Insurance (Photo credit: Christopher S. Penn)

Know What to Expect from Your Cargo Insurance

If you do enough shipping and receiving, you’re bound to have some damaged or lost products at some point. Keeping this in mind, make sure you’re prepared with the proper cargo insurance. In this post, we’ll discuss various types of insurance and the coverage that each type provides. Whatever type of cargo insurance you use to protect your freight, the important thing is that you understand what you’re covered for before you need to make a claim.

Primary Insurance vs Contingent Insurance

Primary Insurance

If your freight is covered under more than one insurance plan (eg your carrier’s insurance and your freight broker’s insurance), then the primary insurance is the insurance plan that the claim will come to first. If the claim falls under the coverage of more than one plan, the claim will be paid by the primary insurance plan.

Contingent Insurance

This is insurance that comes into effect if the primary insurance plan does not cover the damages. A good freight broker will carry contingent insurance in case the carrier’s insurance has expired without the carrier or freight broker realizing it.

However, keep in mind that contingent insurance will only cover your goods if the primary insurance is not accepted. For example, suppose that the primary insurance is the carrier’s insurance which covers the carrier’s liability at $0.50/lb, and your contingent insurance covers the full value of the freight. If your carrier accepts your freight claim, you cannot file a claim with your contingent insurance – even through the coverage is better.

Liability Insurance vs Open Cargo/Shipper’s Interest Insurance

Liability Insurance

If your carrier is covered under liability insurance and your freight is damaged, this means that the carrier’s insurance will cover whatever he is legally responsible for. This is often a price per pound, but is not usually the true value of the damaged goods.

Open Cargo or Shipper’s Interest Insurance

This is another type of insurance that may be held by a carrier, freight broker, or shipper. This type of policy covers you, the shipper, for the actual value of your goods, rather than only the carrier’s legal liability. If you would receive a low payment compared to the actual value of your goods in the event of a claim, you should consider Shipper’s Interest Insurance. If you would be comfortable receiving the liability value or if you don’t mind taking a risk, then Liability Insurance is fine.

Total Loss, Basic Risk, & All Risk

1. Total Loss Coverage

Do not mistake “total loss coverage” for “total coverage”. This type of insurance will only cover you if your entire shipment is a total loss. It will not cover partial losses. The types of events that you are covered for may vary by insurance provider. This type of insurance is usually used for low value cargo.

2. Basic Risk Coverage

This type of insurance will cover you for both partial and total losses of your shipment due to any specific risks listed in your policy.

3. All Risk Cargo Insurance

All Risk cargo insurance is the most comprehensive form of cargo insurance. This type of policy will cover you for any losses or damages from any external source, barring any exceptions listed on the policy.

This is by no means an exhaustive list – there are many types of cargo insurance policies available. Now when your carrier or broker mentions that you’re covered under “contingent shipper’s interest insurance”, you’ll have a better idea of what that means, and if it’s the policy that is best for you.

Disclaimer: The information is for personal reference only. This is not official legal or insurance advice. We accept no responsibility for consequences resulting from the use of this information. For official legal or insurance advice, talk to a certified professional.

Written by Guest Blogger Vanessa Glavac, TranSolutions Inc.

TranSolutions’ mission is to effectively minimize the time, cost, and mental burden of processing freight claims through state of the art technology and supportive customer service. TranSolutions’ blog is dedicated to providing  free freight claim filing tips, templates, and resources, available at www.transolutionsinc.com/blog

1)      Find waste

2)      Remove the waste

3)      Repeat Steps 1-3

Now before you get frustrated with me, I realize it’s not that easy. It is simple, but not easy.  As simple as it is to say “remove the waste”, it can be exponentially more difficult to successfully execute that step of the process.

Removing waste effectively can take many steps, and is rarely easy:

-        First, you have to deeply understand the process (the work being done) to understand the full magnitude of the waste.

-        Next, you have to become a student of the process to be certain you’ve found the root cause of the waste and not just skimmed the surface.

-        Finally, you can take action against the root cause to put a systemic end to the waste in your supply chain.

