buying transportation and 3rd party logistics services-part ii
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Buying Transportation and 3Buying Transportation and 3rdrd Party Logistics Services II: Party Logistics Services II:
How Do You Bring Purchasing Skills to the Process of Purchasing How Do You Bring Purchasing Skills to the Process of Purchasing Transportation and Logistics ServicesTransportation and Logistics Services
ForFor
The 61The 61stst Annual Southwest Annual Southwest Supply Management Supply Management
ConferenceConference
Thomas L. Tanel, C.P.M., CTL, CCA, CISCM, President and CEO andThomas L. Tanel, C.P.M., CTL, CCA, CISCM, President and CEO andRonald D. Grossman, PMC, PCMH, CISCM, CEPP, Practice LeaderRonald D. Grossman, PMC, PCMH, CISCM, CEPP, Practice Leader
CATTAN Services Group, Inc., College Station, TXCATTAN Services Group, Inc., College Station, TXcattan@cattan.com 979-260-7200
© 2007 CATTAN Services Group, Inc.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 22
Today’s AgendaToday’s Agenda
Part IIPart II Purchasing T & L Profile and SpendPurchasing T & L Profile and Spend Freight Modal Analysis and Decision Freight Modal Analysis and Decision
ImpactsImpacts The Four ‘S’sThe Four ‘S’s Define Expectations and Routing Define Expectations and Routing
GuidesGuides Strategies to Enhance Your T & L ‘Buy’Strategies to Enhance Your T & L ‘Buy’
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 33
Purchasing Transportation and Purchasing Transportation and 3PL Profile3PL Profile
This is a template that: This is a template that: ConsidersConsidersAppreciatesAppreciatesUnderstands Understands
The following:The following:Corporate philosophy and cultureCorporate philosophy and cultureSupplier and inbound requirementsSupplier and inbound requirementsInternal/external customer requirementsInternal/external customer requirements
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 44
Supply Chain USA 1Supply Chain USA 1
Airport
Port
Option 1 - Ship
Option 2 - Air
Port
Airport
CustomsBroker
DC USA•Inspection•Warehousing•Pick, Pack•Shipping
CustomerTD
Returns
ShopsFL, LH
Returns
DC Bremen•Inspection•Warehousing•Shipping
Timing (days) Alt 1 A (Sea) Alt 1 B (Air) Cost / Week (US) Alt 1 A (Sea) Alt 1 B (Air)
Min Max Min Max
Available in USA 16 d 25 d 8 d 10.5 d
Order Cycle FL/LH 2 d 2 d 2 d 2 d Total US 43,800 71,400
Order Cycle TD 2 d 6 d 2 d 6 d US per LE 1.87 3.05
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 55
Purchasing Transportation and Purchasing Transportation and 3PL Profile Con’t3PL Profile Con’t
Map all locations:Map all locations: Company inbound/outbound locationsCompany inbound/outbound locations
PlantsPlants Warehouse/DCsWarehouse/DCs
Supplier locationsSupplier locations Customer locationsCustomer locations Ports and major consolidation pointsPorts and major consolidation points Major traffic flow lanesMajor traffic flow lanes
Collect traffic flow data for aboveCollect traffic flow data for above Article descriptionArticle description Alpha and numeric STCCAlpha and numeric STCC Bulk or packagedBulk or packaged Quantity or volume per shipment per time periodQuantity or volume per shipment per time period
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 66
Facility Location MapFacility Location Map——
ExampleExample
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 77
Freight Traffic Flow Major LanesFreight Traffic Flow Major Lanes——
ExampleExample
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 88
Purchasing Transportation and Purchasing Transportation and 3PL Profile Con’t3PL Profile Con’t
Define expenditures and analyze spend:Define expenditures and analyze spend:Origin/destinationsOrigin/destinationsCarriers and 3PLsCarriers and 3PLsFreight rates-both line haul and accessorialFreight rates-both line haul and accessorialWarehouse rates-both storage and in/outWarehouse rates-both storage and in/outFreight and sales termsFreight and sales termsProduct specification/STCC/NMFC/UFCProduct specification/STCC/NMFC/UFCProduct weight and packagingProduct weight and packaging
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 99
Transportation SpendTransportation Spend——
