As
a third party provider of services, or a transportation broker, Fast
Track Logistics is responsible for coordinating the packaging and
shipping of goods. Accredited by the Better Business Bureau, Fast Track
services all sites with transportation service access throughout the
country. The company also has a unique function when it comes to
business. While there are numerous sub processes involved in their
day-to-day operations, on the whole, the work of Fast Track Logistics is the
‘process’ for other client companies or for individual customers. In order
remain successful, Fast Track Logistics places a great deal of focus and
attention on relationships, both with customers, and with their supplier
(carrier), UPS Freight; this is able to be seen through the steps that Fast
Track goes through when processing an order.
Generating 85% of the company’s business, the primary source of
business for the company is generated through Government
Liquidation, a marketplace which is the exclusive contractor
of the DLA Disposition Services for the sale of surplus and scrap assets of the
United States Department of Defense (DOD). Business is generated through
the site as when a customer of GL looks on GL’s website for a shipping company
after placing a winning bid, there are three companies which are
recommended. The first to be listed is Fast Tack Logistics, flowed by a
competing transportation broker, and International Cargo (a business partner of
Fast Track that deals with international shipping). The listing of a competing
transportation broker helps to prevent Fast Track from being overrun with
requests for shipments if it was the only company listed.
Government Liquidation Featured on NBC
4 Columbus News
Recommendation of Fast Track
Logistics on the Government Liquidation Website
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Steps Involved in Processing an Order2
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The following are the steps involved in the process of receiving a request for
a rate estimate from a potential client to the fulfillment of the order.
- A potential customer submits a request for an estimate or order through an online form.
- The potential customer will receive an acknowledgement of their request being submitted, and will receive a time frame as to when they will receive the estimate. All requests are guaranteed to be answered within 72 hours.
- The potential customer will receive an estimate from Steve Turso, owner of Fast Track Logistics. Steve Turso is generally the only employee of Fast Track that is able to give the potential customer an estimate.
- The potential customer can accept or deny the estimate. Approximately 300 estimates are accepted each month, with approximately 240 accepted estimates stemming from the Government Liquidation website. If accepting the estimate, the customer will follow the directions provided in the email with the estimate which details how to proceed, what documentation is needed, and how to make a payment.
- The customer then sends the payment and necessary documents to Fast Track; payment is required before the service is provided. To save time and increase convenience, the customer is able to scan the documents into a computer and send them to Fast Track via email.
- Once the payment and documents are submitted, the customer will receive a confirmation email.
- Fast Track employees will then enter the paperwork into their computer system Sanford.
- The customer will receive another email informing them that the order is being processed and will receive an order number.
- Another email will be sent to notify the customer of a tracking number from UPS, and will also notify them of when the item is picked up and on route to delivery.
- Another email will be sent when the order is delivered.
- A follow up email will be sent to assess customer satisfaction.
Online Request for Rate Estimate
Throughout the process, Fast Track works to “gather and pass information”;
information is gathered from the carrier, UPS, and is passed to the
customer. Additionally, the updates sent via email to the main customer
(shipper) are also sent to the receiver; allowing both parties to remain
constantly informed throughout the process. Sending such updates has been
made feasible through Fast Track’s information system, Sanford.
Flow Chart of the main operation of
Fast Track:
Brief Overview of Fast Track's role in
the shipment of an item or items from the customer's viewpoint
Information System and
Automation3
In continuously working to increase productivity, Fast Track has recently
developed their own online based information system, Sanford. At a cost of
$4,000, Sanford was designed specifically for Fast Track Logistics. In
addition to being able to be seen on every computer in the office, Sanford
features pull down menus and check boxes that help automate the process.
