Choosing a 3PL Partner: Does Asset-Based Matter?

All logistics providers have the same goal: increase overall efficiency for clients while reducing costs. The way the providers conduct the supply chain functions and achieve efficiency is different based on if the company is asset-based or non-asset based.

Asset-based logistics providers can offer complete supply chain solutions since both warehousing and transportation are done in-house. This also allows for increased control, continuity, and communication.

Asset-based 3PLs have invested in the long-term operation of their company which provides stability as well as the ability to expand their network for clients if needed. Asset-based 3PLs can grow along with their clients more easily.

Non-asset-based logistics outsource responsibilities which results in more hands involved in storing and moving goods and less control. There are more opportunities for errors. This does not mean there will be more errors because these companies have the same goal as asset-based. Non-asset-based providers have a network of providers which allows them to assess the needs on a case-by-case basis. But costs will be based on successful negotiations with their network providers. And the quality of work is left to multiple outsourced vendors which can increase the risk of error.

KTI LTD is an asset-based transportation and warehouse provider with three southeast locations. Our dedicated capacity solutions provide all the benefits of your own private fleet without the challenges. You will have a team of drivers and management with a fleet of high-quality equipment at your disposal. Scheduled or “on-demand”, we will handle it from start to finish so you can concentrate on your core business. We provide scalable solutions so whether you’re increasing your market share or diversifying your customer base, we stand ready by your path to growth.

We can customize a logistics structure that is agile and scalable based on your industry’s unique fluctuations.

Request A Quote: kristi.birchfield@ktiltd.com or https://www.ktiltd.com/test/contact-us/

LTL, Truckload, and Warehouse Storage Trends

With 2020 being a year filled with so much volatility, many supply chain leaders are realizing they cannot use historical data to plan their transportation and logistics budgets for 2021 adequately. While the pandemic illuminated weaknesses within supply chains, 2021 has been somewhat a play-it-by-ear year.

LTL Trends:

Many LTL industry trends, such as capacity constraints, rising rates, and changing consumer buying patterns, will continue through the remainder of 2021.

Capacity constraints will most likely become more pronounced ahead of the holiday peak season.

Increase in diesel fuel prices – the average diesel retail price per gallon is $3.29 as of June 21, the highest average since May 28, 2018.

E-commerce sales will continue to climb: The Census Bureau of the Department of Commerce released their estimate of retail -ecommerce sales for Q2 2021 on August 19th: $222.5 billion, an increase of 3.3 percent (±0.7%) from the first quarter of 2021.

Truckload Trends:

The truckload industry will face the same issues as LTL, with an increase in rates up to 10%.

Warehouse Trends:

Before 2020, customers were focused on meeting customer demand. For 2021, the focus shifts to mitigating risk resiliency in supply chains.

The boom in e-commerce has accelerated the need to expand warehouse and fulfillment space closer to population centers to meet faster delivery windows. In the past, low-cost warehousing space was priority. Many companies will invest in warehouse space closer to their customers, even if it means an increased cost to serve.

The rapid adoption of new technologies that are part of a single solution or platform that allows customers to see across their entire supply chain. With more real-time insights and data to inform decisions, companies can map out the flow of goods from manufacturing facility to end-user more efficiently. Digital transformation will allow organizations will have a better idea of their inventory levels and location.

Leveraging a partnership with a trusted 3PL will help organizations navigate the ever-changing market.

Let us provide you a no-obligation quote for warehousing, transportation, or both.

Source: http://www. transportationinsight.com

Pick and Pack Best Practices

The most important goal of a warehouse operation is to fulfill customer orders efficiently in a timely and cost effective manner. Timely could mean same hour, day, or week. Cost effective is relative to what the customer and market dictate – fast turnaround will typically be more costly than preparing for a weekly delivery.

To help improve this process, consider how people and product flow and what are the factors that resist smooth flow.  Think about fingerprints and footprints, moves and touches – how can you reduce the number of times a product is touched and how far it is moved during pick and pack.

The key metrics related to the picking and packing process are:

On Time Ready to Ship – Having orders ready for pickup by a carrier at the appointed time is important, but having those orders take up staging space by prepping them hours or  days ahead is not a good thing.

Lines Picked and Shipped per Hour – Focus on lines picked.  Consider the flow, touches and distance moved.  Measure and compare productivity by associate or team.

Internal Order Cycle Time – Look specifically at the time between pick release and packing/Load Consolidation.  Do you have opportunities to compress this time?

