For U.S. Businesses, Lots of Optimism with a Heavy Dose of Uncertainty

When Dow Chemical CEO Andrew Liveris emerged from a mid-February meeting with President Trump and senior administration officials, he told waiting members of the media:  “Some of us have said this is the most pro-business administration since the Founding Fathers.  There is no question that the language of business is occurring here at the White House.”

Liveris was at The White House as part of a group of 24 CEOs representing the nation’s largest manufacturers including Dow Chemical, General Electric, Lockheed Martin and Ford.  The DOW CEO has been asked by President Trump to lead an “American Manufacturing Council,” to focus on igniting manufacturing opportunities in the U.S.

This sense of optimism is shared by the nation’s small businesses, with the National Federation of Independent Business (NFIB) announcing a 12-year high in its small business optimism index.

Amidst all this excitement though, there is also a deep sense of uncertainty, as businesses wait to see exactly how some of President Trump’s campaign pledges shake out.  Will the President pursue his vow to impose a 45 percent tariff on imports from China?  What exactly is in store for NAFTA, which the President has called “the single worst trade deal ever approved in this country.”

The Administration has vowed to revisit existing trade practices that, the President says, in their current form are unfair to U.S. businesses.  At the same time, both the President and Congressional leaders have pledged to reduce the United States’ sky high 35 percent corporate tax rate, and reduce the regulatory burden on businesses.

A new white paper from Purolator International, “2017 International Trade Uncertainty: What’s at Stake for U.S. Businesses,” offers insight about each of the front burner issues now under consideration.

The paper also discusses actions taken in recent months by our top trading partners to further their own trade positions.  Canada, for example, significantly strengthened its international position with finalization in late December of the Comprehensive Economic and Trade Agreement (CETA), which is a free trade agreement between that country and the nations of the European Union.

It’s an interesting time.  But with so much at stake, businesses must keep informed.  Start now by clicking here to download a complimentary copy of Purolator’s new white paper.

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Manufacturers’ Efficiency Revolution Must Extend to Logistics Solutions

When PriceWaterhouse Coopers released its list of industrial manufacturing trends, it cited a “technological renaissance” taking place in America’s factories, “that is transforming the look, systems and processes of the modern factory.”

Technology has become integral to U.S. manufacturing, with research by the National Center for the Middle Market finding nearly half of “middle market” (companies with annual revenue between $10 million and $1 billion) companies rely on some degree of advanced manufacturing techniques including automation and robotics.  Of those companies that do not currently employ any advanced manufacturing capabilities, 78 percent expect to do so within the next 3-to-5 years.

Manufacturers that have successfully transitioned to automated, highly-efficient processes certainly did not make these investments without giving careful thought to their supply chains, and their ability to seamlessly move both supplies and finished goods.  How, for example, would increased automation affect the speed at which supplies were needed?  Would additional parts inventory be needed and if so, at what cost?  And what if a piece of machinery broke down?  What would be the plan for quickly having a replacement part available, to avert any production delays?

Fortunately, at the same time America’s factories were undergoing a technology revolution, so too were many of the country’s logistics providers.  As a result, logistics solutions are available today – and in place in manufacturing facilities around the country – that were unthinkable a few years ago.

For example, one Texas manufacturer was pleasantly surprised that its logistics provider’s ground solution could deliver its products to the Canadian market faster than most providers’ air solutions!  This expedited – yet cost efficient – solution allows the manufacturer to meet delivery promises to its customers without having to incur excessive costs.

A new white paper from Purolator International, “Preparing your Logistics Strategy for Today’s Advanced Manufacturing Practices,” delves into changes afoot in manufacturing practices, and the importance of strategic logistics solutions.  For businesses that have invested heavily in technology, ensuring the right logistics plan is in place is the natural next step.

Click here to download a complimentary copy of Purolator’s new white paper.