For instance, when the paperwork is being entered, the employee entering the
paperwork would check off a specified box, this would trigger an email to
automatically be sent to the customer of the specific order informing them that
his or her order is being processed. In addition, information from the
carrier’s database, UPS, can be sent to the customer as well through the use of
Sanford, such as the UPS tracking number and the notification of when the item
or items are picked up and on route for delivery. To increase the ease of
use, the system is also color coded, for example, using a drop down menu, when
an order is initially being entered, an employee will select one color, when an
order is on route for delivery another color is selected. By having
corresponding colors for specific stages in the process, it increases the ease
of use. Overall, this software package helps to automate the
process and has increased capacity, in turn increasing productivity, by
approximately twenty to twenty-five percent. Since the company was
started over ten years ago, as a result of various forms of automation, such as
standard email and then transitioning to Sanford, with the same staff size,
sales have increased by approximately seven-hundred percent.
Although Sanford has allowed for increased automation, at this time it is not
possible to use automation for rate estimates. In creating a rate
estimate a number of factors must be taken into consideration, including but
not limited to freight classifications, different packaging costs depending on
the item or items, the location from where to item is being picked up, and the
location of the final destination. Therefore, due to the involvement of these
factors, rate estimates cannot be automated.
In addition to increasing productivity through Sanford, to further increase
productivity, each employee at Fast Track has their own computer at their desk
which features dual monitors and each computer has its own printer, rather than
being connected to a network printer. The dual monitors increase
productivity and flexibility by allowing the employees to be able to easily
refer back and forth between documents and pages. Furthermore, it
provides employees with the tools they want and in turn, allows their job to
run more smoothly.
Freight Class4
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Although there is a great deal of automation involved in Fast Track’s
operations, one task that cannot be automated is the determination of freight
class. The National Motor Freight
Classification (NMFC) has eighteen freight classes in which class 50 is the
lowest class and class 500 is the highest class; the greater the class, the
more expensive the shipping rate is for every one hundred pounds to be
shipped.
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In conjunction with UPS Freight,
there are four factors in which fright class is based on as follows:
1.
Density: Density is
calculated by dividing the weight (in
pounds) by the volume (cubic feet).
The lower the density, the greater the freight class, and thus the
grater the shipping rate.
2. Stowability: Relates to the
dimensions of the shipment and relates to the level of difficulty in loading
and shipping the item or items. Some
hazardous items must be transported following specific guidelines, while at
the same time other items with excessive weight or length can make it
difficult to ship with other items as it may not be feasible to stack. The more difficult the item is to ship, the
greater the freight class.
3. Handling: Often times,
machines are used to load freight which makes the handling less
difficult. However, when shipping
certain items, such as military trucks, as are auctioned through Government
Liquidation, special attention is required.
Additional attention is also required for items of larger weights,
unique shapes, item that can be considered hazardous, and items that are
fragile. The more attention an item
requires and the less machines can be used in handling that item, the greater
the freight class is.
4. Liability: Liability relates
to the value of the item or items being shipped and the likelihood of the
theft of them or damage to them during shipment. Items that are of high value, prone to
damage, or that can combust receive a higher level of liability and thus a
higher freight class.
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Core
Processes5
Supplier Relationship
While many transportation brokers rely on several suppliers, or carriers to
actually move the items, at Fast Track, only one carrier is used, UPS Freight.
It is Fast Track’s responsibility to arrange for the best shipping option with
UPS, such options include air, ocean, rail, and truck, or a combination of the
various options. Be relying on a single carrier, it allows
Fast Track to focus on a closer supplier relationship, helping to increase
communication between the two companies; a crucial factor in maintaining
quality and on time deliveries. In addition, the positive reputation and
record of UPS is crucial when looking at the company and processes from a
supply chain viewpoint.
An example of the communication between Fast Track and UPS Freight can be found
in the requesting of item pick-ups and the confirmation of item pick-ups. Fast
Track will provide UPS with exact information on items to be picked up, such as
the amount of packages and the package numbers. This prevents delays that
would result from UPS having to contact Fast Track to confirm what items need
to be picked up. Additionally, each morning Fast Track receives a fax
from UPS notifying Fast Track of what items were picked up. This allows
Fast Track to verify that the correct number of items was picked up. If
it is seen that not all of the items scheduled to be picked up were indeed
picked up, it allows Fast Track to quickly address the problem, helping to
ensure on time delivery and customer satisfaction.
