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As COVID quiets, demand for warehouse space surges

While the novel coronavirus is still a problem across the U.S. — and one that's not likely to go away anytime soon — some aspects of the business world are returning to normal slowly but surely. Based on recent industry data, that certainly includes the logistics industry. After a definitive fallow period around the start of the outbreak nationwide, demand for warehousing space is once again surging, portending big things for the sector in the months and years ahead.

A big part of the reason for this, of course, is more people are staying home and thus ordering from online merchants who need more space to meet demand, according to The Financial Times. The e-commerce titan Amazon has, in recent months, signed leases for some 35 million square feet of additional warehouses in locations from coast to coast, and that seems to be a sign of the times.

Consumer habits have shifted — perhaps permanently — as a result of the lockdowns, such that it's expected online sales in the U.S. will approach $20 billion annually within the next few years, the report said. As such, some industry estimates show that demand for warehousing space will hit 333 million square feet by the end of 2022.

Warehousing space is in increasingly high demand nationwide.Warehousing space is in increasingly high demand nationwide.

What's at stake?
The fact of the matter is that years-long trends are converging for the industry at a time when the space to actually fulfill needs may be somewhat limited, according to Business Insider. Because of how companies have increasingly offered low-cost or free shipping with quick turnaround times, the need for additional space closer to population centers is on the rise. Moreover, just-in-time inventory strategies have become common, but that leaves companies vulnerable to unexpected shifts in demand and the like.

Because many logistics firms have to effectively be all things to all people in today's environment, they require more space than ever — as much as three times more than retailers, the report said. However, it's worth noting that retailers are also trying to get into the warehousing game at a higher rate these days; shutdowns and slowdowns have forced them to close brick-and-mortar locations, but these companies largely still exist and have loyal customer bases. As such, they need their own warehouses to keep up with demand.

Rising costs
As with anything else in business, when demand for something rises, so too do prices, and that's certainly been observed in the world of industrial real estate, according to Globe St. Indeed, rents for such spaces in the second quarter set new records in just about every major market nationwide as companies moved to claim space at levels comparable to pre-pandemic rates. Demand is growing so quickly that some companies may look to convert large retail spaces into warehouses.

With all this in mind, it's critical for any logistics manager to at least consider what their companies' growth strategy will look like in both the short and long term. Knowing far in advance how you will need to evolve to continually meet your goals will help you craft the perfect roadmap to do so.

Many companies in the supply chain have made steps to modernize some aspects of their operations in recent years, but in a lot of ways, they may still be doing the same basic things they did years ago. For that reason, purchasing managers in particular may want to examine their internal procurement processes and see if there are any changes they can make to modernize their efforts. Doing so could increase efficiency and, in the long run, save enough money to provide a complete return on investment.

The first thing purchasing managers need to understand about this issue is that even if they aren't making efforts to modernize their processes in some way, the competition almost certainly is, according to VNDLY. Typically, such efforts will start with adoption of a new, modern software platform that allows them to track and manage things like inventory, shipments and more on an ongoing basis, in as close to real time as possible. Many organizations currently use legacy software that has been customized time and again to meet their companies' needs, but now handle so much data that the programs have become unwieldy and unreliable.

The future is now for your procurement department.The future is now for your procurement department.

However, with modern operations, data in one department will typically be less siloed-off from the rest of the company, and it becomes easier for purchasing managers to monitor needs based on budget and operational requirements, the report said. That means all potential stakeholders need to have a say in figuring out what course modernization will take.

What's at stake
Companies that want to make sure they can do more to smooth all their processes and both internal and external communications would be wise to get buy-in from their supply chain partners, but that's not always easy, according to PYMNTS. The obvious advantages of high-tech adoption is that it speeds every aspect of procurement, but you also need to be able to complete the financial aspects of sales with an all-digital approach as well.

As many as 3 in 5 companies specializing in business-to-business transactions don't even have a website of their own, so the idea of everyone simultaneously becoming a high-tech, engaged partner is likely far-fetched (at least initially), the report said. But if even a small number of organizations can demonstrate the value of adoption, the pressure to adopt may build to a critical mass.

How high-tech is too-high-tech?
Given the slow build toward adoption of even basic modern software, going well beyond your current capabilities may not seem to be in the cards any time soon. However, as the blockchain becomes a big point of focus, interest in such technology may be on the rise, according to a recent Deloitte survey. Across the U.S., more than 3 in 5 companies say they plan to make at least $1 million in investments toward blockchain adoption over the next 12 years, potentially giving them even more insight into their purchasing strategies and shipping networks.

