Take a look at our Summer edition of Point to Point, presented by Averitt, with topics including Choosing the Right TMS for Any Size Business, The Rise of Micro-Fulfillment Centers, Optimizing Fuel Use in Your Supply Chain, and Mitigating your Cargo Theft Risks
Point SUMMER 2022 Logistics insights provided to you by 1 2 IN THIS ISSUE 3 4 DISTRIBUTION The Rise Of Micro- Fulfillment Centers CHOOSING The Right TMS For Any Size Business OPTIMIZING Fuel Use In Your Supply Chain
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CARGO THEFT Mitigating
Your Risk
CHOOSING THE RIGHT TMS FOR ANY SIZE BUSINESS Along with the cost of staffing and materials, shipping and transportation management consistently ranks as one of the most expensive items in a company’s budget. One of the reasons for this is that many companies, both large and small, still use outmoded methods of managing their transportation services – spreadsheets, multiple phone calls, etc. – that don’t take advantage of new services and technology. A well-run Transportation Management System (TMS) can provide an ideal solution – yet there’s a common misconception among many small and mid-sized businesses (SMBs) that such systems are the sole province of large companies.
requirements. While there are advantages to this approach, this isn’t an option for companies of all sizes. On-premise systems are off-the-shelf products you purchase from a TMS provider but host on-site. Often, you’re able to customize elements of the system. But while there are advantages to purchasing something that’s been vetted by many other companies, there are limits to how much you can tailor the system to your needs. Cloud-based systems are hosted off-site and require a simple subscription. Given that they can be quickly updated and enhanced, cloud-based systems are increasingly becoming the standard for companies of all sizes. They’re highly scalable, and they provide everyone on your team access to the most current information. This makes them an ideal choice for SMBs looking for a way to optimize their shipping. A good example of a scalable cloud-based TMS that puts control directly in your hands is Averitt Connect – powered by MyCarrierTMS. Averitt Connect is a self-service, multi-carrier TMS that allows shippers to control their shipping needs directly with their carriers. It lets you shop LTL rates from different carriers, then book and track shipments through an online portal. Best of all, with multiple tiers and plans available, it lets shippers pick the TMS that’s right for them. To learn more, visit AverittConnect.com . P to P
The truth is that virtually any company can benefit from the streamlining capabilities of a tailored TMS. by understanding what options are available and knowing the right questions to ask before selecting one. A FEW BENEFITS OF A TMS Thanks to technological advances like cloud storage and precise tracking software, a modern TMS provides many advantages over older, more traditional approaches. Optimized freight routing A TMS enables you to route both inbound and outbound shipments more efficiently – with fewer miles, fewer stops, and less overall travel time. Enhanced visibility A modern TMS allows for end-to-end tracking and visibility of shipments. They also provide real-time communication and transparency between carriers and customers. Inventory management Through a TMS, companies can monitor order and shipment lifecycles in real-time – getting accurate inventory forecasts while improving accountability across their entire supply chain.
