Monthly Archives: September 2012

71lbs.com Review – Stop Overpaying FedEx and UPS with 60 Seconds at 71lbs.com

I recently recovered $284 from a FedEx shipment without doing anything at all. Here’s how you too can save money on your FedEx and UPS bills.

71lbs Service Logo

Several weeks ago, I stumbled across a freight auditing service called 71lbs. Intrigued by the service’s promise, I did a little research to find out exactly what the company did. Basically, 71lbs combs through your FedEx and UPS accounts to find late small parcel shipments. When they find a late shipment, 71lbs requests a refund on your behalf. You get that shipment charge deducted on your next UPS or FedEx invoice, and 71lbs invoices you for half of the refund.

Sounds like a great service, but since they are a relatively new company, I wanted a few more details before signing up. My first concern was a service fee. I’m familiar with a few similar services, but they usually require a monthly fee whether they find anything or not. Other service’s monthly fees usually outweigh the potential gain if shipping volumes are low or everything delivers on time. To see whether this service was indeed free, I dug a little deeper into their business model.

I read 71lbs’s entire user agreement, but just to make sure, I also emailed the company. The CEO, Jose Li, responded personally to my questions. He guaranteed me that the only charge my company would ever receive was half of what we saved. Additionally, he told me that if I was not satisfied for any reason, I could simply send an email and they would cancel the service – there was no long-term contract. I went ahead and signed up my company’s FedEx account for 71lbs’s service.

Now I certainly cannot say that your business will experience the same quick results that mine did, but I received two emails within two weeks of signing up explaining successful refunds that 71lbs secured on my behalf. One was just a $17 domestic shipment, but the other was for a 26-piece shipment to Germany worth $569. Of course, half of those refunds will go toward 71lbs, but that’s still $293 in my company’s pocket that we would have paid to FedEx. I see it as a definite win for me, a win for my company, a win for 71lbs. It’s also a bit of motivation for FedEx to increase its service levels.

Now to be realistic, these two shipments were quick successes that represent far less than 1% of the shipments my company sends out. Certainly, I wouldn’t lower my freight budget forecast because of this service – at least not at first. Nevertheless, a quick and easy setup has the potential to save money you weren’t expecting.

71lbs is also working on a few other services that could help your business even more in the future. One is a service that audits your FedEx and UPS invoices to make sure the pricing matches contract pricing. I see huge potential savings for this, since I often have to dispute pricing errors. Additionally, I asked Mr. Li if 71lbs could notify me the morning a shipment is late so that I can contact the customers and manage damage control for a late shipment. He responded, “I know exactly what you are being faced with. I’ll add it to our product pipeline and will get back to you when we have it done.” I look forward to what other great services 71lbs creates.

Update Since Posting

My company is a 71lbs customer, but I did not receive any compensation for this review. I think 71lbs’s service is a great add-on for any business wanting to lower small parcel freight expenditure. A year after posting this review in Sept. 2012, 71lbs began advertising with Supply Chain Cowboy. As an update, my company saved over $2000 in the past year from their service.

Questions or comments? Please join the discussion below.

Surviving the Amazon Effect

The Amazon EffectThe Amazon Effect – a term for the change to the competitive landscape caused by the growth of Amazon.com. Jim Tompkins recently posted a podcast about this topic and how its changing the business climate. Essentially, Amazon has grown to become a competitor with nearly every company – from Walmart to Apple, Home Depot to Netflix. Jim predicts that because of Amazon’s growth, and several other tipping points, a perfect storm of bankruptcies will sweep through an unprecedented number of companies by 2014. The podcast also spends considerable time speculating on what the brick-and-mortar Amazon store will look like – a move that has many large retailers anxious as Amazon continues to expand its business models.

With Amazon competing with everyone, how can a small business endure this new wave of competition and survive the Amazon Effect? Three survival options are (1) differentiate your services to what Amazon does not yet offer, (2) leverage your business’s flexibility to innovate, or (3) join forces with Amazon and become a supplier. Above all, remaining focused on your customers will help weather any challenge.

Differentiate Your Services

“In real estate, it’s location, location, location. In business, it’s differentiate, differentiate, differentiate.” – Robert Goizueta

Obviously, in order to avoid direct competition with Amazon, your business needs to provide a product or service that is different. Though this may seem simple, the great challenge lies in staying ahead of how quickly Amazon’s portfolio is expanding. Having not yet opened a brick-and-mortar location, Amazon’s business model still relies fully on the Internet. Web hosting, software, and eBooks delivered electronically, as well as their enormous SKU count of products ordered electronically, all rely on their website and customers interacting with their system. Although their system is easy to use, that model leaves an opportunity for differentiation.

