THE FREIGHT MANAGEMENT ISSUE

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1 Trinity Topics volume 14, no. 3 logistics news & commentary fall 2014 THE FREIGHT MANAGEMENT ISSUE Warehousing, transportation management software, logistics consulting, and more

2 Autumn is here already, and what a summer it has been for Trinity Logistics. We ve experienced a settling in period to our new operations software and are already looking at future enhancement phases of this system in order to bring new efficiencies and enhanced services to our shipping customers. Trinity has never been a complacent company that settles for the status quo, no, when we learned that the software we needed wasn t available off the shelf in the marketplace, we set out to customize and rebuild our own. We now stand in the position to offer our customers the fruits of that labor with the ability to pivot even quicker to serve your needs than ever before. In addition, this summer we were also again recognized as a Top Workplace by the Delaware News Journal, proving that not only do we have a great team of individuals for you to interact with, but we re poised to competitively recruit the best talent in the industry as we grow. The people that make up our brand must be the best, because you deserve nothing less when you choose to call or us. We ve ranked a second time as a Top 100 3PL & Cold Storage Providers by Food Logistics Magazine which proves the commitment to excellence our team members demonstrate when arranging temperature controlled shipments. If you re currently a customer of ours, thank you for the opportunity. If you haven t yet given Trinity a try, I hope this magazine will convince you of our ability to serve you. JEFF BANNING CEO & PRESIDENT, TRINITY LOGISTICS LINKEDIN.COM/IN/JBANNING In 1979, Trinity was founded as a company largely focused on refrigerated freight brokerage. Since that time, the company has evolved and emerged a market leader in freight services. Five years ago, the company began a repositioning effort in response to the industry around us. Shippers, manufacturers, distributors, and retailers were starting to head in a new direction, searching for technology that would allow them to outsource some or all of their supply chain and increase efficiencies while reducing costs. A major piece of our rebranding was solidified in 2012 when we changed from Trinity Transport to Trinity Logistics, staking our flag in the ground as a true logistics solutions provider. Gone were the days of only handling freight brokerage, we were already involved in new avenues as a freight management provider with best-in-breed technology to back the effort. We have experienced some of the most exciting growth in 2014, including landing some of our largest customers to date and we have even branched into complex warehouse solutions as a result of going where the customer takes us. The talented group of people I lead are referred to internally as the Design Solutions team, because we work with your representative, our team member, to design a solution to meet any need that exists outside of traditional freight brokerage. I hope our paths will cross in the months ahead, and I would love to hear from you should you like to discuss anything contained in this magazine as a resource for your company. Our #1 goal is to be the first call you place when you have a logistics question, and it s our honor to be your trusted advisors. The Trinity Topics newsletter is published quarterly for the customers and friends of Trinity Logistics. PUBLISHER Jeffrey E. Banning, CTB EDITOR-IN-CHIEF Brandy McMullen MANAGING EDITOR Kellie Morgan LAYOUT & DESIGN Kellie Morgan CORPORATE HEADQUARTERS 50 Fallon Avenue Seaford, DE TOLL-FREE DIRECT FAX MAILING ADDRESS Trinity Logistics, Inc. PO Box 1620 Seaford, DE RAY SMITH SENIOR VICE PRESIDENT OF DESIGN SOLUTIONS, TRINITY LOGISTICS LINKEDIN.COM/IN/RAYDSMITH Table of Contents Trinity Logistics Featured in Inbound Logistics Magazine Check out the July issue of Inbound Logistics to read a case study on how Trinity s TMS (transportation management software) has helped flooring manufacturer and distributor TAJ Flooring! If you don t have access to a print copy, you can read the case study online here: What Is A TMS (Transportation Management System)? 3 Top 10 Factors to Consider When Selecting a Warehouse 4 Top 5 Reports Every Logistics Manager Should Be Analyzing 5 CSCMP s 25th Annual State of Logistics Report 6 How Transportation Management Systems Help Reduce Total Expenses 7 Case Study 8 LIKE WHAT YOU SEE IN OUR NEWSLETTERS? Read even more great content online: 2

3 Transportation Management Software (TMS): The Basics EXCERPT FROM FREE WHITEPAPER AVAILABLE FOR DOWNLOAD AT TRINITYLOGISTICS.COM A transportation management system (TMS) is a software program that allows companies to manage their supply chain (including their internal logistics department, suppliers, carriers, and vendors). Although transportation management software was very expensive when it first became popular, the new options available for on-demand, scalable TMS software mean that even smaller companies can now take advantage of the benefits of implementation. These benefits include automation, optimization, visibility, and reporting that lead to developing more efficient logistics processes, and ultimately, time and money saved. Common TMS Functions Although there are some differences between the various transportation management systems available, there are some functions that are shared by almost all. Most can automate manual processes, optimize shipments, provide visibility into freight spend, and generate financial and operational metric reports. Automation A TMS will allow