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Parcel Carriers shift from “Oversize” to “Dimensional” charges

Jerry M. Hempstead is a 32 year air express industry veteran and consultant.  He is President of Hempstead Consulting based in Orlando, FL.  Jerry is a contributing author to freightdawg.com and may be contacted by email at gmhempstead@aol.com

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Parcel carriers change rating practices on oversize shipments

In January 2007, all three major parcel carriers announced revisions in how they treated over sized shipments.   New FedEx, DHL, and UPS "dimensional weight" rules are noted in the links below.

• FedEx Dimensional Weight Rules
• DHL Dimensional Weight Rules (Viewed as PDF)
• UPS Dimensional Weight Rules

Whether you are negatively impacted by these amendments is contingent on the package size of your shipments. If a shipper’s items are less than 3 cubic feet in size then these announcements are actually good and could result in lower shipment costs. However, studies have shown that if your shipments currently move under previous Oversize Rule(s) the migration to dimensional weight could result in your company paying between 15 and 17% more than you pay today for these shipments.

"What can I do about it?"

First, Understand your Book of Business

With respect to managing your parcel costs, a shipper first must understand what they have and how the rule may affect them. The first step in this process is to create a profile of your parcel shipments that details the types of parcel shipments that occur, where they are shipped and the volume of packages tendered to each carrier.  If this profile discloses a significant number of oversize shipments, or there are other warning signs that indicate that your company may be adversely affected, then you  likely have some thinking to do.

"Then consider your options"

You have several options, some of which can be used in combination. These first address internal inefficiencies, then leverage the politics of your carrier relationships, the competitive marketplace and your specific situation.  Each case may be different.

Consider Changing Packaging - Based on what the profile discloses, it may be worthwhile to look at the packaging sizes used. There are some nuances between various box sizes where one size may dim one-way and another not at all. The information may be in your shipper invoice file or on your weekly flat file billing from your carrier.   A review of the bills can provide some beneficial insight.

Ask for higher discount to offset Dim rule changes - You can always try the traditional method of demanding a higher discount off of the base tariff rate to mitigate some of the impact of the rule change. One toy company noted that after they sat down with their current parcel carrier and went over their analysis of the impact of this change, (which showed an increase of 14%), the carrier volunteered to increase their discount to partially offset the impact of this increase.

“Breach of Contract” - Call in the incumbent and tell them it is your expectation that the oversize rule that was in effect at the time the contract was signed must be the rule moving forward for the duration of the contract. If they refuse, then advise them that you consider that carrier in breach of the contract and are therefore canceling the contract on 30 or 60 days notice per the contract. No parcel carrier wants to lose market share or lose customers over this new rule.

Put the business out to bid - Call in the competition and put the book of business in play and TELL the bidders they can only have the business if they grandfather the old OS rule and or waive Oversize entirely for the duration of the contract award. The key here is convincing the incumbent parcel carrier that his business is at risk. Right now, there is a battle going on amongst the Big Three (UPS, Fed Ex and DHL) and they have been very aggressive in protecting their turf and trying to get new customers.

Suggest a Phased approach - If you want to adopt a less adversarial stance, you can request that the incumbent carrier phase in this new rule by applying a more liberal dimensional factor such as 300 or 600 for the next year and then gradually reduce the divisor until the 194 is reached some time in the future. The increase in the dimensional factor can reduce the weight against which the package is compared (a.k.a. the package is billed at the greater of the weight of the package or the weight calculated under the dimensional freight rule).

Consider adding regional parcel carriers - If the Big Three are not willing to budge, then consider using use regional parcel carriers that don't apply an oversize or dimensional rule (such as Eastern Connection or California Overnight or WPX) wherever possible. Our experience has proven that the Big Three are very adept at noticing (what we refer to as) diverted freight. This is freight that once was moving in their system and is no longer there.

While some of these steps may seem pretty basic, we have surveyed some shippers and have been somewhat surprised at how few of them are being proactive in negotiating with their carrier (right now) to address these issues. Additionally, we have been a bit surprised to learn that very few of these shippers have a complete profile that details their parcel transactions. 

If you would like additional information, or have any questions, don’t hesitate to contact me at gmhempstead@aol.com.

