Tag Archive: trucks

The Sheer Relevance & Impact of Transportation (A Billion Here, a Billion There)

November 24th, 2018

Recently, I attended Mobility 21, the Southern California transportation coalition, and it reminded me of the sheer relevance of transportation.  No manufacturer can operate without transportation: distributors are out of business without trucks dropping off and picking up, healthcare would stop functioning and our frequent Amazon orders would be a thing of the past.  In essence, everything would come to a grinding halt!     

Certainly, trucks are what we typically think about when it comes to transportation.  They account for $722 billion in freight flows with Canada and Mexico, for example. Whereas rail still accounts for $174 billion (not pocket change).  The ports are our gateway to the rest of the world (and the Los Angeles ports alone bring in 40% of the U.S. volume). Air carries an impressive number of packages especially with the rise of e-commerce. UPS and FedEx are expanding at amazing rates, especially at Ontario airport, the hub of e-commerce activity.  For example, during the 2017 peak season, this region of UPS alone processed 13.1 million packages!

At Mobility 21, there were some interesting statistics throw out:

  • AAA has 60,000 service calls per day
  • Transportation has a $700 billion dollar economic impact on Southern California and accounts for 1/3 of the jobs in Southern CA!  
  • 350 billion miles each year are driven in California
  • The number of trucks is expected to go from 1.8 trillion to 3.9+ trillion by 2045
  • And the list goes on….

What Should We Consider and/or What Impacts Could Arise?
At a minimum, why not take a step back to think about your transportation network?  What does it look like? How do you receive materials and products? Do you use the ports?  Air? Rail? Undoubtedly, you use trucks! How expansive is your network? Are there many players involved?  Since it could cause your operations to cease, it makes sense to find out!

Next, think about what you’d like your transportation network to deliver.  Do your customers expect rapid deliveries and “above and beyond” service? If so, who is your partner in ensuring this occurs?  

Your transportation partners are your last face to your customer. And, in today’s marketplace, there is a significant demand and challenges your transportation partners must navigate.  If you plan to be successful, you must stay on top of your transportation network and partners. Are you attractive to them? Perhaps we better think about that further….



The Resilient Supply Chain: Can You Get Trucks?

October 3rd, 2018

Are you able to find trucks?  This is quickly becoming a major question that needs to be answered.  Every driver has at least 12 options. Why will he/she take your load?  Are you attractive to carriers? That is the key question. After all, you can carry inventory so you are responsive (assuming you planned well and have the right inventory at the right place at the right time) but if you cannot deliver, it was all for naught.

According to the Journal of Commerce, truck rates are up in the low double digits half way through the year.  And, they are expected to go up to 15% before slowing down to 7-10% increase in 2019.  However, these rate hikes are quite the shock to businesses. Many clients are tell us that there are times they cannot find a truck, whether they pay 15% more or not. What are you doing to ensure you have a resilient supply chain?

Here are a few questions to ponder:

  • Do you view your carriers as partners or vendors? – Undoubtedly, if you view them as vendors, you probably aren’t delivering on-time or are paying double or triple the going rates.  
  • Do you have a backup carrier? – I learned this lesson from the Director of Purchasing who worked with me at PaperPak.  He kept a backup supply of our critical material so that if anything went wrong in the supply chain, he could “turn it on”.  This meant we were paying higher prices on an ongoing basis to keep this backup supply. Naturally, our board members were not happy about the increased cost.  However, he was “right on”.  Eventually there was a strike at the ports and our supply was delayed. Because we had been bringing in backup supply all along, we were able to turn up the production and cover our needs seamlessly.  Do you have a backup in place you are confident will be there when you need them?
  • Are you proactively partnering with your carriers? – When supply chain challenges arise, do you proactively collaborate with your carriers to resolve the issues?  Are you willing to think outside the box and try new and innovative ideas?
  • Are you an attractive customer? – How you treat people will either make or break success.  People tend to do business with people they know, like and trust. Are you finding ways to improve your customers’ conditions?  Remember you cannot just decide to become attractive when you need your suppliers. It is a way of doing business.
  • Do you need trucks at all?– Perhaps it’s time to re-think your strategy.  Should you consider rail, air or another method?  Can you partner with your customers or suppliers in a new way?  How about collaborating with competitors? Or, you could consider insourcing vs. outsourcing. 