So, if you can agree with my model for removing waste at least from a high-level, then we are ready to move on with this discussion.

The process outlined above can actually be executed in a variety of different ways. Once the tires hit the road, different leaders are going to go about trying that cycle in different ways and at different levels of the organization. I want to propose to you that even within the process you use to eliminate waste, more waste can be found! I realize that can sound defeating, but the idea of this article is to help you lean up your process for eliminating waste from the supply chain and do it to the best of your ability.

The fundamental problem for most organizations with the cycle described above is that is requires time, and sometimes very large amounts of time. It takes time to put together teams, committees, or problem solving efforts to identify root causes and solve them. Sometimes, even with those teams in place, problems still don’t seem to be getting solved. It’s hard for organizations to justify devoting time to something that isn’t producing results and takes resources away from other areas. This begs the question, is there something wrong with this simple plan of finding waste and removing it? What makes it so hard to execute? Does the way we go about trying it make a difference?

I believe that the primary reason this cycle doesn’t work is because the wrong people within your organization are trying to run it. If this cycle of “find waste, remove waste” is pushed from the top down and the people not doing the work itself are the ones finding problems and trying to solve them, you will end up sinking endless hours into problem solving with few long term benefits. If we look into the three things required to actually remove the waste from your supply chain, we can get a better understanding of why the top down approach doesn’t work:

-        Understand the process: It takes people who don’t do the work every day a longer amount of time to deeply understand the process. Essentially, time is wasted understanding a process that someone else already understands.

-        Identify the root cause: Without a deep understanding of the process, it’s easy to jump to conclusions and not identify a true root cause, leading to ineffective problem solving.

-        Take action: While managers or executives usually have no problem with this step, taking action prematurely and not solving the true root cause can end up creating more problems than you started with.

The ideal situation is for the people doing the work to be the ones driving this cycle of “find waste, remove waste” on a daily basis within the supply chain. They are the most equipped when it comes to “understanding the process”. Many times I think the employees fail to execute this cycle well because they are lacking support in the second two areas:

-        Identify the root cause: This does require some level of training around problem solving tools (5 Why Analysis, Fish bone diagram, etc.) and the mental model needed to get under the surface of problems. You have to be willing to embrace problems and not run from them before you can consistently get to the root cause. Organizations must be willing to invest in their people with teaching and training so they are equipped and empowered to do this.

-        Take action: The employees doing the work each day need to feel empowered to actually make changes to their process once they’ve identified root causes. Management and leadership needs to strongly support this type of behavior and take roadblocks out of the way that prevent those doing the work from being able to take action against waste.

If you can teach, train, and empower the people doing the work to identify waste and remove it, this really can be a successful, sustainable effort that produces bottom-line improvements to your entire supply chain. Putting power to solve problems into the hands of your people is the best thing you can do for your organization.

As we’ve now seen, the process itself for removing waste is very simple. That doesn’t mean it’s easy, but it is simple to understand. My parting question to you is now that some of the roadblocks to successfully implementing it have been called out, what’s stopping you from trying it?

Written by Colin Willis, SCPro, OPEX Team Lead at LeanCor

When I think about Supply Chain, the imagery of a real, physical chain is what comes to mind. I see cold, hardened links of steel, seamlessly bound together creating a shared bond of immense strength. You might already be wondering where I’m going with this, but the analogy of a chain can take us deep into the keys of a strong and seamless supply chain if we are willing to descend further. Here are some other things about a chain that come to mind:

-        A chain is one object, and cannot be separated or it is no longer a chain.

-        If any single link in the chain is made of a different material and is not as strong as the rest, that will be the “breaking point” in the chain.

-        The whole chain is always stronger than any individual link making up the chain.

-        The difference between a chain and plain links of metal are the connectivity and seamless integration between each piece.

