When it comes to distribution and logistics, Mark Bray proudly considers himself a nerd. As the new vice-chair of HARDI’s distribution and logistics management committee, Bray provides the organization with knowledge and understanding of industry distribution and logistics he hopes to soon use to the benefit of HARDI’s many members.
“We’re trying to get a survey together to figure out what kind of distribution and logistics metrics are being looked at with different HARDI members,” Bray explained. “We’re looking to standardize those metrics and then see how each other’s scores compare.”
The ultimate goal, Bray said, is to analyze the information and develop best practices for HARDI members to help them cut costs and operate as efficiently as possible. But in order for the survey to be successful, Bray said HARDI needs help.
Number GamesEach year for the past decade, the Warehousing Education and Research Council (WERC) has conducted a warehouse benchmarking study, “DC Measures,” with the goal of helping distributors and suppliers nationwide better understand key distribution metrics while tracking performance changes over time. But an industry-specific survey of HVACR distributors and suppliers has never been done, which is something Bray hopes to rectify.
“I think the most challenging part is going to be getting participation in the survey,” he said, adding that generating member interest in surveys historically has not been easy. “I’m going after everybody, knowing some of them may not respond to the survey, but the more people we can get to fill it out, the more accurate it will be.”
Bray said he and fellow committee members Greg Toler and Scott Larson hope to survey as many of HARDI’s nearly 1,000 members as possible in order to have a true representation of industry distributors and suppliers. Most likely, Bray said, the survey will be available online for members’ convenience in the near future.
“I would like to have our measures put together for the survey and be ready to begin promoting it by the start of HARDI’s Congressional Fly-In event in mid-May.”
Survey Says…So, what will the survey measure? As much as possible, Bray said.
“First, I’ll probably take a list of all the common industry metrics and simply have them check ‘yes’ or ‘no’ just to see what people are measuring,” he explained. “Then, we’ll figure out how they’re measuring and narrow the selections down in a later phase.”
Some of what HARDI plans to survey its members about will include “things like damage percentages, order picking accuracy, cost per line picked, distribution costs as a percent of sales, and the list goes on,” Bray said. According to him, HARDI will likely draw upon Texas A&M University’s Key Performance Indicator (KPI) list for optimizing distributor profitability. The list has six categories that include more than 80 total KPIs.
The point of the survey is to overcome the challenge of not having a single set of standardized metrics to use in the industry, said Bray. When that happens, it makes it nearly impossible to accurately compare and contrast what businesses are doing, how well they’re doing it, and what they could be doing to improve efficiency and lower costs.
“Certain companies look at certain metrics that other companies don’t, or they may look at a similar metric and measure it differently,” Bray explained. “With this survey, HARDI can compare and contrast what other companies are doing.”
Shipping WarsIn addition to the upcoming member survey, HARDI is also helping its members save money by finding innovative ways to cut shipping costs. Recently, Toler spotlighted the website www.freightconnections.com, which directly connects the shipper with transportation companies, thereby eliminating third-party freight brokers. Those brokers, who collect a sometimes sizeable fee for their services, often provide no added value or services for their clients, unlike full-service distributors.
Instead, those who sign up on the website can either use the free plan or pay a $39.99 flat fee per month for a premium account.
“People who are shipping products can go on the website and post their shipment requirements, then trucking companies can bid on those shipments,” Bray said. “It puts shippers and carriers in direct contact with each other.”
The concept of freight bidding in the shipping business has become so popular that it is featured in the A&E television show “Shipping Wars,” now in its third season. In the show, six independent carriers bid on jobs listed online, then race to meet the client’s delivery deadline.
Bray said the potential for HARDI members to save money by using websites like www.freightconnections.com for their shipping needs is very real.
“For years and years, these third-party freight brokers have dominated the transportation game,” he noted. “Essentially, shippers are really just paying for the broker’s list of contacts and they aren’t doing much else for us. But with online freight bidding, there’s an opportunity to open new doors and save money by partnering with the trucking companies directly.”