Time for a visit from the supply chain doctor?

Here’s a revelation: your company has supply chain inefficiencies. And guess what? Correcting some of these inefficiencies could bring substantial savings, while improving logistics performance. The problem is how to uncover these issues and prioritize which ones to address.

Think of it like visiting a doctor. You can wait until you have an ache or pain, or in this case “pains” such as costly overtime or increased transportation costs. A more proactive approach, however, entails visiting the doctor’s office for regular health checkups. Your doctor can highlight areas to work on to improve overall health, but most importantly, head off major issues later on.

This is the role a supply chain consultant can perform for your company. Their “health check” will focus on key decision-making levels – strategic, tactical, and operational.

Strategic can look at things like:

• Network optimization
• Facility Layout
• Space utilization
• Pick/pack strategy 

Tactical includes:

• Ship-to alignment
• Safety stock analysis
• Mode conversion
• Racking configurations

Operational touches on:

• Carrier and mode selection
• Transit time analysis
• Metrics and reporting
• SOP creation

What companies will receive following a consultant’s visit is a roadmap to improving the health of their supply chain. The best logistics consultants will not only identify areas of improvement, but prioritize them and provide an ROI calculation. Companies then can enlist the services of a supply chain professional to swiftly correct high-priority inefficiencies.

It’s a simple fact that you can’t fix what you can’t measure. Enlisting the help of a supply chain consultant will not only help identify problems and corrective actions, but they also can assist with developing metrics to measure performance moving forward. The end result is a healthier supply chain.

Your customers buy value. Why are you selling features?

Your company is great at developing new products and services, but is it equally adept at positioning value? Are sales and marketing in synch on articulating that value? Quite often the answer to these questions is no. The simple exercise of creating value propositions many times is ignored. The result is a fragmented approach to selling, one that removes value from the discussion.

Without value, companies are reduced to selling features, which doesn’t differentiate the company or its products and services from all others in the space.

Selling your value is a four-step process that begins with understanding your customers’ needs and problems. The first question to ask is: what is the need my customers have for the product or service my company markets? This answer is likely a simple sentence or two.

Next, ask what are the problems clients face in meeting this need. This will be a bit longer list. Answers may include a lack of: expertise, time, costs, systems, tools, space, etc.

The third step is detailing your company’s solution that helps customers overcome these problems to meet the need. Here’s where you list those features and benefits to begin building your case.

Finally, and most important, list your company’s differentiation points. How does your company, product/service differ from all others in the marketplace? Points may include expert staff, warranty, quality, advanced systems, better ingredients, production process, facilities, longevity, and certifications, anything that enables you to carve out a unique space in the industry. This is the section that helps companies elevate beyond just selling their features.

Work, however, is not done once the value proposition document is completed and vetted past subject matter experts. It must become a cornerstone piece, meaning sales and all customer-facing departments should be trained on it. Marketing must use it as a guide for all advertising, campaigns, collateral, sales tools, website messaging, and content marketing initiatives.

Designing a strategy around value propositions unites all players in the business and ensures everyone is speaking from the same script. While tactics may vary, the messaging remains consistent. Companies that solve customers’ problems and sell their value are far better positioned than those simply pushing a product or service.

Are you making this major website mistake?

An About Us page is arguably the most important page on a company’s website, and is often the first one that people visit. Your web analytics will confirm this. Unfortunately, many companies miss the mark when it comes to the content they choose to fill this page with – giving people information that is of little or no value to them as a potential customer.

Below is a list of tips to ensure your About Us page is giving people the information they want.

• Keep it simple. Your About Us page is not the place to do a deep dive on everything you do as a company. Save that information for product/service specific pages on your website. You want to give your readers a quick, general snapshot of who you are, and the value your company delivers to its customers.

• Do not give a history lesson. This is the most common mistake companies make on their About Us page. They use this precious real estate to tell people what year they were founded, why they were founded, who started the company, and other information that has no value to website visitors. Make sure you are telling people who you are today, and not who you were when you first opened.
  
  If you feel your history is an important part of your identity as a company, create a separate page specifically dedicated to history.
  
  

• Explain your values. It’s important to give readers a sense of your values as a company, and how you conduct business. Don’t just give them laundry list of your services.
  
  For example, instead of a dairy company listing out the different products they produce, they could explain their commitment to customer service and new product development to adapt to changing consumer demands. These features differentiate their company from the competition, and offer value to potential customers.   