Highlight your Company’s Service

A key asset that a small business can offer is expertise and service to its customers. Although I sometimes spend hours comparing customer reviews and creating my own analysis of a product, I greatly value the honest expertise and guidance that small businesses provide. The more we become accustomed to working with computers, the more we feel refreshed with positive human interactions. Human relationship building is often absent from the Amazon experience. Therefore, customer service and human interaction can be a key to differentiating.

In addition, you may want to change how you approach your customers. Several years ago, IBM, seeing the trouble ahead for its business if it focused on hardware, switched its business model. Instead, it became an executive consulting company that helps implement its hardware and software. This value-added service satisfies a demand that a 1-Click purchase and a box full of hardware cannot.

Leverage Your Business’s Flexibility to Innovate

“The ability to learn faster than your competitors may be the only sustainable competitive advantage.” – Arie de Gues

Being a small business has an inherent strength of flexibility that most large companies wish they still had. Alignment is much easier when you can fit all your employees into one room and share your vision. More importantly, it is much easier to test and implement innovations because implementation on a smaller scale is more feasible. Once you grow as Amazon has, you cannot implement innovations as quickly and easily as a startup.

A friend of mine who recently completed a summer internship at Amazon highlighted one of its weaknesses. My friend had spent the summer working at a distribution center and proposing various process improvements. However, because of the company’s size and emphasis on short-term ROI, he was not able to implement his ideas. To be fair, I do not know any of the details or merits of his suggestions. Nevertheless, my friend did not want to work for them after the internship because of this experience. It highlights not only the lack of flexibility in operations, but also inefficiencies such as paying an MBA intern for a summer with little in return.

Instead, being able to integrate quickly the latest innovations in supply chain – or any other department – will help you withstand the waves of Amazon’s competitive presence.

Join Forces with Amazon and Become a Supplier

If you want to be incrementally better: Be competitive. If you want to be exponentially better: Be cooperative. – Author Unknown

For many businesses, the strength of Amazon is a boon rather than a burden. From my dad who sells books on Amazon’s marketplace to consumer goods manufacturers that work through Amazon as a retail channel, more people visiting the site means more potential customers. Recognizing that Amazon will be one of the main retail channels for the next few years can help you prepare your company to fit into its network.

How can you become a supplier to Amazon and other online retailers? Listing your products online is quite easy – most online sites pride themselves on large SKU counts, especially if you are the one holding the inventory. Success depends more on your ability to process orders seamlessly and drop-ship to customers. Quickly shipping to consumers will keep your supplier scorecards high and customer reviews favorable. Many 3PLs can handle these services for you, which is an excellent option if order volumes justify the expense.

Customer Focused Philosophy

The Amazon Effect is certainly a threat to many companies unprepared for the new competitive landscape. I agree with Jim Tompkins that many companies will eventual shut their doors because of the increased competition. However, Amazon’s devotion to its customers, more than their operations or business model, is what has made it so powerful. Jeff Bezos, CEO and founder of Amazon.com has said,

“Do not be competitor focused, be customer focused.”

That then is the key to surviving the Amazon effect. Recognize the increased competition, but then work on every part of your supply chain and business to serve the customer better.

What do you think? Please add your comments on how small businesses can survive the Amazon Effect.

The Three-year-old Why Technique

Giant problems often appear to need giant solutions. However, honest analysis and investigation usually points to something small that nobody thought of. This small oversight upstream often results in the fire downstream. For example, thousands of products can have an incorrect barcode because the packaging designer didn’t have a good proofreading process. While the giant solution of relabeling all the products may be needed to fix the immediate problem, a two-minute process upstream could avoid future problems. To find the root cause of an emergency, I often use the 5 Whys technique, which helps get down to the bottom of what caused the current problem by asking “why?” repeatedly. However, I think most companies need another technique to catch problems before they turn into emergencies. I call this method the Three-year-old Why Technique.

Profound Questions by Three-Year-Olds

Girl Asking "Why?"

Whenever I talk with a child age three to five, I usually hear several “Why?” questions. From reading a couple online articles about the subject, I’ve learned that this behavior is most likely children’s method of both learning and capturing attention. However, the part of this behavior that always surprises me is the profound questions that children stumble upon simply by questioning everything. “Why do I have to sleep?” “Why can’t we eat grass?” “Why do we eat with forks?” These questions likely helped neuroscientists, biologists, and anthropologists earn tenure by publishing deep scientific responses. These questions also leave me with a much different question of myself: Why don’t I still ask ‘why?’ question? Most likely, my sense of wonder and curiosity has taken a back seat to the demands of meetings, action items, and everyday operations. Yet, when I am able to take a few minutes to ask, I usually stumble upon an opportunity to improve.

