By Carlos Canseco
Are you prepared for the 2022 Peak Season? We are almost returning to normal, so it is very important to plan your value chain for your main KPI’s: Fill Rate, CPFR, Customer Centric, Optimum Inventory Levels, Forecast Accuracy, Budgets and Logistics Costs.
In this article we offer 12 tips to face the 2022 Peak Season:
- Value chain alignment. Maybe it sounds obvious but the main challenge is to work like a chain, not in silos. We have to work as a unique value chain from sourcing to delivery, and, importantly, the collection of payments. We have to make our S&OP functional.
- Key performance indicators. Don´t stop measuring KPIs because given the pretext that you have more volume to operate in peak season, KPIs give us visibility on how our logistics operation is performing and also highlights trends. Daily, weekly and monthly KPIs must be presented so that we can use them to make business decisions.
- Rates negotiations. Be very specific about the rates that you are considering for the peak season, both the carrier and shipper must have the same freight numbers. Focus your negotiations on 80 percent of your main transportation suppliers. And remember suppliers can encompass: transportation in all its modes, warehousing, customs brokers, 3PLs and every cost related to the value chain.
- Budget for emergencies. Set aside a budget for unplanned freight, warehouse facilities or new carriers with higher prices. If you are going to pay a higher price, be very discreet and closely analyze it and if you really have to give that difference in money, make it worth it. Splitting this emergency budget among your actual and faithful suppliers is a very good strategy.
- Payments. Check your payment terms. This is a deal breaker when it comes to deciding whether to have or not to have equipment in the peak season. An acceptable term is 30 days, while competing with companies that are paying twice a month, and even weekly.
- Digital brokers. Consider working with new transportation trends. Transportation technology companies (TTC)/ brokers are the new great solution for transportation buyers. You deal with one supplier expert in technology instead of 50 regular transportation truck companies. TTC operate the transport companies, they charge you a fee that includes truck, trailer, driver and technology to deliver to your clients. Will you pay for that service? Obviously, yes! Remember we are in a carrier market era.
- LTL solution. It is very important to deliver on time, so LTL solutions are a very good option to comply with your clients requirements. You have to think outside the box and you need to lose all fear because the price for these logistics solutions is all about negotiating well. It is a very good option in a new logistics era.
- Clients. Closeness to your external and internal clients. Are we providing results? Remember, our grade is given by our clients; it is not a self- appraisal. Evaluations in the logistics business are crucial.
- Nearshoring. Are your value chains coming back to the USMCA region? Did you plan for a faster chain, new transportation and warehousing rates, and new custom brokers? Nearshoring is a reality. Even Chinese companies are establishing in Mexico, mainly in the Monterrey area because of its proximity to the US.
- Human resources. Focus on positions like operators, forklifters, and floor coordinators who do the hard work, plan the different shifts and have lower salaries than corporate executives. The challenge is to have complete teams that work three shifts, which in peak season is essential.
- Holidays. Independence Day, Cristobal Colon Day, Days of the Dead, Revolution Day, Virgin Mary Day, Christmas and New Year… there are plenty of holidays from September to December, so you have to schedule your workshifts, your work guards, your time and your clients’ time appropriately. Is it worth paying extra time? Are you sure that each day will be completely productive? Maybe it is more productive to let your employees rest and recover these holiday days in complete Saturday shifts. It is important to let the logistics team rest, don’t burn them out.
- Strategic planning. Value chains are alive, in continuous improvement, always looking performance, better cost and looking for the best supplier. They never stop, so focus on the 2022 Peak Season and start planning for 2023.
We are returning to normal. The carrier market will continue but not for much longer. Experts say that the carrier market will remain in force in 2023, but working as an ally of shippers and carriers, value chains will be focused on generating productivity for both sides, making it a really collaborative value chain.
Final question: Are you prepared to face the 2022 Peak Season? I am pretty sure you are.Photo by: Carlos Canseco
Información tomada de: Mexico Bussines New