Other supplier
relationships are also present at Fast Track as can be seen in the graphic
below:
Customer Relationship
Without clients, Fast Track Logistics would simply not be able to continue to
exist; customers are at the center of Fast Track Logistics. One way in which
customers are focused on is through keeping customers constantly updated, as
can be seen through the above description of the process at Fast Track and the
use of Sanford. Also related to the customer relationship is the
interaction between the customers and the staff at Fast Track. While the
staff would be more than happy to speak with customers on the phone to answer
any questions or to provide them with updates, it does not appear that is what
the customers want. Instead, the customers appear to want automated electronic
communications with little interaction over the phone; in fact the phone rarely
rings in the office, yet business continues to increase. In turn, it is
clear to see that the customer relationship is a key focus at Fast Track.
Additionally, through the use of a centralized system, Sanford, with each employee
being able to access information on individual customers, in the event of a
problem, issue, or concern arises, any employee can easily access a customer’s
information allowing them to more quickly address the situation.
New Service/Product
Development Process
Relating to the want of the customers is the development of new services and
product. In creating Sanford, and in turn increasing automated
communications, Fast Track was able to create a type of new service offered
(automated communications) to meet what the customer wants, while at the same
time allowing the company to better connect to the customer and increase
productivity.
Order Fulfillment Process
As a shipping company, order fulfillment is critical, the item being ship must
arrive at the final destination in the same condition it was in when initially
picked up by UPS Freight. This means that it is not only important for a
delivery to be on time, but it is also necessary to take precautions in the
shipping and handling of packages to prevent damage to them. If items are
not picked up or delivered on time, or if damaged items are delivered, the
customer may decide not use Fast Track’s services in the future. In
addressing the on time delivery, Fast Track focuses on the communication with
UPS Freight, as was described above. In preventing damage to the items,
while Fast Track does not play a direct role in the physical handling of items,
they still play a role in insuring the proper delivery of the items. In
the unfortunate and rare event of an item being lost or damaged during
shipment, UPS Freight (carrier) has insurance, if their insurance is not
enough, Fast Track has contingency cargo insurance (secondary insurance) that
will be used. Fast Track will also handle all paper work and documents
involved in the insurance claims for the customer in an effort to keep
customers satisfied.
Process Strategy6
Customer Satisfaction
According to the text, customers are satisfied when expectations are met or
exceeded. Related to customer satisfaction is quality, which describes a
customer’s general satisfaction with a service or product, in the case of Fast
Track, a service. In terms of value, it relates to how well the service
serves its purpose at a price which customers are willing to pay. To
address this, while Fast Track may not always offer the lowest prices for
shipping, Fast Track focuses on providing excellent service with timely delivery.
This high level of service increases quality, in turn balancing out the higher
price a customer is expected to pay. Another aspect of quality and
customer satisfaction is the level of support for a service provided; proper
support once a sale is made has the capability of reducing the consequences of
quality failures. Through Fast Track’s policy to handle any insurance
claims and paperwork for the customer in the rare case that an item is damaged
or lost during shipment, as detailed above, Fast Track is working to provide an
adequate level of support in an effort to increase customer satisfaction and
quality. The emphasis and importance Fast Track places on its customers
can be seen through several customer testimonials as seen below.
Customer
Testimonials on Fast Track's Website
Customer Contact
The level of customer contact, or the extent in which a customer is involved
and receives personal attention, plays an important role in Fast Track’s
processes. In the case of Fast Track there is a moderate level of
customer contact as the customer is an active and crucial part of the
process. For instance, as there is direct communication between the
customer and Fast Track, such as through the customer sending documents and
Fast Track sending updates, there is a level of personalization and contact.
However, as the customer is not physically present and much of the
communication is done electronically through automation, there is a lower level
of contact.