Enhanced warehouse efficiency and productivity By pairing a TMS with a Warehouse Management System (WMS), companies can create a record of orders and track where they are at all times – in the distribution center, in transit, and at the final location – ensuring timely and efficient transport. Reduced paperwork By automating the process, a TMS eliminates much of the paperwork that was required in older systems. This significantly reduces administration expenses, invoicing errors and billing issues. A better overall customer experience Today’s customers are not known for their patience. By using data to track key performance indicators such as on-time delivery and more, the right TMS can bridge the gap between high customer expectations and cost-effective order management for shippers. UNDERSTAND THE OPTIONS AVAILABLE Generally speaking, there are three common types of TMS platforms available: homegrown, on-premise, and cloud-based. Homegrown systems are custom-built for your company. In this approach, your own IT team (or a contracted team) builds the system to your specific
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DISTRIBUTION : THE RISE OF MICRO-FULFILLMENT CENTERS
position to build stronger customer relationships and gain traction with consumers who might otherwise default to other online retailers because of their same- day delivery. IMPROVE THE CUSTOMER EXPERIENCE More than ever, rapid delivery is a significant component of the overall customer experience. Meeting these expectations will go a long way toward boosting their satisfaction with the entire transaction. Also, by reducing the distance and number of transits between the product and consumer, you help ensure that it arrives undamaged – further improving customer satisfaction. REDUCE SHIPPING COSTS This is undoubtedly one of the more significant perks of implementing a micro-fulfillment strategy. Given MFCs’ proximity to consumers, delivery distances are cut dramatically – and in the case of customer pickup, eliminated altogether. Also, since they require a smaller footprint, MFCs reduce real estate costs in urban markets where every square foot is at a premium. These smaller warehouses can also be operational far more quickly, at a fraction of the cost it takes to build and automate a larger facility. shorten the time it takes goods to reach consumers, micro-fulfillment centers are quickly becoming an essential part of many companies’ supply chain strategies. They can help you simultaneously adapt to shifting consumer expectations while also enhancing the shopping experience. Averitt has more than 2.5 million square feet of distribution and fulfillment space spread across dozens A worthwhile option to consider Given their ability to reduce delivery costs and of facilities – from large warehousing solutions to smaller fulfillment centers. Each one is positioned to handle your freight staging needs and set your business up for quick delivery across your key markets. Our dedicated fulfillment teams are experts at managing and streamlining the transportation and logistics needs of the e-commerce supply chain – with the ability to provide unique order fulfillment solutions that range from direct-to-consumer parcel to freight delivery. P to P
3,000 and 10,000 square feet of space. Unlike traditional fulfillment hubs, which are often on the outskirts of a city or some other remote area, micro-fulfillment centers are intentionally placed in smaller urban spaces. In other words, right where the consumers are. The purpose of MFCs is to speed up the delivery of goods to consumers. They create a hub-and- spoke-style distribution model where larger, regional fulfillment centers serve as the hub and micro- fulfillment centers serve as spokes, reaching out to denser population centers. This shortens the distance for last-mile deliveries and allows the option of in- store pickup for many retailers. Like traditional warehouses, micro-fulfillment centers can be constructed as standalone facilities. But they’re often built inside an existing location to either use empty space (shuttered storefronts, for instance) or expand a company’s fulfillment capacity. When an MFC is positioned near a multi-service carrier, shippers also benefit from the integration between convenient storage and diverse fulfillment options – full load inbound, LTL, parcel outbound – all under one roof. (At Averitt, we call this the Power of One.) MFCs are an effective delivery solution that fit well into a wide range of supply chain strategies. They give companies the flexibility to meet customers’ ever- shifting needs – particularly in areas where real estate space is limited or cost-prohibitive. How can micro-fulfillment centers help your business? REMOVE THE KINKS FROM YOUR SUPPLY CHAIN We’ve all felt the impact of supply chain bottle necks in the last few years. Warehouse management and final-mile fulfillment have become increasingly acute pain points for many companies. Delivery delays directly impact both your reputation and customer retention. By speeding delivery to consumers, micro-fulfillment centers provide an answer to these disruptions. ALLOW YOU TO BE MORE COMPETITIVE Competition for consumers’ dollars is as fierce as ever. Streamlining your delivery using micro-fulfillment centers puts smaller e-commerce sellers in a