you to eliminate manual processes that could be performed automatically. For example, by integrating the TMS with your company s existing ERP, order information can be automatically transferred from one system to the other, preventing the need for dual shipment entry. Once the shipment information is in the TMS, you will have the ability to perform all procurement processes automatically including rate shopping for contracted carrier rates, requesting spot quotes from multiple carriers, selecting a preferred carrier based on rate or service, and waterfall tendering of the freight until it s accepted. Optimization With a TMS, you can analyze a batch of shipments based on a variety of sophisticated parameters in order to determine the most cost-effective route plan. The TMS can make recommendations based on least-cost mode analyses (including parcel, LTL, truckload and intermodal), shipment consolidation opportunities (including multi-pick or multi-stop loads), continuous move opportunities, and pool distribution opportunities while accounting for factors like due dates, mileage, vehicle weight, stops in transit, and out-of-route parameters. Visibility A TMS can provide user visibility, supply chain visibility, and freight spend visibility. User visibility is controlled by setting constraints upon each user s login in order to control the amount of information they have access to. Supply chain visibility comes from providing each member of the supply chain (including suppliers, warehouses, carriers, vendors, etc.) with the ability to update their portion of the shipment in order to provide accurate real-time visibility into shipment status. Freight spend visibility comes from generating reports that will help you analyze your freight costs. Reporting With a best-in-class TMS, you can generate advanced reports that actually drill down into the very core of the specific logistics metrics that affect your business s bottom line. Examples of reports include freight spend totals, shipment statuses, shipment volume reports, accountability reports, analyzed freight spend reports, lane analysis reports, and carrier performance reports. These reports are dynamic and can easily be filtered, summarized and graphed. We invite you to learn more about transportation management software in the articles throughout this issue! The benefits of a TMS are far-reaching and can help you save money not just in your supply chain, but company-wide. For more on that, see page 7. 3

4 TOP TEN FACTORS TO CONSIDER WHEN SELECTING A WAREHOUSE BY BRANDY MCMULLEN, DIRECTOR OF MARKETING, TRINITY LOGISTICS Selecting a warehouse can be an overwhelming and confusing experience. Your company likely has very specific warehousing needs, and it can be difficult to get past all the complicated lingo and sales pitches in order to discern which warehouses are actually a good fit for your business. Below, we ll outline the ten most important considerations you should think about when choosing a warehouse. Location Consider the current shipping locations of your suppliers, as well as the delivery locations you re arranging for customers. Where are most of those deliveries being made? Are your warehouses located in the optimal zones to minimize the costs for both your company and your client? Access Any public warehouse you re thinking about contracting or considering as a major distribution center will need to be easily accessible from major highway arteries. Additionally, if you ll be importing or exporting a great deal of material, they should also be close to major port locations with strengths aligned with your product type. Client Profile Do you recognize any of their clients? On average, how much square footage do each of those clients occupy? If they have 50 customers who only occupy a small amount of their space, that could be a warning sign that the warehouse doesn t have the experience to attract larger companies with more sophisticated requirements to command larger square footage utilization. Storage Area Will their storage area provide the capacity you require? It s important to not only ask about their storage area, but more specifically, what is presently available to you. Do they anticipate any storage becoming available in the future in order to accommodate your growth? Association Memberships Are they active members of any well-known associations that can lend an extra bit of credibility to their operations? If they demonstrate their commitment to being card-carrying members of the IWLA (International Warehouse Logistics Association), for example, that shows they are interested in presenting themselves among groups of their peers, learning, gaining resources for improvement, and demonstrating their value over time. Experience Check their established date to make sure it s a good balance of age, showing they ve weathered the test of time, combined with newness of the facility with modern technology and touches to make things flow efficiently. Too old can mean antiquated processes, but too new can mean they re still working out the kinks, so to speak. Additionally, what are they experienced with? It s a simplistic example, but for food manufacturers and distributors crossing their FSMA T s, you would definitely want a warehouse with lots of experience meeting strict food grade requirements. Employees Compare the size of their facility to the amount of employees and determine if you feel it s a good fit for the type of service you require. Are the employees knowledgeable about the types of services you need provided? Will you have a go to account representative whose primary responsibility it is to help make certain your needs (and the other clients needs) are addressed? Processes