With all of this in mind, my belief is that closely and seamlessly connecting members of a supply chain is the most beneficial thing you can do to benefit the whole. Again, bringing members of a supply chain closer together in my opinion is more effective than strengthening any one individual member. Immense effort can be spent strengthening individual chains (i.e. supplier fill rate improvement, plant productivity and efficiency gains, increased forecasting accuracy, etc.) but without collaboration and integration amongst these pieces, you are never going to experience the true effect of a supply chain. Behind all of our factories, machines, products, strategies, and plans, the real value of the supply chain is hiding… human beings. If we want to get to the heart of supply chain, then we should be spending our time getting those human beings more connected, collaborating, and striving toward common goals. A seamless, integrated chain can only be formed when the voice behind each “link” decides to truly join together with the other links.

What does this mean practically for you or your business? What are some steps you can take to move towards a more integrated and strong supply chain?

1)      Create steady rhythms of collaboration and communication between key partners in your supply chain. This could look like weekly PDCA calls, monthly supplier visits, or quarterly vision planning sessions with key supply chain partners. The key is to keep the open, honest conversation and collaboration going between all parties.

2)      Identify processes or business functions where your most valuable resources (people) aren’t being empowered or connected to the rest of the chain. Break down barriers and allow them to collaborate-cross functionally.

3)      Hire an expert to help! LeanCor Supply Chain Group excels at connecting members of existing supply chains and deepening their level of collaboration through a steady application of Lean concepts and practices. As a third party logistics provider, we are adept at helping you to leverage existing relationships and take your collaboration to deeper levels by integrating ourselves into your business, training your people, and helping to perfect your processes. We have a proven track record of results and can lead you or your business into a stronger and more complete supply chain. Feel free to contact us through the website for further details.

All of this talk on interdependency, shared vision, and common goals… it really starts speaking to deeper themes that go beyond the world of business. As humans, the things we pursue together will always be more lasting, beneficial, and rewarding than the accomplishments we achieve alone. I hope that this discussion is just a small step in deepening your belief in that concept.  I also hope that your view on Supply Chain has been challenged for the better. If you are already on board with these concepts, then I hope this post has revitalized and encouraged you to keep moving forward. My challenge for you today is to get outside of your normal rhythms and try collaborating with your fellow links in the grand chain of life.

Written by Colin Willis, OPEX Team Leader at LeanCor

Related articles

• Spring Supply Chain Forum – “How E-Commerce is Affecting the Supply Chain”
• How Lean Supply Chain Guiding Principles Improve Your Bottom Line
• How Lean Supply Chain Guiding Principles Improve Your Bottom Line

Business Sign X (Photo credits: http://www.roadtrafficsigns.com)

The people in your organization are the secret keys to improving your businesses bottom line results. Many of us, including myself, have gone to a lean six sigma training course to learn the tools necessary to improve our organization, and although this is great and we learned a lot of valuable tools, we need to realize that the tools are just that, a tool to enable our PEOPLE to improve.

What we need to do is understand how we can involve all people within an organization into the lean supply chain, a system that thinks horizontally through the sharing of best practices in the pursuit of perfection for the customer. Do not get me wrong, I am passionate about Lean Six Sigma training, especially when it deals with the supply chain. But what I see in many organizations is the lack of motivating the people to always work toward the organizations goals in its pursuit of perfection.

Principles are those things that we believe in as an organization, that gives us an actionable plan to go do something that we value. An example that I really like is one from the Building the Lean Fulfillment Stream book published through the Lean Enterprise Institute which states – Collaborate, Solve Problems, and Focus on Process Discipline. This principle IS about the people. How principles help us improve is that it helps us communicate the reason “WHY” we are on this journey, instead of just expecting our people to learn “HOW” to improve, without any true direction.

So my questions and challenge to you are:

• Does your organization have guiding principles that are aligned to the vision of your organization?

• Are these guiding principles communicated to the people of your organization, and does everyone understand what they mean?

• Do you teach your people “WHY
  ” they are needed to improve the organization, instead of just giving them the tools and teaching them “HOW” to improve?

• After you have communicated the “WHY”, do you arm your people with the right training (lean training, six sigma training, lean supply chain training) and coaching in order to learn the “HOW” to improving the business, and their own education?