Review your About Us page content. Next, ask yourself, if this was the only page a major prospective customer viewed, would they get the full picture of the value you can deliver? If the content doesn’t position your value, it’s time for a refresh.

Know Your Supply Chain Terms

When it comes to warehousing and logistics, it can seem like those in the business are speaking another language. However, familiarizing yourself with a few of the basic terms will help increase your understanding of supply chain operations.

Below are a number of phrases to build your supply chain knowledge base.

• KPI. Key Performance Indicator. This is a pre-established standard or standards used to gauge the performance of a supply chain.

• WMS. Warehouse Management System. A program that manages inventory and tracks inbound and outbound transactions, effectively managing and recording day-to-day operations.

• EDI. Electronic Data Interchange. This is a communication method that allows companies to exchange data through a standardized format. EDI helps streamline logistics by allowing computers, utilizing different systems, to talk to each other.

• TMS. Transportation Management System. This system pulls together all elements of shipping loads, helping automate processes and make cost effective decisions in planning transportation.

• BOL. Bill Of Lading. A BOL is the declaration of content within a shipment provided by a shipper to the carrier.

• MHE. Material Handling Equipment. MHE refers to lift trucks, reach trucks, etc. used in a warehouse for unloading stock or picking items for delivery.

• FTE. Full Time Equivalent. A unit of measurement for an operation that denotes one full-time employee.

• OTIF. On-Time, In Full. This is a type of KPI that looks at shipping performance.

• OS&D. Over, Short, & Damaged. A report, normally filed by the receiver of a shipment, that details product quantity or damage issues.

• LMS. Labor Management System. A system the tracks and reports on the productivity of a workforce.

• RF. Radio Frequency. RF barcode scanning is used for warehouse location signs to increase accuracy and speed in inventory management, including put away and picking functions.

• 3PL. Third Party Logistics. A 3PL provides logistics management services to shippers (vs. companies taking on these tasks in-house), which enables companies to focus more on their core competencies. 

Is outsourcing transportation right for your company?

Is transportation your company’s expertise? Chances are, the answer is no. With transportation being one of the highest expenses in the supply chain, companies can’t afford to run these departments inefficiently. Without the proper knowledge and procedures in place, costs can quickly become out of control.

Outsourcing to a specialist that provides Managed Transportation Services can significantly increase efficiency and reduce costs in these departments.  

With Managed Transportation, you will see improvements through:

Reduced personnel expenses. By outsourcing your transportation department, the burden of hiring and managing an experienced staff will be eliminated.

Strategy. Experts who are skilled in efficiently directing all facets of transportation operations will develop, build, and manage an overall strategy – which will result in a more effective operation.

Cost Savings. By outsourcing to a company with knowledge of industry best practices, key performance indicator (KPI) development, and custom process implementation, operating costs will significantly improve.

Mitigate risk. Handing over transportation management tasks to someone with extensive knowledge in carrier compliance and safety will decrease your overall risk.

Latest technology. Technology customized to help manage transportation tasks can be extremely expensive and time consuming to implement. By outsourcing, you’ll gain access to these powerful tools without the major time and capital investments.

Transportation always will be a necessary cost of doing business; however, enlisting the help of an expert to manage these tasks can improve overall performance and reduce costs. 

Have a Plan for your Philanthropy

Everything about business operations is carefully managed – from hiring, inventory, and standard operating procedures, to advertising placements, product mix, and I.T. systems. One area, however, often is neglected or just plain suffers from a lack of direction – philanthropy.

Most companies are doing some level of giving, but focused philanthropy requires forethought and management on-par with other business activities. Without a plan, companies will just be cutting checks.

Here are some basic tips for creating an impactful charitable donation plan.

• Pick a charity (or charities) aligned to your company’s goals or values. Chat with directors of several organizations to get a feel for their own values. If your company will seek employee support (and it should), craft a list of possible organizations/causes and survey employees on their favorites. This is the first step in generating support internally.

•  Set criteria and a plan for fielding requests. Companies are inundated with requests through letters, calls, and emails. Setting a list of criteria up front for what types of causes your company will support will help reduce the number of applications. Also, document where requests go when they come in. This is where having a group decide which causes to support creates transparency, both internally and externally, on where dollars go.

