Global Leadership

Y ou may not spend much time thinking about logistics, but it’s all around you. That’s because “logistics” is a catchall term that covers a vast range of services and

capabilities—so vast that the total amount of money devoted to all things logistical was nearly $1.5 trillion in the U.S. last year, equivalent to 8.3 percent of the nation’s gross domestic product (GDP), according to the Council of Supply Chain Management Professionals.

That demonstrates the degree to which companies of all sizes and in all industries rely on some aspect of logistics in their business models, and making the right decisions in this area “can determine the success or failure of an organization,” says Paul Myerson, professor of supply chain management at Lehigh University’s College of Business and Economics. “These decisions have a huge impact, not only on cost and service, but also on revenue, since poor service can result in lost sales and damage to a business’s reputation.” And with

more and more companies expanding into global markets, the stakes become even higher.

Transportation and inventory carrying costs account for more than 95 percent of the enormous sum U.S. businesses spend on logistics each year, while shipper-related costs and logistics administration account for less than 5 percent. But what’s signifi cant about the latter two categories is that they present real opportunities to cut costs, boost effi ciency, and improve ROI and bottom-line performance, especially for small and medium-sized businesses.

If you’re wondering where to start, Myerson says the most important advances for SMBs in this area in recent years are the development of readily available, low-cost, sophisticated technology, and the growth and accessibility of third-party logistics providers (3PLs). “These developments give SMBs access to the same capabilities as their larger competitors,” he notes.

Whether you know it or not, logistics is a vital part of your business. As it becomes more complex, look for partners who can solve the problems you may not even see coming.

Your New Logistics Challenge:

GLOBALIZATION

I N C . B R A N D E D C O N T E N T / L O G I S T I C S

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When Inbound Logistics, an industry

trade publication, asked shippers of all

sizes about the greatest challenges they

faced last year, cutting transport costs

topped the list, at 63 percent. Business

process improvement (32 percent) and

improving customer service (31 percent)

also emerged as high priorities. SMBs

share those same concerns, of course,

but they also face additional challenges.

“One common challenge—a great

one to have—is rapid growth,” says

Jason Roberts, managing director of

Freightview, which provides revolutionary

technology solutions to help shippers

streamline their freight quoting, booking,

tracking, and reporting. Poor visibility

across carriers, competing against larger

competitors with warehouses closer to

customers, capitalizing on emerging global

opportunities, and navigating a morass

of rules and regulations—especially in

international markets—are others.

Enterprise organizations have been

harnessing technology to meet their

logistics challenges for many years,

especially transportation management

system (TMS) software. A TMS typically

manages four key logistics processes:

planning and decision-making to achieve

the most effi cient and economical

transportation solutions; plan execution;

follow-up, including shipment tracing,

customs clearance, invoicing, and other

administrative duties; and measurement

of key performance indicators (KPIs).

Most TMS solutions rely on electronic

data interchange (EDI), an aging

technology, and they require signifi cant

capital investment and in-house IT

resources. That puts TMS solutions

out of reach for many SMBs, especially

those doing fi ve to 25 shipments a day

of less-than-truckload (LTL) size. A new

generation of cloud-based technology

solutions that rely on application

programming interfaces (APIs) rather

than EDI are making it possible for many

SMBs to achieve the kind of cost and

productivity benefi ts that enterprise

organizations have been getting from EDI-

based TMS for years.

Roberts calls out three primary benefi ts

cloud-based solutions like Freightview

can provide to SMBs:

• Shippers can access all their freight-

shipping rates from all their carriers

and brokers in one place. “Instead of

going to their carrier websites one at

a time, they can instantly compare all

their different costs, servicing options,

and transit times. That makes it easy for

them to identify the right way to move

each shipment with the right balance

of low cost and quick delivery,” he

explains.

• By scheduling pickups and tracking

shipments in one place, a shipper’s

visibility isn’t diffused across multiple

websites. “When shippers need to track

a shipment or double-check a carrier

invoice, there’s one source for all of their

information.”

• When it comes time to negotiate with

carriers, shippers have the information

they need to get the best deal. “They

have data about their shipment

characteristics, lanes, and spending,”

Roberts points out. “They are well

positioned to collaborate with their

carriers to get the best possible

rates based on facts rather than

assumptions.”