RILA Logistics 2007 Conference

Between February 11th and the 14th, the Retail Industry Leaders Association held their annual conference and exhibition in San Diego, Ca.    RILA is the premier trade organization for big box retail and associated manufacturers and suppliers.     The RILA conference always draws the best and brightest from the retail industry.   Attendees usually include senior leaders from companies ranging from Wal*Mart, Best Buy and Target to the 3PL’s and transportation companies that serve them.   This year’s conference was the largest on record with close to 1000 participants.   Since RILA manages the balance between retail attendees and service providers, at least two thirds of attendees were retailers or manufacturers

I always enjoy RILA because it’s a unique opportunity to reconnect with old friends as well as to see key decision makers in Retail all in one location.    This year was no different in that I saw several former colleagues whom I had not seen in several years.  Reconnecting there was a real treat.   

Theme of this year’s conference was “Back to Basics”.  I found that interesting because of the flux the retail market is in.   Consumers have huge spending choices now, ranging from use of Gift cards, on-line purchasing and eBay.   Purchase channels are blurring. 

For big box retailers, the choice is either to extend the virtual storefront to these other channels or to entice consumers back to the store.     Best Buy does a tremendous job of tailoring the purchasing experience toward consumer lifestyles.   So does Whole Foods.  Go to any Whole Foods market and you’ll find convenience mixed with good taste and healthy products.   

Generally there appear to be three kinds of Retail spending types today.

• Purchasers who go to value stores like Wal*Mart
• Specialty stores like Chico’s Fashions or Ann Taylor.
• Department Stores such as Nordstrom’s, whose focus is a highly customized store experience. 

Customers are now less loyal to brands as much as they are to convenience or experience. The key is to engage the consumer in the way he chooses. 

While retailers continue to fight for consumer dollars, non-traditional retailers are appearing all over to compete for the same money.   Companies like Washington Mutual and Apple are now increasingly positioning themselves as retailers, while companies like Starbucks move beyond coffee to the sales of music and accessory products.   

Margin Pressures

While traffic to department stores and the shopping malls continue to be pressured by new sources of competition, CEO’s remain concerned about how to keep the margins they do make.    There was an interesting list put forward during the conference about what keeps CEO’s up at night. 

Some items included

• Attracting and keeping quality talent
• Leveraging use of Private Labels to improve margin and increase store branding
• Better ability to forecast product life cycles
• Increased supply chain visibility in order to maintain optimum product availability.

Did Fred "Mail it In"?

The keynote speaker for RILA this year was Fred Smith, the parcel express pioneer and founder of FedEx.   As a guy in the parcel business, I was most interested to hear what the man in purple had to say.    Fred Smith covered trends in retail and in the regulatory environment for multiple modes of transportation.    Overall a good speech, but I was a little disappointed that Fred didn’t cover any new ground.  Listening to people at the coffee break after his presentation, I guess I wasn’t alone.  Many found him to appear distracted.  The general opinion was that “Fred mailed it in”.   Strange.

RILA continues to be the primary forum and voice of big box Retail.  I look forward to the next conference.  “Logistics 2008” will be held in Orlando, Florida with a new primary sponsor: Exel Logistics. 

Web Tech: We are the Web

This isn't strictly logistics related, but I surfed up on the most amazing video this evening by Michael Wesch, an assistant professor at Kansas State University, that explains the "Web 2.0" phenomenon better than anything else I've seen.   I love it when complex information is brilliantly but simply described.  This 5 minute video does both. That's actually the essence of the whole "web 2.0" experience and the blogosphere!

I'm heartened to know that Youtube is good for something other than "Jackass" low lights. This was just too good, and too educational not to share.

A good friend of mine once told me that the old Chinese proverb "May you live in interesting times" is actually a curse.   I'm not so sure.   I see videos like this one that depict a social and technical (global!) revolution and I think we are lucky.   

Meeting Bet $$:  Bet your buddy on who can be the first to use the word "blogosphere" in a meeting with your boss and/or anybody with an SVP title or above.  This was blood sport at a couple of places I have worked!  You who read this blog know who you are!

February 11-14th - 2007 RILA Logistics Conference

Go West Young Man!

February 11th through the 14th 2007 I'll be at the Retail Industry Leaders Association annual conference in San Diego, Ca.    RILA is the association for global thought leaders in retail supply chain logistics.   Senior leaders from major retailers and supply chain vendors will meet to discuss key topics and issues in retail today.   RILA is only open to retailers and sponsoring vendors, which makes for a very high quality crowd and an intimate setting.

