(Ryan Brower is Director of Client Solutions at Weber Logistics)
Nice job by the Journal of Commerce (as usual) in its April 29 feature on Mexico as an alternative to China for contract manufacturing. The China to Mexico nearsourcing trend is gaining steam, with 33% of recently surveyed manufacturers saying they have or soon will shift production closer to the U.S. (source: Alix Partners).
What is dimming the luster of China as a hub of global manufacturing? Rising fuel costs, rising labor costs, and volatile exchange rates. The cost gap between China and alternate manufacturing sites is narrowing and, in some cases, disappearing. One analyst even commented that “China may soon replace Detroit as the world’s rust belt.”
Many companies are comparing total landed costs as they consider a nearsourcing move from China to Mexico. For companies with a primarily U.S. customer base, things in Mexico’s favor include:
· It’s close! This cuts fuel costs and speeds the cash cycle. Getting Chinese-made goods to retail can take over a month.
· Labor costs are now comparable to those in China.
So the financial numbers are looking better for a move from China to Mexico. But other factors suggest that Mexico may not be quite ready for a large uptick in new manufacturing output. The freight infrastructure remains a work in progress and manufacturing capacity is limited compared to a huge country like China. Drug-related violence in Mexico raises another caution flag to U.S. companies examining nearsourcing options. But progress continues to be made and Mexico is hanging out the “open for business” sign.
Weber Logistics is definitely seeing an increase in interest for our San Diego logistics operation, which is very near the border crossing at Otay Mesa to Tijuana. The interest is from companies that need a staging point for inbound materials coming into Tijuana-area maquiladoras, and also from companies needing a distribution solution in the U.S. for finished goods rolling off the line in Mexico.
As a Southern California 3PL, Weber Logistics is watching the nearsourcing trend very closely and believes the decreasing cost benefit of a China solution will lead many U.S.-based companies to consider Mexico as a viable alternative for contract manufacturing.
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
Too slow. Unreliable. Risk of damage. These were some of the reasons transportation managers once gave for avoiding rail freight. But many companies are now making intermodal transportation a key element of their freight strategy. Should you?
The benefits of intermodal include lower shipping costs and reduced carbon emissions. 
Transporting a medium-to long-distance load via rail costs 15 to 40 percent less than moving the same load over the road (OTR). And studies show that shipping by rail is three to four times more fuel-efficient – and therefore more environmentally friendly – than road freight.
A recent Weber INSIGHT paper outlines how to reduce transportation costs using intermodal transportation and looks at why some shippers are still reluctant to put freight on the rails.
Here are some common misperceptions about intermodal transportation that persist.
· Rail is much slower than OTR. Without a doubt, an intermodal move is usually slower than one done over the road. But often the lower cost of intermodal transportation can be worth a day or so of extra transit time. And the railroads have developed expedited service offerings to accommodate the most urgent freight.
· Rail is unreliable. Although rail delays were a genuine problem in the past, U.S. railroads today have gained a reputation for on-time performance. As a result, some of the best-known OTR carriers in the U.S. now put freight on the rails. For example, intermodal moves represented 10 to 12 percent of FedEx Freight’s total linehaul mileage in 2012.
· Rail freight is more likely to be damaged or stolen. Containers moving on solid blocks of flatcars rarely sustain damage, especially if the freight is blocked and braced correctly. A container car also provides a security advantage, especially for the bottom box in a double stack. The doors of that container are locked well into the rail car unit, so it’s far more secure than an over-the-road truck just moving down the highway.
You can’t track freight while it’s on the rail. Railroads generally collect location data at specific checkpoints along a route. Unless they install GPS units on containers, they don’t provide the real-time visibility that many motor carriers can. But shippers often find status information from the railroads sufficient to their needs. Class I railroads offer technology for tracking shipments, as do many third-party providers of intermodal transportation services. Visibility tools from 3PLs integrate data from the railroads with tracking information from other sources, letting a shipper monitor a load seamlessly from pickup to delivery.
Today, the benefits of intermodal are significant enough that companies should at least explore greater use of rail. By making the switch from road freight to intermodal transportation for a portion of your volume, you can achieve significant savings and provide a nice boost to your company’s sustainability objectives.
Interested in learing more about intermodal solutions from Weber Logistics?
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
(Rob Hartley is Regional Sales Manager at Weber Logistics)
In the supply chain, there is sometimes confusion about what is transloading and what is cross docking. The strategies are different, but both work to accomplish the same goal – to reduce supply chain costs. Crossdock services and transload services both include handling the product and delivery to multiple destinations on a different truck or container than the inbound shipment.