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AOG Repairs Don’t Always Have to Mean Premium Pricing

“Speed” and “Urgency” are words commonly used in the world of AOG repairs, as airlines spare no expense in locating parts needed to repair grounded planes.  But let’s add two additional terms – “Consolidation” and “Cost Efficiency” – that can help streamline the process and control costs.

We don’t often think of an AOG repair as an opportunity for cost efficiency, but innovative logistics solutions are increasingly changing the way certain carriers approach their repair orders.  And consolidation – the process whereby smaller shipments are combined to achieve economies of scale – is rapidly becoming a preferred option for many AOG managers.  While you certainly can’t plan your next AOG situation, you can, as the saying goes, make lemonade out of lemons by finding opportunities for efficiency.

How exactly does consolidation work in the fast-paced world of AOG repairs?

Consider these three situations:

  • Same City Maximization: Let’s say a plane is hard grounded in Atlanta, with an unserviceable air data computer.  AOG technicians will find the necessary replacement part to get the plane airborne again, but the malfunctioning part will need servicing at a repair station located in Dallas.  Now in the past, that single unit would be expedited to Dallas via a costly courier solution.  But doesn’t it make sense to combine the broken air computer with other parts also in need of service in the Dallas area?

Some airlines are beginning to make good use of this classic example of consolidation.  Multiple parts in need of service move together – as a single shipment.  Upon arrival in Dallas, the larger unit is broken down and each part is transported directly to the appropriate repair center.  This solution is ideal for AOG repairs that are slightly less urgent, and can have a surprising impact on transportation costs.

  • Volume Efficiency. It’s not uncommon for an airline to have a volume of unserviceable parts in need of repair at the same time.  An example of this might be an FAA-mandated modification to a certain part that needs to be made across an entire fleet.  Rather than ship individual components on a piecemeal basis, airlines are realizing the efficiency of consolidating parts into a single shipment.  Airlines have gotten quite sophisticated at developing and maintaining spare parts provisioning lists.  It makes sense then, that a consolidated approach to performing mandated equipment upgrades/refurbishments would be most effective.
  • Customs/Handling Facilitation for International Shipments. Many international airlines rely on U.S. repair facilities.  This of course involves transport of parts and materials across international borders which, if not properly managed, can be a supply chain killer.  Keep in mind, the top reasons for border clearance delays are incomplete paperwork and missing documentation.  Plus, U.S. customs agents have increased scrutiny on parts, equipment, and technology-related shipments, meaning AOG-related products are prime candidates for extra scrutiny.

If properly handled consolidation can minimize delays associated with the clearance process in several ways.  First, a consolidated shipment will move as a single unit, meaning each individual product will not have to be processed for transportation as a shipment.   Upon arrival at the port, individual items are cleared as separate units.  This prevents the entire shipment from being delayed should customs seek further inspection of a particular item.

In addition, international shipments traveling to different domestic destinations can move as a consolidated shipment in the manner discussed above. Once cleared through customs, the larger shipment is deconsolidated for further domestic distribution.

Consolidation also has the benefit of minimizing in-transit damage, since smaller units are bundled together, and less susceptible to turbulence, shifting and other in-flight risks.

It would seem then, that consolidation opportunities would be especially appealing to larger carriers, that deal in significant volumes.  However, I am continually amazed to find AOG managers who not only fail to take advantage of consolidation, but who seem to believe their current logistics operations are just fine.

Well maybe parts are arriving on time, and there haven’t been too many glitches, but there is always room for improvement.  AOG managers should be constantly on the lookout for innovations, always looking for the “next great thing,” and constantly curious about how other carriers manage their AOG services.  Consolidation, for example, could be a tremendous source of savings, but if an AOG manager doesn’t know the option even exists, it will remain a missed opportunity.

AOG repairs are so costly, that managers need to turn every stone looking for areas of efficiency.  Shipment consolidation is an obvious place to start, and as I will point out in future posts, it is certainly not the only place.