ExampleExample
FREIGHT ITEM MISC Sum
Amount SUM
PCT AmountSUM
PCT AmountSUM
PCT
Vendor Name
SNL DISTRIBUTION INC $39,345.44 6.6% $554,802.41 93.4% $594,147.85
CARGILL $33,806.56 5.7% $559,368.12 94.1% $1,560.92 0.3% $594,735.60
AZTECA $26,993.57 7.8% $319,598.24 92.1% $396.00 0.1% $346,987.81
GENERAL MILLS $20,128.26 12.3% $143,434.59 87.7% $163,562.85
BEMIS COMPANY $11,916.56 1.0% $1,177,949.07 99.0% $1,189,865.63
ROMAN MEAL $11,607.23 14.1% $69,833.37 84.9% $828.98 1.0% $82,269.58
DANISCO USA INC $10,994.43 5.1% $204,547.20 94.9% $215,541.63
SUNMAID GROWERS $9,311.00 6.4% $134,867.41 92.9% $967.60 0.7% $145,146.01
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1010
Transportation SpendTransportation Spend——ExampleExample
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1111
Transportation SpendTransportation Spend——ExampleExample
Destination Mill Owner
Total CostsPer
Truckload
AverageCost
Per DayApproximate AnnualTransportation Costs
Port Hudson, LA GP $ 218 $ 655 $ 229,021
Pineville, LA IP $ 330 $ 330 $ 158,217
Bogalusa, LA I $ 429 $ 1,287 $ 486,320
Monticello, MS GP $ 509 $ 2,035 $ 643,277
Vicksburg, MS IP $ 512 $ 1,024 $ 357,051
DeRidder, LA Boise $ 482 $ 965 $ 273,429
Hodge, LA S $ 527 $ 1,055 $ 344,929
Bastrop, LA IP $ 569 $ 1,138 $ 475,017
Campti, LA W $ 526 $ 1,577 $ 504,162
Mansfield, LA GP $ 571 $ 1,142 $ 298,676
West Monroe, LA R $ 568 $ 1,135 $ 476,285
Orange, TX I $ 566 $ 1,133 $ 444,378
Crossett, AR GP $ 631 $ 1,892 $ 716,182
Evadale, TX MW $ 697 $ 2,787 $ 884,308
Texarkana, TX IP $ 837 $ 2,510 $ 871,975
Pine Bluff, AR IP $ 851 $ 1,702 $ 653,819
Pine Bluff, AR Inland $ 851 $ 851 $ 185,523
Lufkin, TX A $ 821 $ 821 $ 214,614
Ashdown, AR D $ 885 $ 5,312 $ 1,697,178
TOTAL $29,351 $ 9,914,359
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1212
Don’t Forget…Plan for the FutureDon’t Forget…Plan for the Future
Where is your business headed in Where is your business headed in the next 12, 24, and 36 months?the next 12, 24, and 36 months?
What are the major initiatives that What are the major initiatives that will have an impact on what you will have an impact on what you expect from your carriers and/or expect from your carriers and/or third parties? third parties?
What risk and costs factors may What risk and costs factors may affect your transportation and 3PL affect your transportation and 3PL budget forecasts?budget forecasts?
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1313
Purchasing Freight Modal Profile by # of Purchasing Freight Modal Profile by # of Shipments—Shipments—
Based on Weight of Shipment and Distance Based on Weight of Shipment and Distance ShippedShipped
DistanceDistance
milesmiles<1,000 <1,000
lbslbs1,000-1,000-
1,999 lbs1,999 lbs10,000-10,000-29,999 29,999
lbslbs
30,000-30,000-59,999 59,999
lbslbs
60,000-60,000-89,999 89,999
lbslbs
90,000-or 90,000-or more lbsmore lbs
<100<100
100-199100-199
200-499200-499
500-750500-750
750-1,000750-1,000
1,000-1,000-1,4991,499
1,500 or 1,500 or moremore
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1414
Freight Modal Shipment Volume Freight Modal Shipment Volume AnalysisAnalysis
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1-5 lbs 70-150 lbs 10,000 lbs 40,000 lbs 60,000 lbs
MODAL WEIGHT BREAKS
PCT PER MODE
Water Rail TL LTL Air Parcel
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1515
Performance Comparison for Selected Freight ModesPerformance Comparison for Selected Freight Modes
Barge
Hopper Car
100 Car Train Unit
Semi-Trailer truck
1500 Tons52,500 Bushels453,600 Gallons
100 Tons3,500 Bushels30,240 Gallons
10,000 Tons350,000 Bushels3,024,000 Gallons
26 Tons; 910 Bushels7,865 Gallons9,000 for a tanker truck
124 tons
Capacity
5
57.7(865.4 for 15 barges in tow)
Truck EquivalencyVehicle
3.8
384.6
1
Post-Panamax containership5,000 TEU 2,116
9,330VLCC
300,000 tons2 million barrels of oil
747-400F
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1616
Purchasing Transportation Profile—Purchasing Transportation Profile—Affect Modal DecisionsAffect Modal Decisions
Rail generally competes with truck on Rail generally competes with truck on freight movements of more than 750 freight movements of more than 750 miles.miles.
