4 Practical Ways to Consolidate Courier Networks

Consolidation is the buzzword of the decade, and rightfully so. The upsides to consolidating logistics vendors are apparent in most aspects of a business, but everything tends to boil down to one simple thing – its just easier. Consolidation means better communication, simper billing and accounting, and reduced complexity in your network.

But even with all of these benefits, most companies with large regional and national delivery networks have a hard time consolidating. So, practically speaking, what steps can a company take to begin the process of reducing vendors and consolidating their network?

DECIDE WHAT’S IMPORTANT

It’s a cliche, but you really can’t have everything. Define what matters most to you and pursue it. It may mean that you choose a vendor with a higher cost but a much better experience for your customer. You may have to decide between owning your own fleet or being able to easily scale up to reach new markets with a large regional 3PL. Whatever the case, decide what matters most before you move forward.

RESEARCH YOUR CURRENT VENDORS

A lot of times people think there is a magic bullet vendor out there just over the horizon. Remember, you work with your current vendors for a reason, and one or two of them may have more than enough capability to help you make the next step in consolidation. Call your vendors and ask questions. It may be that a vendor you use to cover a small market in New York can easily cover 5 states, and do it with the right integration tools and within the compliance standards you need to adhere to.

SHOP THE BIG REGIONALS

The last decade has seen the emergence of some regional logistical powerhouses. Small courier companies have been buying and merging to the point that they’ve become large courier companies with all the same benefits of FedEx/UPS but with more of the flexibility. These regionals usually have the network coverage, the technology integration, and the industry expertise to offer a competitive solution. Look for companies that are making over 7,500 stops a day and cover multiple states.

CONSIDER THE COST

Most companies shy away from consolidation because they think it should be cheaper, and sometimes its not. Remember, your love for low bids is probably what got you to this place, so something needs to change. Consider that some of the savings you’ll never see on the balance sheet comes from a healthier culture, better billing and technology integration, and the benefits of a consistent delivery experience for your customer. Cost isn’t always king, and sometimes better service is worth it – for you and your customers.


3 Ways Logistics Helps Your Brand

Anyone in control of a company’s logistics process has a responsibility for the reputation of the company. Sure, your job is to get things from A to B, but your job is also to protect the Brand (with a capital B). Some executives are losing sleep over this, and in our world of 24 hour news coverage, blogging and social media, there’s no question why.

So how can we protect ourselves from the midnight phone call or that doomsday email? Well, unfortunate situations are going to happen, and mistakes are going to be made, but here’s three things that are strong protection against some of the serious liabilities we face:

KNOW YOUR DRIVERS

Let’s say a financial institution has it’s own delivery fleet and has never run background checks on their drivers. This is a recipe for disaster. Any employee or contracted courier can steal a batch of checks, but if that person also has a criminal history of stealing checks, someone in the executive suite is in trouble. Every company should know their drivers, and that means criminal background checks, drug screening, previous address history, and whatever else your specific industry demands.

NEVER COMPROMISE STANDARDS FOR CONVENIENCE

A painfully obvious example of this is the Walmart incident with comedian Tracy Morgan. A driver awake for 24 hours straight is illegal, but we all understand the tendency to stretch the limits to make things work. Develop a culture that looks at standards as a “must,” and doesn’t look to cut corners regardless of the payoffs. The risks far outweigh the rewards, and no brand can afford to be a negative news story.

BUILD A CULTURE OF CHARACTER

A large company in the midwest created a grant system for the employees that works like this: if someone is in a bad situation (be it family, health, or finance) they can apply for a grant from this fund to help them financially through the situation. What do you think that says to employees? And, how much less of a risk are employees to the company when they know the company cares? When you build a culture that treats people well, you’ll find that you attract the kind of character that you want.


How Logistics Transformed Everything

Q: One obvious change in world of banking logistics has been the implementation of branch image-capture and a reduced need to transport checks. How has AEXGroup adapted to that change and what logistical needs do banks value now?

JD: We’ve been working with banks since the 80’s, so we’re used to change. One thing we’ve learned is to be flexible and accommodate our clients business model – not the other way around. When branch image-capture reduced the amount of checks being transported, we had to look at the whole system and see where we fit. Things shifted from a security and compliance needs to network needs, and we saw an opportunity in that. Banks still needed a lot of services – inter-office mail, marketing materials, office products – and our network became a huge asset to them. A lot of banks are seeing a real cost-savings in outsourcing courier services today. The cost of owning a private fleet is more difficult to sustain. Because of how AEX integrates with our clients, and because of our large network of coverage across the Mid-Atlantic, we’ve been a really logical choice as a partner in the past few years.

 

Q: So banks are outsourcing courier services, but what they really want is someone who “feels” like a private courier?

JD: Exactly. That’s the real business now. So at AEXGroup we’ve recognized a competitive advantage in integrating better than anyone else. At Susquehanna Bank (SBI) for example, we’ve actually created their own labeling system recognized by our software. A branch manager at Susquehanna can print out a SBI label that looks every bit like something that would be routed internally, then an AEX truck picks it up and routes it where it needs to go. That’s seamless, and that’s the way you need to integrate into customers operations today.

 

Q: But you’re still not a private courier, you’re delivering for companies in a wide range of industries. So how are you learning what’s best for banks and helping them improve?