Servant Leadership: The Ritz-Carlton Way

Recently my brother Harry wrote a great article for marketingheadhunter.com on the value of servant leadership.  Last week I had a unique opportunity to see it in action.

Simon F. Cooper is the president and chief operating officer of Ritz-Carlton Hotel Company LLC.    Ritz-Carlton is known worldwide as a global leader in personal service excellence.  Their clientele pay a significant premium to stay at a Ritz-Carlton hotel.   Ritz customers are also amongst the most sophisticated and discerning in terms of knowing the value of good service for the money paid.   Senior business executives, dignitaries, international travelers and entertainers are often found at Ritz-Carlton. These folks have options on where to stay.  Ritz-Carlton knows it and cares about it.

Mr. Cooper was a speaker at a business conference I attended last week and shared both the Ritz-Carlton way of business and their unique culture that has been developed over many years of service excellence.

I work for a major logistics integrator.  In our industry, services are often seen as a commodity.   In an effort to emphasize that all customers require and demand personal service excellence, we invited speakers whose businesses exemplify great service and more importantly, empower employees to make decisions on the spot to do the right thing. 

According to Mr. Cooper, The secret to Ritz-Carlton’s extraordinary service lies in what Ritz-Carlton calls its “Gold Standards”.   Cooper shared these values on a wallet sized folding card that each employee carries.    Everybody at the conference got one.

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The Ritz-Carlton Gold Standards

MOTTO
   
At The Ritz-Carlton Hotel Company, L.L.C., "We are ladies and gentlemen serving ladies and gentlemen."  This motto exemplifies the anticipatory service provided by all staff members.

THREE STEPS OF SERVICE
   
1.    A warm and sincere greeting. Use the guest's name.
2.    Anticipation and fulfillment of each guest's needs.
3.    Fond farewell. Give a warm good-bye and use the guest's name.

SERVICE VALUES: I AM PROUD TO BE RITZ-CARLTON

1.    I build strong relationships and create Ritz-Carlton guests for life.
2.    I am always responsive to the expressed and unexpressed wishes and needs of our guests.
3.    I am empowered to create unique, memorable and personal experiences for our guests.
4.    I understand my role in achieving the Key Success Factors and creating The Ritz-Carlton Mystique.
5.    I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
6.    I own and immediately resolve guest problems.
7.    I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.
8.    I have the opportunity to continuously learn and grow.
9.    I am involved in the planning of the work that affects me.
10.    I am proud of my professional appearance, language and behavior.
11.    I protect the privacy and security of our guests, my fellow employees and the company's confidential information and assets. 
12.    I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.

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Looking closely at the motto and employee engagement these standards imply, it is easy to see that employees at all levels are empowered with an ability to solve problems, and to help build the Ritz-Carlton brand by personally serving each customer.   

Then something cool happened!

In order to drive his message home Simon Cooper invited three Ritz-Carlton employees onto the stage with him.   These three “ladies and gentlemen” were from the local Ritz-Carlton hotel.   A bellman, a room-service coordinator and a member of the housekeeping staff.     These were local folks Mr. Cooper had met only the morning of the presentation, yet each had a unique story to tell about the Ritz-Carlton culture.

• The Room Service Coordinator told of helping a guest stuff over 400 champagne bottles with messages for a planned meeting.  When she realized that they needed more help, got her boss to send up two more staff colleagues to help finish the job!    The fact that the employee assisted without being asked and then her boss immediately supported her with additional staff, shows personal commitment to problem solving as well as the company’s real support to empowering the employees’ customer service commitment.  You think that guest will remember and stay at the Ritz-Carlton again?   You bet.  You think this employee will do this again?  Yep.   What is that worth to Ritz-Carlton?  A probable return visit by this guest and reinforcement of the Ritz-Carlton brand.

• The housekeepers story was told my Mr. Cooper himself.   A guest needed to have a prescription filled.  The housekeeper, who spoke little English and was on her way home,  personally drove the guest to not one, but four pharmacies in order to find the proper medication.   When offered a tip, the housekeeper refused and cited the Gold Standard values of the Ritz-Carlton.   This is the essence of servant leadership.

• The bellman, a young man from South America, talked about the hiring process at Ritz-Carlton.  Less than two percent of applicants for ANY position are hired.    Ritz-Carlton tests for specific aptitudes and then puts new hires through extensive training prior to placement in jobs their testing and temperament seem to fit best.     The key point is to put the right employee into the right job, then give them the power and the training to execute the mission.