Picking Accuracy – If not 100% do a root cause analysis to determine cause and use the learnings to improve by training people and fixing processes.

Fill Rate – A great measure of supply chain success, but not for measuring outbound operations.  Products cannot be filled if they are not available.  This is a planning problem, not a picking problem.

A few ways to improve the picking and packing process:

1. Organize the storage areas for easy access and pick flow.
2. Identify the storage locations using a standard scheme –Bldg/Zone, Aisle, Column, Shelf, Position using barcoded labels.
3. Add a dedicated picking area or module for high velocity fast movers and promos.
4. Identify the product using common industry standard labels and barcodes.
5. Have the right equipment for the task – varies by situation.
6. Locate products in the right place. Slot those most often picked near packing/shipping and slow movers further away.

Source: http://www.werc.org

The complexity of the modern supply chain

The modern supply chain is incredibly complex due to a combination of consumer expectations, more routes to market, and international challenges. Some of the main drivers behind the changing supply chain include:

Increased costs – Rising price of fuel, increasing raw materials costs, higher labor costs, and higher charges for storage, transfer, and management of products.

Multiple channels to markets – eCommerce websites, traditional retailers, third-party marketplaces, and drop shipping retail, to name a few.

Consumer demand – Consumers have more choices than ever and in addition to fair pricing, consumers now expect quality and speed.

Pressure – Suppliers, manufacturers, clients, and customers are located in multiple countries, time zones, and continents – making coordination difficult.

Lack of visibility – Siloed data increases the difficulty of business intelligence and good decision-making.

Other factors such as port congestion, increased storage costs at ports, a chronic shortage of long-haul drivers, and politics further complicate the supply chain.

Supply chain managers can develop contingencies and mitigating action plans to prioritize and eliminate risks and manage issues when they occur. Investments into technology delivering true end-to-end visibility, alerts, and deep analytics critical to maximizing business efficiency can also help in addressing these supply chain issues.

Source: Blume Global http://www.blumeglobal.com

The impacts on warehouse space, customer satisfaction, cash flow, and the bottom line

Accurate inventory forecasts are invaluable as supply chains and consumer demand are changing rapidly. Forecasting ensures businesses have enough product to fulfill customer orders and less carrying costs. Inventory carrying costs include storage, labor, transportation, handling, insurance, taxes, item replacement, shrinkage, and depreciation, which account for 20% to 30% of the total inventory value. That number increases the longer products are held.

Other benefits of accurate forecasting include:

• Maximizing warehouse space
• A reduction in “dead” inventory
• A reduction in “write-downs”

A few metrics that can inform and refine your forecasting efforts include:

• Average inventory
• Lead time
• Lost sales ratio
• Inventory carrying costs

Below is an explanation of each of these metrics.

Average inventory: The amount of inventory a company has on hand during a period. The goal is for companies to keep their average inventory consistent over the course of a year.

Average inventory = (Beginning inventory + Ending inventory) / 2

Lead time: The time it takes for a customer to receive a product after they order it. This KPI measures the efficiency of the entire supply chain.

Lead time = Order process time + Production lead time + Delivery lead time

Lost sales ratio: The number of days a specific product is out of stock compared to the expected rate of sales for that product. A higher lost sales ratio is a sign a company is running too lean on its stock.

Lost sales ratio = (Number of days product is out of stock / 365) x 100

Inventory carrying cost: The percentage of the total inventory value a company pays to store that inventory. The total cost depends on which products a company carries, the number of SKUs, the storage location, the inventory turnover rate and whether the company uses a third-party fulfillment provider.

Inventory carrying costs = (Inventory service costs + Inventory risk costs + Capital cost + Storage cost) / Total inventory value x 100

The forecasting process, at a basic level, can be distilled down to four basic steps:

1. Calculate your lead time demand, which is the amount of product you expect to use over the amount of time it takes to receive a replenishment order.
2. Second, review sales trends by using one or a combination of the techniques below to help determine the lead time demand and plan safety stock.
3. Third, calculate safety stock—the inventory companies carry as a final line of protection against running out of items. The amount of safety stock a company carries will vary depending on its broader strategy. Some may adopt a just-in-time (JIT) approach where they attempt to align inventory deliveries with production schedules to only order inventory as the company uses it; others will keep far more stock on hand.