• Have you been to a Lean Leadership course or done any reading in order to learn how to be a servant leader for your teams?

Remember, as former Hockey Coach Barry Melrose once stated, “The coach’s (leaders) job is to take excuses away from the player – no travel problems, no equipment problems, no bad practices, no bad game plans – so that there is nowhere for the player to look but in the mirror”. So, have you created an supply chain environment where your people are educated with the knowledge of the “WHY”, and armed with the tools of the “HOW”?

Written by Ana Bailey, Supply Chain Engineer at LeanCor

#3: Use a Standard Freight Claim Form in Digital Format

If you file with multiple carriers, you’ll know that they each have their own specific freight claim filing form. Of course, searching for the appropriate form adds to your filing time. But it can be hard to get around because each carrier requires different information – and if you don’t include everything the first time, they’ll return your claim due to lack of information.

The solution? Use a freight claim form that’s accepted by all carriers. You can download a standard freight claim form here. The form also allows you to type directly into it and send it to your carrier as an email attachment. Thus, this eliminates the time that you would have spent handling mail.

#2: Streamline Freight Claim Reminders

How do you manage carriers who do not respond to your freight claim in a timely manner? Do you call them, only to find that they’re always out of the office? Do you sit down and write them a reminder, wondering how to word it in such a way that is firm, yet polite?

The solution? Write your carrier a reminder letter using a template. If you don’t have your own carrier reminder letter templates, you can download these 4 templates here. Like the standard freight claim form above, you can type directly into these templates so that you can email it, rather than mailing it to your carrier.

#1 Freight Claim Prevention

The best way to reduce time spent on freight claims is to reduce the number of freight claims you have to do! Prevention takes a little extra time upfront, but it will be worth it in the end.

Sit down with your freight claims and look for patterns. Is there a particular carrier that comes up more often than others? If this is the case, you can approach your carrier and work to solve the problem, or change carriers.

Is there a specific product that is consistently being damaged? In this case you probably need better packaging and labelling.

If you only have a few claims, you can probably find a few patterns just by browsing through your freight claim forms. If you do a large number of freight claims or if you want to find more subtle trends, you’ll want to use a database or freight claim software to help you.

For example, freight claim software might help you realize that many of your claims are coming from one particular route where the roads are bad, even though a variety of carriers are using that route. Or perhaps you’ll find that the shipment was not loaded properly, or it was not secured correctly inside the trailer. Analyzing your data can help you find and eliminate these problems.

In Conclusion

Hopefully you came out of this discussion with a few ideas for reducing your freight claim filing time. Do you have any other tips for filing freight claims? Let us know in the comments!

Written by Guest Blogger Vanessa Glavac, TranSolutions Inc.

TranSolutions’ mission is to effectively minimize the time, cost, and mental burden of processing freight claims through state of the art technology and supportive customer service. TranSolutions’ blog is dedicated to providing  free freight claim filing tips, templates, and resources, available at www.transolutionsinc.com/blog

On April 23, 2013 at 12:00 P.M. (EST) the Laurier Executive Development Centre will host a 1-hour webinar with Kevin von Grabe, co-author of the award-winning workbook “Building a Lean Fulfillment Stream” to discuss the implications of these issues. This webinar is useful for you if your organization needs to:

• be lean and efficient
• reduce costs
• eliminate waste
• decrease inventory
• create a positive flow of material.

This webinar is key for: Lean Implementation Leaders, Logistics Managers, Supply Chain Managers, Material Managers, Senior Management, Lean Manufacturers, and Suppliers to Lean Manufacturers.

Click here to register for the webinar!

Designing and defining packaging requirements is a difficult task for most companies who purchase packaged components. Competing forces such as lot size, consumption frequency, logistics utilization, ergonomics, and especially piece price can make it challenging to determine the correct packaging. We often observe one of two approaches to this situation:

Piece Price

The most common approach we see is with companies who focus on piece price and logistics utilization. This approach generally yields large, bulk packaging for larger lot size components and densely packed parts in corrugated containers for smaller lot size components. While piece price and logistics utilization are usually favorable with these packaging choices, ergonomics and point-of-use presentation are extremely unfavorable. Bulk containers are difficult for operators to pick from and require significant line-side space. Corrugated containers create material waste and periodic work for the operators in un-packaging the components.

