warehousing, transportation management, and order management. Detention/demurrage: Penalty charges assessed by a carrier for holding transportation equipment (such as trailers or containers) longer than a stipulated period of time for loading/unloading. FOB (free-on-board) point: Point at which ownership of freight transfers from shipper to consignee (the freight receiver). FOB terms-of-sale: Document stipulating who arranges for transport and carrier, who pays for transport, and the FOB point. Freight bill-of-lading (BoL): Document providing a binding contract between a shipper and a carrier for transportation of freight; specifies obligations of both parties, and usually designates the consignee. Freight forwarder: Agency that receives freight from a shipper and arranges transport with one or more carriers; often used for international shipping. LTL: Less-than-truckload shipment; priced according to weight, commodity class, and mileage within designated lanes. TL/FTL: Truckload/full truckload shipment, where the shipper contracts an entire truck for direct point-to-point transport and pays a price per mile within designated lanes, regardless of size of shipment; less expensive than LTL. Conquering Complexity To be successful, it is imperative that companies understand how these trade developments could impact their business and do their due diligence to prepare for them, LaMancuso says. They should strategize business opportunities and adapt their business model to encompass trade opportunities. It s also important to build a compliance strategy so that importing and exporting processes and documentation are in compliance with the pending trade agreements rules and regulations. While many SMBs might have the strategic firepower to capitalize on the opportunities LaMancuso foresees, the complex demands of regulatory compliance can be overwhelming. Fortunately, they can outsource many of those responsibilities to third-party providers. Livingston International simplifies the complexities of importing and exporting for its clients of all sizes, giving them the freedom to focus on growing their business, he says. Since understanding trade regulation trends and the latest news is important, we educate SMB clients through weekly webinars on all facets of trade, including compliance, expansion into new regions, trade agreements, duty recovery, and regulations. Livingston International also provides innovative technology solutions, such as its TradeSphere suite of automation software. Companies with a more narrowly focused international business model often can get the logistics help they need from a third-party provider targeting their specific industry vertical. Bongo International, for example, focuses on e-retailers looking to expand into global markets. Our goal is to make every international transaction as easy as possible for both the customer and the retailer, says Greg Sack, managing director and co-founder of Bongo S7

8 International. In order to do that, we provide end-to-end services that are configurable to each retailer. This gives our retailers the ability to create the experience they feel will generate the optimal conversion rate based on their customers buying habits. The E-commerce Advantage The company offers two solutions, Bongo Checkout and Bongo Export. The first is a fully outsourced crossborder enablement (CBE) solution that includes currency conversion, shipping calculations, duty/tax calculations, compliance, and payment. With Bongo Checkout, we provide a currency conversion feed so the retailer can display its website in more than 120 countries, Sack explains. This gives the international customer a level of comfort knowing that the site is set up to handle international transactions. Bongo International takes over when things move to the checkout stage, displaying a calculation of landed costs in the language detected in the customer s browser settings. Customers are then able to check out through Bongo International, while the site retains the look and feel of the retailer. Orders are screened for fraud then pushed to the retailer with the domestic shipping address of a Bongo export hub, where goods may be repackaged to optimize shipping weight and configuration before being processed and delivered to international customers via FedEx. Bongo Export is designed for retailers that want to maintain merchant-of-record status. Customers create a shopping basket and select their destination country to receive a shipping, duty, and tax quote. An API calculates the landed cost and submits it back to the website, and goods from accepted orders are shipped to a Bongo export hub, where they go through the same process as Bongo Checkout orders. As Rick Schreiber, partner, manufacturing & distribution, at BDO USA, observes, Getting goods from point A to point B is a critical component of any company s supply chain. An efficient transportation and logistics (T&L) system is essential, as errors and inefficiencies in any one component can quickly snowball and become quite costly for a small business. Customers are then able to checkout through Bongo International, while the site retains the look and feel of the retailer. Beyond that, T&L is also a key ingredient in overall customer satisfaction. While efficient T&L remains a significant challenge for many SMBs, it s one that technology is making easier to meet. Using software that produces actionable analytics has allowed companies to vastly improve T&L efficiencies. The most significant advantage to a well-thought-out T&L structure is being able to provide the highest level of service at all times, Schreiber affirms.