Not too early, not too late

Not too early,
not too late

Picture this scenario: It's the day before Mother's Day and you're in a store desperately looking for a greeting card that assures Mom how much you care about her. If you can't find a Hallmark card, your brand loyalty isn't going to last much longer than the time it takes you to find another company's card. We are talking about your mother, after all.

That's the kind of replenishment nightmare Hallmark works hard to avoid. It's the same challenge facing any company specializing in seasonal products, but the ways companies respond to those challenges are many and varied. To ensure precise delivery, Larry Faitz, transportation modal consultant for Hallmark Global Services Inc., elects to use planned expedited shipping services.

Two timing issues Hallmark faces are resolved through use of expedited, explains Faitz. “We no longer have inventory space at our retail locations. The stores want the square footage for sales, not for storage. Even at our own Hallmark stores, we try not to have a whole lot of inventory,” he says.

Another factor is the challenge of making sure that the correct product meets with the company's installation crews. Some of Faitz's customers now give Hallmark a definite time in which to install product.

“We basically have a four-hour time frame to complete our installation,” he says. “The stores don't want us showing up early. They want the product to show up when our installation crew shows up. We have to match our freight with our installation crews — they all show up at the same time, 9:00 a.m. So, we are able to get the installation going on schedule without disrupting the schedule of the retail outlet opening up.”

The situation is the same with Hallmark's proprietary stores. Faitz makes sure all stores have the correct product on the exact same day for a given promotion. In this case, product moves by time-definite, expedited shipments planned to arrive all at the same time.

Although Hallmark uses a few other carriers, the primary provider for its expedited freight needs is Yellow Exact Express, the expedited arm of Yellow Transportation. According to Rick Mathews, vice president of Exact Express, the company operates as a consumer-defined, mode-transparent service.

“Certainly we use the Yellow network, but we also use over 2,000 other providers,” Mathews says.

For Exact Express, the retail industry is a prime customer. Mathews explains that the carrier is able to hit specific delivery windows for vendors, allowing them to stretch out their supply chains and avoid retailer chargebacks.

Faitz agrees, noting that some of Hallmark's bigger savings have been in avoiding chargebacks from their customers. “A lot of our customers are retailers,” he notes, “and they have chargeback programs in place if product doesn't arrive on a certain day within a certain window. By using these expedited and guaranteed delivery systems, we've avoided a lot of chargebacks we had in the past where a normal less-than-truckload (LTL) ground shipment might get bumped or delayed and we'd be charged for tardiness.”

Hallmark has its own manufacturing plants, with three of them located in Kansas where it produces most of its product. It also has a distribution center (DC) in Liberty, Mo.

Mathews says that, “A big part of business we do for Hallmark is picking up product from their vendors and delivering directly to their retail outlet instead of a Hallmark DC. Generally their retailers don't have a lot of dock space or storage room. It's very important that we deliver within a certain window for their crews to be able to set up the displays — get old products off the shelves, new products on them and then depart before the main consumer shopping hours.”

Hallmark is connected to Exact Express through the carrier's website, where the manufacturer gains visibility into service performance, proof of delivery and other necessary data. The carrier also has a resolutions team with the sole purpose of proactively monitoring all Exact Express shipments moving within the Yellow system.

If there are any unforeseen circumstances that might cause a delivery delay — called “proactive notification” — the team provides alternative solutions in advance of expected delivery times. For Hallmark this means installation teams can be alerted so they aren't sitting at retail outlets waiting for product to arrive.

Faitz looks at transit times in determ ining how to ship. “If it's a four-day transit time, we try to ship it four days out, matching our transit time with the carrier's time,” he explains. “We produce product in advance. We'll do a distribution with the farthest state shipped first and the closest shipped last. So something in Missouri will receive its shipment the same time that a store in California receives it because we ship California earlier.”

For both Hallmark and Exact Express, the relationship works because they have a good partnership. “We work with them and share with them our costs, goals, responsibilities, requirements and expectations,” says Faitz.

Mathews concurs. “We have developed true partnerships with our custo-mers,” he notes. “Price sensitivity today is not as critical as service sensitivity. Planned expedited is work-ing with many of our retailers. A very large part of our business isn't necessarily the speed, but rather the time-specific, planned delivery window. We have quite a few customers that give us expedited business but don't want it delivered until eight, nine or 10 days from now. But on that eighth, ninth and 10th day it's got to be delivered between 8 and 9 in the morning.”

