Archive for April, 2010

Five Key Benefits That 3PLs Offer Chemical Shippers

Wednesday, April 28th, 2010

Chemical shippers contract 3PLs to gain additional resources, technology and assets unavailable in their own logistic departments to optimize and automate supply chain operations.  More than vendors who merely provide certain contract services, 3PLs should serve as long-term partners in helping customers effectively manage their supply chain processes.  Here are five key benefits that chemical shippers should derive from their business relationship with a 3PL:

1. Ongoing cost reduction/containment strategies

Going beyond the terms of a contract to manage specific freight activities on a monthly or cost-per-transaction basis, 3PLs should proactively present cost management ideas as part of their services.  After becoming familiar with customer operations, 3PLs should be able to identify areas in the supply chain where costs can be contained.  Ideas can range from optimizing weight per shipment through load consolidation, spot bidding on more cost effective carrier lanes or even initiating a freight reduction project to reduce inbound transportation costs.

2.Access to best-in-class transportation management technology

Incorporating the latest transportation management technology to optimize supply chain operations was typically not an option for small- to mid-size shippers who could not afford the upfront investment or ongoing maintenance.  3PLs now offer best-in-class transportation management technology that does not require large investments in hardware, software or even additional personnel.  On demand transportation management systems can be connected to customers’ existing ERP systems in as little as 6 months.  Customers should seek additional capabilities such as online RFQ tools and global order tracking.  Most recently, ChemLogix began offering its customers an iPhone® application as part of its TMS capabilities that gives users mobile access to shipment data on iPhones.

3. Ensure Orderly Review Process

Rather than wait for problems to arise, a 3PL should lead a periodic review of supply chain processes with appropriate personnel to discuss new transportation solutions, specific cost reduction ideas, service levels, and any issues that the client may have with current operations. By reviewing data pertinent to different supply chain elements such as on-time deliveries, costs, customer service issues, etc., the 3PL can discuss which objectives have been met, if there are any problem areas and set new goals for the next operating period. 

4. On-line Visibility to Freight Activity

In addition to automating many processes, a 3PL should give customers online, real-time visibility to supply chain operations including freight, invoices, routing guides, carrier service records and more. With visibility to in-transit data, shippers can determine at any point during the supply chain process if shipments will be delivered on time and when to notify plants and customers of impending deliveries and shipments.  Should shipments be late, automatic email alerts can sent to customer service reps so that they can proactively make arrangements with their own customers.

5. Support in Boardroom Discusses

Getting the funds from executives to implement and/or expand transportation services and systems sometimes takes the assistance of 3PLs who can provide detailed explanations of the long-term benefits of specific supply chain strategies.  Experienced in providing transportation solutions to customers in the same industry but with varying scenarios, 3PLs can readily provide informed answers to the questions posed by executives and give examples of the successes and pitfalls associated with certain actions.  3PLs, essentially, become a part of the logistics team when presenting ideas and updates to the board room.

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Posted in 3pl, Transportation, Uncategorized | 1 Comment »

3PLs – Not Banks – Offer Seamless, Paperless Solutions for Freight Audit and Payment

Thursday, April 8th, 2010

About half a century ago, the transportation marketplace was heavily regulated.  Motor carrier bills had to be paid within seven days and rail within five days.  Seeing an opportunity for new business, many banks began to offer freight payment services.   Chemical shippers contracted these services to ensure prompt invoice processing. 

After the deregulation of the transportation industry in 1980, using bank freight payment services  to meet tight deadlines was no longer necessary.   Services also became obsolete as web-based freight audit and payment services became available to chemical shippers.  However, many companies continue to use bank freight payment services out of habit, not for valid economic reasons.

The Banking Freight Payment Process  

The bank’s approach to handling and processing freight payment has not changed in over half a century.  Formulas remain:  “If A equals B, pay.  If not, reject and return back to the company.”   Many banks have even shamelessly bullied carriers to accept a discounted value for receiving payments on time. 

In a banking model, all payments are the same.  For example, cable, telephone and credit card payments are all handled much the same way.  Processing freight invoices for chemicals, however, requires a higher degree of specialization.    Sometimes, it is not just about carrier rates but whether a carrier is qualified to handle chemicals.

3PLs, such as ChemLogix, hold industry certifications that give us the specialized knowledge to understand that when auditing a freight bill, we must not only verify rates but also if the material is being handled according to manufacturer’s specifications and if the carrier has been certified to transport the material.

3PLs Offer Paperless Processing

Supported by world class transportation management systems (TMS), 3PLs also can offer best-in-class freight audit and payment services in a truly paperless environment where documents and data can be transmitted to carriers in a variety of formats (EDI, XML, etc.).  Unlike banks where general ledger code information is limited, TMS capabilities give 3PLs the technology to work in an automated, always current environment that provides customers and carriers with relevant information on a real-time basis from many devices including mobile device applications such as Iphones®.  Banks typically offer limited access to information.  

Companies that use banks to handle their freight audit and payment are finding that they are still heavily involved in the process.   And in most cases, shippers are not achieving expected savings. As banks use similar tactics when processing bills for different industries, they do not have industry data to handle exceptions on their own.  As a result, exception rates run as high as 20 percent, with chemical shippers having to get involved with resolving most of these exceptions while paying for additional handling fees by banks. 

3PLs, like ChemLogix, have access to advanced, multi-relational databases that include information such as fuel surcharge tables, freight rates  and accessorial costs that help resolve many exceptions without going to the customer.   ChemLogix’ customers experience less than five percent exceptions, with most handled by our experienced logistics team without getting the customer involved with problem resolution.  For those times when exceptions cannot be readily resolved, a collaborative exception resolution capability via network interface affords real-time electronic communications to customers instead of faxes and emails.

Taking the time to compare bank vs. 3PL services related to freight audit and payment can save a chemical shipper substantial processing time and money while improving relationships with carriers.  Even if your current process seems to be working well, it is worth taking the time to evaluate the benefits of new processing options for freight audit and payment.

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Posted in Financial, Uncategorized | 1 Comment »