It’s been a year since fuel hit an all time high and companies were scrambling to keep fleets on the road, goods on the shelves and their sanity.  And it’s been nine months since the economy went south and the jury’s still out on when we’ll begin the long, arduous climb back to normalcy.

I believe it’s not all bad.  In fact, there are lasting lessons to be learned from an economic downturn and tough times often make better businesses.  It’s a little like Darwin’s theory – evolve or, well you know.  There’s a lot of change for the better that can be made when everyone’s looking to find a way out of a tight corner.

As the link between all the stakeholders in the supply chain, who’s better to be the catalyst than the logistics providers?  From where we sit, there are plenty of opportunities for everyone in the supply chain to work together to drive value creation, improve efficiency, and reduce costs.

Just take a look at the traditional delivery model for soda to a convenience store: there’s likely to be as many as 15 suppliers, making three to four deliveries a week.  In theory, this works for the retailer – there’s no need to hold inventory at the store level, and high service-level agreements make it nearly impossible for the supplier to miss a delivery.  Often overlooked though are soft costs, like the extra staff needed to accept the delivery.  There’s risk, too: if the supplier’s marketing group has a big promotion that hasn’t been communicated to the operations’ team, the retailer may find themselves with empty shelves.  The cost of the model to the supplier is apparent – it’s not ideal, but in many cases, it’s viewed as the cost of doing business.

But when everyone works together toward a common goal, collaboration can deliver so much more than just a way to increase efficiencies.  

• For one of our largest customers in the CPG space, recognizing that route sales are actually a key component of merchandising was a powerful place to start.  For them, the best solution was a direct-to-store model; of course, eliminating the distribution channel provided cost savings, but the real win came from being much, much closer to their customers – and the demand cycle.
• For others, joining with other customers in their regions to share warehouse space, and fleet capacity is a better strategy.  In one instance, we have competitors openly embracing this co-op approach.

By analyzing supply chain networks and identifying opportunities to pool volumes, share facilities, and take advantage of third-party suppliers’ economies of scale, everyone will realize significant cost savings while still achieving outstanding customer service levels.

The key is that in any case, bringing everyone to the table, sleeves rolled-up and ready to wrestle the most difficult questions to the ground often uncovers unexpected – and sustainable – value.

What does collaboration look like in terms of real benefits?

• Better visibility. Whether the products are in production, in transit, arriving at their destination or ultimately, being purchased, everyone in the supply chain can see them.  Increased visibility improves faster decision making and adjustments to the supply chain can be made real-time — saving money or making money depending on what’s happening.
• Optimized inventory levels.  When everyone is working from a common platform, it’s much easier to achieve more accurate fulfillment and replenishment cycles.  Minimum quantity thresholds are eliminated since pooled volume levels are fulfilled across the shared network.  Common platform visibility eliminates the need for buffer stock.
• Dramatic improvements in order-to-cash cycles.  It is business after all.  When goods move seamlessly and are synchronized over the shared network, and transit and delivery times are clearly tracked to provide triggers for ownership and payment transfers, money gets where it needs to go faster and with more reliability.

I’m not saying it will be easy.  We’ve been doing what we’ve been doing for decades and change is scary.  But after the past year, I firmly believe that now’s the best time to turn the old way of doing business on its head and embrace a new way of thinking and doing business.  After all, what better way to spend the recession than investing in the evolution of our business?  I, for one, don’t want to end up as one of Darwin’s alternatives.  How about you?

Darin Cooprider, VP-Supply Chain Solutions Retail/Consumer Packaged Goods at Ryder, has more than 20 years of experience in operations, transportation and 3rd-party logistics implementation and management. Prior to joining Ryder, he was with Johns Manville, a Berkshire Hathaway Company where he lead the company’s strategy for supply chain integration across seven global business and was the technology leader for commercial and operational systems. Darin also served as VP of supply chain for The Home Depot and VP of supply chain operations and planning for Kmart Corporation.