JD: Well, we’re a logistics provider, not a bank. We don’t tell banks what rate to lend at or who should be approved for mortgages, but we sure do know a lot about logistics. We always look at our customers business model and find areas for improvement. Take Wells Fargo, who we’ve worked with for ages. They were using Fedex to transport checks to be destroyed, and they were paying standard rates for it. That’s crazy! We added document destruction as a service and reduced that cost dramatically.

 

Q: In the banking industry, what are some of the most tangible things a logistics partner brings to the the table and what impact do they have to the bottom line?

JD: There’s really two answers to that question: the right logistics partner should help you work smarter and save money. We kill two birds with one stone by having the best network. Because we cover such a wide area and deliver the same time every day, our costs are incremental instead of fixed – like UPS/Fedex. There’s also strength in our flexibility for our clients. Scheduled delivery times mean less interruptions for our customers, and a better overall experience. I really think that you have to care about your customers business to succeed, and that’s exactly what we do.


The Model: What’s Important in Last-Mile

Last-mile delivery comes in a hundred different shapes and sizes, and to assume that there is a one-size-fits-all solution for every organization is simply assuming too much. That said, we’ve built a long history on a foundation of three aspects of the business: customer service, technology, and integration.

Technology and integration really go hand-in-hand in 2015, and we’ve found the logistics landscape to be very fragmented. Some companies still use local couriers who don’t even offer electronic POD’s and tracking, and some have best-in-class applications that integrate seamlessly. It’s hard to calculate the costs of those outdated models, but one thing we’ve always been aware of with our clients is the cost in human capital. Too often we see valuable time wasted doing manual work that could be automated, or the same job being down twice.

We work hard upfront to make life easy for our clients. For example, Susquehanna Bank integrated seamlessly with our track and trace technology to bring their in-house routing system to another level. Using AEXTrack software, they walk through a simple delivery process, print their own label, and then track their shipments in real time.

But it’s almost impossible to talk about integration without talking about customer service too. The unfortunate reality is that even some of the best integrators out there believe that technology is the ultimate answer – push the button and automate everything. But what about that shipment that bucks the system? What about that quick change that needs to be made to onboard a new customer? That’s where service comes in. We’ve built AEX to be available to our clients 24/7 and 365 days, so you can always get a live person on the phone and work through your situation.

The fusion of customer service, technology, and integration is the key to a successful logistics model – built for the world that is here today, and ready for the one that is coming tomorrow.


What to Look For in a Delivery Network

What do you look for in a delivery network? Below are the four aspects of a network that should be top of mind when considering where you deliver, and who you work with:

• How Big is the Network

Its obvious to always consider how large the network is. Working with a single provider who can cover your entire network helps streamline your processes and reduced some of the hassles that come with multiple integrations. Also, make sure to consider markets you may be entering. Scaling up and down becomes much easier when working with a larger network.

• How Deep is the Network

Coverage comes in different shapes and sizes. It’s important to find out how many stops-per-day a provider makes, as this will be a good indicator of their costs. When 3PL’s add new customers on, many of the costs are incremental – if they’re already delivering to a pharmacy, it’s not much added cost to take your totes to a retail location just across the street.

• How Secure is the Network

Your delivery network is a representation of your brand. When drivers are properly drug-screened, background-checked, and vetted for previous driving history, chances are your brand will be represented well. If that’s not the case, you are rolling the dice. Make sure your delivery network has the proper safety and compliance standards in place to serve your customers well and protect your brand

• How Supported is the Network

When all the boxes are checked – size, depth, security – you need to get an understand of the support you’ll be receiving. The widest networks are of no value when you need the rush shipment to go out and can’t get a hold of someone, or when the line-haul is three hours late and you need to get a game plan together for your customers. Find a vendor with service that is 24/7 and 365 days a year, so you can always get a live person on the phone. Also, look for the kind of service that is consistent, where you are dealing with people who know you well and understand the way you work.


Overhead is Slowing You Down

Overhead slows you down, but it would be unrealistic for a logistics provider to claim that they would always be better than a company’s private fleet, mainly because there are too many variables to claim that absolutely. However, there are certain types of companies that should definitely not own a fleet of couriers, and here are three of them:

THE RAPIDLY-GROWING COMPANY

Overhead doesn’t move fast. That is the reality for companies that are growing and need to rapidly expand into new markets to meet new demands. A large regional courier can handle even the most rapid expansions because they already have the network coverage you need. Too many companies are making a big sale in a new market, and then running around trying to rent warehouse space and hire drivers in 30 days to make it work. Focus on what you do best, and let a 3PL help you with what they do best.

THE VOLATILE COMPANY

A company that experiences dramatic shifts in volume and customers can’t sustain a stable internal fleet. The nightmare scenario would be drivers with only four or five totes in their vans each day, warehouses that are at 25% capacity, and employees who are being paid but have nothing to do. Its a liability and a culture-killer.

THE FOCUSED COMPANY

A large regional bank is trying to figure out how to grow their customer base and offer a better service. Should they be focused on innovating their logistics model too? Chances are that focusing too many resources on a better internal logistics process just takes you away from the core of what you do and what makes your business model great. Most 3PL’s are constantly innovating to cut costs and better serve their customers, so let them take care of that aspect of the business.