About 15-25% of rail movement business About 15-25% of rail movement business is truck competitive.is truck competitive.
Rail transit times for most bulk and break-Rail transit times for most bulk and break-bulk cargo are roughly equal to barge bulk cargo are roughly equal to barge transit times within 750 miles and are transit times within 750 miles and are days shorter beyond 1000 miles.days shorter beyond 1000 miles.
High-value goods and time-sensitive goods High-value goods and time-sensitive goods are likely to move through faster, more are likely to move through faster, more expensive modes of transportation like air.expensive modes of transportation like air.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1717
Purchasing Transportation Profile—Purchasing Transportation Profile—Affect Modal DecisionsAffect Modal Decisions
Potential to convert TL to intermodal when Potential to convert TL to intermodal when distance in excess of 1,000 miles and not distance in excess of 1,000 miles and not time sensitive.time sensitive.
Competition for long-haul highway Competition for long-haul highway shipments in particular are becoming shipments in particular are becoming noticeably more intermodal as trucking noticeably more intermodal as trucking companies have shifted line haul movement companies have shifted line haul movement legs to railroad TOFC or COFC movements. legs to railroad TOFC or COFC movements.
About 90% of intermodal container traffic is About 90% of intermodal container traffic is potentially rail vs. truck competitive potentially rail vs. truck competitive
Much of the international intermodal Much of the international intermodal business through the ports lends itself more business through the ports lends itself more practically to rail moves and possibly barge.practically to rail moves and possibly barge.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1818
Purchasing Transportation Profile—Purchasing Transportation Profile—Affect Modal DecisionsAffect Modal Decisions
If you have to ship over 1,000 miles, you If you have to ship over 1,000 miles, you may want to consider a national LTL carrier may want to consider a national LTL carrier over a regional LTL carrier. These firms over a regional LTL carrier. These firms offer the advantage of not having to offer the advantage of not having to interline freight traveling long distances. interline freight traveling long distances.
Private internal fleets are expanding to take Private internal fleets are expanding to take on shorter distance LTL or TL moves.on shorter distance LTL or TL moves.
Don’t assume that air means “you hear the Don’t assume that air means “you hear the roar of jet engines” ; if the carrier can move roar of jet engines” ; if the carrier can move your freight on what it calls an ‘expedited your freight on what it calls an ‘expedited truck’ and get it to your destination in the truck’ and get it to your destination in the timeframe you specified---it may never see timeframe you specified---it may never see the tarmac. Also don’t expect any great cost the tarmac. Also don’t expect any great cost savings to result. savings to result.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 1919
Modal Decisions Translate Modal Decisions Translate to Carrier Optionsto Carrier Options
• LTL/FTL
• Parcel
• Ocean
• Rail
• LTL/FTL
• Parcel
• Ocean
• Rail
Shipping Modes Carrier Options
Orders
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2020
Purchasing Transportation Profile—Purchasing Transportation Profile—Affect Modal DecisionsAffect Modal Decisions
Review your shipping profile statistics Review your shipping profile statistics and understand where the economic and understand where the economic shift points are in your:shift points are in your:Parcel or Air/LTL mixParcel or Air/LTL mixLTL/TL mixLTL/TL mixTL/Rail mixTL/Rail mixAir/Ocean mixAir/Ocean mix
Over 90% of all organizations are Over 90% of all organizations are either receiving and/or shipping either receiving and/or shipping internationally internationally
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2121
Comparison of Distribution Costs and Time from National Warehouses—Comparison of Distribution Costs and Time from National Warehouses—ExampleExample
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2222
Bottom Line:Bottom Line:
A company should define a A company should define a lane, process, operation, or lane, process, operation, or function that can be function that can be improved, then make these improved, then make these carriers and 3PL providers carriers and 3PL providers compete for it.compete for it.