There's been an additional benefit for Hallmark as a result of its planned expedited shipping. As Faitz points out, “Our sales department has been very happy. Previously, they might miss promotions or sales dates. If they miss one day's worth of sales, they miss a lot. If a customer comes in and the product isn't there, the customer goes somewhere else to buy it. It's a lost sale. Today we don't need to spend time and effort in tracking shipments.”

There is no substitute for planned expedited service when the issue is disaster recovery. For example, Steve Spiewak, marketing manager of information management specialist Iron Mountain Off-Site Data Protection, points to the ability to get business back on its feet after the tragic events of September 11.

“Half of the people within the Twin Towers were our customers,” he says. “Because they had a recovery plan in place, every single customer that was in the Towers was able to get their systems back up and running.”

A disaster like the attack on the World Trade Center isn't the only highly visible need for off-site data storage. Weather, last year's power grid failure, earthquakes, fires, internal human failures like sabotage, and needs for information pertaining to Sarbanes-Oxley or other regulatory matters offer additional reasons for the service.

Spiewak's group offers pickup and distribution of customer's information stored on media, versus text on paper. The majority of what the company handles are DLT (digital linear tape) computer tapes. The media are stored in climate controlled, protected branches.

Iron Mountain has more than 56 facilities in the U.S. that specialize in all of the environmental handling conditions that pertain to media versus paper. Most overall company visibility is with paper storage operations: The paper handling trucks have the Iron Mountain logos on their sides while offsite data protection trucks do not.

Once data is moved and stored at a facility, on request Iron Mountain uses its tape management system application to retrieve asked-for information in a file from the customer's application, and then deliver it the next day if needed.

The Off-Site Data Protection group has more than 400 of its own vehicles throughout the U.S. for both inbound and outbound. For disaster recovery work, it partners mainly with FedEx Custom Critical. Spiewak explains that for disaster recovery a customer will call for a number of tapes — the number could be as many as 100,000 — because it needs to rebuild itself at a disaster recovery Hot Site, generally those of SunGard or IBM Corp.

“Hot Sites are third-party facilities where companies lease time and space in case they are needed to rebuild,” says Spiewak. “If the need is for us to partner with FedEx Custom Critical, we would probably use one of our vehicles to take all of the tapes in an environmentally-controlled Iron Mountain truck to an airport. We would hand them over and continue the auditing trail with the FedEx Custom Critical people, who would pick them up at the destination airport.”

All of the tapes in the shipment have to move in a climate-controlled plane as they fly to the city where the Hot Site is located, which could be on the other side of the country. Iron Mountain would contract with FedEx Custom Critical for on-road transportation because the carrier has very large and climate-controlled trucks available.

“This is where Custom Critical performs as an extension of the Iron Mountain transportation system, where we don't have within our fleet the large trucks and facilities and airplanes to fully fulfill the customer's expectations,” explains Spiewak. “They help us continue the value proposition we offer customers that we will protect their tapes and media at all times.” LT

Planning for the worst
Iron Mountain's Steve Spiewak offers these observations as a guide to creating a disaster recovery plan:

  • A company should have a disaster recovery plan in place, as well as copies of it stored safely somewhere else. This plan should include strategic Hot Site relationships, as well as transportation contacts. They should be tested on a regular basis.
  • If the plan isn't tested on an on-going basis, it won't be possible to uncover holes that opened up since original planning that will be exposed when an actual disaster hits. For instance, you may have assigned specific tasks to personnel that have left the company since you put the original plan in place.
  • You should have on-line extraction capability for your disaster recovery plan. In this plan you can state which tapes are needed for disaster recovery purposes, which can be designated to arrive within a period of hours to a specific location, whether it's a third-party's Hot Site or a smaller data center.

resources

FedEx Custom Critical

Hallmark Global Services Inc.

IBM Corp.

Iron Mountain Inc.

SunGard

Yellow Exact Express

Logistics Today logo
June, 2004

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at a glance

This article looks at how shippers are using expedited services to avoid chargebacks while maintaining minimal inventories.

Copyright© 2004 Penton Media, Inc.

Thinking expeditiously

Jim Snider, vice president & general manager, White Glove Services, FedEx Custom Critical, offers these four key points to consider when buying expedited transportation:

1. Transportation is the final key to recovery.
2. Transportation is part of the total disaster recovery process. |
3. Make it a rush shipment, not a rush decision.
4. Preplanning is critical.

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