It’s no secret that the last decade has seen a dramatic rise in e-commerce. While as recently as 2011, the segment accounted for barely 5% of retail sales, that percentage has grown steadily – reaching nearly 20% in 2021. And forecasts indicate that by 2025, e-commerce will make up roughly a quarter of all global retail sales. This trend shows no signs of slowing … which creates a problem for supply chains. It’s an unavoidable fact: Consumers expect faster and faster delivery. Where two-day delivery was once considered a luxury, it’s now considered the norm. Thanks to massive investments in shipping infrastructure by companies like Amazon and Walmart, delivery timelines have tightened to the point where they are now measured in hours instead of days. This has necessitated that companies move their fulfillment operations closer to the consumer. Which brings us to micro-fulfillment centers. As the name suggests, micro-fulfillment centers (MFCs) are smaller than their traditional warehouse cousins. Generally speaking, they occupy between
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OPTIMIZING FUEL USE: IN YOUR SUPPLY CHAIN
And since drayage usually stays under 100 miles, one driver can complete multiple loads from the Intermodal ramp. Compared to a truckload-only solution where a driver may have over 2,000 miles between loads, this creates enormous fuel efficiencies and a substantially reduced carbon footprint. Position Goods Closer to the Consumer Strategically staging goods closer to the end customer is an obvious way to reduce fuel costs; fewer miles equal less diesel burned. Too often, businesses choose sites for a distribution center based on transitory factors such as tax abatements or inexpensive real estate. But those considerations are temporary – transporting goods to the consumer is a need that will forever be part of business. That’s why companies are increasingly turning to Micro Fulfillment Centers (MFCs) to help minimize these delivery distances and, as a result, their fuel costs. Unlike traditional fulfillment hubs, which are often located in more remote locations, MFCs are closer to consumers in denser urban areas. This dramatically speeds up delivery times while reducing fuel consumption. Having fulfillment locations closer to customers also enables returns, refunds, and exchanges to be completed more quickly, reducing fuel use and carbon emissions while increasing customer satisfaction. Many micro fulfillment centers also function as dark stores, where customers can pick up their orders locally – eliminating the need for shipping altogether. Use Technology to Optimize Your Route Planning Efficient routing is another powerful way for shippers to manage their fuel expenses. By working with a carrier that employs a robust Transportation Management System (TMS) you can consolidate trips, map the best routes, avoid backtracking, find the lowest fuel prices, and even bypass congested areas. The Right Carrier Makes All the Difference Even when fuel prices return to more historically “normal” levels, any of the above tactics will still help save your company money. And there are several additional approaches to consider.
The rising cost and decreased supply of fuel continue to pose a significant challenge for shippers and carriers alike. Ongoing concerns over inflation, foreign wars, and economic uncertainty have only exacerbated the problem, with the national average price of diesel fuel soaring past previous records. In the meantime, there are several tactics shippers can implement to help manage their overall fuel costs. Utilize Pool Distribution and Consolidation The right distribution model makes all the difference in a supply chain. And pool distribution is a model companies have turned to for years. In fact, it’s become one of the most widely used shipping methods used by shippers worldwide. As the name implies, pool distribution describes the process when freight from multiple sources in one area is “pooled” – then shipped out together to be delivered at various stops along the way. In essence, pool distribution combines multiple separate LTL shipments into one full truckload, eliminating multiple truck routes and consolidating them into one, fuel-efficient delivery. Order consolidation – a practice where all orders received from a single customer or location are packed and shipped together – is another way to reduce shipping costs. It enables shipment companies to combine shipments from different suppliers into a single package, limiting total deliveries and making fulfillment more efficient. By using fewer packages for shipment, it minimizes packaging materials while also cutting down on fuel costs. Consider Rail or Intermodal Intermodal freight transportation – integrating rail and truck services to move products to market efficiently – has become an indispensable tool for companies looking to streamline transportation costs. Intermodal transportation utilizes the nation’s rail network to transport cargo that would have otherwise moved entirely via truck. This allows shippers to reap the benefits of both – the fuel efficiency of rail and the transit freedom of trucks. According to Inbound Logistics, rail can move one ton of freight almost 450 miles on a single gallon of fuel.
