Almost all transportation and supply chain professionals  will agree that a well executed Freight RFP is both time consuming and analytically challenging.  With everyone’s resources stretched to the max, freight tenders are often delayed, or not completed at all.  So when you bite the bullet and invest in an RFP project, it pays to make sure you are getting the best result possible.

Based on our experience conducting numerous carrier sourcing engagements, we have discovered some key tactics that will ensure your next Carrier RFP generates the best results possible. Please join us on Thursday January 19th, 2012 at 12 noon, when we will reveal value tips, strategies and practical lessons learned as a result of our experience in this area.

Our special guest for this webinar will be Aaron Lalvani who is a leading industry expert on Freight RFP’s. A member of the Nulogx organization, he has over 15 years of experience and brings a fresh insightful approach to freight cost management strategies.

Click Here to Register

Nulogx’s President Doug Payne credits the ability of its service and technology solutions to improve transportation processes and reduce costs with the company’s substantial revenue growth.  Payne said, “The ability of our team members to understand client needs and rapidly deploy technology-enabled solutions has resulted in significant improvements in supply chain efficiency for our customers and growth opportunities for Nulogx.”

“Nulogx and all the Technology Fast 500™ winners in 2011 have shown a remarkable drive for creativity and innovation, and of course growth, particularly when you look at their accomplishments in the context of current economic challenges” said Richard Lee, National Leader, Technology Media & Telecommunications Industry Group, Deloitte Canada. “Deloitte congratulates Nulogx for this significant achievement.”

“We are pleased to honor Nulogx as one of the 2011 Technology Fast 500,” said Mark Jensen, managing partner, technology and venture capital services, Deloitte & Touche LLP. “As one of the fastest growing tech companies in North America, Nulogx has demonstrated technological innovation, entrepreneurship and rapid growth.”

For additional detail on the Technology Fast 500™ including selection and qualifying criteria, visit www.fast500.com

“Canadian technology companies have demonstrated some very impressive growth numbers over the past year, amid the challenges of an uncertain global economic recovery,” said Richard Lee, National Leader, Technology, Media & Telecommunications Industry Group, Deloitte. “Nulogx is an example of the determination, drive and skill that will serve to position them for further growth and success in the years to come.”

Nulogx’s President Doug Payne, credits the ability of its service and technology solutions to improve transportation processes and reduce costs with the company’s substantial revenue growth. Payne said, “Our ability to understand client needs and rapidly deploy technology-enabled solutions has resulted in significant improvements in supply chain efficiency for our customers and growth opportunities for Nulogx.”

To qualify for the Deloitte Technology Fast 50^TM ranking, companies must have been in business for at least five years, have revenues of at least $5 million, be headquartered in Canada, own proprietary technology, and conduct research and development activities in Canada. A panel of industry experts evaluate and judge companies based on four key criteria: competitive advantage; size, growth, and market attractiveness; management effectiveness and organization; and financial performance.

About the Deloitte Technology Fast 50^TM – The Deloitte Technology Fast 50^TM program is Canada’s pre-eminent technology awards program. Celebrating business growth, innovation and entrepreneurship, the program features four distinct categories including the Technology Fast 50^TM Ranking, Companies-to-Watch Awards (early-stage Canadian tech companies in business less than five years, with the potential to be a future Deloitte Technology Fast 50^TM candidate,) Leadership Awards (companies that demonstrate technological leadership in four industry subcategories: hardware/semiconductor, software, telecommunications and emerging technologies) and the Deloitte Technology Green 15^TM Awards (Canada’s leading GreenTech companies that promote a more efficient use and re-use of the earth’s resources in industrial production and consumption.) Program sponsors include Deloitte, Gowlings, Wellington Financial, TMX Group, HKMB Hub International, National Angel Capital Organization, CVCA, MaRS and IGLOO Software. For further information, visit www.fast50.ca

As the management consultant Peter Drucker once said, “If you can’t measure it, you can’t manage it!”  This is definitely true for anyone involved in Transportation.  Large shippers will have a huge number of shipments, on a variety of carriers, going to thousands of places, creating a mind-boggling array of data points.

Even if we can get the data to measure this activity, we also need to summarize and organize it into insightful Transportation Management Reports that provide  “actionable information”.   Here are the 5 most important Transportation Management Reports we believe all shippers need.