 

Mario Rojas

Mario Rojas

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Single Window Initiative – Long-Awaited Relief for U.S. Trade Community

If you needed any convincing that the U.S. customs compliance process was in need of an overhaul, consider this statement from U.S. Customs and Border Protection‘s (CBP) own publication: “Forty-seven agencies are involved in the trade process and among these agencies, nearly 200 forms are required for imports and exports. The current processes are largely paper-based and require information to be keyed into multiple electronic systems. As a result, importers and exporters are often required to submit the same data to multiple agencies at multiple times.”

The situation reached a point where members of the trade community appealed –- loudly and often – to the government for relief. A report by the Peterson Institute for International Economics found “the United States is no star when it comes to logistics. Overall the country lags in trade facilitation to its own detriment as a competitor in the global marketplace.”

And a subsequent analysis from the Washington, D.C.-based Wilson Center found that border inefficiencies added roughly $800 to the price of every new car manufactured in North America. Among other reasons, overlapping authority of government departments, plus requirements for multiple inspections, were cited as key factors in driving up costs.

Fortunately, help arrived in the form of the single window initiative, which was fully implemented in January 2017. The single window, known officially as the International Trade Data System, operates off of the Automated Commercial Environment (ACE), and now serves as the nation’s primary trade processing system.

This means a trader can satisfy all documentation requirements by entering data once. The ACE platform will accept the data, and then route the information to all applicable agencies. Going forward, traders will no longer be hampered by the onerous process of complying with multiple documentation demands, or the prolonged process of waiting for CBP to determine a shipment’s admissibility.

A new white paper from Purolator International, “The ABCs of CBP’s Single Window Initiative,” takes a detailed look at the new process. Among other things, the paper discusses how the system works, and how members of the community can become ACE-compliant.

To learn more, please click here to download a complimentary copy of Purolator International’s new white paper.

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Hidden Fees and Unexpected Costs in your Supply Chain

Next time you see an 18-wheeler stuck in a traffic jam, you’d better hope it’s not carrying a shipment addressed to you or your business. That’s because, as reported by Forbes Magazine, traffic congestion costs the U.S. trucking industry nearly $50 billion each year in lost productivity. That amounts to about $26,000 per truck, and guess who pays the costs?

That’s right, costs are generally passed along to shippers, and ultimately to consumers. The cost of poor infrastructure is just one of several “hidden” or “below the surface” fees that go into the transportation and logistics costs U.S. businesses pay each year. Other fees that are seemingly slipped in to transportation bills include costs associated with “free” shipping, costs resulting from shipments that arrive damaged, regulatory costs and excessive or unwarranted accessorial fees. This is in addition to costs resulting from inefficiencies and redundancies in warehouse and transportation operations that often go unnoticed.

Research by McKinsey and Partners estimates that supply chain inefficiencies are so widespread, a business could reduce warehouse costs by up to 50 percent, and transportation costs by 40 percent if corrective steps are taken.

The first step in taking control of these hidden costs though, is knowing about them. A business can start by conducting an audit of all freight and supply chain costs. Dig deep into the fine print and ask questions about any charges that look suspicious. There’s nothing to lose and everything to gain from asking a logistics provider to explain a certain charge, or provide supporting documentation.

A new white paper from Purolator International, “From ‘Free’ Shipping to Product Returns: Understanding Hidden Costs in your Supply Chain,” discusses several factors that help drive up overall supply chain spending. The paper highlights the impact these charges can have on the bottom line, and identifies solutions for managing these costs, if not eliminating them entirely

Please click here to download a complimentary copy of Purolator’s new white paper and learn more.

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With Two-Day Delivery the Norm, Expedited Service is an appealing E-Commerce Option

It’s no secret that online shoppers place a premium on free shipping, with multiple surveys showing that consumers have come to expect this benefit. But what does come as somewhat of a surprise, is the changing definition of what consumers consider “fast” shipping.