For instance, thanks to constantly improving technology, modern tractors provide dramatically better fuel economy than their older counterparts – in some cases delivering over twice the miles per gallon. So, partnering with a carrier with newer equipment is another step you can take to reduce fuel costs. (At Averitt, we maintain one of the most modern fleets in the industry – with 87% of our tractors being less than two years old.) We’re also proud to be a founding member of SmartWay – an EPA program that exists to reduce emissions while improving supply chain efficiency. In addition to the positive ecological effects, our commitment to sustainability has resulted in over 6.2 million gallons of diesel fuel being saved. We use leading-edge software to plan the most efficient routes and alert our drivers to the most cost- effective fueling locations. We also maintain balance in our network to reduce empty miles. We equip our trucks with systems to automatically shut down idling engines, and we’re constantly finding new ways to improve aerodynamics – all of which help decrease our fuel use . P to P
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CARGO THEFT: MITIGATING YOUR RISK
lost. That marks a demonstrable rise since the start of the pandemic. According to data from CargoNet, the theft prevention and recovery network, only $49 million in cargo was stolen throughout all of 2019. In 2020, $68 million was reported lost. A SHIFT IN FOCUS Although the first quarter of 2022 saw an astronomical 73% increase in reported losses over 2021 (with a total of $19 million), the actual number of reported thefts remained exactly the same; 319. That’s because thieves are now targeting more expensive items. Unlike 2020, when hard-to-find products like toilet paper and personal protective equipment were the most targeted goods, consumer electronics became the most sought-after items in the third quarter of 2021. That costly trend has continued into 2022; while the average value of a theft in the first quarter of 2020 was $106,000, an average theft for the same time period in 2022 has ballooned to $232,000. MITIGATING YOUR RISK Due to ongoing supply chain disruptions, cargo theft risks are predicted to increase in 2022. That’s why it’s vital that companies implement a comprehensive strategy to ensure that their supply chain is protected. The NICB, which is the nation’s premier not- for-profit organization dedicated exclusively to fighting insurance fraud and crime, offers a list of recommendations to help transportation companies limit the impact cargo theft has on their bottom line: • Screen employees . Oftentimes, cargo thieves receive help from someone within the targeted company itself – including such information as the content of shipments, their destination, route, etc. Companies should conduct a background check on all employees, including drivers, warehouse workers, and those with access to the shipping information. • Train employees . Theft prevention begins with proper training. Companies should provide security training for employees throughout the organization, making certain to educate truck drivers in hijack awareness and prevention. • Choose your transportation partners wisely . Investigate your potential transportation partners
before hiring them. In addition to assessing their record and reputation, make sure they share your emphasis and philosophy on freight security. • Use in-transit security measures . It’s not uncommon for thieves to wait outside known shipping facilities, trail a driver, then wait for the truck to stop. Drivers should be aware of their surroundings, alert to the possibility that they may be followed, and park only in known or secure locations. • Be vigilant . Trucks and cargo are most vulnerable to theft when sitting idle. Be sure your security guards are actively patrolling and protecting the freight on your premises. • Make the most of technology . In addition to installing surveillance and alarm systems, consider investing in vehicle and cargo tracking and advanced security seals. Also, make sure your perimeter, entrances, building doors, and windows are all well-lit. • Conduct regular safety audits . Cargo thieves never sleep – they’re always coming up with new ways to sidestep security systems. Conduct regular supply chain audits to identify gaps in your shipment protection. While there’s no way to eliminate the risk of cargo theft, using some proactive tactics like those listed above can greatly reduce the chance that your freight will become a statistic. It also helps to partner with a carrier with a reputation for safe, intact, on-time delivery. With one of the industry’s lowest cargo claim rates year after year, and an on-time delivery record of better than 99%, Averitt has the experience and expertise to help your cargo arrive safely at your destination each and every time. Freight security is one of our team’s top priorities, including regular safety audits of our facilities, video and monitoring technology, in-depth cargo and in-transit security training, pickup and delivery procedures that limit fraud, and thorough background checks for our associates. If you’d like to learn more about how you can protect your shipments from falling prey to cargo theft, contact your Averitt transportation specialist. P to P
It’s an unfortunate reality of the business – cargo has always been vulnerable to theft.
The National Insurance Crime Bureau (NICB) estimates that on average, cargo theft accounts for between $15 billion and $35 billion in losses every year, much of which goes unreported. And ongoing supply chain issues – from bottled-up ports to a lack of drivers – are only exacerbating the problem. When a supply chain backs up, cargo sits idle. When freight is left at an unsecured port, a yard, or even a truck stop, it creates an ideal opportunity for thieves. It also creates protection nightmares for shippers – with all that stationary cargo sitting in multiple places through a supply chain, it becomes harder to accurately predict where an attack is likely to occur. In the first quarter of 2021, reported thefts in the United States increased by a remarkable 42%. Through September, roughly $45 million was reported
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