I left our business conference very impressed in two things. First, that Mr. Cooper talked-the-talk, but then backed it up with employee actions that show that Ritz-Carlton “walks-the-walk”.       Second, that Ritz-Carlton has a corporate culture based in employee empowerment to solve problems.   

As a consumer, these actions are rare.    The best companies to work for, and the best companies to buy from have these things in common.   Ritz-Carlton  builds its brand  through  customer  service and the many touch points through which they exercise it.    In the logistics business the customer touch points are fewer, therefore the power to solve problems at the most local level become that much more important.   

Leadership: Declaration of Future Independence

My brother, Eric Joiner is a senior sales executive with a major 3PL and Logistics integrator.  Eric is a regular contributing author to Logistics Recruiter.com.  Eric may be reached at ejoiner2@gmail.com.

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On the internet you find dozens of web sites with helpful advice.  Numerous lists exist of pithy things one should do to be successful. Some I like better than others. You'll find links to those things often in the Clipmarks lists in the margin of this blog.

Every once in awhile though, I find a list that needs to be pulled up and highlighted.  This article is one.  Motivational speaker and business coach Gary Blair runs a website called Goalsguy.com.  He published this list called "Ten Things Every Kid Should Know".   

The best employees and leaders are people whose parents or mentors taught them to be strong, independent people of character while in their youth.   An ability to leverage that background is a clear indicator of future success. Character is fundamental to coachability, personal growth and ultimately of leadership. 

At least in my view, instilling these kinds of values in our children serves as a Declaration of Future Independence.  Resumes are often a reflection of a persons adoption rate of these principles and the corresponding consequential results.

Ten Things Every Kid Should Know

1. Accept Your Power of Choice

Success is the intentional, pre-meditated use of choice and decision. Unless you choose–with certainty–what it is you want, you accept table scraps by default! The quality of your future years is largely determined by the quality of the choices you make when you are young.

2. Respect Reality – Face the Facts

True and accurate information is essential to success. Reality is the truth, the whole truth, and nothing but the truth. Deny reality, and you will soon discover that life is a game of truth or consequences. Tell the truth and demand the truth from others, otherwise you’re toast.

3. Take Responsibility – Make No Excuses

Excuses are convenient, temporary scapegoats. Sometime, somewhere and somehow they will come back and make things very uncomfortable. Dreams die under a burden of excuses; they are a character deficiency, which destroys your potential. Make a no excuses policy and stick to it!

4. Character Counts!

Everything you say, and do complements or compromises your character. Always do the right thing, because having character is much more important than being a character. When all is said and done, all a person has is their character and integrity nothing else really matters.

5. Make Everything Count

Every thought, decision, and action moves you closer to or further from your goals. Look at it this way, if you spend an hour exercising you have just moved north towards a healthier life, if after, you have a greasy cheeseburger and fries you have now gone south – got it?

6. Practice Self-Discipline

If you don’t discipline yourself, you are sure to be disciplined by others. Every act of self-discipline moves you toward your goals, and every exception takes you off course. Don’t believe me, huh? Chew on this, run up your credit cards real high, be late on a few payments and see how quickly those companies are to teach you a thing or two about discipline.

7. Continue Your Education

There will never be a day that will not require dedication, discipline, good judgment, and energy. Life is an ongoing journey, with lots of beginnings and continuations. We get better when we do better and we do better when we know better. Education is the ONLY answer!

8. Commit to Excellence

A commitment to excellence can help you capture true wealth and realize the inherent value of your potential. A lack of commitment devalues potential, credibility, and reputation. Mediocrity is a choice—not always made consciously—but still a choice. Choose excellence!

9. Learn From Failure

Sorry kid, but your not going to win them all. Failure serves an indispensable function in the production of your success. It provides information for you to learn from and apply. So don’t cry and suck your thumb when you lose, get back in the game better prepared to win.

10. Have Fun

Life is short, so enjoy it while you can. You are accountable for all you do as well as for the permitted pleasures that you fail to enjoy during your lifetime. Count the day, week, and life lost if you have not laughed or if you have not played because fun is essential to the good life!