1. On-Time Performance

A certainty in the manufacturing, wholesale, and retail industries is that the value of the product and the customer relationship you are managing far exceeds the cost of the freight to get it to them.   Unfortunately a lot of shippers are not aware they have a delivery problem until they hear about it from their Sales team – usually because the customers are complaining – loudly!

Ensuring that your product is delivered within the time-frames expected by your customer is the single most important measure of success for many shippers.  Leading shippers measure their performance proactively – breaking down results by mode, carrier, customer and region.  Worrisome trends can be identified and corrected before they translate into customer relationship issues.  And when it does become an issue, shippers have the data they need to isolate the root cause and ensure that the solutions have the desired impact.

Unfortunately a lot of shippers compile this information by aggregating (a fancy word for “cutting & pasting”) reports submitted by carriers.  This is tedious and time consuming for both carriers and shippers.   However this information can also be generated by collecting it electronically either via a TMS or Freight Audit solution.

2. Productivity

The objective of a company’s Transportation team is to safely ship the most amount of freight at the least amount of cost, while meeting delivery expectations, minimizing damage or defects – and still understanding and addressing associated supply chain impacts.  This is basically a fancy way of saying “you need to be as productive as possible”.

Measures of productivity are usually financial (i.e.  $/lb, $/Case, $/Load)  but can also be operational (i.e. Lbs/Load, Cases/Order).   These can be hard variables to benchmark, because so much can change from period to period.  Sales volumes change, order sizes change, and the mix of customers and locations change.  However over the long term, good transportation managers will show a consistent trend of improved performance because they are actively managing each factor that affects productivity.  This will include modal utilization, carrier rates, order sizes, consolidation strategies, and systems adoption.

The key to managing this is a daily/weekly/monthly report that shows current productivity and changes in the primary drivers that are impacting this.  Breaking this information down by customer, region, line of business and so on will allow trends and potential solutions to be more easily identified.

3. Product or Business Level Costing

The tight economy we have been experiencing for the last few years has resulted in sharpened focus on costs and profitability.   In the past it may have been possible to allocate transportation costs broadly across all product lines or locations.  However, with the need to understand and manage costs, these allocations are becoming much more specific.   Without this information, it is very possible that the actual or real cost of transportation makes some of your product lines or customers unattractive, or even unprofitable.

Also, with increasing fuel surcharges affecting everyone, knowing how these are impacting your COGs will be vital in establishing pricing strategies to pass these increases along to customers.

4. Customer Cost-To-Serve

Not all customers are created equal.  They order in different quantities, from different geographies and have different policies for receiving products that can result in fines, detention or claims.  All of these factors can roll up into a vast difference in Cost-To-Serve, which should be taken into account when managing customer relationships and pricing products.

Another reason why this report is so important is the growth in Customer Pick-Up (CPU) orders.  In this situation the receiver will often ask for a Freight Allowance (discount) to be applied to the cost of the product.  A solid Cost-To-Serve report will arm your company with the correct information to strike a beneficial agreement with your customer.

5. Accessorial Reports

While there are some accessorial charges that are just part of doing business, many of these are avoidable and result from volatility in a firm’s transportation process.

Unlike some cost-reduction opportunities that may take months to implement because they require contract re-negotiations or changes in shipping policies, eliminating certain accessorial charges can be done in a matter of days or weeks.

A good example is Detention, which could result from a number of service related factors caused by a shipper, carrier or even consignee. Getting a weekly and monthly report on all accessorial charges incurred is the first step in enabling a Transportation Manager to focus improvement efforts and reduce these costs.

How we can Help

Nulogx is a leader in enabling shippers to gain visibility into their transportation activities, which results in an improved ability to manage and improve operations.  If you would like to learn more about how we can assist your business, please contact us.

The Base Rate Index, which excludes the impact of Fuel Surcharges assessed by carriers, has increased for 4 consecutive months including a 1.4% increase in July. However, Base Rates remain 3.6% below the same period in July 2010.

Average Fuel Surcharges assessed by carriers declined from 19.3% of Base Rates in June to 19.0% in July.

“It appears there is a trend toward marginal increases in Base Rates,” said Doug Payne, President  & COO, Nulogx. “If carriers continue to manage their capacity and price rationally we may see this trend continue, however that could be offset if there is a slowing economy” continued Payne.

