Evaluate Your Total Cost of Installation to Increase Profits

By John Cox
National Accounts
Technical Transportation, Inc

If you’re like many manufacturers, the fulfillment and logistics processes to deliver products to your customers can be complex and consist of many moving parts.

You may have several providers for transportation, one for transit from your shipping dock to your customers’ destination location, one for final-mile delivery, and yet another for setup and installation. That’s not to mention who performs your training and field service calls.

With all of these disparate providers, it is difficult nailing down your total cost of transportation/ installation for your products, and thus you might find it hard to accurately determine if your logistics spend is truly efficient and within budget parameters.

So what exactly is total cost of installation? We simply define it as the cost of the logistics processes required for you to get your product to your end-user. This is the typical routine:

• Product is ordered
• Shipped
• Delivered to site
• Set up and installed
• End-user training conducted
• Product is ready for customer to use it for intended purpose(s)

All for One, One for All

Traditionally, these have all been viewed as separate processes that require a different provider resource for each.

In today’s world, though, that’s like going to McDonalds to get a hamburger, Burger King to get your fries and Sonic to get your drink, instead of going to Whataburger to get a combo meal in one location, for a better price, better quality (we’re from Texas and are biased here), all while saving you time and headaches.

The good news is, you can do the same with your logistics by optimizing your fulfillment costs and processes, meaning you look at the processes stated above as steps in a single process that can be handled by a single provider. It’s a combo deal rather than a la carte.

Consolidating to a single service provider allows you to:

• Cut down on administrative management of multiple vendors
• Increase response times internally
• Increase internal efficiencies
• Decrease overlap, redundancies and break down of communications
• Minimize the need for field service engineers (FSEs) for service calls (that exceed costs beyond $1,000/day)
• Minimize overall disruption to your end-user and their daily activities
• Eliminate delays while waiting for one vendor to hand off services to another

One word of advice, though, when looking for a single vendor—some will seem like they offer bargain prices on their core services, but then they’ll hit you for extra fees on common services that are necessary for you to fulfill your products and get them into your customers hands. So do your homework!

Need Help?
If you are stuck in a quagmire of logistics processes and vendors, or have questions about how you can improve the efficiency and effectiveness of your supply chain operations, we’re happy to help—no strings attached. Just click here to submit your question today.

Efficient Reverse Logistics Offers Opportunities for Profit Growth

By Tom Chick
Vice President, National Accounts
Technical Transportation, Inc

Returning purchased items or swapping out existing equipment in the field can be a difficult – and costly process – for everyone, from end-users, to retailers, to manufacturers, and all of the logistical touch points in between.

But it can also present a big opportunity, especially for manufacturers, if they have an efficient reverse logistics process in place.

A recent CBRE Group report indicated that ecommerce returns throughout the U.S. retail industry from just this past holiday roughly equaled $32 billion of retail sales, and these returns accounted for 15-30% of total sales. CBRE also noted that while the number of returns from ecommerce sales continues to grow each year, the process for returns – or reverse logistics – is an intricate process that requires many components, including a precise network of warehouses for handling returns and a robust inventory management system.

While this statistic is noteworthy, routine returns and the need for reverse logistics aren’t limited to the retail industry anymore. They are necessary for any business in any industry, and they are being driven by a variety of factors, including an increase in big data, ongoing labor shortages, an increasing need to cut costs, and consumer pressures to increase speed of delivery while enhancing customer service.

Reverse Logistics for More Complex Products and Technology
That growing demand even reaches into the realm of highly complex equipment and technology.

For example, rentals, leases and trade-ins are now commonplace for large medical equipment such as MRI machines, ultrasound equipment and ophthalmology technology, due to the large price tags on those products and the constant upgrades in technologies. So a medical manufacturer must have a reverse logistics program in place in order to swap out older models for newer ones, or to help with any repairs in the field.

The challenge for manufacturers is determining how to manage a reverse logistics program of this big or high-value equipment in a way that accurately values the inventory at the time of pick up, manages customer expectations, and reduces overall costs.

Many companies have tried using their in-house sales teams to handle this process, but it has often produced a disconnect between the sales person’s desire to make the customer happy by maximizing the trade-in value of the old product, versus the actual and objective value of the product in its current condition.

Manufacturers have also tried using field service engineers (FSEs), but given the shortage of qualified FSEs, they’ve proven very expensive to the tune of $600-$700 for each “event” on average—with specialty projects as much as $500 per hour or $1,500 per day.

What is working best among many manufacturers of large and complex equipment is the use of 3PL companies that already have reverse logistics capabilities and processes in place. These providers can expertly and cost-efficiently assess the old product’s condition and value, and then help the manufacturer break down, disassemble and return the equipment.