Of course, that kind of involvement isn't for everyone and it's important for your business to strategize carefully about whatever steps you take toward a more modern procurement process.

While things are starting to shift back to the "old normal" in some parts of the U.S., it's more than fair to say that the novel coronavirus pandemic fundamentally altered consumers' shopping habits. Although companies have been trending toward more online ordering in recent years to begin with, the lockdowns nationwide seem to have only accelerated the preference to shy away from brick-and-mortar stores.

That, in turn, raises an interesting question for companies in the logistics sector: Should they prioritize their direct-to-consumer shipping efforts over their B2B side? A recent survey retail industry survey from enVista paints the picture nicely, according to DC Velocity. About 1 in 3 retailers say they are trying to strike a better balance between in-store shopping and B2C e-commerce demand, and about the same number say they want to improve planning and forecasting for demand, or improve efficiency overall.

Going B2C would be a big shift for many businesses, but a potentially lucrative one.Going B2C would be a big shift for many businesses, but a potentially lucrative one.

Along similar lines, a previous enVista survey found that about two-thirds of consumers want improved visibility into inventory online, and nearly as many wanted to have the ability to buy items from anywhere and ship them anywhere, the report said. Fewer than half of respondents felt it was important to be able to pick up an online order from a physical location.

Temporary or permanent?
One thing any business has to consider under the current conditions is whether the changes they make to their operations will only last as long as the lockdowns do, or whether some or all of those new processes will be permanently incorporated into how they do business, according to Supply Chain Brain. There may be plenty of things your company can adopt — such as machine learning and artificial intelligence to improve internal processes — that would have plenty of practical applications after the pandemic is over, but others — such as increased staffing levels — that might not be as necessary.

Less broadly, among the big things companies may have to consider at this time is whether shipping smaller quantities of your items to individuals, rather than huge orders to single entities, is feasible in the long run, the report said. There may be plenty of avenues to make this possible, and you will need to investigate them to determine whether a B2C approach works for your unique business.

Getting it done
In many cases, companies may be able to complete B2C shipping at scale, but it will require fundamental rethinking of not just their strategies, but their entire offerings, according to enVista. For instance, some companies that specialized in B2B have begun offering smaller-batch products with far less wiggle room for changing or customizing orders, meaning they don't have to spend time in the warehouse picking and packing every order just-so, and can still seamlessly send a greater number of packages to more people.

Of course, every company is different and their paths to building a parallel B2C operation will be unique. But what remains a common issue is that everyone will have to drill down and strategize carefully before rolling out any changes to their offerings.

For many companies in the logistics field, the industry requires them to have a broad and diversified supply chain to procure everything they need to operate. However, especially in a post-coronavirus world, that's often easier said than done, and many businesses are trying to find new strategies to make sure purchasing remains an easy process.

While you aren't likely to suffer a once-in-a-century disruption again any time soon, the following steps should help your company build a more reliable, resilient supply chain:

1) Find new partners

Perhaps the easiest way to make sure your supply chain can withstand any disruption, regardless of size, is to diversify it so that you can rely on more suppliers when problems arise, according to Strategic Sourceror. Simply knowing that you can easily pivot from one partner to another when and if you need to makes it much simpler to proceed with whatever your current plans may be.

2) Keep waste to a minimum

The name of the game is efficiency in just about any business, but in the supply chain, it should be your entire organization's watch word, Strategic Sourceror advised. The more you can do to ensure every process you have in place runs smoothly and at the lowest cost possible, the better off you will be in both good and turbulent times.

It's critical to understand every aspect of your supply chain.It's critical to understand every aspect of your supply chain.

3) Make sure you keep up compliance

Even as you partner with suppliers — potentially in a number of different countries — you need to make sure that all appropriate rules and regulations are being followed to the letter, according to G2. Finding more areas of efficiency does not mean you should cut corners, and putting at least one or two people in charge of compliance (including hiring a separate compliance officer) is always a good idea to ensure all aspects of what you do are held in check.

4) Know your risk factors

At the same time you are trying to be cognizant of the ins and outs of regulatory controls, you also need to make sure you have a holistic picture of your supply chain and can consistently identify emergent issues that might knock you off course, G2 said. When you are able to use data and consistent communication with your partners to recognize problematic patterns before they even arise, you'll be able to weather any storm.