Eric

Weblogs: Coaching and Fun at Work

Only a short article this week because I've been traveling a lot and am fighting a head cold. However, I do want to point out the blog of one of my favorite business coaches. Michael Bungay Stanier.   Michaels view on life is a little different.  Very practical, but definitely not the buttoned down uber serious business model.

Getunstuckandgetgoing.com is a blog worthy of a link.   

Also check out Michaels Eight Irresistible Principles of Fun.

Highly entertaining and thought provoking.

Inbound Logistics: Hidden Costs in Overseas Sourcing

My brother, Eric Joiner is a senior sales executive with a major 3PL and Logistics integrator.  Eric is a regular contributing author to Logistics Recruiter.com.  Eric may be reached at ejoiner2@gmail.com.

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Linda Taylor of FedEx wrote an excellent article on “Hidden Savings” in international supply chains back in October 2006 for Electronic Supply and Manufacturing. The crux of Linda’s article was that in order to get products from point A to point B by the most efficient and cost effective means, you must control first costs and know what is happening to your freight while it’s in transit. That’s not rocket science, but many people don’t know exactly “why" that is important and "how" we got to where we are today.

Linda wrote for the electronics industry, but the conditions she notes apply to all international supply chains. It is especially true in industries like Retail, where costs of goods may be quite low relative to the cost to transport them.

Controlling costs means knowing what the costs are. Depending on your buying terms, there may be key transport costs that are either inefficient or marked up at a profit. Hidden costs only become visible when you pay for them.

Buying Terms Conversion

The Chart below shows the trend in the last 25 years toward increased control by US consignees in terms of control of buying terms.

Back in the 1980’s when many companies first started their import departments, goods were purchased Landed, Duty Paid (LDP, or the old “CIF” buying term). Companies in businesses like furniture and footwear had traditionally sourced domestically. With increasing costs of US manufacturing, sourcing managers started looking offshore for cheaper labor costs and sourcing closer to raw materials. Not being experienced internationalists; many companies bought through buying agents and allowed the goods to be delivered to destination for a fixed price. This left the cost of transportation entirely in the hands of the manufacturer and his agent.

Being enterprising folks, origin manufacturers often added additional profit margins to the transportation, since consignees couldn’t clearly see what the cost of transportation was.

It didn’t take but a few buying seasons of this for retailers to understand that they could get better rates on shipping if they controlled their own transportation.  Soon buying terms changed from title changing hands on CIF delivery to FOB Port of Origin in say, Hong Kong. Now major retailers were negotiating directly with ocean carriers.  Soon the rates negotiated by companies like Mattel and Nike would set the benchmark for all other ocean service contracts in the toy and footwear markets. Whether these companies accepted a rate increase often determined whether the whole trans pacific market would take one. Wal*Mart was a factor, but not the giant force it is today on ocean shipping (more on that later…).

By the late 80’s and early 90’s port infrastructure had built up in South China to handle the massive growth in container volume. The Port of Hong Kong remained the primary load port, but new ports in Chiwan, Shekou and Yantian were rapidly siphoning off Hong Kong traffic for two simple reasons. First was distance to port. With the factories in Dongguan, Guangzhou and other southern Chinese cities, it was simply closer to go to new port areas.

The other factor was the China / Hong Kong customs border crossing. In those days you didn’t send a truck from Hong Kong all the way to Guangzhou to pick up goods. A vehicle license on a Hong Kong registered vehicle cost too much. ($40,000 US Dollars roughly). Instead, a Chinese truck would haul the goods to the border, and the goods would be trans-loaded into a Hong Kong vehicle. This added labor cost and a damage element to the transportation many western customers were not even aware of! The Chinese drayage companies however thought this highly efficient because it kept their assets (the trucks with HK licenses) moving and generating revenue.

Time and cost drove traffic to the South China ports. For this reason, importers changed terms again from FOB Hong Kong to the cheaper and more efficient locations in South China’s Guangdong province.

Chinese manufacturers were happy to transport the goods to whatever port their customers wanted. What many of their customers still didn’t fully appreciate was that the factory sometimes either owned the trucker who hauled the container to port, or even better, was owned by a family member. Transport costs to port were therefore rarely done at cost, but with a mark up buried in the buying terms.

By now a trend was rapidly developing whereby importers in the US and Europe were working harder and harder to control more and more of the supply chain. Factories didn’t like having the side businesses eaten up, so in some cases, manufacturers would just raise their prices to cover the lost income on transportation!

