Tiffany's logistics operation delivers the kind of impeccable service expected of a premier jeweler, earning the company honors as NASSTRAC shipper of the year.

Tiffany. The very name evokes quality, luxury, and customer care. The jeweler's signature blue box and white ribbon signal that what's inside is something special.

Customers of Tiffany & Co., the New York-based luxury retailer, are not likely to think much about logistics when selecting a piece of jewelry, crystal, silver, or china. Yet as a company that transports extremely valuable merchandise around the globe and places a premium on high-quality customer service, Tiffany considers logistics to be an important part of its business.

In fact, the transportation department's record in meeting customers' demands for impeccable service while fulfilling the company's business requirements has earned it recognition as Shipper of the Year from NASSTRAC, the national organization of shippers of LTL and parcel shipments. Each year, editors of Logistics Management & Distribution Report select one member of the organization for the award.

The team responsible for providing this top-quality service is headed up by S.D. (Stu) Slifkin, director of transportation, who works out of the company's customer-service center in Parsippany, N.J. In addition to Slifkin, five full-time associates, and one part-time associate, the department includes MaryPat Paxton Schreibman, manager of domestic transportation, and Susan Studeny, manager of international transportation and customs compliance. Slifkin, in turn, reports to Kent Rauscher, vice president of distribution.

This small group supports Tiffany's worldwide retail, catalog, e-commerce, and business sales channels and handles replenishment for the company's 123 retail stores. Its challenge is to provide flawless logistics service across those channels in a business that is both worldwide and highly seasonal. Because product values can be very high, the company's transportation programs must emphasize security and asset protection.

In his six years at Tiffany, Slifkin has worked toward making transportation as predictable and smooth as possible. His task is made easier by the nature of the shipments, many of which are repetitive moves. "We will make 3,000 shipments today," he says, "and we don't have to get involved with each one. We can focus on the big orders or unique customer requirements."

Slifkin takes a broad view of what constitutes a customer for his department. "It's anyone who needs assistance with transportation," he says. "It may be that manufacturing needs a new machine brought in or a sales person needs something in a store, or it may be that an item has been sold and we have to deliver it. In simplest terms, it's whoever needs assistance." Products that must be moved either into the distribution center (DC) in Parsippany or out to stores or to customers account for most of the retailer's volume, which reaches about a million shipments a year.

Because most of Tiffany's shipping volume consists of small-parcel shipments, the company might look like a small shipper in comparison to mass merchandisers moving thousands of containerloads. But the value of the goods moved by the company makes it a major importer and exporter.

The high value of its jewelry—products can be worth tens of thousands of dollars or more—and irreplaceable one-of-a-kind commissioned pieces such as major sports trophies also make Tiffany's choice of carriers unusual among parcel shippers. Not surprisingly, Brinks Inc., which is known primarily for its armored car services used to move cash, is one of its top two carriers, along with United Parcel Service.

Brinks handles most jewelry shipments to retail stores. The shipments are consolidated at the Parsippany distribution center, with Brinks handling the outbound transportation. UPS handles most other product shipments to the retail outlets.

Brinks also handles high-value international shipments. "It has a unique ability to move high-value shipments worldwide," Slifkin says. As part of its commitment to the Tiffany business, Brinks has an employee who works full time on the Tiffany account from the Parsippany DC.

For other international shipments, Tiffany uses forwarders and airfreight carriers, including Expeditors International and, for Japan (Tiffany's largest international market), Nippon Express.

In addition, Tiffany makes a number of shipments to residential addresses, delivering products sold via its catalogs or the Internet. The retail stores, too, generate a substantial amount of small parcel residential shipments. "We are a tourist destination stop," Slifkin says. "People like to send gifts from Tiffany." If the item is not unique, Tiffany will likely ship it from its DC rather than from the store, using UPS for most domestic deliveries and DHL Worldwide Express for international residential shipments.

For international shipments, Slifkin's department offers another important service: Associates can call with the SKU and destination for any Tiffany product and obtain the total cost of freight, tax, and duties. That allows the customer to pay all charges, thus avoiding the need to collect any charges from the gift's recipient. The company uses a tariff watching service to ensure that all of those charges are kept up to date. The transportation department is currently working with Tiffany's IT, sales, and customer-service areas to provide this information on the company's intranet.

The importance of security for Tiffany can hardly be overstated, given the value of many of its products and the unique and irreplaceable nature of others. Because many of the security practices require confidentiality, Slifkin can share few details of the program. But he does talk about the process and some of the decisions that came from it.

One of those decisions was to form a "best practices" store shipping and receiving program. This program was developed by Tiffany's security department in conjunction with UPS Security, two groups that have collaborated to solve problems both large and small. For example, says Slifkin, "at one point [w]e were concerned about UPS losses. We met with UPS Security and looked at our packaging. We had exterior packaging that anyone could recognize as Tiffany's. What we came up with was a totally generic package. Now a package goes through the UPS transportation system as just one of millions of packages the carrier handles nightly." The result has been a reduction of losses in the UPS system.

In another instance of collaboration, Tiffany and UPS worked to resolve a retail-store problem. Most of Tiffany's retail stores are located in fashionable malls and other high-end real estate. More often than not, they have neither receiving docks nor dedicated receiving personnel. To enhance both efficiency and security, Tiffany and UPS Security have developed a "best practices" book that explains what to expect from a UPS driver and what is expected of the Tiffany receiver.