Big companies with TMS software

already have those advantages, Roberts

acknowledges, but until now, they’ve

been out of reach for SMBs. “The costs

were too high, the implementations

took too long, and the software was

too hard to use,” he says. “Freightview

brings these features to SMBs via the

cloud with a low price point, quick

implementation—often the same day—

and the right set of features to help

without getting in the way.”

Growth Can Pose Problems

The Price Is Right

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Businesses with more complex shipping needs, such

as a mix of LTL and full-truckload shipments, intermodal

transportation requirements, and others, or those just

looking for greater convenience and fl exibility might be better

served by a 3PL. This is robust outsourcing of the one-stop-

shopping variety, as 3PLs provide multiple logistics services

(transportation, warehousing, cross-docking, inventory

management, packaging, freight forwarding) integrated to best

meet their customers’ needs.

“Shippers using a 3PL gain access to a vast network of

resources and industry expertise that can save them time and

money,” says Greg West, vice president North America LTL at

C.H. Robinson, which was voted the No. 1 3PL by readers of

Inbound Logistics for the fi fth consecutive year in 2015. “Using

a 3PL gives shippers the fl exibility to scale logistics according

to inventory needs, which is very important for businesses

with signifi cant seasonal swings in volume. At C.H. Robinson,

we are continuously improving every link in the supply chain

to optimize speed, effi ciency, and cost-effectiveness to benefi t

our clients.”

C.H. Robinson leverages scalable global technology

in its Navisphere® platform to help clients doing business

internationally bring all aspects of their supply chain together,

providing them with end-to-end shipment visibility and reporting

across all regions where they do business. It also offers

Collaborative Outsourcing® as an additive approach to logistics

outsourcing, enabling businesses to add the resources and

integrated services they need to help drive desired outcomes.

This hybrid approach can improve supply chain performance for

the same or lower total landed cost, reduce capital investment,

increase insight into performance metrics, and speed up

response time to changing market conditions.

Several major new developments in global trade are

expected to play a signifi cant role in logistics in 2016, affecting

nearly every business that imports or exports goods, says John

LaMancuso, chief sales and marketing offi cer at Livingston

International, North America’s leading customs brokerage and

trade compliance fi rm focused on simplifying the movement

of goods through international borders for more than 40,000

clients. “New trade agreements aim to open markets and

simplify trade processes, creating an unprecedented

opportunity for North American companies to expand their

business,” LaMancuso says.

One important development is the implementation of a new

U.S. Customs and Border Protection (CBP) system known

as the Automated Commercial Environment (ACE), which

requires every U.S. company conducting international trade to

submit forms electronically to a single source. When ACE goes

fully into effect in February, it will streamline and automate

existing manual processes by providing shippers with a single

portal where they can submit forms to CBE. “Paper will be

eliminated, and the international trade community will be able

to comply with U.S. laws and regulations more easily and

effi ciently,” LaMancuso says. “Businesses will have better

visibility with respect to release and inspection, shipment cycle

time will be reduced as mismatched information is identifi ed

earlier in the process, and turnaround for customs and agency

review will be faster.”

That streamlined process may prove even more benefi cial

to companies doing business internationally as several

pending trade agreements take effect. One is the Trans-Pacifi c

Partnership (TPP), which LaMancuso says is the biggest free-

trade deal in history. The 12 countries participating in the TPP

account for about 40 percent of global GDP, and they reached

an agreement in October after seven years of negotiations.

Now it must be ratifi ed by the governments of each country,

a process that could start in the U.S. next year. A separate

trade and investment agreement, the Transatlantic Trade and

Investment Partnership (T-TIP), being negotiated between

the U.S. and 28 European Union member countries would

increase access to European markets for U.S.-made goods

and services.

I N C . B R A N D E D C O N T E N T / L O G I S T I C S

New trade agreements aim

to open markets and simplify

trade processes, creating an

unprecedented opportunity for

North American companies to

expand their business.

The Fast Route to Optimization

Seizing Global Opportunities

S5

3PL: A third-party fi rm to which a variety of

logistics services are outsourced, such

as purchasing, inventory management

and/or warehousing, transportation

management, and order management.

Detention/demurrage: Penalty charges assessed by a carrier

for holding transportation equipment

(such as trailers or containers) longer

than a stipulated period of time for

loading/unloading.

FOB (free-on-board) point: Point at which ownership of freight

transfers from shipper to consignee

(the freight receiver).

FOB terms-of-sale: Document stipulating who arranges

for transport and carrier, who pays for

transport, and the FOB point.