Whether that happened of course was often decided by factors such as how big a customer you are, how easily he can resell his goods to another buyer and whether you are buying a specialized component or a finished good. To control these factors, and to be “where the action is”, many importers now had buying offices in Asia. Buying offices were first located in Hong Kong, but increasingly are now in South China itself.

With increased control, comes an increased need to know exactly where your goods are. In order to gain visibility and control, consignee retailers started to use consolidation companies and freight forwarders to insure that the goods that the retailer ordered were the goods that the manufacturer shipped (order compliance) as well as to make sure that goods were shipped on time and in appropriate quantities.

The consolidators and 3PL’s all of course charge for their services. Origin handling fees are collected from the factory, which the factory accounts for in their cost of goods and pass along to importers. The 3PL also charges the consignee for whatever services are rendered whether its order compliance, tagging, crating, garment handling, whatever.

Here’s a dirty little secret: Origin Receiving Charges are almost always non-negotiable in Asia. The reason? The factories all talk to each other. If a 3PL gives a “deal” to one factory, in about 2 days or less, everybody in South China will demand the same deal.

The key for a US consignee is to have the ORC billed by the consolidator in the US. That’s the only way a 3PL is likely to negotiate a receiving charge. The 3PL just wants to protect his revenue stream without jeopardizing his entire tariff with one deal. This is yet another reason for consignee control and buying terms that support it.

Demand for tracking and supply chain visibility software also increased in order to know where a particular order was. Buyers are the rock stars of any retail organization. Their job is to put the right merchandise on the store shelves that customers want. A buyer wants his goods NOW. If he is worried he may not get them on time, he orders more.

To keep the phone calls to the logistics department down, and to keep order quantities in check, importers demanded visibility software and EDI connections with their carriers, trading partners and vendors. And…since Logistics folks never seem to have any money for IT related things, they wanted it Free. Guess what? They pretty much got it. Whether its UPS, APL, United Airlines, Maersk Logistics, DHL or Joe the freight forwarder, all provide at least some tracking software now. That’s a good thing…because in 2001 the US got attacked.

Since 9/11 and the advent of C-TPAT (US Customs and Trade Partnership against Terrorism), importers have needed to insure that what they bring into the US exactly matches the cargo bill of lading or manifest. Use of buying terms that require the manufacturer to turn over control of the goods either at their door or the door of the consignees 3PL or freight forwarder, helps insure cargo security and control.

Wal*Mart imports almost 400,000 containers of goods a year from around the world. The vast majority comes from Asia. 400,000 container loads (FEU’s) is enough to run your own shipping line. With a Maersk K class ship averaging 6000 TEU’s in capacity, Wal*Mart could operate 133 voyages with nothing but their own freight.

                                      M/V Kate Maersk  (6000 TEU Capacity)

Don’t think that’s lost on Wal*Mart either. For some time, Wal*Mart ran their own mid stream container operation in conjunction with Great Western Steamship out of Hong Kong. The fact is though that Wal*Mart is so huge and their sourcing so varied that they have to use most of the major shipping lines for both capacity and container management.

It is for these reasons, that tight management of first costs, transportation and supply chain visibility are so important. Whether you compete with Wal*Mart or you ARE Wal*Mart, the time and distance and control of inventory are the difference between profit and loss. The key is ability to control these factors. Buying term conversion is the first key to control.

Eric

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PS: Quote of the Week:  Paul "Bear" Bryant.

“If anything goes bad, I did it. If anything goes semi-good, then we did it. If anything goes real good, then you did it. That's all it takes to get people to win football games.”

Its a great recipe for Marriage too!

Career Advice: Leadership for Women

My brother, Eric Joiner is a senior sales executive with a major 3PL and Logistics integrator.  Eric is a regular contributing author to Logistics Recruiter.com.  Eric may be reached at ejoiner2@gmail.com.
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My brother Harry posted a great article on marketing headhunter.com about the value of the Boy Scouts Eagle Scout Award.  I couldn't agree more.  What I found interesting was some of the feedback Harry got regarding Girl Scouting and a similar award they have.  What I share below is my personal experience as a former Boy Scout Asst. Scoutmaster and father of 4 children -- 3 of whom are girls.