Bottom Line:Bottom Line:
A company should define a A company should define a lane, process, operation, or lane, process, operation, or function that can be function that can be improved, then make these improved, then make these carriers and 3PL providers carriers and 3PL providers compete for it.compete for it.
Thoughts About ChoicesThoughts About ChoicesThoughts About ChoicesThoughts About Choices
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2323
The Four S’sThe Four S’s
SourceSource
SolicitSolicit
SelectSelect
SecureSecure
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2424
The Four S’s: SourceThe Four S’s: Source
Identify Logistics Identify Logistics and Transportation and Transportation requirements:requirements: Review and clarify Review and clarify
req’mtsreq’mts Obtain feedback on Obtain feedback on
3PLs and carriers3PLs and carriers Review KPIs, KRAs, Review KPIs, KRAs,
and analyze gapsand analyze gaps Establish which gaps Establish which gaps
are most criticalare most critical
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2525
Material Flow DC USAMaterial Flow DC USA——Daily 4 Month AverageDaily 4 Month Average
Supply Chain Alternatives
Goods In
0.8 Trucks/day
21 Pal/day (Euro) 5 Pal/day
Division Shop, Concessions Division T-Direct
17 Pal/day (Euro) 4 Pal/day (Euro)
2,060 Picks/day 640 Picks/day
Returns
5 Pal/day
Others
Pick / Pack
Goods Out
183 Cartons/day172 Cartons/day172 Cartons/day 5 Pal/day
Shop, Concession14 Pal/day
1.5 Trucks/day
Direct5 Pal/day
0.5 Truck/day
Others5 Pal/day
0.5 Trucks/day
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2626
The Four S’s: SourceThe Four S’s: Source
Gather data and manipulate Gather data and manipulate information:information:Compile or obtain 6-12 months of Compile or obtain 6-12 months of
history/activity req’mtshistory/activity req’mtsObtain details: inbound and outbound; Obtain details: inbound and outbound;
origins and destinations; weight, origins and destinations; weight, cube and # of pieces; traffic lanes, cube and # of pieces; traffic lanes, supply chain streams, and demand supply chain streams, and demand chain streams; types of equipment; chain streams; types of equipment; volatility and performance req’mtsvolatility and performance req’mts
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2727
The Four S’s: SourceThe Four S’s: Source
Create a RFI: Create a RFI: Review 3PLs’ and carriers’ company Review 3PLs’ and carriers’ company
and public profilesand public profiles Invite both current and Invite both current and new new sourcessources Get: completed profile questionnaires, Get: completed profile questionnaires,
financials, insurance and safety financials, insurance and safety certificates, authority or operating certificates, authority or operating documents, and referencesdocuments, and references
• Perform site visit when applicable. Talk Perform site visit when applicable. Talk with local management.with local management.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2828
Trucker RFI Compilation and Status—Example—Example
Company Name Blue Flash Dupre Savage Omni Interest Level High High High MediumOwn Pneumatics Yes No Yes No24/7 Service Yes Yes Yes YesRate Flexibility Yes Yes Yes YesOwn Terminals Yes Yes Yes NoFull Time Drivers Yes Yes Yes NoSub-Contractors Yes Yes Yes OnlyAct as 3PL Option Option Must MustRegional Exp Yes Yes Yes NoNational Exp Yes No Yes Yes
© 2003 CATTAN Services Group, Inc.© 2003 CATTAN Services Group, Inc.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 2929
The Four S’s: SolicitThe Four S’s: Solicit
Develop a RFB/RFP: Develop a RFB/RFP: Decide which 3PLs and carriers receive Decide which 3PLs and carriers receive
solicitation based on RFI resultssolicitation based on RFI resultsDetermine your preferred pricing and Determine your preferred pricing and
contract formats contract formats Specify whether bid/proposal by lane Specify whether bid/proposal by lane
allocation, region or complete scopeallocation, region or complete scopeInclude TCA/NITLInclude TCA/NITL Voluntary Guidelines Voluntary Guidelines
to Good Business Relationsto Good Business Relations
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3030
The Four S’s: SolicitThe Four S’s: Solicit Send bid/proposal package to qualified Send bid/proposal package to qualified
sources: sources: Prepare a template with details of info Prepare a template with details of info
gatheredgatheredProvide clear instructions concerning info Provide clear instructions concerning info
you want includedyou want includedAttach a copy of anticipated contract and Attach a copy of anticipated contract and
T&Cs upfrontT&Cs upfrontProvide sample performance reports to be Provide sample performance reports to be
used as measures of agreed performanceused as measures of agreed performanceEstablish what is a responsive bid/proposal Establish what is a responsive bid/proposal
and adequate submission dateand adequate submission date
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3131
Information Gathered TemplateInformation Gathered Template—Example—Example
Note: BH means backhaul opportunity
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3232
A carrier or 3PL can perform services which an A carrier or 3PL can perform services which an organization is either unwilling or unable to perform organization is either unwilling or unable to perform itself, but are they as good as advertised? itself, but are they as good as advertised?