Freight bill-of-lading (BoL): Document providing a binding

contract between a shipper and a

carrier for transportation of freight;

specifi es obligations of both parties,

and usually designates the consignee.

Freight forwarder: Agency that receives freight from a

shipper and arranges transport with

one or more carriers; often used for

international shipping.

LTL: Less-than-truckload shipment; priced

according to weight, commodity class,

and mileage within designated lanes.

TL/FTL: Truckload/full truckload shipment,

where the shipper contracts an entire

truck for direct point-to-point transport

and pays a price per mile within

designated lanes, regardless of size of

shipment; less expensive than LTL.

A Crash Course on Logistics Lingo

“To be successful, it is imperative

that companies understand how these

trade developments could impact their

business and do their due diligence to

prepare for them,” LaMancuso says.

“They should strategize business

opportunities and adapt their

business model to encompass trade

opportunities. It’s also important to

build a compliance strategy so that

importing and exporting processes and

documentation are in compliance with

the pending trade agreements’ rules

and regulations.”

While many SMBs might have the

strategic fi repower to capitalize on the

opportunities LaMancuso foresees,

the complex demands of regulatory

compliance can be overwhelming.

Fortunately, they can outsource many

of those responsibilities to third-party

providers. “Livingston International

simplifi es the complexities of importing

and exporting for its clients of all sizes,

giving them the freedom to focus on

growing their business,” he says. “Since

understanding trade regulation trends

and the latest news is important, we

educate SMB clients through weekly

webinars on all facets of trade, including

compliance, expansion into new regions,

trade agreements, duty recovery, and

regulations.” Livingston International

also provides innovative technology

solutions, such as its TradeSphere suite of

automation software.

Companies with a more narrowly

focused international business model

often can get the logistics help they need

from a third-party provider targeting

their specifi c industry vertical. Bongo

International, for example, focuses

on e-retailers looking to expand into

global markets. “Our goal is to make

every international transaction as easy

as possible for both the customer and

the retailer,” says Greg Sack, managing

director and co-founder of Bongo

Conquering Complexity

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The E-commerce Advantage

The company offers two solutions,

Bongo Checkout and Bongo Export.

The fi rst is a fully outsourced cross-

border enablement (CBE) solution that

includes currency conversion, shipping

calculations, duty/tax calculations,

compliance, and payment. “With Bongo

Checkout, we provide a currency

conversion feed so the retailer can

display its website in more than 120

countries,” Sack explains. “This gives the

international customer a level of comfort

knowing that the site is set up to handle

international transactions.”

Bongo International takes over when

things move to the checkout stage,

displaying a calculation of landed costs in

the language detected in the customer’s

browser settings. “Customers are

then able to check out through Bongo

International, while the site retains the

look and feel of the retailer.” Orders

are screened for fraud then pushed to

the retailer with the domestic shipping

address of a Bongo export hub, where

goods may be repackaged to optimize

shipping weight and confi guration

before being processed and delivered to

international customers via FedEx.

Bongo Export is designed for retailers

that want to maintain merchant-of-record

status. Customers create a shopping basket

and select their destination country to

receive a shipping, duty, and tax quote. An

API calculates the landed cost and submits

it back to the website, and goods from

accepted orders are shipped to a Bongo

export hub, where they go through the same

process as Bongo Checkout orders.

As Rick Schreiber, partner,

manufacturing & distribution, at BDO USA,

observes, “Getting goods from point A

to point B is a critical component of any

company’s supply chain. An effi cient

transportation and logistics (T&L) system is

essential, as errors and ineffi ciencies in any

one component can quickly snowball and

become quite costly for a small business.

Beyond that, T&L is also a key ingredient

in overall customer satisfaction.” While

effi cient T&L remains a signifi cant challenge

for many SMBs, it’s one that technology

is making easier to meet. “Using software

that produces actionable analytics has

allowed companies to vastly improve T&L

effi ciencies. The most signifi cant advantage

to a well-thought-out T&L structure is being

able to provide the highest level of service at

all times,” Schreiber affi rms.

Customers are then able

to checkout through

Bongo International, while

the site retains the look

and feel of the retailer.

International. “In order to do that, we

provide end-to-end services that are

confi gurable to each retailer. This gives

our retailers the ability to create the

experience they feel will generate the

optimal conversion rate based on their

customers’ buying habits.”

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