SEARCH searchBY TOPIC
right_division Green SCM Distribution
Bookmark us
sitemap
SCDigest Logo
 
 
 
distribution

Focus: Transportation Management

Feature Article from Our Transportation Management Subject Area - See All
 

From SCDigest's On-Target E-Magazine

- May 9, 2013 -

 

Supply Chain News: Sustainability Driving Push for Collaborative Transportation, but Savings are Real Too

 

JCPenney, 7-Eleven Both Now Hauling Goods for Rivals; 7-Eleven Gets Around Local Bottling Delivery Rules in Interesting Way


SCDigest Editorial Staff

 

The math behind the opportunities for collaborative transportation have been around since the 1990s. That simply means it has been easy to show how collaboration around trucks and deliveries could provide significant savings to the supply chain.

SCDigest Says:

start
"The opportunity to improve sustainability for the industry really drove the strategy, but in the end it also helps us reduce our supply chain costs," 7-11's Clinger said.
close
What Do You Say?
Click Here to Send Us Your Comments
feedback
Click Here to See Reader Feedback


Yet, despite that evidence, the concept never has really caught on in the US market except for sort of one-off efforts between individual companies, often the same metros areas.

In fact, a company called Nistevo was founded in the early 2000s with the express mission of having a platform for enabling collaborative moves across companies, and initially gained a large interest from the market and companies such as Georgia Pacific and Pillsbury. But the concept never really took off, and Nistevo turned to become a more traditional (though Cloud-based) TMS provider, now after a couple of acquisitions becoming IBM's TMS solution.

For awhile in the mid-2000s, rising transport costs and trouble accessing capacity appeared like they may open the collaboration door, but in the end neither factor individually or combined were enough.

It just seemed there were always too many issues to resolve: how the savings should be shared, what happens if schedules change, confidentiality, etc.

But, as SCDigest predicted a few years ago, sustainability programs may just be the lever that at last does pry open that door.

That at least is how supply chain executives from department store chain JCPenney and convenience store chain 7-11 stores positioned it during a panel discussion at the Warehouse Education and Resource Council annual conference in Dallas last week.

Christy Clinger, vice president of logistics and demand chain at 7-Eleven, Inc., said her company had recently begun doing third-party logistics work in delivering products for other retailers in many markets.

"The opportunity to improve sustainability for the industry really drove the strategy, but in the end it also helps us reduce our supply chain costs," Clinger said, noting the company's cold chain capabilities are attractive to many other retailers.

Similarly, Marie Lacertosa, senior vice president of supply chain for JCPenney, said her company has ramped up its collaboration around backhauls with other companies, especially on the West Coast - and that those transportation "partners" can include some of their most fierce market rivals.

That probably would not have happened if not for the sustainability imperative, Lacertosa said.

In that backhaul collaboration, a Penney's truck might deliver from one of its distribution centers to a store or set of stores, then pick up a load from another retailer or retail vendor, and deliver that load somewhere back near to its original starting point.

(Transportation Management Article Continued Below)

 
CATEGORY SPONSOR: SOFTEON

 
 

7-11 Consolidates Store Deliveries


Clinger notes that deliveries to its c-stores must go through the front door, and can be a major disruption to store operations. In general, she said there are three kinds of deliveries to its stores: (1) direct store deliveries from some vendors, notably soft drink and beer suppliers, but some other categories as well; (2) deliveries from 7-11's own trucks for the chain's growing assortment of fresh food items that are delivered daily; and (3) "middle of the store" SKUs that are delivered maybe twice per week.

That could result in more than 50 deliveries per week to some stores, and be something of a disruption in total to store operations. In an effort to reduce that disruption, and save on delivery costs at the same time, Clinger said on the West Coast at least the chain has been using a different model over the past couple of years, where it moves some of former DSD products into its DCs and then delivers all three classes of products on a single truck three times per week.

That reduces total weekly deliveries from more than 50 weekly to maybe 17-18, Clinger said.

One barrier to this strategy, of course, is that state laws often guarantee the rights of local soda and beer bottlers to deliver products to retailers within their territories.

Clinger said the company initially sought to somehow somehow get around these rules and have the bottlers deliver product to the chain's DCs, but that move in the end - at least for now - proved too challenging. So, it went with an unusual strategy - it buys Coke and Pepsi products from warehouse club chain COSTCO, brings them in by the truckload to its West Coast DCs, and picks those products for store delivery along with other items ordered by the stores.

It was not explicitly said, but it appears the beer deliveries to store are still going through standard DSD.


Do you believe sustainability will be the lever that finally drives transportation collaboration? Let us know your thoughts at the Feedback button (for email) or section (for web form) below.

 


   
 

Recent Feedback

I think it's the other way around!  Sustainability changes happen when there is economic benefit identified!

Sustainability projects are on everybody's radar; but they don't get executed till someone identifies a direct benefit to the bottom line, and a reasonable ROI on the project.  Once their ROI rises above the other uses, they get done.

It's no different than the average homeowner contemplating a solar hot water system.  We'd all love one, but when we look at the cost and other factors, we put it on the back bench, behind fixing the leaky faucet or repairing the leaky roof, or the new quiet dishwasher. 

A dishwasher in the desert is actually an older case in point. Labor saving, yes; but as an old rancher told me, "Your labor ain't worth nothin' ".  But when the capital cost comes down enough, and when the water company shows you that you use less water washing dishes in the dishwasher than by hand, it tips the balance.


Bruce Hartman
Professor of Logistics
University of St Francis, Joliet IL
May, 15 2013
 
   
.