Archive for 2017

October 10, 2017

FAQ About FOB

If you’ve been in the supply chain business for very long, then you’ll have seen the term “FOB” on various invoices. While some people in the supply chain and warehousing industries might feel comfortable with their knowledge about what FOB means for them and their business, there are a lot of people who are confused by it. It becomes even more complicated when there are additional terms attached to it, such as “freight collect” and “freight prepaid.” Each of these terms means something slightly different but could have huge ramifications for your business and your customers. If you are confused by FOB, our warehouse consultants have put together this simple guide to help you understand what it is and why you should care about it.

Answers to Frequently Asked Questions About FOB

What Does FOB Mean?

FOB stands for “freight on board” or “free on board.” The two terms are used interchangeably, so don’t let that confuse you if you see it spelled out instead of abbreviated as FOB.

International versus Shipping the United States

While the abbreviation means the same thing, there are differences in what FOB implies in international shipping and what it means for shipments within the United States. Within the United States, FOB indicates at which point the seller is no longer responsible for the cost of shipping the items. They might cover the costs up to a certain point, after which a third party shipping company will take over and deliver the items the rest of the way at the buyer’s expense. In the international shipping industry, FOB is used to indicate where the risk and costs of delivering goods change from being the seller’s responsibility to the buyer’s responsibility.

Where Did the Term Come From?

The term actually originated hundreds of years ago when sailing ships were the primary means of transporting freight around the world. The rail of the ship was used to designate when the freight left the responsibility of the shipper and became the responsibility of the recipient. It’s been in common use since 1936 and is used as a shipping term around the world.

What Do These Additional Terms Mean?

The term might stand for “free on board” but there is nothing actually free about it. Someone is still paying for the shipment of the cargo. However, what FOB does is let all the parties involved understand who is paying for it and how they are paying for it. This is typically designated by an additional term that comes after FOB.

FOB port

In international shipping, you’ll see FOB followed by the name of a port. This port is where the responsibility and risk of the shipping transfer from the seller to the buyer. For instance, if you purchase something from China and it’s shipped FOB Seattle, then the seller is assuming the responsibility of shipping the item until it reaches Seattle. After that, you’ll assume the risk and responsibility of making sure the items make it the rest of the way.

FOB origin

In North American shipping, this means the responsibility of getting the goods shipped ends once the seller gets them onto the truck. The buyers will pay the costs of shipping the item from the point of origin.

FOB destination

In North American shipping, this means the responsibility of shipping the goods remains with the seller until it reaches the final destination. The sellers will pay for the shipping of the items to the final destination.

Why You Should Care About FOB

It might seem like a little thing on your purchase order or invoice, but the terms and conditions that are implied in these simple terms can have a big impact on your business. First and foremost, it means your business could have a legal responsibility for the goods that you are shipping. Depending on how your FOB terms are worded, if something happens along the way, you could be responsible for the risk and costs associated with the shipment. So if you are responsible, you’ll likely want to take out insurance on the shipment just in case something goes wrong along the way. Otherwise, you could be eating the costs of damaged merchandise and lost sales.

Knowing what you are responsible for and being prepared can help you mitigate the damage in a worst-case scenario. Additionally, not understanding the costs associated with FOB terms could dramatically raise the cost of your goods and decrease your bottom line. So knowing what you are paying for and what the seller is paying for will help you manage those costs now and in the future, since the cost of insuring FOB origin shipments will need to be factored into your selling price.

Who Can Help You Manage FOB

There are a number of third-party shipping companies who specialize in FOB shipments. If your seller is only responsible for the merchandise up to a certain point, then you’ll need to work with a company who can help you bring those items the rest of the way. Look for companies who have handled these arrangements in the past and are used to the process.

How to Lower the Costs of FOB Shipments

If you are covering the costs of a lot of shipments, it’s going to eat away at your profits. Insuring and paying for shipping costs isn’t cheap. There are a couple of ways you can try to lower these expenses:

  • Reduce the number of shipments. Ordering larger quantities can help you avoid paying insurance and shipping costs repeatedly.
  • Renegotiate your terms. If you are ordering a lot of merchandise from a company, then they may be willing to give you a break and assume some of the shipping costs up to a certain point. It’s worth talking to them or shopping around.

Confused About a Supply Chain Term?

Our warehouse consultants are here to help! Get in touch with our team and we’ll take the mystery out of whatever term you’ve been puzzling over. Simply give us a call or contact us through our website and let us know what term you’d like to know more about. We may feature your request in a future blog!

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October 05, 2017

What Needs to Happen Once Your Pallet Racking Is Installed

There are a lot of Illinois warehouses that seem to think once their pallet rack system is installed, they won’t have to do much else with it. The take the “set it and forget it” approach to racking. While it’s true that a good racking system should be relatively low-maintenance and last your warehouse for years to come, it’s going to work best when it continues to get regular maintenance and attention. It’s the same as any other piece of equipment in your warehouse: the better you take care of it, the longer it’s going to last and the safer it will be. The best way to avoid rack failure is by implementing a program of regular warehouse equipment inspections and maintenance.