• Get employees involved. Involvement could range from creation of a charity board to manage donations, to implementing programs such as a $1 casual Friday, or bake sale. Highly successful programs go beyond just the company-funded variety; they should offer employees opportunities to donate money and/or time. Internal engagement is key.

• Communicate. Internal and external communication are must-haves. Simple updates, photos, emails, social media posts, and press releases all help to keep employees, your customers, and the community updated on your company’s giving activities. While the satisfaction of doing good within the community is its own reward, creating awareness helps paint the company as more than just an employer.

Creating a culture of giving within an organization will not happen overnight. But with a clearly defined philanthropy plan, strong communication, and employee participation, companies will evolve from just writing checks. 

Don’t get caught flatfooted when a recall crisis hits

Recalls have been in the news quite a bit of late, and no company ever wants to be in the media spotlight having this conversation.

The unfortunate situations, however, raise the importance of companies having crisis plans in place to deal with such recall scenarios. Getting caught flatfooted when a story of this size breaks can cause significant damage to the brand.

Below are a few cornerstone elements for a crisis plan. But any strategy is only as good as employees’ readiness. So it’s imperative that marketing communications and public relations teams regularly review and drill on plans.

• Get ahead of the story. In our digital world, news is breaking fast and from multiple channels. So companies that feel they can sit on a story, do so at their peril. As soon as an issue is discovered, get in front of it utilizing all media tools available. The caveat to this is that, while multiple channels will be utilized, the company needs one gatekeeper controlling the flow of all information. This ensures consistency of message. The only thing worse than no information being released, are details that trickle out from multiple company sources. 

• Communicate a plan. Know what the company is going to do to address the problem, and communicate it. This is the active part of the plan that helps a company steer the conversation. Good plans will highlight what the company is doing to assess why the situation occurred, as well as a focus on key steps involved in managing the recall. Plans also should emphasize the safeguards being put in place to prevent the need for a similar recall in the future. Step outside your company role and anticipate what consumers and media really want to know, versus what the company wants to say. 

• Admit the mistake. This seems like a no-brainer, but it’s surprising how many companies can’t utter the words “we are sorry.” Again, use the mediums available to your company and make it a part of all communications. Something as simple as a 30-second video clip of a company president apologizing can have a major impact, provided he or she comes across as natural and unscripted.

No company wants to face a major recall. However, having a plan in place with three simple elements – control the story; communicate your plan; and apologize – will help protect the brand in the marketplace.

NFDM Prices Present Significant Profit Opportunity

Lower your production costs and your profits will increase. This is why companies do all they can to leverage the best prices on raw materials.

Food product manufacturers are doing this today, taking full advantage of Non-fat Dairy Milk (NFDM) powder prices that are at five-year lows. This low point is an opening for companies to utilize an asset-based line of credit to stockpile the commodity. But food product manufacturers aren’t the only ones who can benefit.

The down market also presents a fantastic opportunity for savvy NFDM manufacturers and traders to hedge. Given the right financing terms, setting aside product now for a later sale can pay significant dividends in the months ahead.

Consider this scenario. Powder is selling today for roughly $1 per pound. Let’s say a company was able to secure advantageous finance terms, which came out to $.02 per pound every three months. If the price of NFDM were to increase to $1.15 in three months, that’s $.13 of profit per pound.

Now what if NFDM rallied within a year to its 3-year average of $1.60? Subtract the $1.08 in finance costs, and the profit becomes $.52 per pound.

All of this depends on a financing mechanism that not only gives companies highly competitive rates, but also is agile enough to put them in a hedging position now, while the market is at a low point. The old adage holds true – time is money.

What Is Contract Operations And What Value Does It Bring?

There is a difference between getting things done and getting them done efficiently. One example is running a distribution center in-house. Because the operation appears to run with no major roadblocks, many companies aren’t aware of their true costs and don’t focus the time or resources to drive out inefficiencies and unnecessary expense. This results in a distribution center that is operating sub-optimally and negatively impacting the company’s bottom-line profit. Additionally, allocating resources to an in-house distribution center only diverts attention from the company’s core competencies, priorities, and business purpose.

Turning over distribution center operations to a third party can often reduce costs, improve operational performance, and customer satisfaction, and ultimately help companies better focus on their business priorities.

Use the topics below to determine if your company could benefit from a contract operation.