A carrier or 3PL can perform services which an A carrier or 3PL can perform services which an organization is either unwilling or unable to perform organization is either unwilling or unable to perform itself, but are they as good as advertised? itself, but are they as good as advertised?
First we need to determine who they are and what they offer.First we need to determine who they are and what they offer.
The question is:The question is:
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3333
• Financial Performance and HealthFinancial Performance and Health
• StaffingStaffing
• Assets and FacilitiesAssets and Facilities
• Internal and External ProgramsInternal and External Programs
• Pricing Methods, Utilization, Periodic ReviewPricing Methods, Utilization, Periodic Review
• Measures of Agreed PerformanceMeasures of Agreed Performance
• OperationsOperations
• Financial Performance and HealthFinancial Performance and Health
• StaffingStaffing
• Assets and FacilitiesAssets and Facilities
• Internal and External ProgramsInternal and External Programs
• Pricing Methods, Utilization, Periodic ReviewPricing Methods, Utilization, Periodic Review
• Measures of Agreed PerformanceMeasures of Agreed Performance
• OperationsOperations
The Seven Most Important The Seven Most Important Considerations To Include When Considerations To Include When
Choosing Choosing Carriers
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3434
1. FINANCIAL STRENGTH
2. BUSINESS EXPERIENCE
3. BUSINESS DEVELOPMENT
4. SUPPORT SERVICES
5. BUSINESS ARRANGEMENTS AND PRICING
1. FINANCIAL STRENGTH
2. BUSINESS EXPERIENCE
3. BUSINESS DEVELOPMENT
4. SUPPORT SERVICES
5. BUSINESS ARRANGEMENTS AND PRICING
The Five Most Important Considerations To The Five Most Important Considerations To IncludeInclude
When Choosing A Contract Logistics FirmWhen Choosing A Contract Logistics Firm
The Five Most Important Considerations To The Five Most Important Considerations To IncludeInclude
When Choosing A Contract Logistics FirmWhen Choosing A Contract Logistics Firm
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3535
The Four S’s: SolicitThe Four S’s: Solicit
Hold a Pre-Bid/Proposal Conference: Hold a Pre-Bid/Proposal Conference: Invite qualified bidders and proposersInvite qualified bidders and proposersDiscuss expectationsDiscuss expectationsHold Q&AHold Q&AProvide feedback and answers to all: Provide feedback and answers to all:
During conference During conference After conferenceAfter conference
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3737
The Four S’s: SelectThe Four S’s: Select
Verify documentation submittedVerify documentation submitted Establish T&Cs that may require Establish T&Cs that may require
adjustment, compromise or negotiationadjustment, compromise or negotiation Analyze bid or proposal submissionsAnalyze bid or proposal submissions Develop selection criteria or negotiation Develop selection criteria or negotiation
strategystrategy Use analytical tools to select. Do industry Use analytical tools to select. Do industry
comparisons for the type of customers, comparisons for the type of customers, facilities, regional, coverage, management facilities, regional, coverage, management and cultural attitudes, cost model, etc.and cultural attitudes, cost model, etc.