5) Strategize as far in advance as you can

Along similar lines to recognizing issues in advance, you should also map out your purchasing strategies weeks or months before you actually take any action, so that you can tweak what you need to, as necessary, according to IndustryWeek. That way, you always have your eyes on the prize and won't be deterred unless absolutely necessary.

6) Work on your contingency plans

With that having been said, the coronavirus pandemic certainly highlighted that you can't plan for every eventuality, IndustryWeek added. Instead, you should have multiple plans in place that account for as many potential hurdles as you can think of, so that you always have a fallback plan when normal procurement strategies aren't feasible.

Each week, we will go into details on how to address project and change management now to create a resilient and robust organization for tomorrow.

If you missed last week’s blog on Employee Training, you can check it out here.

This week, we will look at the 6th and final way a company can use downtime to impact the greater good of the organization and position themselves to be a better, stronger company when the work picks back up.

Optimize, Organize, and Design

When companies expand over time, it’s easy to just add on piecemeal to handle that growth. Those adjustments may work in the moment but as growth continues and operations begin to change or shift, how many times are those added processes and procedures revisited? An organization may not want to look at ways to become more efficient or effective because what they have in place still works. Those companies are in jeopardy of quickly falling behind the competition. However, if a growing company is willing to peel back the layers of the onion periodically and look at ways to optimize, organize, and design their entire operation as growth occurs, it becomes much easier to make adjustments along the way.

Specific Example: Reorganize the Warehouse

Deciding how to design a warehouse layout is a step of vital importance—it can make or break the productivity, safety, and overall success of a warehouse. The layout of your warehouse needs to maximize available space, allow for limited travel time, provide easy access to product, and create a safe work environment. While it can be challenging to design a layout that fits all needs, proper analysis of business objectives and practices, as well as a dedication to safety and a cultivation of productive procedures, can help you come up with a design that is optimal for success.

From receiving to storing to shipping, the layout and flow of your warehouse will determine in large part how well your business operates.

Following are 5 warehouse organization tips to get your warehouse in order and improve the speed and efficiency of your employees:

1. Re-evaluate your warehouse layout design

  • Keep the following design elements in mind when planning (or updating) your warehouse layout:
  • Flow – meaning the uninterrupted movement of materials, people, and traffic within your building
  • Accessibility – meaning every product and all products on pallets should be accessible by everyone, usually without the need to move one product to get to another
  • Space – meaning the maximum warehouse space you can afford, taking into consideration storage, stock, offices, working areas, empty pallet storage, battery charging, etc.

2. Use warehouse racking organization

Warehouse racking organization is a method of storing your inventory vertically instead of horizontally, such as on pallet racks. This is a cost-effective way to maximize your warehouse space if you carry a lot of inventory or if you have a small warehouse and can’t afford to buy more space.

3. Use ABC Analysis to set up warehouse inventory

ABC Analysis of inventory is a method of sorting your inventory into three categories according to how well they sell and how much they cost to hold:

  • A-Items – best-selling items that don’t take up all your warehouse space or cost
  • B-Items – mid-range items that sell regularly but may cost more than A-items to hold
  • C-Items – the rest of your inventory that makes up the bulk of your inventory costs while contributing the least to your bottom line

4. Label warehouse inventory

Your employees shouldn’t have to rely on memory when searching for items in your warehouse. Every SKU in your inventory should be clearly labeled for easy identification.

Keep your labeling consistent for every item (i.e., always label the bottom right corner of boxes) and include all the necessary information on every label, such as:

  • Product name
  • SKU
  • Color
  • Size
  • Date

5. Make receiving inventory easy

Receiving inventory effectively is one of the key warehouse management tips because it sets the tone for the rest of your warehouse and inventory processes.

Here are a few ways you can improve inventory receiving:

  • Optimize your receiving space by providing the proper tools and enough space to allow your employees to sort and store incoming inventory.
  • Keep your receiving space clean and organized by removing clutter and putting every tool away after using it.
  • Track inventory in real-time by implementing a perpetual inventory system, in order to reduce miscounts, missing inventory, and incorrect shipments.
  • Monitor quality control by hiring a quality control manager to watch for mistakes, point out problematic procedures, and reduce the instances of inventory damage.
  • Unload received inventory quickly and safely by using the appropriate machines (i.e., forklifts and conveyor belts) and following clear safety procedures.
  • Avoid shipping the wrong items to your customers by verifying the goods received using metrics, such as the description of goods, product code, batch tracking number, etc.