Relearning to Ask Why

One time that many of us ask a great deal of questions is when we start a new job. Trying to learn the duties of a new position is stressful, but the questions I ask often highlight opportunities for the department to improve. Each ‘why?’ question gives my manager an opportunity to reflect on the answer and validate the reasoning. Without fail, I eventually receive an answer that I love to hear: “I’m not sure why. That’s just the way we’ve always done it.” To a process engineer, this is the low hanging fruit to improve the company. But how do we find those golden answers? In order to find improvement opportunities before problems erupt, you must ask questions without a reason to ask. This is hard, especially with a long To-Do list of urgent initiatives. Perhaps stepping back every hour or two and asking, “why am I doing this?” is the easiest way to get started. Eventually, it will become a habit of questioning processes and decisions. As many parents of three-year-olds will warn, the key is to always be optimistic and never become annoying.

The Goal Answer

The goal of your questions should be a response such as “I don’t know. That’s just the way we’ve always done it” or something similar. Alternatively, there may be a logical answer, but the circumstances have changed. For example, “Why do we use this supplier?” “Because when our company started four years ago, they were our neighbors and were willing to give us great credit terms.” Loyalty is important, but if your company has moved across the country and you need better prices, it’s probably worth some analysis.

Examples

The following is a table of questions I’ve asked before that may help you start thinking.

Question

Possible Improvements if Answer Unknown

Why do we use this specific supplier? Opportunity to save money, improve service, or improve quality
Why is our warehouse organized this way? Opportunity to improve efficiency or capacity
Why do we track this data on a spreadsheet and not in our database? Opportunity to improve information sharing
Why do we have our garbage picked up (or another service) so often? Opportunity to save money
Why don’t we look at this data when we make decisions? Opportunity to increase customer service, efficiency, or quality
Why is everyone in this meeting? Opportunity to maximize people’s time

Final Thoughts

Now, I do not recommend just questioning everything all day. Too many questions can sometimes hinder us from moving forward. I certainly don’t advocate questions to stir up commotion. Rather, I believe questions are an underutilized tool in a quest for solutions. Start asking a few unprovoked questions and see where they lead. Reach for quick wins with the limited time you have. The most rewarding questions fireproof processes so they’ll never erupt into emergencies, which will give you more time to improve your processes. If you find you just don’t have time to ask “why”, perhaps you can consider adding a three-year-old to your staff.

What are your thoughts? Why not add your comment below, or subscribe to future posts through our feed?

Image: © Vladacanon | Stock Free Images & Dreamstime Stock Photos

Achieving Great Things

Lean Quote Roundup

Leonard Bernstein, a composer and orchestra director, isn’t mentioned in any supply chain book I’ve read. However, I love his quote that hangs above my computer:

“To achieve great things, two things are needed; a plan, and not quite enough time.”

The pressure of a deadline has a unique way of motivating action. Even if a plan isn’t perfect, the momentum from starting helps course correct and guide to the final goal.

Personal Significance

Recently, my company was able to clear out most of its obsolete inventory to a liquidation partner with a single order. In total, this included a fifth of everything we stocked–quite a bit of product. To make the project more challenging, we needed to repackage everything into different configurations. This rework amounted to 850,000 touches in two weeks; the task daunted my small crew and me.

I jumped into the production plan. Any mistakes at the front would hinder us from filling the order with variety packs, because if we used the wrong SKUs at the beginning, we would end up with the wrong ones at the end. I built a simulation in Excel that laid out exactly what items should be in each of the cases. It wasn’t perfect; I knew some of the inventory numbers were incorrect, but it helped me move forward in the right direction.

Since my team was busy with our usual orders, I brought on a new team of temporary employees just for the order. I even had my wife come in, since she was on summer break from teaching. We lined up everything numerically, built an assembly line to pack the boxes, and worked tirelessly. While slow at first, everyone contributed ideas of how to improve speed and quality. After instituting many suggestions, we reached a pace previously thought unachievable. Pallet after pallet filled our warehouse with product that was ready to ship. As the final Friday deadline rolled by, we were calmly cleaning up because we had finished ahead of schedule.

Now I’m not sure everyone would concur that several truckloads of reworked product qualifies as a ‘great thing’, but to me and my company, it was.

What’s your recent great thing? Please add your Comment below and share your story.

Introduction

Supply Chain Cowboy

Supply Chain Cowboy

Most large companies have well-established and precisely timed supply chains, but for small companies, it’s still the Wild West. With a scan gun in your holster and your compadres at your side, you head out on the long trail ahead. Each day brings containers to be herded, pallets to be wrangled, inventory to be branded, and promises to be fulfilled.  Despite feeling worn out,you know you’ve done good as you ride into the sunset.

This site is dedicated to taming the Wild West of supply chain. I’ll share thoughts and stories of victories as well as lessons learned, and I hope you get involved as well. Please share the lessons you’ve learned along the trail so we can all benefit. If you have a particular question or suggestion to explore, please let me know. Feel free to contact me through the link on the right, add a comment to a post, or keep in touch by subscribing to the site’s feed.