With more companies setting up manufacturing or suppliers abroad, inbound ocean containers have increased. The AAPA expects the volume of cargo shipped by water to double by the year 2020. Transload services transfer container cargo from one load unit to another. When a container is transloaded, it usually occurs at a facility that is close to a port terminal. A container will be taken into a facility and transferred to a domestic container or truckload. During the transload process, the product is often palletized at the facility since many of the 20-foot or 40-foot ocean containers are floor loaded. Inventory and transportation cost savings are achieved by switching to a truck from a container, however there remains a concern for delays at the port, damages, and theft.
Many major retailers, such as Wal-Mart, have utilized crossdock services within their own DCs to handle individual stores by consolidating multiple inbound trucks to outbound less-than-truckload or truckload shipments to individual stores. Crossdock services involve unloading 
products/goods from a truck or container directly onto another truck for delivery. Items are not put away but merely staged near dock doors to await loading. Therefore, there is little to no storage, and turnaround time between receipt and shipment is usually less than 24hours. This rapid turnaround requires excellent communication and coordination among 3PLs, carriers, and shippers. Electronic feeds must provide data on the contents of the inbound load, when it will arrive, and when pickup should occur. Lack of timely and accurate data leads to supply chain delays and inefficiency, undoing the benefits of a crossdock strategy.
Speed to market is a key ingredient to an efficient supply chain. Transload and crossdock services deliver this benefit by consolidating products and shipping directly to the final customer, without incurring the costs and delays associated with storing product at a warehouse. Both transload services and crossdock services can include product customization, such as labeling and kitting, at the warehouse/crossdock facility. With continued advancements in computer technology in the supply chain, transload services and cross dock services have become more efficient and will continue to gain momentum.
Interested in learning more about Weber Logistics' supply chain services?
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
Connie Anderson is the SVP of Client Solutions for Weber Logistics
What is C-TPAT? The acronym stands for Customs-Trade Partnership Against Terrorism. It’s a voluntary supply chain security program led by U.S. Customs and Border Patrol.
The program started shortly after 9-11, when the U.S. Government stepped up border inspections of imported goods. These inspections delay processing of imports from 1 to 2 weeks, slowing the importer’s supply chain and cash cycle. To date, about 4,300 importers that want to avoid these Customs delays and support efforts to secure the country’s borders have completed C-TPAT certification.
Is C-TPAT certification right for you? This paper may help you decide by reviewing the benefits of C-TPAT certification for importers.
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
Posted by
Marc Levin on Wed, Apr 10, 2013 @ 08:58 AM
Marc Levin is Senior VP of Business Development at Weber Logistics
Reverse logistics management is one of the fastest moving fields of supply chain 
management. Companies are recognizing that aggressive management at the end of a product lifecycle offers profit-driving savings, and revenue, opportunities. Today, the reverse supply chain today includes everything from defective and end-of-life products, to shipment overages and refused goods, to reusable assets like pallets and containers seen often in automotive and electronics. These goods could be refurbished, resold, recycled, destroyed, exported, or a host of other disposition options.
Twenty percent of everything sold in the U.S. is returned, either from the consumer to the retailer or retailer back to the vendor. In the U.S. alone, reverse logistics costs companies in excess of $100 billion annually. This cost can represent anywhere from 8 to 15% of a company’s top line revenue. The cost of processing a return can be 2-3 times that of handling the original outbound shipment.
Companies looking to shave costs and improve financial performance would be wise to take a hard look at their reverse supply chain. There are a variety of ways that aggressive reverse logistics management can translate into higher profits for your company.
- Pursue “secondary market” sales, such as auctions. Returns items have less value, but they still have value. Bulk sales to liquidators or discount retailers is the easiest, fastest way to handle disposition of the return, but it may be important to remove brand markings to avoid competition with your own first-quality product on the retail shelf.
- Refurbish and resell items. But you’ll want to crunch the numbers and make sure that the price charged for the refurbished item covers ALL the costs of storage, freight and repair through the reverse cycle.
- Dis-assemble and recycle. Kiosks are opening up in shopping malls to buy electronics today. In some places, when you upgrade your cellular phone, you can sell your old phone for almost the same amount of money that you buy your new one.
- Recycle product that is not re-sellable in the secondary market. Recycling companies will pay money for certain raw materials. If this is product that was previously landfilled, that recycling revenue is pure profit, in addition to reducing landfill waste.
- Share information gathered during the returns process. This is a huge area of untapped savings potential. For instance, knowledge of why an item was returned can help improve product design, packaging, and manufacturing processes to reduce future returns of that item.
- Appoint a reverse supply chain manager. Many companies have created such a job, which is focused solely on maximizing recovery on returned goods, from reselling to exporting to repairing to recycling.
