SCDigest editorial staff
At CSCMP 2005, three retail transportation executives shared insight on what they are doing to improve transportation performance and adopt best practices. Many of their ideas are worth considering.
All three were relatively new to their current positions. Katy Keane, VP of Transportation Services at retailer Big Lots, accepted the job a few months back after having worked with the company as a consultant. Bob Hutchinson recently left Rite Aid to take the spot as VP of Global Transportation for Best Buy. Terri Ferraro was just stepping into a role as director of Supply Chain and Transportation for Famous Footwear, after leaving consumer goods manufacturer Fiskars Brands.
Hutchinson, for example, noted that with many of the changing dynamics in the marketplace – fuel costs, driver shortage, capacity issues, etc., it may be time to review decisions that had been made in the past to see whether the scenario or cost analysis has changed. “You need to take a look at existing programs,” he said. “Costs have changed dramatically. You should be looking at things like pre-paid versus collect, pooling, and use of dedicated or private fleets. Your decision may be different than it was a few years ago.” He also noted, for example, that something like a Yard Management system may have been difficult to cost justify in the past, but with new carrier detention charges and other factors, that may no longer be the case.
All of the panelists agreed better collaboration with carriers was essential. “We’ve tended to focus just on price in the past. Now we have to pay more attention to business process and use of technology,” Hutchinson noted.
Keane of Big Lots has spent a lot of time working with carriers to improve the timeliness and accuracy of information about freight movement. Her work has shown improvement is needed on both sides. “It’s really a 50/50 problem between carrier and shipper on data synch,” she said, while noting that having the right data was critical to managing operations.
Keane also recently organized a conference with the retailer’s top 75 carriers – a practice the company had once employed but had dropped over the past few years. At the conference, cross functional teams met with the top 10 carriers and explored ways on both sides that performance could be improved. “It identified some excellent opportunities,” Keane said. “We attacked three or four of the ideas until we knock them off, and then will move on to the next set.”
The panelists also agreed it was critical to focus on what you can control and what you can’t, with fuel costs being perhaps the primary example. “While I can’t control fuel costs, it’s critical that I be an excellent communicator about what’s happening so that the company can understand the impact on profit, and to be able to forecast well for preparation of next year’s budget.”
Famous Footwear’s Ferraro stressed the need to do the things that can make your company an easier and more profitable customer for the carrier. This includes things like extending pick up and delivery windows, broader use of “drop and hook” programs, speeding up loading/unloading times by simply adding people if needed, paying bills on time, and looking how claims can be reduced.
Extending receiving hours is a strategy being pursued or considered by all the panelists. Big Lots in peak season is now open to receive earlier Monday-Friday, on Saturdays and even some Sundays, using a skeleton crew.
These companies are also focused improving their understanding of the effort it is going to take to receive a load. Several of the panelists only recently put in capabilities to be able to see and estimate unlading times based on whether a trailer is pallet or floor loaded, for example. With a delta in receiving times of as much as 4X, this information is critical for planning.
The panelists were also working closer with the DCs on turnaround issues – and in some cases actually putting more of the control in distribution’s hands to get buy-in for the needed changes. Big Lots out of necessity in peak season overbooks the DC, but allows the DC to manage the actual appointment times and inbound flow. To help in the process, Big Lots has developed a tool that provides event notification if they are getting close to a detention charge with a carrier, allowing the DC to expedite handling of that trailer to avoid the cost.
Keane also united her inbound and outbound transportation teams, which were organized both logically and even physically apart until recently, operating out of different buildings. By bringing the teams together, the company is better able to leverage volumes, drive overall process improvements, look for backhaul opportunities, etc.
Ferraro noted that in this transportation environment, re-looking at your overall network may be big dividends, as the previous optimal design may no longer be valid. She also said that these dynamics may favor more outsourcing. “If you don’t own your facilities and/or your equipment, it provides you with a lot more flexibility,” she said.
The panelists also noted it was more important than ever to capture and measure detailed performance data, including dwell times at each node. While he was at Rite Aid, for example, Hutchinson helped developed a system that looked at store delivery dwell time by specific store, driver and store-driver combination. This information led to important insights about opportunities for improvement. On the inbound to DC side, however, most were using fairly manual tools to measure this.
Finally, Ferraro noted that companies strongly ramping up their import volumes, as many companies are, really need to understand how their supply chains will make that happen effectively. “You have to really lay out a plan for the year-on-year growth,” she said.
What other suggestions would you offer for improving transportation operations? Would a non-retail centric view change the picture a lot? And really, how do you collaborate with carriers?
Let us know your thoughts.