According to 2016 research by Deloitte, a strong majority of consumers — 83 percent – consider fast shipping to mean delivery within two days or less. Only 42 percent of consumers consider three-to-four-day shipping “fast,” down from 63 percent just a year earlier.

Deloitte’s researchers cite Amazon.com as a key driver behind this attitude change. Specifically, Amazon Prime, which offers two-day delivery to members who pay an annual membership fee. With as many as 65 million Americans reportedly signed up as Amazon Prime members, it’s not surprising that consumers have come to see two-day shipping as the new normal.

But meeting these expectations has been a challenge for many online retailers, who suddenly find themselves tasked with reconfiguring warehouse and inventory strategies, and developing logistics solutions to ensure fast, on-time delivery.

For many, expedited service has proven to be an obvious and highly effective solution.

Yes, this is the same expedited service traditionally associated with emergency shipments racing through the night, or across multiple continents to meet a critical deadline. But in today’s customer-driven world, a growing number of retailers are embracing expedited as a sure-fire way to meet expectations and ensure definite deliveries.

And like so much else in the logistics industry, expedited service has benefitted from technology and innovative thinking. Today certain logistics providers can provide faster ground-based solutions than some carriers’ air service. And high levels of visibility, in-transit communication, flexibility, security and exceptional last mile service ensure premium levels of customer service.

A new white paper from Purolator International, “Expedited Logistics becoming Preferred Option for Non-Critical Shipments,” takes an in-depth look at today’s expedited services, along with insight for shippers considering enlisting an expedited provider. Please click here to download a copy of the white paper.

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Time for an AOG Efficiency Check Up?

Boeing estimates the cost of a grounded aircraft to be as high as $150,000 for a one-to-two hour delay. That figures represents the cost to the airline of not having its plane in the air, generating revenue. It does not though, include the high costs of customer angst. Customers who are inconvenienced by sudden disruptions — flight cancellations, long delays, even a gate change – can have a lasting impact on a carrier’s reputation.

It’s no wonder then, that “aircraft on ground (AOG)” repair services generally have a “do whatever it takes” mentality toward fixing whatever problem has grounded a plane. For most AOG operations managers, by the time a problem is escalated to their level, it’s understood that every available resource should be marshaled to have the right part on site as quickly as possible.

But “do whatever it takes” no longer has to automatically mean uber-expedited services that come at an eye-popping cost.

This is because technology and innovation have taken hold, and smart managers are availing themselves of opportunities for greater efficiency. In some instances, managers are finding new ways to expedite parts by turning to increasingly innovative, out-of-the-box options. And along the way, managers are uncovering better ways to manage processes they didn’t necessarily realize were in need of improvement.

This is especially critical given the global scope of aviation and today’s required AOG services. No longer is a European or Asian-based repair job the exception. This means a U.S.-based AOG coordination center must have “best in class” solutions available to meet the challenge of expedited international services.

With so much at stake, the AOG sector has much to gain from a Logistics Checkup – a top to bottom review of existing practices, in order to determine better solutions going forward. At a minimum, a business may find validation that it has the right partners and strategies in place. Other businesses though, can find opportunities for improvement in critical areas including:

• Inventory Management. In a perfect world, every airport would have a complete inventory of replacement parts, readily available when needed. Since that’s not realistic, the next best thing is to have a good idea of where replacement parts are located at any given time. Many carriers traditionally relied on a Required Spare Provisioning List (RSPL) to help prioritize parts inventories, including provisions for critically-needed no-go items, which can automatically ground a plane if they become inoperable. The RSPL lets carriers know which parts it should stock, and lays out instructions for quickly obtaining a non-stocked item when the need arises.

In fact though, RSPLs are not uniformly embraced by airline material organizations and AOG desks, and to a large extent, have been minimized by advances in technology. Carriers are implementing forecasting and inventory planning systems that go well beyond traditional RSPLs. Technology allows a manager to know precisely where a part is located at any given time, and in many instances, to develop web-based inventory systems that can be easily accessed throughout the organization.

