Visibility is critical at the border, and being proactive rather than reactive can keep products moving. Penske has added a border workflow technology tool as part of its ClearChain® technology suite that facilitates collaboration between the many stakeholders involved in a border crossing to mitigate the risk of a delay.

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Increasing consumer expectations, ongoing volatility, and the drive to increase efficiency and control costs continue to enhance the value logistics service providers offer to shippers. The supply chain and logistics sectors have relied significantly on third-party providers to create and deliver value to end-user customers and consumers, the 27th Annual Third-Party Logistics Study reported.

“As the relevance of the end-to-end supply concept continues to advance, it has become clear that the quality of relationships between 3PLs and shippers is a valuable component of overall supply chain success,” according to the report, which was sponsored by Penske Logistics.

Dr. John Langley, a Penn State University supply chain professor and the founder of the Third-Party Logistics Study, wrote within the report that shippers continue to leverage what logistics service providers offer, and this facilitates optimization of the supply chain, minimization of costs and creation of value. Here are three ways logistics service providers are adding value to their customers.

Logistics Service Providers Drive Efficiency

The use of outsourcing can drive efficiencies, and each shipper organization needs to diligently assess the need for all of its supply chain services and determine which strategies relating to outsourcing best fit their needs, according to the study. The percentage of total logistics expenditures directed to outsourcing was slightly higher at 42% in the 2023 study, versus the 40% reported in the previous 3PL study.

There has been a continuation of the most frequently outsourced activities, which tend to be those that are more transactional, operational and repetitive, Langley wrote. The most prevalent activities shippers outsource is domestic transportation (69%), freight forwarding (60%), international transportation (52%) and customs brokerage (51%).

Technology Provided by a Logistics Service Provider

The 2023 Third-Party Logistics Study highlighted once again how important it is for logistics service providers to provide a range of IT-based services to help create value for their shipper customers. Shippers are increasingly aware that if they do not have the technological capabilities to accomplish their goals, they should partner with those that do.

Technology is increasing at a rapid pace and 65% of shippers stated that their expectations have been increasing, while 78% of 3PLs believe that shipper expectations have increased in regard to the technology solutions they offer.

Shippers appear to be becoming more confident in 3PLs’ technology offerings. Execution and transaction-based technologies tended to increase over the previous year, including transportation management-planning (62%), transportation management-scheduling (57%) and warehouse/distribution center management (48%), according to the study.

The majority of shippers — 94% — agree that IT capabilities are a necessary element of 3PL expertise, and 56% of shippers agree they are satisfied with logistics service providers’ IT capabilities, which the study identifies as the “IT Gap.”

Access to Analytics is Critical

As the amount of available data increases, shippers and their logistics partners will need to be able to take the available information and make it relevant. Many logistics service providers are already making significant investments in technology that allow them to analyze shippers’ operations. Nearly half of shipper respondents (48%) said advanced analytics and data mining tools are a “must have” information technology.

Various studies have documented the need for analytics to improve business planning and operations, and a number of these have focused specifically on applications and implications for supply chains and the key processes implied therein, Dr. Langley said.

There are several reasons why a production line may unexpectedly shut down, including a lack of supply, a lack of employees or a cyberattack. During COVID-19, production lines were shuttered worldwide, causing unprecedented supply chain disruptions. Restarting a supply chain, especially when stoppages are widespread, can be complex.

“Plants may have experience starting up after a summer or holiday shutdown, but an unexpected shutdown, such as COVID-19, creates a unique situation,” said Andy Moses, senior vice president of sales and solutions for Penske Logistics. "During the pandemic, some companies experienced a six-to-eight-week cessation of production, and their transportation providers and suppliers have also been experiencing turmoil."

Companies can embrace these five tips for restarting the supply chain after any type of shutdown.

1. Examine Your Carrier Base

When there is an extreme disruption carriers may be affected as well. The lack of cash flow some carriers are experiencing is going to affect the carrier base. Moses recommends companies examine their carrier base and, if possible, do a financial analysis. “If that isn’t in your procurement group’s sweet spot, the right 3PL can help,” he said. “Identify those companies that might be troubled and set up meetings to have frank discussions.”