A well-run and well-organized warehouse is a critical function within a company’s sourcing and procurement management efforts. While there is a direct relationship between procurement and supply chain management, the two functions are not interchangeable.

Procurement is the process of getting the goods and materials your company needs, while supply chain management is the process of transforming those goods into products and distributing them to customers as efficiently as possible. Warehouse operations are often where these two practices cross paths, so this pivotal business operation requires the most efficient and well-run systems.

Series Conclusion

It’s easy to become complacent in the way your company does business. If the company is turning a profit, employees are perceived to be happy, and suppliers and clients are limited in their complaints, then why spend the time to self-evaluate and make potentially disruptive changes? Times will change. Industry will change. The world will change. Preparing your company to have the structure in place to withstand economic downturns or extreme cases like global pandemics will allow for a quicker rebound when those crises are over. More importantly, a company’s ability to find ways to improve and evolve, no matter what the global economy indicates, will be a critical measure for your company’s future.

If you would like to download a free white paper from the Corcentric website where all 6 parts of this series of blogs are organized into one single document, please visit our library here.

When the coronavirus first swept through China around the start of 2020, it shuttered many factories and shipping facilities in the Far East and, in many cases, crippled U.S. companies' supply chains. That led those businesses to reconsider many things about how they operate, including whether they should rely on a global supply chain at all. Now, more businesses are facing a kind of existential question: When the pandemic comes to an end, will we ever go back to previous norms?

The idea of having a global supply chain — which often requires interaction with potentially large numbers of partners to get everything you order from Points A and B to C, D, E and more — might now seem like a literal logistical nightmare. According to Supply Chain Digital, it's not out of the question to revert to old ways, and many companies already have, but the level of control at every step of the supply chain may need to increase dramatically.

It always helps to have backup plans.It always helps to have backup plans.

First things first, that will require digitization and automation of many processes that used to be handled manually, so that it's easier to share information between partners and track items as they cross borders and oceans, the report said. That also requires increased cooperation and different sourcing options, so that if partners in one part of the world cannot hold up their end of the bargain, for whatever reason, your business always has something to fall back on.

Plan for everything
While the novel coronavirus was a once-in-a-century event that provided a major shock to the system, there are all sorts of difficulties (big and small) that can crop up in even the simplest of processes, and those need to be accounted for, according to The Hackett Group. Together with your partners, as well as within your own organization, you need to sit down and think of all the potential contingencies that could arise over the course of years, and how you will respond if those incidents arise.

You will also need to understand the areas that will be your signals that something has gone awry in the first place, the report said. It's one thing to know that a problem has arisen; it's quite another to be able to figure out why, and revert to a Plan B as early as you possibly can.

Never settle
Finally, it's worth remembering that your supply chain (and the world) is ever-changing and even contingencies that have worked in the past might not cut the mustard when a new situation arises, according to Supply Chain Digest. For that reason, your approach needs to be more diversified — such as with regionalization — so that if you lose some options for a period of time, you always have somewhere else to pivot. And more to the point, you should have those contingencies tested as a just-in-case so you know they're as reliable as possible.

The more you can do to take a holistic look at how your supply chain operates and how your relationships with partners affect things, the better off your company will be when it comes to weathering any storm.

Businesses in the logistics sector are always looking for a way they can improve the efficiency of their operations by even fractions of a percentage point, so it's no surprise that they're always searching for new avenues to evaluate themselves. For many, that means the next few years will see them dive headlong into the high-tech world of data analysis, if they haven't done so already, and those investments may take a number of different forms.

For instance, nearly three-quarters of logistics firms say asset tracking and location technology, as well as wireless connection areas, are going to be vital to their companies within the next three to five years, according to a recent global industry survey from Ericsson. At the same time, roughly two-thirds said the same about adopting the blockchain, artificial intelligence, and robotic process automation.

AI holds a lot of promise in the logistics industry.

Fortunately, it seems that this is likely to become easier within the proscribed timeframe largely because mobile service providers are rolling out high-speed 5G technology that enables faster and more accessible communication between entities, the report said.