Point of Use Presentation

Another approach we observe in the industry places a focus on point-of-use presentation and reduction of periodic work for the operators. This usually results in handheld totes of smaller container quantities. While this option is great for assembly efficiency, it often results in significantly higher piece prices and substantial investment in returnable container fleets.

The Solution

The best approach is a middle ground between the two aforementioned approaches. In order to be truly effective in package design, however, there must be collaboration between all stakeholders. The stakeholder most often forgotten is the supplier. Supplier collaboration stimulates solutions that satisfy the purchaser’s point-of-use and logistics efficiency needs while aligning with the supplier’s manufacturing needs and simultaneously satisfying the purchaser’s piece price requirements. Supplier collaboration also creates an environment where both buyer and seller can help each other find efficiencies that result in a better situation for each party. In prime examples I’ve seen, collaboration with the supplier has gone so far that the purchasing company staffs engineers on-site with the supplier to help gain manufacturing efficiencies tailored towards producing and packaging products that meet the purchaser’s requirements.

Most companies have learned that beating up suppliers for marginal piece price savings creates inefficiencies in other areas. Even so, many companies are not sure how to take the first step towards true supplier collaboration. The approach that seems to work best is having both parties participate in a gemba walk at each other’s facilities. Actually being at the gemba helps to reinforce the requirements and constraints of packaging design because each party can see and understand the reasons why. The power of welcoming your business partner into your doors can’t be overstated either. True supplier collaboration occurs with trust and trust comes from effective communication.

Written by Kelcy Monday, Supply Chain Engineering Team Lead at LeanCor

Specifically, the survey found that mid-sized warehouses (approximately 50 workers) lose almost 3,000 hours a year due to workforce inefficiencies. Additionally, while 89 percent of those surveyed indicated that new technology could help managers recoup these inefficiencies, only 70 percent had conducted a thorough review of practices in the warehouse in the past year.

In this post, we’ll identify four strategies to help evaluate your warehouse operations and eliminate redundant, ineffective processes.

1) Maintain a Thorough Process Log of Any and All Changes

While it’s common to keep track of inventory error rates, many warehouse managers fail to take advantage of the insight within these metrics. While they certainly do point to problems, error rates are best utilized when seen as indicators of systematic failures within your organization.

The best way to pinpoint these failure points is to meticulously log any changes in training procedures, new workers, new technology implemented, or other changes within your warehouse. The ability to put these changes on a time scale is the difference from the ability to be proactive and reactive when analyzing error rates.

2) Emphasize Processes that Reinforce Accountability

When creating a procedure or process in your warehouse, the benefits realized in these methods are lost when workers circumvent the system or create work-arounds. All too often, a mistake made at the start of the picking process isn’t a big concern for the perpetrator–they know that someone down the line, likely a packer, will fix the problem for them.

Create a workflow within your organization that creates accountability, but also puts an emphasis on the importance of accuracy. For example, create an area for packers to place errant inventory, and ask them to notify pickers of the mistake rather than fixing it themselves. The near-term losses in efficiency will be regained in the long-term with workers that are more attentive to the little things.

3) Offer Continuing Education Courses for your Workers

It’s important to invest in technology that empowers staff to their jobs effectively. It’s just as important to invest in their development. By doing so, you are able to create a “lean” culture and workforce that can work together to continually improve the operation.

LeanCor, for example, has seen great success implementing the LeanCor Academy. An optional program for employees, the Academy educates employees on lean manufacturing concepts such as FIFO, PDCA, and other concepts synonymous with lean manufacturing and supply chain management. While optional, the interest has been exceptional among LeanCor employees. Most team members have completed Level 1 coursework, and many will begin taking Level 2 coursework this year.