And if a manufacturer can find a 3PL with expertise in their specific industry, further cost savings can be realized due to fewer potential mistakes. The end result is higher efficiency and higher profits both up and down the supply chain.

Need Help?
Do you have a reverse logistics need that you need addressed, or do you simply have a question about your current reverse logistics process? We’re happy to help. Click here to contact us today.

2018 Logistics Industry Trend Forecast:Part Three of Three: The New Norm in White Glove Delivery

By Len Batcha
President
Technical Transportation, Inc

The Amazon effect literally impacts every step of the supply chain delivery process today. As customer expectations rise, so do the demands shippers and carriers must satisfy to remain competitive.

It’s a particularly challenging situation for white glove delivery providers, because many aspects of the procedure don’t lend themselves to quick, customer-pleasing solutions that are the driving force behind the Amazon effect.

But that doesn’t mean white glove delivery providers can afford to ignore significant changes in the ordering and delivery paradigm. In fact, just the opposite is true. Like all logistics companies, white glove delivery providers must adjust to the new—and constantly changing—norm. Here are three major trends I foresee that will affect the white glove delivery process in 2018.

1. Standardization of additional specialty services

Increasingly, customers are expecting additional types of service that have not been part of standard white glove delivery offerings. It’s particularly evident in vertical markets—such as healthcare and medical equipment, technology, complex home deliveries, and other sophisticated products.

Standard expectations include two uniformed delivery personnel with liftgates and who are able to deliver equipment inside, anywhere in the facility. Increasingly, however, manufacturers and recipients alike expect:

• Professional unpacking
• Doing some required assembly
• Basic wiring and configuration
• Potential boot-up
• And in some cases, facility construction work
• Clean up and, oftentimes, much more.

I believe the trend to include non-traditional services will continue to accelerate in the coming year, and will keep adding more components over the long run.

2. Shifting overhead costs to field personnel

Costs are always a major concern when white glove delivery is required. Manufacturers are getting more and more pressure to maintain—and preferably lower—costs while, at the same time, expecting more services from their logistics providers.

What shippers want is to keep costs as low as possible without sacrificing quality or on-time delivery. This puts added pressure to transfer responsibilities onto their logistics providers that, in the past, have been typically handled by the manufacturers’ own engineers or sales personnel.

By the time you add up the cost of sending an engineer to an on-site installation, you’re typically looking at a price tag around $1200-1500 per trip, when you consider air fare, lodging, food and out-of-pocket costs.

So, the more a logistics provider can handle white glove deliveries on a turnkey basis, the more the manufacturer can defray travel costs—even with the add-on costs of providing specialized delivery services. And when multiple installations can be handled by the logistics provider without manufacturer reps on site, the savings on the shippers’ part are not only substantial, delays in equipment uptime can be far less.

The obvious solution is to move as much as possible to the logistic provider’s field service team, a trend we expect to grow significantly in 2018 and beyond.

3. More sophisticated Learning Management Systems (LMS) for logistics providers

A Learning Management System (LMS) is a useful software app for the administration, documentation, tracking and delivery of training programs. They’re instrumental in helping deliver material to trainees, administer certification tests, as well as to assess and track personnel progress—all from a centralized application.

An LMS is also capable of efficiently managing record-keeping, and since they’re essentially an online solution, they allow logistics and shipping companies alike to train and monitor the performance of all white glove delivery field personnel. As logistics field service reps take on more responsibilities, the value and demand for LMS systems will continue to grow. Without the right training and proven performance, quality can’t be guaranteed.

To wrap up what we foresee in 2018, white glove delivery providers will continue to grow in technology, management effectiveness and sophistication. Those who don’t make these changes stand a very good chance of losing their competitive strengths and customers as the logistics industry continues to evolve.

For more information on the latest innovations in white glove delivery for complex products, contact TechTrans today.

2018 Logistics Industry Trend Forecast:Part One of Three: All Roads Point to Greater Price Pressure

By Len Batcha
President
Technical Transportation, Inc

No one has a crystal ball. But so much has impacted the logistics industry in 2017 that I have no doubt what the most important trend—and challenge—for logistics providers will be in the coming year. And it’s all due to the constant changes we’ve had to deal with over the past 12 months.

And that trend is—Increasing price pressure.

To cut to the chase, 2018 will be a year where we’ll be hit from all sides with changes and mandates that are likely to lead to one of two consequences:

1. Lower profits for logistics providers.
2. Higher pass-on costs to the consumer.

The #1 challenge we will all face in 2018 is how to keep costs down in order to remain competitive, despite these market demands. Here are my thoughts on the three trends that will make this pressure all too real.