"5G will definitely help," Aljosja Beije, logistics and technology lead at a blockchain tech firm, told Ericsson. "It will be a big leap forward compared to what we can do today with 4G. It will enable us to integrate and coordinate devices so that data can flow throughout the supply chain."

Why data helps
When companies have a better handle on the information that powers their decision-making, a lot of those issues are taken out of humans' hands, according to Tank Transport. Put another way, when artificial intelligence systems have a broad array of data flowing into them, humans have to make fewer decisions manually, freeing them up to focus on other tasks that aren't as easily automated.

That doesn't mean the decisions made by an AI system don't have to be monitored, or that the platforms are foolproof — far from it, the report said. However, with machine learning, these decisions are getting better all the time, and companies just need to make sure the proper flow of information continues apace.

Speeding the supply chain
Especially when you are sharing data with your various partners in the supply chain, AI platforms can be used to increase efficiency in a number of ways, according to Material Handling & Logistics. Not only can these systems deal with tasks like ordering and monitoring; they may also be able to help companies adjust their labor distribution to match conditions, ensure on-time delivery and more.

The more data these platforms have available to them — including legacy documents such as Excel spreadsheets — the more powerful their decision-making becomes, the report said.

For all these reasons and more, companies that have yet to fully invest in data tracking and AI may want to start laying the groundwork in the near future. Doing so will help you stay on the cutting edge of your industry or, at the very least, keep you from falling behind your competitors.


Each week, we will go into details on how to address project and change management now to create a resilient and robust organization for tomorrow.

If you missed last week’s blog on Introducing Automation, you can check it out here.

This week, we will look at the 5th of 6 ways a company can use downtime to impact the greater good of the organization and position themselves to be a better, stronger company when the work picks back up.

Employee Training

When client or customer work slows, internal training can be a great way to keep employees engaged in their job and company. A key piece to internal training is gaining buy-in from employees. Some are willing to learn as much as possible, others will look at it as a chore or as something unnecessary for their job. Communication is crucial to convey the positive attributes of internal training and how an employee’s participation in the training will benefit their career path within the organization.

  • Key benefits of internal training
  • Improved employee performance
  • Improved employee satisfaction and morale
  • Addressing weaknesses
  • Increased productivity and adherence to quality standards
  • Increased innovation in new strategies and products
  • Reduced employee turnover
  • Enhanced company reputation and profile

When it comes to training, companies can think outside the box by promoting expanded skill sets and convenient delivery systems. Data analytics, new technology, presentation skills, public speaking, negotiations, crisis management, other company operations, etc., are all concentrations that increase the value of the employee.

In terms of delivery of training, there are multiple innovative methods that can keep employees engaged:

  • eLearning
  • Virtual instructor-led classroom
  • Webinar
  • Job aids
  • Infographics

Specific Example: Project Management Training

Project management training can help bring into focus the larger picture of why a company does what it does. It can help to define all the complexities that go into a project and allow employees to better understand the arc of decision making.

Project management training courses provide competitive advantage for the company and the employee, including the development and success of project goals; advanced industry education; effective implementation of essential phases throughout the project’s entirety; and a realistic defining of project duration and budget. Successful development and delivery of training programs also facilitate a structured approach to project delivery and work packages, as well as effective management of changes in project objectives and scope.

Employees are able to apply newly gained knowledge to refresh company policies and procedures around clients, projects, goals, processes, etc. It’s a win-win for the organization and its people.

Additionally, there are opportunities to then dive deeper into the broader scope of project management and how its many facets can be defined for the organization. For example, distinguishing the difference between project management and change management can help to foster integration between the two.

Although project management and change management disciplines are often viewed as separate and unequal components, assimilation between the two is imperative for project success An important first step is to understand the roles of both the project manager and the change manager and where their responsibilities converge and, at times, collide.

  • According to the Project Management Institute (PMI), a project manager is accountable for the success or failure of a project. They are responsible for the planning, execution, and close of the project. Further, the project manager must manage teams, ensure progress, and motivate project team members. It’s up to the project manager to make sure that project goals are in alignment with key stakeholders.
  • According to Prosci, a change manager facilitates the desired outcome of projects/change initiatives by working with employees. This person focuses on meeting objectives on time and on budget by increasing employee adoption and usage, which could include changes to business processes, systems and technology, job roles, and organizational structures.