Companies often focus on outbound distribution when considering how to streamline their supply chain. But don’t ignore the reverse supply chain. It could be the easiest and fastest path to savings.
Interested in learning more about logistics services from Weber Logistics?
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
Bill Jozefowicz is Vice President of Client Solutions at Weber Logistics
“In the end, you’re measured not by how much you undertake but by what you finally accomplish” - Donald Trump
In today’s supply chain, developing the “right” metrics that improve results are critical for a company’s health. Everyone asks, “What are the Key Performance Indicators (KPIs) that I should measure to improve my supply chain?”
It’s best to first ask: What do our customers want? What will cause them to buy more goods from us? What will they pay more for?
Companies often measure too many KPIs and, after exhaustive analysis, still find that business results are falling short. Others rely on subjective analysis, which may or may not be accurate. For instance, “I’m seeing damaged product, so our damage rate must be high.” Without measurable data, these kinds of assessments can lead down a blind alley.
I would recommend a “less is more” approach when developing your logistics KPIs. Once again:
- What do our customers want?
- What will cause them to buy more from us?
- What will they pay for?
I would then move these questions into the following categories:
- Cost. How are you reducing your costs to pass on savings to your customers? How are you driving a culture of innovation so that all associates are adding value? What lean programs are you using to improve the way you work? What metrics should you track to ensure cost reduction?
- Performance. How are you moving goods and services to market faster? How are you reducing inventories? What metrics identify performance and the impact on customers?
- Cash. How are you developing a “Cash Is King” initiative? What metric best improves your performance in this area?
- Quality. It’s the moment of truth…Does your product or service meet the customer’s expectation? What metric is the best indicator of customer-perceived quality?
Develop your dashboard, then make sure your entire organization understands your KPIs and why each is “key” to delivering real value for the customer. This will align your team so that everyone knows what winning looks like.
Interested in learning more about Weber's logistics solutions?
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
Chargeback penalties from large retailers continue to be a profit-draining problem, particularly for mid-sized companies that don’t have staff dedicated to vendor compliance management. But you can avoid chargebacks, or at least reduce them, by following some basic, technology-aided disciplines in the distribution warehouse.
In a new, vendor compliance video, Weber Logistics reviews its procedures and offers advice on how to avoid chargebacks. It comes down to documenting the requirements of each retail customer (detailed in their routing guides), capturing these in the WMS, then doing automated checks to ensure these compliance requirements are followed.
Watch the vendor compliance video for advice on how to avoid chargebacks.
Need help with your vendor compliance management?
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
Jim Emmerling is the Regional Vice President of Operations at Weber Logistics
Do you use a 3PL to store and distribute products from a multi-client, or shared, warehouse? If you’re like many shippers with a shared warehousing strategy, you may need to change the way you manage your 3PL relationship to maximize your benefit.
With shared warehousing, your logistics costs parallel your revenue stream. When volume (and revenue) is up, the transaction-based invoicing from the 3PL is also up. When volume is down, you see cost reduction tied to fewer transactions. The value proposition for shared warehousing is that you don’t run out of space, equipment or staffing during the peak volume periods, but also don’t pay for excess space and staffing during lax periods.
Large shippers who contract with a 3PL to manage a large, dedicated warehouse just for their products tend to have a more strategic relationship with their partners, with regular dialogue on how to adjust operations to get better, faster and more efficient.
But smaller shippers who may store goods in one or multiple shared warehouses across the country too often view the relationship with their 3PL as tactical, focusing solely on getting the lowest possible transaction cost. Hence, many of the benefits of outsourcing to a logistics specialist are left on the table.
Based on the common mistakes we see, here are some suggestions to maximize the many benefits of shared warehousing.
- Provide an accurate business profile. Getting the transaction rate right at the start is a result of having the right information, in detail, to build a solid order profile. Some shippers may not have the staff or the time to pull parse through and provide the requested data. Instead, they rely on standard, system-generated reports. Example: A manufacturer recently provided monthly shipping volume report as the primary piece of data on which to base pricing. The missing puzzle piece was that volumes on the last 3 days of the month equaled the volume of the first 17 business days. Surprises like this lead the 3PL to request a pricing adjustment – a frustrating process for all concerned and one that could have been avoided with an earlier, deeper dive into the data.