What I have seen in working with scouting is that it develops specific skills that translate into a lifetime work ethic.  Specifically delayed gratification.  Kids learn that work equals reward.  In an xbox 360 society, thats a rare commodity today.  Not many kids make Eagle for a bunch of reasons, interestingly one of which is a new found interest in GIRLS about age 14.  Those who can multi-task learn that girls and scouting can have limited nexus.  Boy Scouting becomes nerdy when trying to date the high school prom queen.  Nevertheless, those who manage the tasking of scouting and finish to Eagle have a prize worth keeping for life. 

I've attended Eagle award ceremonies, and the closest thing it compares to is a college graduation.  Young men working extremely hard, succeed and are rewarded with a rare symbol of excellence.  That symbol is a token of confidence for these young folks that shows them that they are capable of doing almost anything.   Astronauts, presidents, doctors, lawyers,(Bloggers?), whatever.

I have four kids ranging from sophomore in college to 10 years old. Three of those are girls.

For the person who mentioned Girl Scouts,  I would LOVE it if Girl Scouts offered the same opportunities to young women that boy scouts does.  However...and I say this as an EXPERIENCED parent of daughters...Girl Scouts is about cookies.  At least our experience was.

And that sucks.

There are indeed programs similar to Boy Scouts within Girl Scouts, but most girls don't get that exposure.  Thats not a general indictment of Girl Scouts. It is an indictment of the fact that female business professionals rarely are involved in the leadership of Girl Scout troops, at least in our experience.  What we saw were room mothers, cum troop leaders. My wife was among that group.

They don't know how to camp, they don't teach young women business behavior, and they don't teach girls how to compete! I think generally our young women are under served because of it.  My 3 girls were PISSED they didn't get their brothers experience in scouting.  This problem needs to be fixed!

My girls are extremely smart and able young ladies.

The world should be their oyster. The interesting thing is that I know interesting women.  The wife of one of my good friends and former colleagues is a merchant marine academy graduate, licensed 3rd mate on commercial containerships, a licensed Customs House Broker, and presently a supply chain senior executive at a major retail brand.   This woman is beautiful, mother of three, and extremely coooool.  She knows Supply Chain.  There should be more like her.

Girl Scouts needs to step up.

Step ONE is for FEMALE business professionals to make it their mission to engage in the support and mentoring of girls.  Where is Carly Fiorina in this? Marion Blakey?  Where is Nancy Pelosi? Hillary Clinton?  Barbara Boxer?  Diane Finestein?  All those female politicians who demand equality should be investing in their own sex! 

Teach young women how to compete and win.

Here is a link to female leaders worldwide. I want to know how many support Girl Scouts with their own sweat equity.  There are PLENTY of successful, winning professional women.   I just think they need to get involved in supporting girl scouting the way that Boy Scouting is

Make no mistake.  Girls rock.  I love mine.

Eric

Inbound Logistics: E-Tailer Logistics and Innovation.

During Christmas 2006, my household received 10 packages by parcel carrier.   3 USPS, 3 DHL, 2 FedEx and 2 UPS.   All contained products we had purchased as gifts for others or as gifts we ourselves received from friends and relatives.  Virtually all had been purchased on the Internet directly from online stores or from eBay. 

As a consumer, I hate shopping malls.  Too many people, too hard to get a parking space…you know the drill.    Point and click web shopping is the way to go for me!    Not only is it more convenient, the Internet simply has more products available.   As an example, my wife loves the old TV western show “Alias Smith & Jones”, which appeared on ABC in the early 70’s for a few seasons.     I always thought it was a goofy show, but Mary remembers it fondly from her childhood.   Fortunately, eBay sells everything, and I was able to purchase the entire series on DVD.     There is no way I would have found something so obscure in a retail shop.   For the retailer, it’s just too expensive to hold inventory that doesn’t turn.

As a guy who works for one of the big 3 integrators, I of course love the trend toward more parcels.  The US Postal Service, still the largest parcel and mail carrier around, expected to move over 900 million pieces of mail and parcels on December 18th, 2006, which was the peak shipping day for the season.  UPS was next closest, with an estimated 21 million parcels on their peak day.   The upward trend in direct ordering by consumers impacts the traditional retailer by moving purchasing away from the brick and mortar storefront and onto the digital screen.   Companies like Toys “R” Us now have distribution facilities specifically set up to ship Internet ordered goods.  For very good reason, these types of facilities are often located near parcel carrier hubs in places like Louisville, Memphis and Wilmington, Ohio.   Savvy retailers have now shifted to becoming even more clever “e-tailers”.    