Safety stock = (Maximum daily usage x Maximum lead time) – (Average daily usage x Average lead time)

Choose your type of forecasting:

Qualitative forecasting: When they lack historical data, some companies go straight to the source: their customers. Qualitative forecasting often involves complex data collection, such as focus groups and market research. Forecasters then flesh out models from this type of data.

Quantitative forecasting: Considered more accurate than qualitative research alone, quantitative forecasting uses historical and numerical data. The more historical data a company has, the more precise the forecast usually is.

Trend forecasting: This method projects possible trends and excludes seasonal effects and irregularities by using past sales and growth data. More granular sales data helps this forecasting method by showing how likely specific customers, as well as types of customers, are to purchase in the future.

Graphical forecasting: Though the graphical method uses the same data as trend forecasting, some forecasters prefer this approach because it is visual. They can discern patterns from a series of data points and add sloped trend lines to graphs to examine possible shifts in direction that supply chain leaders might otherwise miss.

Here are some recommended steps to help get your forecasting effort off on the right foot:

1. Decide on a future forecast period, typically 30 days, 90 days or one year.

2. Review the base demand for the chosen period; this will become the basis of your forecasting model.

3. Decide on trends and variables (such as promotions) and whether they will result in an increase or decrease in sales.

4. Review your sales velocity, i.e. how fast sales move through the company pipeline, based on the number of leads, average deal value, conversion rate and the metrics noted earlier.

5. Review marketing activity for opportunities that could give products a temporary boost.

6. Consider any pertinent industry forces like new competitors, supplier issues, etc.

7. Review seasonality as it affects each product.

8. Factor in fads or unpaid publicity, including social media activity, and make plans for any additional stock requirements.

Source: http://www.netsuite.com

How adidas quickly transformed their supply chain

Building a connected and agile supply chain which is robust enough to survive the ever-changing market is tough. It’s evolve or die. A few essential strategies which can help manufacturers build a competitive advantage are:

Optimize the supply chain

Respond to customer needs by offering product customization like Apple and Volkswagen

Respond to regulatory pressure using real-time data and automated audits

Let’s talk supply chain optimization. Forty-one percent of companies have already acquired or plan to acquire a supply chain automation technology within 12 months according to Raconteur. Think of your factory as the heart and the supply chain as its veins and arteries. Employees often have to bridge the gap manually between new applications and legacy systems using spreadsheets and emails. Free employees from these manual tasks by using a connected supply chain supported by automation. This also provides built-in adaptability and connectivity, which brings efficiency and agility.

Case Study from http://www.bizagi.com:

adidas transforms supply chain across 400 factories to reduce operations costs by 60%

The largest sportwear manufacturer in Europe, adidas, needed to connect their silos across multiple departments and factory sites to make their platform more efficient. By standardizing processes and making them reusable, they were able to deliver new workflows in just three days. These automated processes eliminated manual tasks and reduced operational costs, such as eliminating a million emails per year through system integration. They also halved factory onboarding time and sped up the two-month asset contract approval cycle to just one week. This resulted in:

50% reduced factory onboarding time and 87% faster contract approval cycle.

Source: http://www.bizagi.com

The Case for Outsourcing to a 3PL

 
    To be competitive on retail price, retailers must have efficient distribution operations. The warehousing and transportation expenses are charged as a direct pass-through. If distribution costs are high, the upcharge for warehousing and transportation will cause the store to be less competitive. 
   Considering a 3PL will charge a fee to cover their desired profit margin, why are more retailers choosing to outsource their reasonably efficient distribution services? 

A few reasons include:

-Specialization: The 3PL is more efficient at distribution than the retailer because this is their area of specialization
-Capital Investments: Retailers prefer to invest capital into more stores or do not want to invest in an area that is not their core competency
-Flexibility and Scalability: The 3PL has a network of facilities which provide additional savings to a retailer’s supply chain through flexibility and scalability
-Labor strategy: Nonunion retailers are forcing retailers to compete on low prices – low, low prices.
-Technology: The 3PL has invested in state-of-the-art transportation and warehouse management software which provides the retailer real-time visibility and process improvement.
It’s clear to see why an overwhelming majority of Fortune 500 companies are partnering with 3PLs. A successful partnership with a 3PL provides value-added services as well as expertise and costs-savings.

LOOKING FOR A 3PL PARTNER? KTI LTD has proudly served as a reliable and reputable 3PL partner for 25+ years! Allow us to provide you with a free quote!

Optimizing Your Warehouse Processes

The rise of e-commerce and globalization has resulted in a growth in the warehouse industry and a trend of outsourcing warehouse services.