How many doors do they have, and what is their system to manage the inbound vs. outbound traffic? Do they have a set staging procedure? What are their standard services (included in the price) vs. special services (for an extra fee)? Can they handle inspection, storage, dispatch, inventory, reverse logistics, packaging, labeling, or reporting? Risk When you re using an outside vendor for warehousing, this can remove a significant part of the risks associated with logistics. Your partners will shoulder some of this burden as they help to resolve potential issues and work proactively to reduce traditional issues associated with moving product with machinery. However, your role must be active, regardless, in mitigating that risk, by asking them about their incident rates, safety plans, insurance coverage, and damage plans. Ask to see copies of their insurance coverage, and make certain their plans and reported incidents marry with your company s expectations. Find out how they handle issues when they arise in order to practice due diligence in protecting your company from poor vendor selection. Technology What type of Warehouse Management System do they use? Can your system for processing orders and managing your supply chain integrate with theirs? What type of handling equipment are they utilizing? If your product lines are numerous with assorted SKU s, you may need to search for warehouses with more advanced robotics or sorting conveyor belt systems to minimize human error when loading the trucks. No matter the sophistication of your product lines, at a minimum, you need to seek a partner that can provide regular reporting regarding your product moving into and out of their facility preferably on a web-based platform that you can access at any time, from any location. It s clear that choosing a warehouse requires very careful consideration and a scrutinizing examination of all your needs. If you re still overwhelmed, we can help! Here at Trinity, a group of special-solutions experts known as our Design Solutions team have loads of expertise in warehousing and so much more. If you re interested in teaming up with us to figure out the best solution for your business, you can send us an at marketing@trinitylogistics.com. 4

5 The Top Five Reports Every Logistics Manager Should Be Running (and Analyzing!) BY KELLIE MORGAN, MARKETING COMMUNICATIONS MANAGER, TRINITY LOGISTICS The implementation of a TMS (transportation management software) is the first step to automation, visibility, and ultimately, cost savings in your supply chain. However, you won t see ROI in your TMS investment unless you re actively taking advantage of the visibility it provides. You now have the power to view, analyze, and take action on a huge range of data. Actively monitoring and making decisions based on these reports will be key to creating efficiencies and cutting costs. It may be overwhelming trying to decide exactly which data you should be analyzing. According to our TMS team, these are the top five reports you should absolutely be running: Freight Accruals Freight accruals are used to keep track of the costs associated with the transportation of your goods to a customer. Costs are accrued from the moment the goods are delivered, and they are discharged once the freight invoice has been paid. Tracking freight accruals allows your company to calculate your true net revenue at any given time by providing insight into any outstanding balances that have accumulated during a specific timeframe. Cost Allocation Cost allocation reports break your freight charges down by the mile, the pound, or the SKU. For multi-stop loads (or loads made up of multiple POs), freight charges can be allocated to each order based on the percentage of distance, weight, or quantity the individual order contributed to the whole. Tracking cost allocations will give your company valuable insight into the true cost of transporting goods and can be used to identify costly SKUs or lanes. Carrier Scorecard Carrier scorecards are used to track a carrier s performance based on their tender acceptance, on-time pickups, and on-time deliveries. Carriers who bid low on an RFP and then proceed to decline tenders or provide poor service can either cost your company thousands of dollars in additional expenses or, worse yet, cause you to lose customers. Tracking carriers performance can help you reevaluate your routing guide by selecting more reliable carriers on trouble lanes, improving both costs and customer service. Least Cost Carriers Least cost carrier reports are used to identify loads where the carrier with the lowest cost did not haul the freight, the reason why, and the additional freight charges that occurred as a result. By tracking least cost carrier usage, your company can identify potential problem areas, resolve the underlying issues, and prevent unnecessary expenses from occurring in the future. If you are looking to cut freight costs, this report makes it clear and simple to see missed opportunities where money could have been saved. Since cost isn't the only factor when selecting a carrier, you can also use this report to identify carriers who are repeatedly passed over despite offering lower rates, providing an opportunity to work with these carriers to set up a service level agreement before you decide to award business solely based on cost. Power Lanes Power lane reports are used to identify new lanes and provide a benchmark for negotiating contracted rates with carriers. You can identify a new lane as an origin-destination pairing that occurs a set number of times. Once a new lane has been identified, the spot market rates paid to move the lane can be broken down by load, mileage, pound, etc. and can be used as a point of reference when negotiating rates with carriers. By identifying power lanes, you can secure fixed rates on a lane, making it easier to predict future freight costs. Note: Most transportation management software products have the ability to run the five reports listed above. If yours does not, or if you are interested in implementing a TMS into your supply chain, feel free to marketing@trinitylogistics.com to set up a free consultation! 5