Integrated approach ensures project benefits are fully realized by utilizing the strengths of both project management and change management disciplines, including:

  • Enhanced employee and leader engagement
  • Increased sustainability of the change enterprise-wide
  • Realization of your people ROI for the project
  • Avoidance of change saturation across an enterprise
  • Measurement of an organization’s change tolerance

An organization requires strong project management and change management to reinvent and grow. Both are crucial for the success of an organization. Without strong project management, organizations will not be able to release new products in the market nor bring about internal changes. Without strong change management, organizations cannot survive in the ever-changing competitive business world.

Please check back next week for a look at part 6 of this series where we will discuss how to ‘Optimize, Organize, and Design’.

The roles and functions of Procurement have evolved over the decades, and it is hard to overstate the value of analytics has played in this evolution. We have seen a shift from spreadsheet-driven, manual spend analysis to automated, predictive and prescriptive data analytics. While it may seem like analytics can grant Procurement professionals a magical crystal ball, be wary of relying too heavily on data analytics, especially when those data sources are less than reliable. Let’s take a look at the benefits and pitfalls of analytics within the Procurement function.

AI-driven and automated tools have proven crucial for almost everyone within Procurement. From Category Managers applying predictive analytics to the AP team measuring cycle times to assisting strategic sourcing lock in better payment terms and discounts, when used properly analytics can build trust and confidence within your Procurement organization. But, let’s consider the foundation for predictive and prescriptive analytic models: data sets from multiple sources. How accurate is the data you are plugging into your cloud-enabled or platform-driven analytics tool? How do you verify the validity and authenticity of the data sets? It is no surprise that bad data can lead to bad decision making. The purpose of these analytical models is to guide our decision making, and if the data we are using isn’t accurate or outdated, the results certainly will vary. Be sure you are vetting and validating your data before you begin to make decisions regarding large contracts or strategic initiatives. This may mean frequent audits or higher accountability on those inputting your data. Save yourself the frustration and hassle associated with “bad data.”

Moreover, if your team is inundated with data or analytic models, you potentially may be causing more harm than good. The same way consumers may feel overwhelmed in a super-store, so might the Category Manager with a variety of dashboard views and filters. Establish three or four key metrics you wish to report out on and use these small sets to guide thinking or decision making before opening to flood gates. If cycle time is important to your organization, start by measuring your average contract lifecycle or average sourcing event duration to help plan any corrective action. But, spending time digging through different filters and dashboard views isn’t productive and will likely cause resistance from those providing the reporting. Also, understand how different metrics may overlap or work with one another. For example, forecasting and benchmarking are separate metrics you can report on, both help build your market intelligence and equip your team with the tools to be trusted consultative advisors for stakeholders.

While predictive analytics can provide a Procurement team with valuable insights, be careful not to rely too heavily on these insights and mistake predictive for prescriptive models. If you trust your data, then your analytics and reporting capabilities influence strategic decisions, but if you are unsure of the validity of your data sets then it is time to revisit where and how you capture your data – manual inputs, ERP systems, source-to-pay platforms, etc. Once you are confident you are capturing and vetting all data sets, start small with key metrics and reports before applying any overly corrective actions. These strategic steps can help make the most out of your analytics and reports while avoiding any over-reliance on easy-to-use reporting features.

    As supply chain consultants we help our customers to improve their purchasing processes and find savings opportunities within their supply chain. There are a number of ways to do so, from instituting centralized purchasing tools, guiding purchasing behavior that promotes process efficiencies, and even managing the relationships with the suppliers that our clients choose to use to support their business. One of the quickest routes to savings is the management of indirect spend through Group Purchasing Organizations (GPOs.) 

    Indirect spend is any spend not directly included in the Cost of Goods Sold of a product or service. Indirect spend refers to expenses incurred for materials, services and maintenance required to operate the business. For example, if you own or operate a fleet of vehicles, any money spent on maintaining that fleet would be an indirect spend. Other examples of indirect spend would uniform rentals, industrial supplies or even janitorial services. To help your business Corcentric would holistically analyze all expenditures you’ve made in the past fiscal year. From there we categorize which spend is indirect vs. direct, and then deem which indirect spend categories may be impactable with our help. We look for supplier redundancies, large tail spends, and spend volumes overall. These are all factors that would lead us to look into further details regarding a supplier relationship and discover the room for improvement. 