The transportation department also has established a specific process for authorizing high-value shipments between the stores. (Because no store can carry, for instance, every ring style in every size, the retail outlets often need to transfer items from one store to another.) For those shipments, store employees call the transportation department, which then makes the arrangements, for example, requesting that Brinks make an unscheduled pickup or purchasing extra insurance. Whatever the need, the store employees are not on their own: Transportation expertise is only a phone call away.

Another best practices program has reduced transit-time uncertainty for store replenishment shipments and supplies like gift boxes. To make deliveries more predictable, the transportation department has developed an LTL carrier network with scheduled shipping and receiving days. "These are large shipments," Slifkin says, "so the store may want to bring a stock person in. We work hard to ship on a particular day so the store knows when to expect its shipment and is staffed and ready."

Tiffany's transportation group also faces some unusual challenges on the inbound side. Although Tiffany buys from some major shippers that understand transportation and logistics issues, it also buys a large number of products from small craft shops that have little if any in-house logistics expertise. The company's supplier base, though small (about 150 vendors), is spread out over a wide geographic area, with the heaviest concentration in Europe.

Foreign suppliers are expected to conform to Tiffany's vendor compliance rules, which include guidelines and policies on carrier selection. The company has developed and implemented a vendor compliance guide that provides routing and warehousing requirements to all vendors. That guide has helped in the effort to consolidate shipments with fewer carriers and brokers. It also provides a one-source reference to packaging, routing, and documentation procedures for both domestic and international suppliers as well as contact information for the carriers.

The foreign vendor compliance rules assign carriers based on the shipment's value, rather than on its physical size, with Brinks assigned to the most valuable products. Forwarder Expeditors International takes charge of most non-jewelry items, and DHL handles the others.

The guide also provides domestic suppliers with instructions on which carriers to use. "Vendors comply because we pay the inbound freight," Slifkin reports. Tiffany also takes title to goods at the shipper's dock—a particular benefit for its small craft shop vendors.

Slifkin and his team have also undertaken a number of efforts to reduce costs in their international operations—particularly in the area of customs compliance. Many of the goods Tiffany purchases internationally that are bound for other company locations outside the United States still come through the Parsippany DC for quality assurance. "We may buy jewelry in Italy that will end up in London, but it will come through here," Slifkin says. Because of the high value of these international shipments, Tiffany's logistics staff has made major efforts to ensure that it is able to defer or avoid tax and duty payments where possible, and to make sure it recaptures funds through a duty drawback program administered by a third party.

Tiffany outsources management of duty drawback and NAFTA (North American Free Trade Agreement) requirements to International Tariff Management (ITM) in Waterbury, Conn. That company matches import and export shipment data to provide documentation for the drawback payments. In addition, ITM prepares NAFTA certificates for shipments to Canadian and Mexican affiliates to ensure that Tiffany receives the lowest available duty rate.

Tiffany has recently applied to participate in a Customs Service program that allows it to conduct self-audits for customs compliance. The company spent two years preparing to enter the program. "We recognized the things we had to fix, had the education, made the corrections, and implemented the policies and procedures," says Slifkin. "I believe our knowledge and compliance is such that we qualify for that [program]. That will shorten our supply chain, with fewer inspections and a faster flow of merchandise," he adds. "That's a very important area."

The company makes significant use of "Carnets"—in essence, passports for merchandise—to move some shipments around the world. Carnets, which were created to allow salespeople to travel with samples across international borders, allow Tiffany to temporarily import promotional material, such as displays of antique jewelry, to various locations worldwide without having to pay duties.

To help coordinate worldwide shipping patterns and enhance communication, Tiffany has established a companywide transportation council. That group is made up of representatives from several segments of the business: operations, facilities management, manufacturing, security, retail administration, customer service, and insurance among them. In addition, meetings include representatives of Tiffany's carriers.

One of the issues the council discusses is the company's use of carrier improvement programs. Like many other shippers, Tiffany has consolidated its carrier base, reducing the number of inbound carriers bringing goods to its distribution center. In addition to Brinks, UPS, DHL Worldwide Express, Nippon Express, and Expeditors International, the company now uses Lynden Air Freight, which is a forwarder, and less-than-truckload carriers Roadway Express, New England Motor Freight, and Daylight Express as well as an occasional niche carrier.

Once selected, the core carriers are offered multi-year contracts with Tiffany. Their performance is then evaluated under a formal Carrier Performance Management program. Retail stores play a major role in the program: Twice a year, the transportation department sends the stores an e-mail survey asking managers to rate carriers on various categories such as driver assistance and the timeliness of deliveries. They rank carriers on a scale of one to four, with "one" meaning "not acceptable."

"If anyone gets a 'one,' the carrier is asked to have a sales rep visit the local store," Slifkin says. "We sit down with the national accounts representative and go through survey results and insist on reports back after the visits." Slifkin reports that the carriers have been very responsive to the program, which has been in place for three years.

Likewise, the transportation department has consolidated Tiffany's freight bill payment and claims program. "We had a lot of people and locations doing their own thing," Slifkin says. "Rather than having stores paying the freight bills, we pay them and audit them here. We've also centralized claims processing. That's another success. We have one person here talking to one person at UPS."

Although its cost control and operational streamlining efforts are crucial, the central focus for Tiffany's transportation department is to provide service that matches Tiffany's reputation for products of the highest caliber. Thus, the ultimate measure of carrier performance for Slifkin and his staff is knowing that customers are satisfied. "If we hear of carrier problems from customer service, that's probably the quickest way to lose our business," Slifkin says. "The last person the customer sees is the carrier. Our goal is to exceed the expectations and requirements of our customer. The carrier has to do that, too."