6 CSCMP s 25th Annual State of Logistics Report This excerpt was republished with permission of the Council of Supply Chain Management Professionals. For more information on this prestigious organization, visit Trinity Logistics is a corporate member of the organization, whose purpose is to educate and connect the world s supply chain professionals. Transportation costs went up 2.0% in Carrier revenues are used to measure the cost to shippers in the State of Logistics Report. All modes posted similar revenue increases in Neither rate nor volume growth was particularly strong during the year, but the middle of the year was the strongest. The carrier revenue picture is not a true picture of the underlying activity in the industry as a whole. In 2013, we began to see load size and weight expand. Capacity was tight sporadically throughout the year. The combination of bad weather and high seasonal volumes caused performance problems for the industry. The truck driver shortage is having a dampening effect on freight movement. Trucking, the largest component of transportation costs, posted a 1.6% rise in 2013, one of the weakest revenue years in recent history. The intercity truck segment rose 1.8% and the local delivery segment was up 1.2%. Truck tonnage increased 6.1% in 2013, which is much higher than revenue figures would seem to indicate. Although the industry remains at near 100% utilization, shippers still perceive that they have enough options to hold the line on rate increases. Rates have been relatively flat with the exception of spot rates when capacity is scarce. The capacity issue is becoming more severe as Federal Motor Carrier Safety Administration (FMCSA) Hours of Service (HOS) Rules and other safety regulations take a bigger bite out of productivity. Another adverse side effect of the new rules is the impact on drivers. More and more drivers are walking away from the industry because of increased burden and decreased wages. Potential drivers must consider these issues when deciding if this career choice is right for them. The truck driver shortage is the number one concern of trucking executives and very close to the top for other industry leaders as well. As costs continue to rise, particularly to attract and retain existing drivers, the industry is experiencing a rising number of trucking failures. Avondale Partner s Donald Broughton has been tracking trucking company failures for more than two decades. He reports that, at the end of 2013, trucking bankruptcies increased for seven consecutive quarters and were at a three year high. He further stated that the increase in expenses and prohibitive cost of adding new drivers reduced truckload capacity by 2.5% in ,775 trucks were pulled off the road due to company shutdowns, which is larger than in 2010 and 2011 combined. The cost of attracting and retaining drivers has driven wages up, bringing them back in line with other industries. This has lowered turnover rates, but they still remain high. The trucking industry is facing a severe problem with demand increasing, while capacity is declining. The capacity loss is in real vehicles, as well as lowered productivity of current assets. Given this situation, it is apparent that carriers should be able to raise rates significantly in 2014, probably into the 5 to 8% range. The cost for rail transportation was up 4.9% in (Slide 14). Class I freight revenue per ton-mile increased 5.3%, from cents to cents. Ton-miles rose in 2013, and remained above 1.7 trillion. Overall, rail traffic was up 9.2%. Total carloads for the year increased 8.1%, the biggest increase in recent memory. Intermodal volume went up 10.6%, but strong competition from trucks held rates down in The railroad industry is continuing its ambitious capital investment programs, increasing capacity to ease choke points. Volume has been rising faster than it can be absorbed by the industry, and 2013 saw many incidents of car shortages or unavailability of the right equipment. There were even reports of a shortage of locomotives to pull loaded cars. The railroads have the ability to increase their volumes carried on paper, but it remains to be seen if it can be handled well operationally. It is important that rail intermodal pick up where the trucking industry cannot. 6

7 HOW TRANSPORTATION MANAGEMENT SYSTEMS HELP REDUCE TOTAL EXPENSES BY RON VEST, VICE PRESIDENT OF INTERMODAL, TRINITY LOGISTICS A transportation management system (TMS) is often thought of as a tool to help shipping departments select the lowest cost carrier. Other times, it s looked upon for consolidating shipments or enhancing the way a shipment is being routed. While these are definite features, a TMS also provides opportunities for savings in both soft and hard costs that create far-reaching benefits for your entire company, not just the transportation department. The TMS has a dramatic positive effect on the profitability of all departments. Let s take a look at how. Reduce inventory costs Through integration with existing ERP s (Enterprise Resource Planning Software) and WMS s (Warehouse Management System Software), a TMS can ensure accurate shipments of product(s) are tracked and removed from inventory. This allows correct inventory levels