Process Divergence
In terms of process divergence, or the extent to which the process is
customized as to how its tasks are performed, Fast Track has neither highly
divergent nor low divergence processes. A highly divergent process
changes with each customer whereas a low divergence process is repetitive, and
standardized, with similar, less complex work being done. Fast Track’s
processes fall in between the two extremes.
Process Structure
According to the Operations Management text, there are three types of process
structures, Front Office, Back Office, and Hybrid. In a Front Office
there is a high level of customization and involvement, there are flexible
resources and flows, and employees have many different skills as they need to
do many things. In a Back Office structure, there is low customer
contact, standardization, and line flows. Lastly, in a Hybrid Structure,
there are moderate levels of customer contact and standard services with some
options available from which the customer chooses, allowing for some
flexibility. In the case of Fast Track, the company is following a Hybrid
Structure. While the overall process is somewhat standardized, with each
customer following a similar path, there is also customization. For
instance, different customers have different packaging and shipping needs
depending both on the item or items being shipped, the packaging requirements
for the mode of transportation, and the location of the final destination of
the shipment; for this reason, customization and flexibility are also
needed.
Supply Chain Design7
When analyzing Fast Track Logistics in terms of its supply chain it is
important to examine the operations of not only Fast Track, but to also examine
the operations of others in the supply chain, such as those of Fast Track’s
suppliers. The main supplier for Fast Track is UPS Freight, as discussed
throughout this analysis. It is important for Fast Track to monitor the
operations of UPS to ensure that the company is able to efficiently and
effectively pick up, move, and deliver shipments. If UPS was to have a
decline in the quality of their services, such as if the company was to be
experiencing increased shipment delays, Fast Track would need to take action to
either work with UPS to address the problem, or possibly find another
carrier. While Fast Track would not directly be responsible for the
delays, as UPS is part of the supply chain, it is a reflection on Fast Track
and can result in customers and the public developing a negative impression of
Fast Track Logistics.
Overall, UPS Freight plays in integral role in the ability of Fast Track to
meet its top competitive priority of on time delivery. It should also be
noted that although UPS Freight is one of the main suppliers for Fast Track,
they are not the only supplier. Other suppliers include Comcast for
telephone and internet service, Microsoft Office, and QuickBooks.
Financial Measures
In analyzing financial measures of supply chain performance, total revenue can
be examined. Throughout the ten years Fast Track has been in operation,
through the ability of Fast Track to consistently provide on time deliveries,
which has increased and continues to increase customer satisfaction, the more
satisfied the customers have become, the more they have continued to use Fast
Track’s services, increasing the total revenue of the company.
Furthermore, the cash flows of the company can also be examined. Related
to cash flow is cash-to-cash, the time lag between Fast Track paying UPS for
their services and receiving the payment from the customer. According to
the text, the shorter the lag time, the better the cash flow position of the
company as it requires less working capital. In the case of Fast Track,
customers are billed and required to pay before services are rendered, this
reduces the amount of working capital needed, and makes a negative cash-to-cash
flow possible as the customer makes the payment before Fast Track has to pay
UPS Freight for the service. Additionally, the requirement for up-front
payment before service is provided prevents bad debts and the need for accounts
receivable. At most, Fast Track may have $1,500 in bad debt per year, much less
than the industry average. Furthermore, because of the positive cash
flow, and negative cash-to-cash amounts, in the past Fast Track was able to
float a small start-up company. That small start-up company has since
developed into a large company that still uses Fast Track for shipping today,
resulting in an increase in revenues for Fast Track Logistics.
Outsourcing
Rather than employing personnel to provide certain services, Fast Track
outsources several processes to other companies or individuals that can better
perform the outsourced process with more efficiency and a higher level of
quality that could be provided by Fast Track. For instance, although the
company uses QuickBooks for accounting records, periodically throughout the
year an outside accountant is hired to provide accounting services, rather than
Fast Track permanently adding an accountant to their payroll. The actual
movement of items is also outsourced to UPS Freight.
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