By working together, shippers and their transportation partners can find ways to address cash flow issues. “In extraordinary times, extraordinary measures may be needed,” Moses said. “That could be changing the payment terms to seven days from 30 days. It is something to consider as a good partner.”

What’s more, if a carrier declares bankruptcy, a shipper may have to spot-buy a lane until it can resource it, and typically spot rates increase when capacity tightens. “It might be smarter to work with that carrier on cash flow issues rather than not,” he said.

As part of the conversation, shippers should examine the whole book of business they have with a carrier. "It could be that, of the 25 lanes they have with you, five are unprofitable, but they took them as part of the bundle. You could discuss altering those,” Moses said. “Have a collaborative attitude so you can help each other."

2. Assess Your Supply Base

The question of financial health also applies to the supply base. “During COVID-19, many companies hadn’t seen cash flow for two months,” Moses said. “If that situation happens, have open conversations with them to try to collaborate and create an environment where both companies can survive and thrive.”

Ports worldwide continue to see disruptions, and companies need to be aware of any cargo limitations. “When shipments arrive, can you process them, or is there a Plan B? Are you going to incur demurrage fees on containers if you can’t unload them? You may need to secure warehouse space short-term,” Moses said.

Prepare early by identifying the capacity, equipment or facilities that may be needed when shipments resume.

3. Review Your Assumptions

Post-COVID-19, there was a new definition of normal and everyone has learned that situations can change rapidly. "It may not be practical for you to think that everything is going to happen the way it always has,” Moses said. “You need to look at every piece of the supply chain and examine your assumptions and your realities.”

It’s prudent for shippers to have a Plan B and C. “Plan B could be as simple as having a relationship with a brokerage company so you can dial up capacity quickly,” Moses said. “You can get brokerage contracts in place now so you know who to talk to and which lanes or areas may be critical.”

Lanes may shift if freight patterns change. “Your freight might not come into the Ports of LA and Long Beach like it always has,” Moses said. “You have to check all of your assumptions. If you’re running through your checklist and say, ‘I don’t need to worry about this because it has never been a problem,’ that’s the one most likely to trip you up.”

4. Ensure Visibility

The supply chain comprises multiple moving parts that all must come together at precisely the right time. Technology can provide visibility to help shippers monitor the health of each individual movement as well as their entire transportation network. “Once our major disruption hurdles are cleared, shippers are still going to want to know the status of loads and whether there is a risk of a delay due to weather or traffic,” Moses said.

5. Start Early

By working with providers and preparing early, shippers can help ensure a fluid network. It is essential to start soon, as people may be hard to reach during a disruption. “Give yourself enough time to get everything in place,” Moses said.

Several companies stepped up to meet new demands during the COVID-19 global pandemic and pivoted their production lines to make much-needed items. Automakers shifted their manufacturing abilities from vehicles to ventilators, fashion designers started making face masks and distilleries learned to make hand sanitizer.

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The fifth generation of mobile phone networks, commonly known as 5G, has arrived, and the list of cities with 5G access continues to grow. According to the 2022 Annual Third-Party Logistics Study, 5G is designed to provide comprehensive connectivity among virtually everyone and everything, including machines, objects and devices, enabling users to move more significant amounts of data more quickly. As a result, it should enhance supply chain operations, performance and real-time communications, ultimately driving the digital supply chain.

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An energy-efficient warehouse can cut operational costs while improving sustainability, making green warehousing initiatives a win-win solution within the supply chain industry. A range of eco-friendly solutions can be applied to new construction or existing facilities.

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Fleets are working to take advantage of tight capacity by optimizing their lanes and converting empty miles to revenue miles, and Penske is finding creative ways to maximize backhaul opportunities.

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The supply chain can make or break a retail business. Empty shelves and out-of-stocks result in lost sales, frustrated customers and decreased loyalty. Technology and visibility tools are helping to bring all the functions in the supply chain together with a common, shared view of what is happening to keep the supply chain running smoothly.

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Shippers need a seamless process when moving goods between the United States and Mexico, and the handoff is critical. Historically, a black hole existed at the border, which is especially challenging given the many parties involved in a crossing.

