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Vendor Compliance from a 3PL Perspective: Are You Ready to Challenge the Status Quo?

Posted By Administration, Thursday, October 9, 2014
Updated: Tuesday, October 7, 2014

by Scott Weiss, Port Logistics Group




 

Your organization is one of thousands upon thousands of vendors shipping to a retailer. Your job is to review the 200 page routing guide and make sure that your organization complies with all of the requirements and does not receive chargebacks. Or is it?

With the RVCF Fall Conference upon us in just a few weeks, it seems appropriate to review the importance of collaboration as well as questioning and following best practices in our industry. Here are a few examples where vendors and 3PL's were able to challenge the status quo and save a significant amount of money at the same time.

Example #1: A DC Tour and Just Asking the Question Saves a Customer $180,000 by Eliminating a Carton Content Label
A 3PL was just awarded business for a high volume apparel company that was generating both a GS1-128 label and a carton content label for all outbound cartons. The 3PL and vendor set up a tour to visit the DC of the customer's biggest retailer. The 3PL noticed that upon receipt into the retailer's facility, all cartons were running through an automated sorter, scanned, and then automatically sorted to an outbound lane. The only thing being scanned was the GS1-128 barcode so the 3PL wondered what the use was for the carton content label. The retailer thought about the questions, chuckled, and said that they do not have a use for it at all. That day, the customer received written approval to no longer generate the carton content label. The customer shipped out 1.2 million cartons that year through the 3PL's facility. Each carton content label had a cost of $0.15 for the label stock, generation, and application on the carton. The customer was able to reduce their costs by $180,000 as a result of that tour and asking a simple question.

Example #2: A Site Visit Saves a Customer $340,000 by Moving to Pallet Labels
A high volume importer of baby cribs was having big service problems with their current 3PL. They were importing about 4,000 containers a year. Each container had about 400 cartons for a total of about 1.6 million cartons. Their business was really exploding so they went to the traffic department of their biggest retailer and asked for a 3PL that they might recommend. The retailer referred them to a 3PL that was supporting twenty of their vendors and easy for their truckers to get in and out of. At about 100 lbs. per carton, cribs are heavy and ship out on pallets vs. being floor loaded. Upon setting up the SOP's, the 3PL was told that all cartons had to have an SCC-14 label on them. After handling the business for a few weeks, the 3PL suggested a follow-up site visit from the retailer's traffic department so they could view the product and outbound shipments. During the visit the 3PL asked if the pallets are broken down at the DC since the product was so heavy. The answer was no. Product moves on pallets from the DC to the stores so the 3PL asked if it would be possible to just generate a pallet label vs. carton labels and the retailer said yes. Each carton label had a cost of $0.20 for the label stock, generation, and application on the carton. The customer was able to reduce their costs by about $300,000 as a result of setting up the visit.

Example #3: Orders are Spread out throughout the Week and $200,000 in Overtime Costs are Eliminated
A major importer of footwear had five major customers. Monday through Wednesday orders would come in steadily to the 3PL and the DC required about fifteen employees working one shift. However, their biggest customer was sending them replenishment orders on Thursday and Friday for distribution to their 34 DC's and the 3PL was getting slammed on those days. Every Thursday and Friday, like clockwork, the 3PL would have to bring in up to 35+ employees and have overtime of about five hours every Thursday and Friday. During a quarterly business review, the VP of Operations for the 3PL wondered if it was possible for the customer to go back to the retailer and ask them to spread out their orders over the week. The customer put a request in to the retailer and the retailer said yes. The customer had been paying about 100 hours of labor costs each Thursday and Friday, equal to about 10,000 overtime hours per year; overtime hourly rates were $28. The customer was able to reduce their costs by $280,000 for the year.

These are just three examples that add up to over $750,000 in annual savings. No doubt there are so many more examples that can be provided. By taking a look at the status quo and having the willingness to challenge it, you too can realize savings in otherwise unexpected places.


As Vice President, Business Development, Scott Weiss works closely with apparel, footwear, and housewares manufacturers of all sizes to ensure compliance with retailer routing guide requirements.  Port Logistics Group is a market leader in gateway port logistics services, operating over 5 million square feet of warehouse space.  Services include port drayage, import deconsolidation, warehousing and distribution, retail compliance, local transportation, and store delivery in key port locations of Los Angeles/Long Beach, New York/New Jersey, Seattle, and Savannah.  Scott may be reached at sweiss@portlogisticsgroup.com or (562) 977-7620.

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Tags:  Chargeback  Collaboration  Deduction 

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