Warehouse processes consist of:

-Receiving
-Labeling/put-away
-Storage
-Picking
-Packing
-Shipping

In order for a warehouse to be streamlined, have reduced cost and errors, and achieve a high rate of order accuracy, these six processes must be optimized.

Receiving-the most crucial warehouse process as this involves the transfer of responsibility. Therefore, it is extremely important for the received goods to be inspected and counted immediately so any discrepancies can be addressed before the items move on to the next step.
In order to receive product more efficiently, consider using power pallet trucks and conveyors and labor management systems to properly allocate personnel needs and avoid accumulation at the receiving docks.

Put-away-the movement of goods from the dock to an optimal storage area. Choose an ideal location that doesn’t result in less productivity but also maximizes warehouse space utilization. Consider using space management systems or put-away devices which direct employees to the right location for the item’s storage.

Storage-When goods are stored in their ideal locations, labor efficiency is increased. Slotting optimization and warehouse storage systems will account for facility size and product mix, allowing you to maximize your horizontal and vertical spaces.

Picking-the process in which customer orders are filled. This is a costly process so optimizing picking can greatly reduce your costs and increase efficiency. Order accuracy is key to keep customers satisfied. Technology such as wearables will allow employees to view pick lists wirelessly and scan from anywhere in the warehouse.

Packing-Preparing all picked items for shipment is the packing process. One of the main concerns in packing is minimizing damage while controlling packaging costs. Packing system software can help in determining the amount of material to keep the item safe but costs low.

Shipping-the final process. If the right goods are delivered undamaged to the right customer and on time, it’s a win. In order for a win to be achieved, each process must be optimized, or the orders will not arrive safely or timely-or at all.

If you are considering outsourcing your warehouse and transportation services, please contact us today for a free quote! KTI LTD has multiple locations in the southeast and has been proudly serving manufacturers since 1995!

Maximizing efficiency with overflow warehouse space

Fluctuating market demand and “peak seasons” can often result in warehouses becoming overly crowded. Congestion results in less efficiency and productivity and increased safety hazards and frustration among warehouse workers. Misplaced product results in delayed shipments and mis-picks. Reaching storage capacity has substantial negative impacts on your bottom line. Effectively managing the inventory in your crowded warehouse becomes a challenge.

Warehouse management is a critical component in logistics and should be aligned to increase your day-to-day productivity. Finding a solution quickly so overcrowding doesn’t become an ongoing issue will get you back on track to profitability. Investments into more warehouse space is not always an option or the most profitable solution.

KTI offers Overflow Warehouse Space and will develop a custom solution for storing and handling your overflow inventory. We understand the fluid nature of your business and have the capacity to adapt quickly to your changing needs. Some of our services include online inventory tracking, barcode labeling, EDI capabilities, cycle counting, and the creation of shipment documents. Let us become your designated overflow warehouse so you can maximize efficiency in yours.

A Quick Guide to 3PL Providers

What is a 3PL? 3PL, or third-party logistics, refers to the supply chain integration of warehousing operations and transportation services. Why do companies outsource to 3PLs?

1) Companies who are growing and wish to scale their business without investments into additional warehouse space, technology, labor, training, and equipment required find 3PLs provide value-added services thus reducing costs, optimizing processes, increasing productivity, and saving time.

2) Business owners find that outsourcing these business processes allow them to focus on strategic initiatives such as product development, marketing, and sales.

3) 3PLs coordinate all aspects of the supply chain allowing for more informed decisions about supply and demand.

How does the 3PL order fulfillment process work?

1) Acceptance of inventory, inventory storage by SKU

2) Orders received through integrated EDI

3) Order fulfillment by warehouse picking teams

4) Packing and shipping label printing

5) Shipping

What costs are involved? Some of the most common costs include:

1) Onboarding

2) Inventory receiving and storage

3) Order pick-and-pack

4) Packaging

5) Shipping

How do you measure the performance of your 3PL?

Looking at various KPIs can help you to measure your 3PLs performance. For example, the rate of returns due to damage occurring in shipping and on-time deliveries. Constantly monitoring key performance indicators and communicating with your 3PL is important to increase efficiency, eliminate issues, and build a strong partnership. Partnering with a reliable 3PL is often the best solution for your growing business. Leveraging the expertise of a 3PL can eliminate the costs of the learning phase. Voicing your concerns to a potential 3PL will allow you to choose the right 3PL who you trust to handle your inventory.