1. The Aftershock of the Electronic Logging MandateAs of December 18, the Federal Motor Carrier Safety Administration (FMCSA) eliminates the use of paper logs by drivers and carriers. Electronic logging devices are far from new, but the FMCSA is continuing to tighten compliance standards. By December 16, 2019, all drivers and carriers of line haul and long-distance deliveries must use self-certified electronic logging devices that are registered with the FMCSA.To make it happen, most of the costs needed to meet new compliance standards throughout the delivery cycle will fall on the carriers’ shoulders. So, to maintain margins, carriers have few options but to pass these added costs on to shippers and consumers.
2. Higher Driver Demand, Higher Driver CostsRecent hurricanes have diverted drivers to support FEMA. What’s more, higher demand from holiday sales, cyber purchases, the Amazon effect, and increasingly high expectations from consumers are pushing internal logistic networks to the limit.When you add them all together, you’ve got a formula for greater transport costs fueled by a short-term lack of qualified drivers and equipment. This may be good news for drivers in the immediate future because their compensation is likely to rise. But for the internal logistics network, not so much.
3. Short-term investments, long-term payoutsThe movement toward driverless vehicles is accelerating and putting increasing pressure on trucking companies to invest in driverless equipment, maybe not today but not too far in the distant future. Such investments are a major paradigm shift in our industry, and one that will require a huge up-front investment in the next 3-5 years.To make the challenge even harder, we’re not likely to see any measurable payback on drivable vehicle investments for another 5-10 years. Regardless of how the timing turns out, one thing is for certain—major changes in our industry are underway. And they’re all putting added price pressure on virtually every logistics provider.

In the next blog in this series, I’ll discuss 2018 logistics forecast trends for the medical segment in particular. If you have any comments or suggestions for future blog ideas in the meantime, please get in touch.

2018 Logistics Industry Trend Forecast:Part Two of Three: A Healthy Outlook for MedicalEquipment Transport

By Len Batcha
President
Technical Transportation, Inc

Several trends point to active growth in the medical logistics industry over the coming year. Unfortunately, not all of the trends are the result of good news. In fact, some are due to severe disasters in 2017 that will have a measurable impact on the demand for medical equipment logistics, especially in the early part of the coming year.

Here’s a list of the top 5 trends I foresee in 2018.

1. Healing in the aftermath of natural disastersWith so many severe hurricanes and uncontrollable wildfires in 2017, there is a pressing need to rebuild facilities and multiple infrastructures that must be replaced as soon as possible. Such a massive undertaking doesn’t happen overnight, and rebuilding medical care facilities is among the top priorities for reconstruction in the coming year.It’s not just about replacing potentially life-saving equipment that was destroyed in recent months, the situation also puts a significant strain on the existing logistics network nationwide. The end result will be a rise in demand for both trucks and drivers alike, which is likely to push 2018 transport costs higher.
2. The potential repeal of ObamacareAt this point, it’s impossible to say how the potential repeal of Obamacare will impact the logistics industry specifically, but the reality of what happens will have a direct—and possibly huge—impact on the healthcare industry overall. It could have a significant effect on costs across the board, from the cost of care to the cost of materials and equipment. When the rules change, the demand for new equipment often increases, which leads to a corresponding increase in order placement and shipment activity.
3. Growing demand for pharmaceuticals and hematology equipmentWe’re already seeing a shift back to a greater concentration on pharmaceutical and hematology equipment, and this trend is likely to continue throughout 2018. Also, the ongoing segmentation of the healthcare market as a whole could drive greater demand for additional emerging vertical segments that would require specialized medical equipment as well.
4. A major shift in pharmaceutical dispensing requirementsThe CVS purchase of Aetna could be a game-changer when it comes to medical care delivery and healthcare insurance. What’s more, the shift toward auto-dispensing units for pharmaceutical products in general will require FDA compliance for manufacturers and end users alike. Stricter compliance standards are always an impetus to ensure providers have all the equipment they need to meet the mandated guidelines. The likelihood is an increase in medical
   equipment orders.
5. Higher patient expectations for quality service and careToday, it’s the end consumer, not the provider, who has ultimate control over how and when they want to buy something. Buyer expectations for convenience and quality have risen dramatically, and healthcare providers aren’t exempt from these increasing consumer demands.

Such expectations create a greater need, not only for quality equipment and care, but also for seamless deliveries. In the next blog in this series, I’ll discuss 2018 logistics forecast trends for white glove deliveries in particular.

In the meantime, if you have any comments or suggestions for future blog ideas,
please get in touch.