However, research by Oliver Wyman found a surprising number of airlines are not keeping pace with technology advancements. Fewer than 10 percent of respondents said they plan to invest in “building or improving inventory management systems.”

• New Generation Aircraft – different needs. As airlines upgrade their fleets with manufacturers’ latest high performance, fuel efficient and technology-based aircraft, AOG services will undergo changes to support the next generation of aircraft. Service managers better be aware of the required changes, and plan accordingly. Although each new class of aircraft is intended as an improvement over the preceding generation, any change will require aviation maintenance technicians (AMTs) to be trained and intimately familiar with the new aircraft and their systems. For example, one MRO analyst referred to Swiss Air’s introduction of Bombardier’s C Series as a replacement for its Avro RJ 110 as a “game changer,” because of the C Series’ introduction of advanced avionics, composite materials and new generation of geared turbofan engines. In addition, advanced aircraft health monitoring systems (AHMS) will provide real time data to AMTs, so that part failures can be diagnosed immediately. This means parts and repair personnel can be at the gate when a plane lands. The key though, is to have parts for the next generation aircraft easily available.

• Transit Times and Modes. In the world of AOG repairs, timing truly is everything. A call comes in to a carrier’s operational control center, and the clock starts ticking. Many AOG desks find comfort in relying on the same tried and trusted transportation providers they have used for years. But improved transit times and creative options are taking hold within the industry, and an AOG manager needs to keep abreast of developments.
o Expedited Ground Solutions. For AOG repairs within the U.S. and Canada, it is possible to have a part delivered within the same time frame as – sometimes faster than – an air solution. How is this possible? For one thing, route optimization software helps ensure that a highly efficient route is selected. And a two-person driving team will ensure that a shipment remains in constant motion, since one person can rest (per U.S. driver “hours of service” regulations) while the other one drives. Many industries – industrial machinery, automotive, semiconductor – rely on expedited ground solutions to meet “just-in-time” manufacturing requirements, and appreciate the lower price point and guaranteed on-time service.

o Hybrid Air-Ground Solutions. In some instances, the ideal solution may be a combination of air and ground services. In this situation, an AOG shipment would rely on ground service for direct delivery to a scheduled air charter. Once on the ground, the part would be picked up planeside and brought directly to the waiting aircraft. In this scenario the part is essentially in constant motion. Clearly this can be an ideal solution, but requires a high degree of visibility and coordination by a logistics provider. Only a provider with access to the necessary ground and air assets can offer such a highly-synchronized, seamless solution.

o Air Charter. AOG managers who rely on air solutions know too well about the time wasted with flight tender and recovery times. Charter flights are an obvious way to avert this wasted time, since cargo is loaded directly onto a plane, or removed immediately upon arrival. Charters traditionally come at a premium price point, but a resourceful AOG manager can minimize those costs by taking advantage of “regularly scheduled” charters that offer direct service to certain locations.

o Mitigate Borrowing Pool Costs. While a regional charter may not be an ideal solution for emergencies, it can help address the high costs that ensue when a part is borrowed. AOG managers understand that the short-term benefit of using a loaner part from a competitor comes with a hefty price tag. The meter literally starts running the moment a part is borrowed, and it doesn’t stop until the part is returned. In many instances, a logistics provider may be able to use their regional charter network to expedite a part’s return to the loaner’s home base. For example, a part that is borrowed in New York, and then removed in Chicago, could be retrieved by a Chicago logistics partner and returned to New York, usually in a fraction of the time generally associated with traditional integrators and their processes.

• Customs Clearance Efficiency. Today’s global AOG services mean unavoidable trips through an international customs process – sometimes multiple processes. At a minimum, a part leaving the United States must meet U.S. export requirements which, depending on the nature of the part, could trigger “dangerous goods” paperwork requirements. And depending on the country to which the part is headed, a customs experience will have varying degrees of complexity. But handled properly by a qualified logistics partner, the process can be hassle-free, and essentially a non-issue.