    One tried and true avenue to create savings is the utilization of Group Purchasing Organizations. GPOs are a quick way to savings because we connect our clients with the suppliers Corcentric has already partnered with and identified as among the best providers in their respective industries. GPOs were a new concept to me upon joining the consulting division here at Corcentric. A GPO is an entity created to combine the purchasing power of a collective of businesses to leverage better pricing and service with desired suppliers. 

    When we think about what that means for our clients, the idea is that we pull together all of customers’ expenditures to qualify for discounts and rebates that they otherwise wouldn’t be able to achieve independently. If we continue to use our example before of being a company that owns a fleet, that fleet will need repairs, fuel and maintenance. If you are a smaller business, you may not have the purchasing power to qualify for rebates from large suppliers. If you were to need new tires, you would be stuck buying them at retail value. However, if you were to join Corcentric’s Michelin GPO, your company’s spend would be combined with all other clients of ours participating in that GPO program and thus would qualify you for better discounts and better service due to that now improved purchasing power. 

    By leveraging pre-negotiated contracts with leading suppliers to source the products your organization uses every day, you benefit from the best possible pricing and service levels. It’s the ideal solution to get everything you need to keep business running smoothly while optimizing control of your indirect spend. We have pre-negotiated GPO deals that you can get immediate access to just by signing up to be a Corcentric customer. Our consulting team knows all the questions to ask and has experience with all the elements of a successful implementation across varying product categories. Corcentric will also act as a managed service for the implementation process, managing the implementation between the customer and supplier. Our goal is to assist with your procurement needs every step of the way.
    See the chart below for more on what your company stands to gain by working with Corcentric GPO programs, either as a buyer or supplier. If you feel like your company could benefit from tidying up indirect spend and leveraging GPOs to reduce costs, or becoming a supplier in our network, feel free to reach out to us today to see how we can help your business grow.

When it comes to purchasing vehicles for your fleet, there are many more considerations than the sticker price of the asset. Asset acquisition, when done wrong, can have a crippling cost on your organization. However, when all factors are taken into consideration, like using Sweet Spot Analysis to find the right vehicles and managing financing and operational costs, it can save your organization millions! Using only manufacturer specifications on gas mileage and recommended maintenance schedules will not provide the best solution as manufacturers do not know the specific needs of your business. They do not know what the function of your fleet is. Your organization may make many local deliveries or strictly deliver large loads across the country. The need of your business will decide what vehicles are best to purchase, as well as HOW they should be purchased. Simply negotiating the cost of the asset upfront will leave potential savings on the table. Deeper analysis on the Total Cost of Ownership (TCO) must be done to take fuel, maintenance, and the correct specification fit for your fleet into account as these on average are eighty percent of fleet costs.

The cost of your fleet is likely to be one of the largest Capital Equipment expenditures your organization will make. Keep reading to see our recommendations on how to collect data, prioritize and analyze, purchase, and manage the cost of your fleet effectively!

1. Data Collection

 Having the right data is extremely important in making a buying decision. Knowing the ins and outs of what your business requires is important. Look at a full picture of your routes, or your company’s vehicle usage. See where most of your routes or lanes are geographically. If the climates are hot, different vehicles may suite you. If the area is mountainous, other vehicles will most likely suite you best.  Be sure to gather data on fuel use, maintenance costs, odometer readings, and your current vehicle specs to get a full picture of your fleet. This information must be gathered prior to making any decision.

One way to gather this data is to use software systems that aggregate this data with the help of Corcentric team members along the way. Many, including Corcentric’s offering, have a web-based portal that reports can be downloaded from on the fly. This could be vendor spend reporting, out-of-service reporting, and much more. However you get the data, make sure it is accurate and accessible.

2. Prioritize and Analyze

The next step is to perform some analysis on the data to prioritize what is most important to your company. The data you have already gathered can be analyzed to find the best vehicles for your specific fleet. Most importantly, you should attempt to find the vehicles that mitigate high operational costs. Remember that operational costs will be eighty percent of the Total Cost of Ownership.

The simplest way to do this is through Corcentric’s Sweet Spot Analysis. Simply providing Corcentric with the data you already gathered in step one, will allow for extensive analytics on how to best purchase and manage your vehicles. The data is run through a massive database of 800,00 fleet vehicles under management to compare pricing on many fleet related costs. The assessment will also offer you information on life-cycle     management, fuel economy and consumption, maintenance and more. From this, you will be able to find the sweet spot on what type of engines, trailer configurations, re-marketing policies, financing structures, preventative maintenance, fuel programs, and much more, work best for your fleet. The best part is that it is provided for free. It allows Corcentric to show how effective we are at providing savings within your fleet.