Select or conduct negotiationSelect or conduct negotiation
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3838
Bid or Proposal Analysis—Bid or Proposal Analysis—ExampleExample
Truckload CHRW
Origin Equipment Rated Per mile/ Trailer FSC
City State Zip Required Miles Flat Fee Size Extension 1/29/2007 TOTAL
Moncks Corner SC 29461 DRY 1101 $ 1.40 48/53 $ 1,541.40 252.23 $ 1,793.63
Cairo GA 31728 DRY 830 $ 1.15 48/53 $ 954.50 190.15 $ 1,144.65
Lithia FL 33547 DRY 1112 $ 1.05 48/53 $ 1,167.60 254.75 $ 1,422.35
Brooksville FL 34609 DRY 1074 $ 1.05 48/53 $ 1,127.70 246.04 $ 1,373.74
Groveland FL 34736 DRY 1069 $ 1.05 48/53 $ 1,122.45 244.90 $ 1,367.35
Loxley AL 36551 DRY 614 $ 1.79 48/53 $ 1,099.06 140.66 $ 1,239.72
Red indicates low bidder on traffic lane
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 3939
Thoughts About ChoicesThoughts About ChoicesThoughts About ChoicesThoughts About ChoicesWhich is a more important category to your company: Warehousing, Transportation, IT, other?Which is a more important category to your company: Warehousing, Transportation, IT, other?
Choose a firm that has its roots in that category.
Do they have a local or regional office nearby your facility or headquarters.Do they have a local or regional office nearby your facility or headquarters.
A local or regional office lends more control to you.
Meet with the actual operations personnel, not just sales, to determine their personal chemistry with you and their fit with your corporate culture.
Meet with the actual operations personnel, not just sales, to determine their personal chemistry with you and their fit with your corporate culture.
Your comfort level is an important key to success.
Know your costs for comparison to theirs.Know your costs for comparison to theirs.
Agree upon measurement criteria in advance. Agree upon measurement criteria in advance.
Remember, you are paying for their profit margin too.
Know when to fix things or to leave them alone.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4040
The Four S’s: SecureThe Four S’s: Secure
Provide contracts to selected providersProvide contracts to selected providersEmphasize Emphasize LLong ong TTerm erm RRelationshipelationshipMonitor 3PLs’ and/or carriers’ Monitor 3PLs’ and/or carriers’
performance, costs and commitments—performance, costs and commitments—use scorecarduse scorecard
Issue company routing guideIssue company routing guideSeek continuous improvement and Seek continuous improvement and
incorporate feedback incorporate feedback to and fromto and from Hold IPRs and provide a performance Hold IPRs and provide a performance
report card on a regular interval report card on a regular interval
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4141
Define ExpectationsDefine Expectations
In the wonderful world of expectations we In the wonderful world of expectations we have a problem:have a problem:
The buyers/shippers want everythingThe buyers/shippers want everything The Carriers or 3PLs want the businessThe Carriers or 3PLs want the business The suppliers and customers want things The suppliers and customers want things
alsoalso In theory, everything is possibleIn theory, everything is possible In reality, there are constraints In reality, there are constraints
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4242
Why Use Routing Guides?Why Use Routing Guides?Are used to provide guidance and rules Are used to provide guidance and rules
for any transportation and logistics for any transportation and logistics scenariosscenarios
Are part of contractual obligations for Are part of contractual obligations for suppliers and internal/external customerssuppliers and internal/external customers
Are used identify each carrier and 3PL Are used identify each carrier and 3PL that you dictate by price/service for use that you dictate by price/service for use by any suppliers and customersby any suppliers and customers
Are used to identify the shipment size, Are used to identify the shipment size, volume, and weight for each carrier and volume, and weight for each carrier and 3PL to be used3PL to be used
CATTAN Services Group, Inc. 43
CATTAN Services Group, Inc. 44
Carrier Selection—Oracle Carrier Selection—Oracle ExampleExample
• Weight• Volume• Geographic Regions
InputsInputs ResultsResults
Rule Criteria
Carrier Selection Process
• Carrier• Service Type• Mode • Payment Terms
Selection Results
Rules Based Selection Process
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4545
Basic Modal Routing Guide—Basic Modal Routing Guide—ExampleExample
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4646
Domestic Ground Routing GuideDomestic Ground Routing Guide—Example—Example
Shipment Weight and Transit Days
201 – 9000 pounds