• Staff recruiting and management. Is recruiting, training and managing warehouse staff an effective use of company time? Could that time be better focused on the company’s core competency.

• Upfront investment. Purchase of racking and material handling equipment is expensive. What is the lost-opportunity cost to tying those dollars up in a major capital purchase? Could they be better deployed in other areas of the business?

• Layout and design. Is your warehouse designed to perform? The efficiency of a distribution center is determined before the first loads are moved. Make the wrong decisions on layout, racking, and design, and the inefficiency will burden a company with overtime and additional personnel costs.

• Management systems. Distribution is driven by big data. Does your facility have the systems in place to collect it? Do you know what the data means and how to act on it? Without a quality warehouse management system, companies operate in a vacuum. Real-time access to this information is critical to the overall performance of the facility and, ultimately, customer satisfaction.

Selecting the Right Transportation Broker for Your Business

Enlisting the help of a broker can be an efficient way to alleviate one of the most time-consuming transportation tasks – finding carriers to cover your lanes. However, not all brokers are created equal. Each has their own network of carriers with unique specialties, their own approach to customer service, and varying lane coverage. 

It’s important to select a broker who truly understands your business and aligns with your needs.

Quality carrier network. The most significant aspect of a quality carrier is their commitment to safety. Talk to potential brokers to better understand how they select their carriers. The best brokers will only work with companies who have a Federal Motor Carrier Safety Administration (FMCSA) rating of satisfactory or better. It’s essential to make sure your broker’s carriers meet the minimum liability insurance requirements – some brokers even require carriers to exceed these amounts.

Customer service. If something goes wrong with one of your shipments, or a change needs to be made in the 11th hour, it’s important to work with a broker you can count on. Look for companies that offer 24/7/365 on-call support to ensure safe, on-time arrival of loads.

Diverse solutions. Whether your company needs interstate, intrastate, or international lanes, it’s key to work with a broker who can offer diverse options. So, as your business needs change, you can be confident your coverage requirements are being met.

Brokers who offer access to a variety of modes and specialized equipment can provide you with superior solutions for your specific product and shipment needs. Some of these include:

Modes	Specialized Equipment
Rail/Intermodal	Flatbed
Less-than-Truckload (LTL)	Heavy Haul
LTL Pools	Curtain Side
Truckload (Dry Van and Refrigerated)	Conestoga
Multi-Stop Truckload

Do you know the true cost of your asset-based loan?

Asset-based lines of credit are a popular finance tool most businesses use to unlock capital held in inventory. Wide utilization, however, does not imply that everyone understands their true cost. When figuring the total cost of money, there is way more to consider than just the upfront interest rate for your loan. Below are just a few items to consider when comparing financing options.

• Advance Rate. Not all lines of credit are equal and certainly not when it comes to advance rates – the percent of inventory value the bank will loan on. Low advance rates prevent you from realizing the full potential of the inventory value, meaning a sizable amount of cash is still tied up in the product. Any way you look at it, that’s a cost – and quite often, a major one. Obviously, the closer you can get to a 100 percent advance rate, the better.

• Focus on fees.  Doing business with banks brings a variety of fees, such as loan origination fees, unused line of credit fees, service fees, fees applied for flexing the line up or down, and termination fees. When all those charges are added up, a 3.00 percent rate can quickly rise by ¾ of a percent or higher.

• The value of equity. If companies are going to fall down anywhere in the finance process, it is in undervaluing their equity. In order to accurately compare finance packages, companies cannot discount this cash outlay. They must determine an ROI that they could expect had those dollars been used for additional production or investment. After all, nobody hands out cash without an expectation of a return. This number absolutely must be figured into that total cost of money. And once it is tallied, that initial upfront interest rate undoubtedly will rise.

So as you shop for asset-based financing, the goal should be to maximize the advance rate, reduce or eliminate fees, and minimize the cost of equity through a low or no down payment.

So what does all this mean? Just how much do these costs impact the interest rate

Consider a $15 million line at 2.75 percent. We’ve already established that fees, alone, can drive costs up by $317,953.

If you look at the equity required to support the difference between the advance rate and the value of the product, you will be required to come up with roughly $4.3 million in cash. If you assess a value of 10 percent to the cost of this required equity, that adds an additional $431,250 to the cost of the line of credit.

That brings the total cost of debt and equity to $749,203 and shifts the previously low 2.75 percent interest rate to 4.99 percent.