Retail industry statistics for December, 2006 from Retail Forward show that same-store sales growth grew 3.2% from the previous month, but were down 3.6% from the year previous in favor of increased use of online purchasing, particularly at the expense of discount department stores and apparel and accessory stores.    I guess I’m not the only one who hates the Mall.

The impact on logistics is significant.   Not only are 3rd Party Logistics companies like Exel now operating distribution centers to handle web orders, the parcel carriers themselves, such as DHL and UPS, are aggressively marketing hybrid products like DHL’s Consolidation Distribution Service. 

DHL’s CDS allows a merchant to purchase goods from an overseas supplier, consolidate the goods into an air or ocean container, then on arrival in the US, rather than going to a traditional retail DC, the container load is broken at a port side cross dock and then directly injected into the DHL US domestic parcel network.    Customs clearance takes place in the air or on a pre-clearance prior to port arrival.    DHL uses its extensive air and ocean network through its DHL Global Forwarding arm to clear the goods, handle the cross dock and present the customer with a single invoice. Depending how the order is placed, the goods could go directly from an ocean container to delivery to your home, office or retail store.  For retailers with good demand planning, US domestic shipping labels can be put on individual packages going into the container while the goods are still in Asia.   

Here is a real example of where such a service could be of interest.  Say you are a grocery or drug chain store operator with 4000 stores nationwide.   Two days before Thanksgiving every year you need to get 10 cartons of gift wrapping paper into your stores for holiday merchandising.     That’s 4000 deliveries on the same day of a fixed quantity of low value goods.     The ideal way to move it would be a parcel shipment direct from the manufacturer.  The problem is the product is paper and the cost of transport would be too high.      Nevertheless, the delivery must be time definite.      Enter one of the hybrid CDS type services.    You get the benefit of ocean container pricing per unit from Asia to the US, and then incur the parcel service demand cost only on the last leg of the journey. 

These kinds of services ultimately impact online services like eBay as well.   eBays online auction has been around for over 10 years.   As Ed Cone’s article in this weeks “e-week.com” points out eBay is looking for ways to get beyond the traditional auction.    eBay is now partnering with a broad group of developers to embed API’s (Application Program Interfaces) between eBay trading technology and applications as disparate as salesforce.com for customer relationship management to parcel carriers such as FedEx and DHL.    This stuff can also link up to ERP systems like SAP.  An order is an order, regardless of where generated!

Using XML as a data communication protocol, customer order information could move from an ERP or CRM platform to an eBay procurement platform, ultimately to a shipment tender and delivery through a parcel carrier.  Don’t forget online payment through eBay’s Paypal network!      All this means more convenience for the customer through faster supply chain velocity, and potentially smaller, more frequent, customized orders.   

Customized orders don’t have to be small in terms of package size.    Say you go to a large electronics store and purchase a big screen TV or even better, purchase it online.   I’m talking about one of those 52-inch HDTV monsters I wish I had.   If you spend $3999.99 on this kind of unit, you expect it to be delivered!   No Problem.   Companies like Exel Direct and NYK Logistics specialize in these kinds of white glove home deliveries.    They’ll bring it to your house, wire it up and you’re watching in Hi Def in no time.    You'll think it was the retailer that delivered the goods, but in fact they either contracted it out, or more likely, the electronics vendor provided the service.  This isn’t because the retailer loves you.  Its because these televisions require wiring and controller set up that’s complex.    The retailers demanded that folks like LG Electronics and Philips provide these services as value adds so that they themselves didn’t have to handle the product beyond the box on the show floor or DC.

The Internet is the logistics high ground relative to consumer purchasing for the future.   To react to the demands of consumers, not only will retailers and their partners have to be increasingly creative in terms of the shopping and purchasing experience, but their logistics partners will have keep pace as well in order to get the product to the end user in a fast and cost effective way.   

The key to all this is data.   Not only customer data, but product level data on inventories, purchase order visibility, shipping label integrity and especially on billing and audit.     For this reason, eBays effort to create a developer network is a great thing.   FedEx and other parcel carriers have had EDI and XML Software Development Kits available for some time to allow data integration to their networks.    Soon, these efforts can be coupled with other network data streams in ways not imagined before.

Imagine the value of the database that will be created….

That may be the ultimate golden egg at eBay.