Origin States Small Package
Transit1 Day 2 Days 3 Days 4–6 Days Truck Load
MD, DC (Local) 1 Day EXCEL EXCEL N/A N/A N/A
CT, MA, MD, NH, NJ, NY, PA, RI, VT
2-3 Days New Penn New Penn N/A N/A CFI or Schneider
ME 3 Days New Penn New Penn New Penn N/A CFI or Schneider
AR, IA, KS, LA, MN, MS, ND, NE, OK, SD, TX
5-7 Days FedEx 1 Day FedEx 2Day FedEx 2Day Yellow Freight CFI or Schneider
AZ, CA, CO, ID,MT, NM, NV, OR, UT, WA, WY
5-7 Days FedEx 1 Day FedEx 2Day FedEx 2Day Yellow Freight CFI or Schneider
AK, HI N/A FedEx 1 Day FedEx 2 Day N/A N/A N/A
For shipments over 9000 pounds, truck load movements, shipments requiring special handling, or shipments between suppliers, contact your buyer for special instructions.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4747
International Routing Guide—International Routing Guide—ExampleExample
INTERNATIONAL ROUTINGS
ORIGIN COUNTRY/REGION AIR FORWARDER OCEAN FORWARDER
Europe/Ukraine Expeditors Expeditors
Africa Expeditors Expeditors
India Expeditors Expeditors
Japan Expeditors Expeditors
Hong Kong Expeditors Expeditors
Taiwan Expeditors Expeditors
Shanghai Expeditors Expeditors
Malaysia Expeditors Expeditors
Singapore Expeditors Expeditors
Central and S. America Expeditors Expeditors
Canada and Mexico Emery/Menlo N/A
All Other Origins Expeditors Expeditors
Shipments in excess of 500 pounds or 227 Kg need authorization to ship via Air.
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4848
International Routing Guide—International Routing Guide—ExampleExample
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 4949
Rail Routing Guide—ExampleRail Routing Guide—Example
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5050
Air Routing Guide—ExampleAir Routing Guide—Example
DOMESTIC AIR SHIPMENTSNote: Second Day Service if PO delivery date permits;
Overnight Air Express if PO delivery requires.
1-150 lb.< 68 kg
Small package shipments requiring overnight service purchased FOB freight collect within the 50 states
DHL ® Priority overnight service
150-500 lb.> 68 kg
Small package shipments requiring overnight service purchased FOB freight collect within the 50 states
EGL Eagle Global Logistics
> 501 lb.> 1105 kg
Contact Traffic Administrator, provide the weight, dimensions, freight description and PO Number
(618) 7xx-1220 Phone(618) 5xx-3677 Fax
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5151
Truck Routing Guide—Truck Routing Guide—ExampleExample
ST ORIGIN STATE
Zip Code
Less Than Truckload (LTL)
LTL to TL transition (Pounds)
Use 'TL' If shipment is over 1/2 the visible capacity of a 48" vehicle or exceeds pounds
AL Alabama All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Prime, Priority, May
AZ Arizona All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, May
CA California All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, May
DE Delaware All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Priority, May
FL Florida All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Priority, May, Prime
GA Georgia All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Prime, Priority, May
IA Iowa All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Prime, Priority, May
ID Idaho All FedEx Freight 10 Pallets or 10,000 Lbs May, Navajo, Prime
KS Kansas All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, M. Bruenger, Prime
KY Kentucky All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Prime, Priority, May
LA Louisiana All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Prime, Priority, May
MD Maryland All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Priority, May
ME Maine All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Priority, May
MI Michigan All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Prime, Priority, May
MN Minnesota All FedEx Freight 10 Pallets or 10,000 Lbs Navajo, Prime, Priority
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5252
Truck Routing Guide—Truck Routing Guide—ExampleExample
LTL Common CarrierLTL (Less Than Truckload) Routing
Shipments under 10,000 lbs.In Order of Preference
State Preferred Carrier 2nd Preferred Carrier
Alabama Yellow Freight UPS Freight
Arizona UPS Freight Yellow Freight
Arkansas UPS Freight Yellow Freight
California UPS Freight Yellow Freight
Colorado Yellow Freight UPS Freight
Connecticut UPS Freight Yellow Freight
Delaware Yellow Freight UPS Freight
Washington D.C. UPS Freight Yellow Freight
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5353
Strategies to Enhance Your Strategies to Enhance Your Transportation and Logistics Transportation and Logistics
‘Buy’‘Buy’Extend the processes beyond the walls Extend the processes beyond the walls
of purchasing, traffic, and logisticsof purchasing, traffic, and logisticsCreate strategies to buffer yourself Create strategies to buffer yourself