Nulogx Inc

The CGFI is published monthly and is used by shippers, carriers and other interested parties to benchmark costs, develop business plans and structure beneficial agreements.  These insights are developed using the data generated by its sponsor, Nulogx Inc, Canada’s largest processor of freight invoices.  As a Data Partner, Ryder will benefit from receiving the same highly detailed reports on freight cost behaviour currently provided to Nulogx customers.

“The CGFI represents the leading indicator of changes to freight costs for Canadian shippers” stated Doug Payne, President and COO of Nulogx. “We are very pleased that Ryder recognizes the value of this service and are partnering with us to grow its importance in the Canadian Transportation Industry” continued Payne.

The CGFI Total Freight Costs Index rose by 1% in June when compared to May. The Base Rate Index, which excludes the impact of Fuel Surcharges assessed by carriers, increased by 0.8% during the same period.

Notably, average Fuel Surcharges assessed by carriers declined for the first time in 8 months from 20.3% of Base Rates to 19.3%.

“We have now seen several consecutive months of increases in freight costs,” said Doug Payne, President & COO, Nulogx. “This is partially due to the effect of increases in Base Rates and the question remains whether this will continue in the future,” continued Payne.

Many shippers will say that they audit their freight bills.  But what does that mean?   Is it a cursory comparison of the invoice to the contract?  Is it every bill or only a sample? Does it take into consideration potential consolidations, cube rating and all of the accessorial charges?

Once the audit has been completed, do you have access to a consolidated database of all your shipping transactions so that you can monitor performance – or more importantly, answers those pesky, time-consuming questions from executives on why your costs are going up (or down)?

Auditing freight bills has always been a necessity due to the complexity of rate structures, the frequency at which they change (perhaps weekly with changing fuel prices), and the sheer volume for some shippers.  The work is time consuming, but what does the average shipper save as a result?

In a recent study conducted by Nulogx, Canada’s largest freight audit and payment provider, a sample of $500 million in freight invoices were studied.  For the most part these invoices were from companies with long-term carriers, and stable operations – meaning that any systemic billing issues have probably been identified and eliminated.

Surprisingly, only 1.4% of all invoices contained errors.  However, catching these errors resulted in direct savings of 2% on freight costs.   As you can see, the 4 major error types are shown on the graph below – ranging from invalid and duplicate invoices (more common than you would expect) to rate and accessorial errors.

So what does this tell us about freight audit?

The first is that your audit process needs to be sophisticated and robust to catch the small percentage of bills that contain errors.  The second is that for shippers with a critical mass of volume carving 2% off the top of your freight spend can be an easy and low risk way of reducing costs.  And this is for companies with established audit procedures.  If you are implementing a comprehensive freight audit process for the first time, the savings are likely to be many times this amount.

But the costs don’t just stop there.  Consider that when you outsource your freight audit, nobody needs to receive the bill, enter the information into a computer system, take calls from carriers looking for payment, resolve discrepancies, prepare reports, and so on.  The elimination of non-value work from your organization is significant.

Furthermore, with access now to a consolidated database containing every detail of your freight transactions you are poised to use this information to better manage your transportation network. improve customer service, and assess carriers – and yes – even have answers to all those pesky questions at your finger tips!

However, after the negotiations are completed, the resulting carrier selections are usually communicated to those in the company making shipping decisions via a Static Routing Guide.   The problem is that “Static” or paper/spreadsheet routing guides have built in efficiencies that can cost shippers significant amounts of money.

Here’s why:

1.       Arbitrary Decision Rules

Static Routing Guides typically determine the choice of carrier based on the origin-destination pair, and the weight (or size) of the shipment.   The problem is that the weight factor used will almost always be incorrect.

For example, if a routing guide stipulates that shipments less than 100 lbs should be routed via a small package carrier, it will only be by coincidence that 100 lbs is the weight at which parcel carriers become more cost effective than LTL carriers.  The actual weight at which a Parcel carrier becomes more cost effective might in fact be 86 lbs, or just as easily 167 lbs.  And it might be a different weight for every market.

In reality a Static Routing Guide, and its users, could never accommodate the level of complexity involved in optimizing the correct cut-off points, so as a necessity arbitrary rules are used.