- Determine Key Performance Indicators (KPIs). Again, it takes time to think through and decide on how you want to measure success. But, otherwise, how can you judge the value of the relationship – for yourself or your senior executives? Having just one KPI – the lowest possible transaction cost – may encourage shortcuts that lead to quality problems and costs in other areas (retailer chargebacks, reworks, etc)
- Establish regular communications that provide a “telescope” view of upcoming business changes. Again, such meetings take time. But it pays off tenfold in increased productivity and lower costs. Let’s say an increased volume of products is required to support an upcoming promotion with a retail customer. If your 3PL gets this information 4-5 weeks in advance, they can use it to plan required space and labor to avoid costly overtime. In a shared warehousing environment, better planning of day-to-day shipping requirements easily translates to 6- and 7-figure savings over the course of a year. Most shippers don’t want to keep their 3PL in the dark, it’s just what happens when there’s too much to do and not enough time and people available. That’s why regular, scheduled communications are so important.
- Talk strategy. These higher level discussions could be scheduled on a quarterly, semi-annual or annual basis. The focus would be on your longer-term business plan and performance expectations. Are you planning to add a new sales channel, such as direct to consumer? Will your product offering expand – possibly through acquisition? Will there be a need for value-added services at the distribution center – variety packs, display building, postponement activities? The purpose of such meetings is to engage the brainpower and experience of your 3PL partner, which can lead to creative solutions you may not have considered.
Shared warehousing should not be regarded as a tactical, transaction-based solution. Establishing a more strategic relationship with your 3PL will help maximize the service and cost advantages that shared warehouse solution can deliver.
Interested in learning more about Weber Logistics shared warehousing services?
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
eCommerce sales in Q4 2012 broke another record. For the year, online sales grew 15.8%, while retail trade in general grew only 5%. When it comes to retail sales, “clicks are definitely gaining on bricks” and making efficient multi channel fulfillment a priority.
But many companies are struggling to adapt fulfillment processes to handle picking and shipping of individual items. Because it’s a very different operational challenge, they have chosen to separate out retail and eCommerce fulfillment operations – using separate buildings, separate systems, even separate financials. The redundancy and inefficiency of such an approach offsets any profit gained from growing online sales.
3PLs like Weber Logistics specialize in helping manufacturers manage a multi channel fulfillment strategy by fulfilling retail and direct-to-consumer orders from the same warehouse inventory pool. The strategy allows companies to control distribution costs by reducing inventory, space, labor – and complexity
A new video on multi-channel fulfillment from Weber reviews how some companies are meeting the logistics challenges of online sales growth by efficiently adapting existing operations.
Need help with your multi channel fulfillment processes? Contact Weber Logistics.
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.
(Scott Weiss is VP of Client Solutions at Weber Logistics)
In a previous blog post, we discussed the Southern California warehouse market. In this post, we want to focus on the Inland Empire region – the logistics hub of Southern California. Located about 50 miles east of Los Angeles, the region has 1.1 billion square feet of warehouse space. The traditional strength of the Inland Empire has been its access to the nation’s largest port complex in Los Angeles-Long Beach.
Importers choose the Inland Empire for import distribution operations because:
- Rental rates are 15 to 20 percent lower than properties in Los Angeles County
- They need a large amount of space, and it’s next to impossible to find vacant property of 300,000 square feet or more near the Southern California ports
Although trucking and other transportation costs to move products to Inland Empire distribution centers are higher, they are more than offset by the savings in labor, land and rents.
That said, space is becoming harder to find in the Inland Empire, particularly large distribution centers of 500,000 square feet or more. Property that became vacant during the 2008-2009 recession has largely been reabsorbed. The current vacancy rate is hovering around 6%, down from about 9% in 2009.
Are Inland Empire distribution centers impossible to find?
No, there are deals to be had. For example, Weber Logistics, which operates 7 large Inland Empire distribution centers, was recently able to lease, implement, and go-live on a new 330,000 square foot DC within 45 days.
But continued property development will be required to meet a growing demand for space and, according to Blaine Kelly of commercial real estate giant CBRE, developers are back in the market. He says plans have been announced for construction of about a dozen large facilities on speculation in the Inland Empire.
Factors fueling this speculative growth include:
- The need for companies to efficiently get products to Southern California’s huge consumer market of 16 million
- Cargo volume growth at the Ports of Los Angeles and Long Beach – America’s two busiest ocean container ports
- The rapid growth of eCommerce fulfillment
eCommerce fulfillment could be the biggest trend in industrial real estate in the region. Amazon recently opened a 950,000-square-foot fulfillment center in San Bernardino, joining other retailers that had already established eCommerce fulfillment operations in the Inland Empire.
Whether it’s eCommerce or traditional distribution operations, the Inland Empire will continue to be a distribution location of choice for many years. Weber first established a presence in the Inland Empire over 20 years ago, making us one of the first third party logistics providers to locate in the region. Feel free to email us with any questions about Inland Empire warehouse space, or post a comment.
Weber Logistics is the leader in
West Coast and California logistics, warehousing and trucking.