Think outside the box and start early.  Waiting until there is an issue is no time to think about resolving one. 

It seems such a basic element to have trucks where you need them and when you need them.  Yet it often isn’t viewed as a priority.  Why not take stock of where you stand and put some thought into your path forward?

You’ll be more likely to meet and exceed your customers’ expectations with this proactive approach to supply chain resiliency.

 



There is More to Chicago than Good Pizza. Logistics Anyone?

July 23rd, 2018

 

My aunt worked at CSX rail outside Chicago for her entire career.  Growing up, it sounded like odd, middle of the night shifts was what rail was all about.  Now, rail – and specifically Chicago – have become strategic. As people moved west in the good old days, Chicago became a rail hub, and it remains so today.  

When having supply chain network strategy discussions with clients, Chicago often arises since it connects rail across the country. Now Chicago has expanded beyond rail to become a high-tech logistics hub.  And with transportation rates tight with no end in sight, we better pay attention to the impacts of Chicago logistics!

Chicago logistics is all about connectivity.  Connecting the east with the west, Chicago is a natural hub.  5 international airports, 7 Class I railroads carrying 50% of the nation’s freight (think of the enormity of that figure!), 3rd largest intermodal port in the world, 3rd largest interstate highway system in America, and more.  Chicago is the leader in transportation assets and connectivity. Have you considered what this means to you?

What Should We Consider and/or What Impacts Could Arise?
Perhaps we shouldn’t be too fast to dismiss Chicago’s relevance (even as tempting as this is when it is in the negative digits in the middle of winter).  Location, location, location. Chicago clearly has the location in the middle of the country which puts it in the top position related to connectivity. Connectivity brings power.

Chicago connects the east with the west, rail with rail, rail with trucks, rail with air, high-tech talent with logistics opportunities, products with consumers (as it is also a significant consumer base) and more.  Being at the center of this activity can have a significant impact. For example, in one client’s supply chain strategy project, we hesitated at expanding the volume through Chicago because it frequently “got stuck” and experienced delays which negatively impacted the customer experience.  

We had to account for this extra lead time (and therefore extra inventory and carrying costs) and find creative offsets to the lead time to support customers.  Whether you go through Chicago or not, do any of your suppliers? How about your suppliers’ suppliers? How about your partners?

We are all impacted. The question is by how much!  Contact us to tell us how it worked out for you.



Will Your Supply Chain Risk Surprise You?

November 15th, 2016
supply chain risks

What happens when you have a break in your supply chain? Do you have contingency plans in place to mitigate business interruption?

Supply chain risks abound! Just look at the recent bankruptcy of Hanjin. It created havoc in the global supply chain. Ships were virtually stranded on the water. No one knew how they’d get paid. Yet, customers still needed the product. And so the results were scary. Have you thought about these types of risks within your supply chain?

 

At our APICS Inland Empire executive panel and networking symposium, we had a panel of experts on navigating the global supply chain. A renowned international business attorney brought up a significant topic — what if a conflict brews in the South China sea? Your supply chain could stop in its tracks. What backup plans do you have?

 

How about natural disasters? We cannot control these but they have a BIG impact on our supply chain. Think about hurricanes, earthquakes, fires, volcanoes and many others. Unfortunately, they seem to occur at an increasing rate — or at least they quickly go viral. Recently, there was a fire along the 15 freeway in Southern CA on the road towards Las Vegas and the north. It created havoc beyond trucks stranded on the freeway. Manufacturers ran short on materials. Railroads and trucks were re-routed. Customers had to air freight if speed was essential. It even impacted the ports.

 

And there are many other risks. Security is a big topic alone. The bottom line is you must prepare for these risks. What will you do to ensure business continues?

Did you like this article? Continue reading on how to be the Strongest Link in your organization: 

Why Care About Supply Chain Risk?

Is Your Supply Chain Ready for Growth?