Unfortunately these rules cost more than you think.  In a recent study of a large small parcel user it was discovered that simply using the right carrier for each individual shipment weight would result in a savings of almost 5%.  While this may not seem like a lot, when your shipping bill is in the millions it really adds up.

2.       Limited Carrier Choices

Again, concerns with how well a Static Routing Guide might be followed result in shippers over-simplifying their networks, limiting their carrier choices and as a result increasing their costs.

The fact is that there are a number of carriers that service smaller territories across Canada that offer extremely good service at very competitive rate levels.   As an example, your most cost effective solution might be to use two different carriers to service a province; splitting the business either geographically, or maybe giving one carrier lighter shipments and another the heavier shipments.  Either way, many Transportation Managers would be concerned about those selecting carriers “getting it right”, and the impact on costs or service if they got it wrong.  So a common decision is to use one carrier instead of two, tolerate the additional cost and keep it simple.

Sure, the cost impact might be in the 2-4% range, but again – for shippers with large spends this can really start to add up.

3.       Compliance

It is one thing for a Transportation Manager to aggregate their company’s spend to negotiate an agreement, and a completely different thing to ensure this gets implemented properly.

It is very common for shippers to stray from the routing guide, for a variety of reasons.  These could range from issues like a simple mistake, or perhaps a carrier being tendered another carrier’s shipments because they were at the dock and it was just easier to give it to them rather than wait for the right carrier. Or from more complex issues when shipping locations engage in maverick spending which dilutes the company’s buying power and makes it more difficult to meet the volume commitments made to carriers.

The first step in controlling compliance is having the ability to measure it, and quantify the impact of the non-compliant spend.  Not just by carrier, but by “decision” – meaning given the weight and destination was the right carrier selected.? The latter is an important step in having the ability to quantify the cost impact of these decisions.  With this information, each shipping location can fully understand the impact of their actions and modify them accordingly.

The Solution – A Dynamic vs. Static Routing Guide

The only way to address the inefficiencies associated with a Static Routing Guide solution is to use a rating engine to power a Dynamic Routing Guide.   A rating engine that is typically found in a TMS will enable a shipper to:

1. Increase the sophistication of their transportation network to use the best carriers to service each area they deliver to.   Cost competitive carriers will not need to be eliminated as the TMS will be able to identify the best carrier for each shipment, based on total cost and delivery requirement.
2. Eliminate arbitrary rules for selecting carriers.  The ability to determine the lowest cost carrier for each individual shipment, based on weight, destination, and all accessorial charges will ensure the lowest overall cost is achieved.  The inherent inefficiencies caused by using arbitrary rules to select carriers will be completely eliminated.
3. Monitor or enforce carrier compliance.  A TMS set-up can either be “open” which allows for non-compliant carriers to be used, or “closed” meaning only the system-selected carrier is to be used.  Either way, the incidence and cost impact associated with using a non-compliant carrier can be easily monitored, reported and reduced.

While these may seem like small areas of inefficiency, the availability of easily acquired TMS applications, and their potentially high ROI’s now make this the low hanging fruit for any Transportation Manager seeking to reduce costs in their organization.

Nulogx has a hosted service that is well positioned to deliver these efficiency improvements, without the need to purchase software or hardware, or learn how to use or maintain it.   Ask us today for more information on how we can help you improve your transportation processes.

Results published today by the Canadian General Freight Index (CGFI) indicate that the cost of ground transportation for Canadian Shippers increased in May when compared to April due to increases in both Base Rates and Fuel Surcharges assessed by carriers.

The CGFI Total Freight Cost Index rose by 0.8% in May when compared to April, its 3^rd consecutive monthly increase. The Base Rate Index, which excludes the impact of Fuel Surcharges assessed by carriers, increased 0.4% during the same period. In addition, average fuel surcharges assessed by carriers increased from 19.9% of Base Rates to 20.3%.

Of note is that fuel surcharges increased for the 8^th consecutive month, and have reached their highest point since November 2008.

“In May we saw the second successive month of increases in Base Rates,” commented Doug Payne, President & COO, Nulogx. “When added to the increase in Fuel Surcharges, this has a notable effect on ground transportation costs for Canadian shippers,” continued Payne.