No matter how the data is analyzed, or what tool is used, the decision of what vehicles suite your organization the best can now be made.

3. Purchase

The last consideration is whether your organization should purchase or lease the vehicles. Many companies need flexibility where leasing will be more effective. Your company may not be able to spend the hundreds of thousands upfront on fleet vehicles to outright purchase them. Additionally, knowing that the most important aspect to look at is the Total Cost of Ownership (TCO), the cheapest price is not always the way to go. Paying a higher amount monthly for a lease allows for newer vehicles. This means that your operational costs, the eighty percent of TCO, are lower. Sweet Spot Analysis will provide you with the best vehicles to keep excessive operational costs down. This will save your organization much more in the long run. Luckily, this is another area where Corcentric can greatly help!

Based on affordability and obsolescence, leasing can provide the dexterity that many businesses require. Your working capital will not be tied up in buying enough expensive vehicles to fulfill your fleet. Also, with the speed of technological advances, your fleet will stay up to date with a lease. The time frame to replace an out-of-date asset is much shorter and may have little to no penalty. Corcentric offers very flexible financing for fleet vehicles. There is no initial cash outlay and terms are very flexible. This will keep your finances and attention on growing your business rather than concern over fleet costs.

4. Continue Analysis 

Finally, just because you purchased vehicles does not mean the effort is complete. Creating an optimal acquisition strategy and maintenance policy are the keys to ongoing success. Fleets are expensive and their management is an ongoing effort. As long-time fleet specialists, Corcentric has an offering in Fleet Management, as well. The many years of working with large fleets has provided us a lot of expertise in this area. Whether it is policy development, better pricing on maintenance parts, ongoing negotiations, or risk-free enrollment, our program can benefit any fleet. We truly are a one-stop shop for any Fleet related need. 

If your company is like many, many others in the logistics industry, its supply chain has been disrupted by the novel coronavirus pandemic. While some have been able to navigate these issues and mostly get back to business as usual in recent months, others still find it difficult to rebuild their procurement strategies. With partners shutting down or facing shortages of the materials they need, it's vital that any business in the supply chain be able to pivot under COVID, and find a new strategy that works for their short- and long-term goals.

First things first, as with anything else in business, it's vital to sit down and map out how the pandemic has affected you to date, and what options you may have to overcome that impact, according to 4C Associates, writing for Supply Chain Digital. When everyone in your organization knows what the problem is, and have a menu of potential solutions to choose from, everyone is on the same page and it becomes easier to find a comprehensive strategy that cuts the best possible path forward.

Simply put, the more you can do to codify and outline your procurement strategy — as well as other aspects of how you plan to operate in the supply chain as long as COVID issues persist — the better off you will be when it comes to pivoting to new options, the report said. When you have a predetermined plan for how you will respond to changing conditions, there's no ambiguity to create delays or entanglements.

Effective procurement planning starts at the team level.Effective procurement planning starts at the team level.

Getting every partner involved
Of course, your company may plan and plan to come up with different solutions for every scenario you can think of, but that might not matter much if one of your supply chain partners encounters its own issues and does not respond properly, according to DevEx. Transparency for as many aspects of your supply chain as possible is critical to understanding what issues your procurement department actually faces, and that takes work with potentially dozens of different companies to forge more effective data-sharing partnerships.

Put another way, your partners' problems become your problems downstream, so you need to do everything you can to encourage and empower them to have their own contingency plans, the report said. If you haven't yet laid this groundwork, you're leaving yourself vulnerable to the vagaries of a very tricky situation.

Optimizing the strategy
Finally, you have to recognize that if you do need to pivot to a contingency plan, you are unlikely to find a solution that allows you to keep operating in exactly the same way you did before the complication arose. According to the Centers for Disease Control and Prevention, noting the need for these plans as it specifically relates to personal protective equipment, you need to have plans for three levels of operation: conventional, contingency and crisis.

The latter is important because, sometimes, all the planning in the world can't help you avoid procurement issues, but it's vital that you know what your operations look like even in a worst-case scenario, the CDC said.

The more strategizing you do now, to account for every possible outcome, the better off you will be in the long run.