for planning purposes and therefore reduces the need to carry just in case inventory. It will also help you avoid the need for additional separate shipments. Reduce wasted employment expenses Since a TMS can automatically track and trace, it reduces the time required by employees to do so. By reducing the time it takes your employees to manually track shipments, it saves on employment expense, reduces overtime costs, as well as increases employee productivity. Reduce services provided to less profitable customers A TMS can track transportation cost down to the granular level. Since it can do this it allows a company to determine the total cost of a customer, compare it against revenue by customer and truly determine the profitability (or loss) of the customer. Perhaps this will allow you to adjust what is included in the sales agreement such as excessive lumper fees or detention. It can also identify where you may need to stop providing certain discounts or increase their cost to accommodate shipping expenses. Reduce handling costs With its ability to optimize and consolidate shipments, a TMS reduces the number of shipments and as such, you re reducing the amount of hands required to touch the shipment and therefore lowering handling costs. Reduce personnel costs Without a TMS, daily operations can require significant fixed cost wages or salaries of the people equipped to handle logistics. With a TMS, many processes can be automated and outsourced to the point where it requires less personnel, allowing you to reassign staff to more productive roles or avoid adding additional salaries. Example: Your TMS receives an order from an ERP electronically and notifies the WMS all within the blink of an eye. The WMS notifies warehouse personnel to pick, pack, and prepare for shipment. Once the shipment is ready for pick-up, the WMS notifies the TMS which automatically tenders the load and notifies the carrier. Overall, the requirement of human involvement and management has been minimized to exception management. Avoid increasing physical network and facilities costs As a TMS automates processes and integrates with other tools, just-in-time order fulfillment can become a reality! As a result, you re able to reduce the amount of inventory stored on hand which decreases your need for more square footage and larger networks. Leverage new and/or alternative distribution channels Through optimization using a TMS, we can determine if your shipments qualify to be shipped through alternative modes such as LTL and intermodal. Alternative modes often carry significant cost savings. Reduce billing costs A TMS can automatically handle billing and is able to be integrated with your company s software which may result in a faster billing and payment cycle without the additional costs of collections staff or agencies. These are just a few areas of expense that a TMS can have a positive effect on. How much can you save with a transportation management system? Contact your representative or call (866) for a free consultation and we ll show you! FOLLOW US ON SOCIAL MEDIA /logisticsleaders /trinity_tweeps /company/trinity-logistics /trinitylogistics 7

8 Trinity Logistics PO Box 1620 Seaford, DE Your single-source provider for truckload, LTL, intermodal, freight management, TMS, international, ocean, and warehousing solutions. Customer Case Study: New Classic Home Furnishings HEADQUARTERS: Fontana, California WAREHOUSE LOCATIONS: California, North Carolina, and Texas OUR SOLUTIONS: Warehousing, Supply Chain Consulting, Freight Services. Thoughts from our customer... We did a thorough and exhaustive search for the right partner in Dallas comparing services, staffing, extended capabilities, and of course, costs. We had dealt with Trinity on the freight side for many years out of our California office, but never on a project like this. The combination that Trinity offered was a competitive, complete package we found to be our best option. Trinity Logistics made our needs a priority and walked all parties through the entire process. We basically set up our system in their facility from the ground up, including racking, shipments procedures and communications. Because of the positive experience with the Trinity Logistics team, we are sourcing their help with another regional warehouse. --- MICHELE MCPHERSON, VICE PRESIDENT Challenge Solution Results New Classic was experiencing rapid growth with several major retailers in the Dallas area and product demand with local accounts, leading to their decision to find local distribution. Until this point, their warehousing spaces were either East or West coast only with additional space in China. Those locations were too far away to accommodate the predicted inventory needed for an estimated 8 million shoppers annually. New Classic needed advice and logistics expertise, and fast! Trinity set to work coordinating the inbound ocean containers of furniture and organizing the rail logistics from the port. Trinity located space to accommodate 400,000 cubic feet of product in the Dallas-Fort Worth market and will also arrange outbound truckload and less-than-truckload deliveries from this location. In addition, Trinity orchestrated New Classic s storage systems within the facility and inventory management systems. The Dallas-Fort Worth distribution center is receiving inventory smoothly and has been a fantastic showcase model. They will be ready to accommodate their sales growth thanks to the proactive actions involving Trinity Logistics. In coordination with open houses, a showroom area is staged with current product for warehouse tours conducted to demonstrate the company s commitment to quality in product and in supply chain execution.