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For those of us whose livelihood focuses on supply chain management, it’s clear that disruption is now a normal part of business. Recent examples of front-page news include extreme weather events, the pandemic and international unrest. When managing a supply chain, there are lessons to be learned from each of these events.

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Freight brokerages like those operated by Penske Logistics can serve as strategic partners for shippers and carriers, matching available trucking capacity with freight. Shippers commonly utilize a mix of transportation options to fill capacity gaps and will work with brokers to aggregate capacity and access a larger pool of carriers. Penske Logistics brokerage solutions provide another option for shippers to secure capacity and move goods.

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The area within the four walls of the warehouse is at a premium, and effective and efficient warehouses maximize space, increase productivity and improve performance. They also make the most of available labor and ensure timely service. From improving slotting patterns to embracing technology, there are several ways to optimize the movement of goods.

Strategies for Warehouse Optimization

Improve Slotting Patterns: Optimal slotting patterns place high-velocity pick items as close to the door and as tightly together as possible to drive efficiency. Optimal slotting designs are based on historical sales data, including volumes and A, B, C and D movers, along with forecasted demand and seasonality. That data will provide insight into what to stock and where to position it to get the top movers out of the door faster. It isn’t hard to move slotting patterns as demands change, and adjustments should be completed at least once a year to ensure efficiency. Some industries, such as food and beverage, change slotting patterns seasonally.

Separate Fulfillment Channels: The growth in e-commerce means more and more warehouses have three fulfillment channels: shipping to their own locations, outside retail locations and business-to-consumer. Depending on the volume or the way warehouses receive orders, there can be a pallet area, case-pick area, and an each-pick area to maximize each category’s efficiency.

Find the Ideal Racking Solutions: The right storage solutions are often based on the cost of specific geographic locations, which varies. Space is much more expensive in California than in the Midwest, so in California warehouses, it might make sense to invest in vertical racking. Sites can utilize single-deep racking, double-deep racking, push-van racking or other types to get additional spots on the rack.

Examine Labor Standards: Labor is central to warehouse operations and software can help manage the movement of people and track productivity. That data can be compared to warehouses’ labor management time standards and results should be evaluated every day after every shift to ensure employees are meeting their productivity standards.

Utilize a Robust Warehouse Management System: A warehouse management system provides inventory visibility and tracking and ensures products don’t get mixed up or misplaced. Improving your warehouse management software can provide several benefits, including the traceability of products, which will become even more important for certain industries, such as food and beverage, that have increased safety standards.

Invest in Technology: Various technologies can help improve operations within the warehouse. Some warehouses use a voice-pick system to help pick items more efficiently and employees can close out orders as they pick them, using their voice and an index finger scanner. Radio frequency scanners, including forklift mounts, handhelds and wearables, direct employees to the correct picking location. Once employees pick the products, the system automatically updates the picked items in the warehouse management system.

Augment Labor: Drones and visual guided vehicles can help free up human talent to focus on more important tasks within an operation and improve overall safety. Drones can fly through a distribution center’s aisles and provide updates on inventory or alerts if products are not in their assigned slot. Visual guided vehicles can be used to move pallets or other inventory throughout the warehouse, and are trained to run the same pattern.

Create a Contingency Plan: Supply chain disruptions have highlighted the need for contingency planning, which can range from preplanning for a natural disaster to knowing how to ramp up operations if there is a spike in business. Thinking through and predefining potential scenarios can ensure an efficient shift when necessary.

Utilize a Multi-Client Warehouse: Companies looking to expand their footprint and move inventory closer to end consumers are turning to multi-client warehouses, which enable them to take advantage of smaller space within a facility. Multi-client solutions make sense for customers needing 75,000 square feet of space or less.

Realize the Benefits of Warehouse Optimization

From efficiency improvements, lowered operating expenses, enhanced worker productivity and reduced turnover to greater inventory management and better customer service, the benefits of a solid warehouse optimization plan are significant. Ensuring you have the right processes and platforms in place can help your business run more efficiently than ever before.

There are many elements to choosing the right logistics partner. Penske places a premium on taking the necessary time to clearly understand how our logistics solutions may impact the entire company. Our goal is to ensure the efficiencies provided by Penske are realized at virtually every level.

For more information on what Penske Logistics can do for your organization, please contact us at 800-529-6531.

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