The results have also been exceptional for the LeanCor operation. Since implementing the Academy, LeanrCor has been able to meet monthly expectations while still improving overall throughout the the year. In addition to its increased performance for customers, the academy has also positively impacted the culture at LeanCor by and created an environment learning and leadership throughout its ranks.

4) Have Leadership on the Floor

Regardless of the amount of effort you put into streamlining the warehouse, redundancies and unnecessary activities will arise over time. It’s just the nature of the beast. And the repetitive nature of many warehouse responsibilities make these habits not only hard to solve, but hard to discover until it becomes a big problem.

One method to help identify these tendencies quickly is to have an outsider look-in–namely, a member of your company’s leadership can help just by walking the warehouse floor, or going to the gemba. When doing so, ask your leaders to question “why” things are being done, more so than “how.” Having eyes that aren’t entrenched in the day-to-day is a helpful way to root-out strange practices.

Written by Michael Koploy, Software Advice

For more details on these strategies and other helpful suggestions to improve the warehouse, check out the Software Advice post: Strategies to Boost Your Warehouse Workforce’s Efficiency.

Enrollment is now open for “Lean Leadership: Building the Lean Culture.”  This is the first course to début in LeanCor’s online training program and the only one remotely like it on the market today.  The course is based off of The book People, a leader’s day-to-day guide to building, managing and sustaining lean organizations. 

Course Objectives:

• Clear direction on how to lead an organization throughout the various stages of a lean implementation
• How to implement lean principles
• How to confront resistance
• How to be a better student and teacher
• How to create appropriate measurement systems
• How to develop management systems that support lean thinking
• How to build successful teams
• How to make time to do it all

Important Links:

Register by contacting our Online Training Services Team

Visit the online training website

Download a printable flyer about the course

Interactive Course Preview:

In the spirit of celebration for St. Patrick’s Day right behind us, below are some encouraging statistics this month that seemed fitting:

Below are some encouraging statistics from the report:

• U.S. wineries set a record for imports last year with $1.43 billion in revenues, up 2.6% year-over-year. The volume of wine shipments reached 424.6 million liters or 47.2 million cases.  (Source: Wine Institute)
• The American craft beer industry set a new record for exports in 2012. The craft beer export volume increased by 72% compared to 2011, with an estimated value of $49.1 million. Canada remained the industry’s largest export market, with shipments increasing 140% by volume in 2012.
  (Source: Brewers Association)
• Georgia’s beer distributors have an annual economic impact of about $1.3 billion, and is tied with Washington and North Carolina at 10^th in the nation for its economic impact of beer distributors.  (Source: National Beer Wholesalers Association)

Or on a more traditional front:

• Intermodal rail traffic in February 2013 was 10.5% higher than in February 2012 and 3% higher than January 2013 totals. Intermodal loadings have experienced year-over-year gains for 39 straight months.
• The trucking industry added 5,600 jobs in February. The trucking workforce increased 0.4% over the previous month and rose 3.2% over the previous year.  (Source: U.S. Bureau of Labor Statistics)
• The unemployment rate in America decreased to 7.7% in February 2013 as there were 236,000 net new jobs.  (Source: US DOL)
• The Consumer Confidence Index increased to 69.6 in February 2013, up from 58.4 in January 2013.

…Visit www.georgialogistics.com to read the rest of the report and sign up for updates.

About the Georgia Center of Innovation for Logistics

The Center of Innovation for Logistics is the leading statewide resource for fueling logistics industry growth and global competitiveness. The Center directly helps companies to overcome challenges and capitalize on opportunities related to the movement of freight. We provide focused expertise, specific industry data, connections to state resources, and an extensive cross-sector industry network.  The Center is an industry focused component of the Georgia Department of Economic Development (GDEcD) and has main offices in Savannah and Atlanta, but has activity in all parts of the State.  The Center represents all segments of the logistics industry and provides a unique platform for companies to network, address industry issues and share knowledge. Simply put, the Center is a catalyst to help logistics-enabled businesses connect, compete and grow.