against:against:Capacity ShortagesCapacity ShortagesReliability IssuesReliability IssuesRate or Price HikesRate or Price Hikes
Possible strategies for consideration Possible strategies for consideration followfollow
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5454
Strategies to Create Greater Strategies to Create Greater CapacityCapacity
Adding consolidation/de-consolidation centers to global Adding consolidation/de-consolidation centers to global distribution networks so freight gets moved as FCL and FTLdistribution networks so freight gets moved as FCL and FTL
Looking for ways to extract more capacity from private Looking for ways to extract more capacity from private fleets and facilities by:fleets and facilities by: Improving cube utilization of fleet equipmentImproving cube utilization of fleet equipment Improving facility cube and storage capacityImproving facility cube and storage capacity Eliminating empty truck miles and ‘dead heads’Eliminating empty truck miles and ‘dead heads’ Consolidating orders to same destination or customerConsolidating orders to same destination or customer Using a carrier appointment scheduling or “order notify” Using a carrier appointment scheduling or “order notify”
systemsystem
Rethinking your transportation and logistics network design Rethinking your transportation and logistics network design and inbound/outbound flow of shipmentsand inbound/outbound flow of shipments
Making your freight traffic or warehouse operations Making your freight traffic or warehouse operations attractive to the service providersattractive to the service providers
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5555
Strategies to Create Greater Strategies to Create Greater ReliabilityReliability
Forging close collaborative ties with their carriers and 3PL Forging close collaborative ties with their carriers and 3PL providersproviders
Establishing preferred customer status or dedicated contract Establishing preferred customer status or dedicated contract carriage and/or contract warehousingcarriage and/or contract warehousing
Consolidating multiple carrier and 3PL provider relationships Consolidating multiple carrier and 3PL provider relationships by traffic lane, region, or geographic areaby traffic lane, region, or geographic area
Increasing volume with premium operators where service is a Increasing volume with premium operators where service is a differentiating factor---not the low price or discounted differentiating factor---not the low price or discounted carriers/providers carriers/providers
Treat carriers and 3PLs as partners in the commitment to Treat carriers and 3PLs as partners in the commitment to
100% on-time performance100% on-time performance
Identifying root causes of service failures and cost overruns by Identifying root causes of service failures and cost overruns by using scorecards and measures of agreed perofrmanceusing scorecards and measures of agreed perofrmance
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5656
Strategies to Create Greater Price Strategies to Create Greater Price StabilityStability
Update the granularity and accuracy of your systems to:Update the granularity and accuracy of your systems to: Create efficient freight lanes and facility networksCreate efficient freight lanes and facility networks Leverage aggregated spend to negotiate better prices, rates, and Leverage aggregated spend to negotiate better prices, rates, and
charges on a contract basischarges on a contract basis Know when to bundle or unbundle goods and transportation costs Know when to bundle or unbundle goods and transportation costs
for freight auditing purposes and checking supplier costsfor freight auditing purposes and checking supplier costs Help calculate costs per supplier, per customer, per product or Help calculate costs per supplier, per customer, per product or
SKU, per geographic area or business unit, per facility or site, etc.SKU, per geographic area or business unit, per facility or site, etc.
Employ total delivered or landed cost analysis and optimizationEmploy total delivered or landed cost analysis and optimization
Use shipment optimization and electronic tendering softwareUse shipment optimization and electronic tendering software
Monitor sources of transportation and logistics data for trends Monitor sources of transportation and logistics data for trends and forecastsand forecasts
Enforce compliance with your routing guide to avoid Enforce compliance with your routing guide to avoid transportation and logistics exceptionstransportation and logistics exceptions
CATTAN Services Group, Inc.CATTAN Services Group, Inc. 5757
Thank You !Thank You !
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