The right maintenance is going to vary from warehouse to warehouse, depending on the type of warehouse equipment you have, how busy your warehouse is, and specific incidences such as accidents with forklifts and other machinery. However, there are a few basic inspections that most warehouses can incorporate into their routine to ensure their pallet racking is safe and sound. Here are some of the things your warehouse team should consider doing.

Basic Inspection Measures for Your Pallet Racking

  • Make sure your racking is plumb and level. The stability of your pallet racking depends on the uprights remaining in a plumb vertical position. Take note of any uprights that aren’t in the proper position and repair racks that are crooked or leaning.
  • Make note of rust or any corrosion that is happening on your pallet racking. These spots could become weakened and create major problems in the stability of your racking. Even flaking paint on the surface of the metal should be noted because that could be the beginning signs of corrosion.
  • Check all the braces within the racking system for bending or other damage. This could be a sign that your shelves are improperly loaded with too much weight, which could put you at risk of racking collapse.
  • Look for uprights that are dented, punctured or buckled. This is often the result of damage from an accident with a forklift or other machinery. The damaged uprights need to be repaired or replaced as soon as possible to avoid collapse.
  • Know the weight capacity of your racking system and stick to it. Some older systems aren’t marked with the weight capacity; that can lead to accidental overloading. Look for signs of bowing in the system, as that’s one of the first signs of overloading. If the bowed piece doesn’t go back to a straight position when you remove the weight, you’ll need to remove that part of the system. A bowed piece is weakened and won’t work properly any longer.

We Can Help With Your Racking Inspection Needs

 

DAK Equipment & Engineering can help with your racking inspections! Our trained teams can come to your location in Illinois or across the United States and provide a thorough inspection of your racking system. If we do find an issue, we can get the damaged pieces repaired or replaced quickly, so there is little or no interruption to your operation. We can often repair damaged pallet racking at a fraction of the cost of replacing it, too, so you can save money while still making your space as safe as possible. Get in touch with us today to learn more about all of our pallet racking services, including layout and design as well as instalaltion, relocation, and inspections. Our team is ready to help!

Give us a call or contact us through our website to get started with a DAK project manager on your pallet racking needs.

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September 20, 2017

Make the Most of Your Square Footage With These Pallet Rack Tips

Pallet racks are one of the basic foundations of good warehouse storage. Selective racking is something that you’ll find in a majority of the warehouses around the world. Some warehouses believe that they can simply put up the storage racks they need, as they need them, and continue to cram them in when additional storage is needed. You might get away with this haphazard treatment of your floor space for a while, but eventually, it’s going to catch up with you. Installing your pallet racks and industrial shelving in your Illinois warehouse without first carefully planning out your design layout and strategy can result in wasting valuable floor space.

Working with an experienced warehouse layout design team such as the one at DAK Equipment & Engineering can help you develop a plan for your storage racks so you ensure you are making the most out of every inch of space that you have. Here are a few ways you can avoid costly errors in the planning and installation of your rack system.

Tips for Maximizing Space With Your Pallet Racks

  • Don’t assume that a clean and orderly pattern to your racking is necessary the best layout. It could actually be an unproductive layout, and you’ll want to consider the entire process happening in your warehouse to ensure you have the layout that works best for your team’s efficiency.
  • Avoid layout our your pallet racking across the shorter dimension of your warehouse or distribution center. This can waste up to 5% of your space, which might not seem like a lot until you are running low on room. Layout your rows out along the length of your facility almost always helps you get more efficient storage.
  • Don’t create a perimeter of racking around your walls. This creates single-deep racking that’s very inefficient and a waste of space. Sometimes wall storage can be beneficial for secured lockers or other specialized storage, but there may be a more efficient way to lay that out. Walls can be better used for other purposes.
  • Your aisles should give you access to pallet racking from both sides. You’ll want to avoid laying out too many aisles against your walls since you’ll only use that aisle to access one row of pallet racking.
  • Try to keep all of your pallet shelves going in the same direction. This allows for more efficient movement within the warehouse, whether that’s human or machine labor.
  • Allow for enough space in your aisles for traffic to move smoothly under different conditions. You may find that a Narrow Aisle setup is best for your warehouse, but you’ll want to make sure that the aisles still allow for enough space for your equipment and workers to move around without creating a safety hazard.

These are just general rules; what works best for your specific warehouse might be different! That’s why it’s best to work with an experienced warehouse design and layout expert to determine the layout that benefits your warehouse the most. Ignoring these rules, though, could limit your storage potential.

We Can Help Maximize Your Storage Capacity

With all the pitfalls and other problems involved in setting up a rack system, it just might make good sense to get professional help on the matter. For the most economical, efficient and effective rack system layout, contact us and we can help. Give us a call or send us a message through our website and we’ll connect you with a design and layout expert. They’ll start by getting to know your warehouse space, your inventory, and any of the challenges you are currently facing. Then they’ll make sure you get a solution that works for you. Get in touch today to get started!

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