An AOG manager must ensure a potential third party supplier has experience. At a minimum, a qualified provider will ensure that a shipment arrives at a customs checkpoint with all paperwork ready to go, and where possible already pre-cleared at wheels-up. All taxes/duties/fees will also be paid in advance, and the shipment will be in compliance with all security and “other government department” mandates.

A truly exceptional logistics provider, will go beyond this, and offer innovative services that may include:
o Use of regional airports. Extremely busy airports can be avoided by rerouting a shipment to travel via a less-busy alternative.
o Maximal use of “customs-friendly” countries. Some countries are notoriously inefficient at clearing shipments through customs, while others can move shipments quickly. A savvy logistics provider will be able to plan a logistics route that avoids likely-difficult customs procedures.
o Local couriers. A qualified provider will have local personnel on the ground ready to oversee the proper handling of a shipment. Local personnel will speak the local language, be fully aware of airport logistics, customs processes and even local ground options. In some instances, the local agent will accompany the shipment to its final destination.

Experienced AOG managers know that uncertainty and contingency planning are the rules of the road in responding to repair requests. A manager literally never knows what the next phone call may bring. The key to success though, is to make sure an AOG service has the best tools and resources in its tool box. And as this discussion makes clear, those tools and resources are improving on a regular basis.

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Visit Purolator International at Supply Chain and Transportation Expo booth #3337!

The expo dates are April 4-7, 2016 at the Georgia World Congress Center Atlanta, GA, We invite you to register for FREE today! Click her for details http://bit.ly/1UYTHtK

 

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Supply Chain and Transportation Expo – April 4-7, 2016

Visit Purolator International at Supply Chain and Transportation Expo booth #3337! 

The expo dates are April 4-7, 2016 at the Georgia World Congress Center Atlanta, GA, We invite you to register for FREE today! Click here for details.

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Logistics Provider can help Businesses Deliver on Customer Experience

 

If a package shows up late, who gets the blame, the retailer who sold the product, or the logistics company that was supposed to oversee its delivery?

Many retailers are surprised to learn, in fact, that roughly half the time, consumers give them the blame.  Research by  Acquity Group found 52 percent of consumers surveyed blame the retailer when a shipment arrives late, versus 49 percent who blame the shipping company.  And, the impact can be devastating to a retailer.  Of the 69 percent of respondents who had experienced a late delivery, 63 percent said it would negatively impact their relationship with the retailer, with 23 percent indicating they would “cease ordering from that company altogether.”

This should be a wake up call to retailers that have invested significant time and resources toward creating a superior customer experience:  The logistics component of the customer experience is critically important, and if not handled correctly, can drive away customers.  That is to say, a business can get everything else right – offer a highly efficient website with competitive pricing, personalized offers, an efficient checkout process and a customer-friendly returns policy.  But all this hard work could be for naught, if a logistics provider fails to make a delivery on time.

This means a retailer must choose carefully when enlisting a logistics provider to interact with its customers, and manage the shipping and delivery component of its supply chain.  Customers clearly view a delivery company as an extension of the retailer, and fair or not, will base their loyalty and future shopping preferences, at least in part, on the delivery company’s performance.

A new white paper from Purolator International, “Does Your Logistics Provider Support Your Customer Experience?,” discusses the important role a logistics provider can have in supporting a retailer’s efforts.  Beyond providing on time service and delivering packages undamaged, a logistics partner can go the extra mile by offering high levels of customer service, accommodating customers’ last minute delivery changes, and by offering high levels of transparency and regular tracking updates.

As the white paper makes clear, the right logistics provider can be an asset to a retailer’s efforts to create a superior customer experience.  But finding the right provider takes time, and a fair amount of diligence to weed through the numerous options, many of which will simply not have the right stuff.

To download a complimentary copy of Purolator’s white paper, please click here.

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