When it comes to your transportation capacity and network, making sure you have the drivers, capacity and on-time delivery performance you need often comes down to an essential, but often-overlooked element: collaboration.
Given a steadily recovering economy, growing demand, an increasingly complex regulatory environment, intensifying driver shortage and capacity constraints, being proactive and willing to “work across the aisle” is becoming a requirement.
Especially when you consider that capacity is never a one-size-fits-all scenario. Volumes fluctuate by season. Special promotions can drive surges in demand. Product types and quantities are always changing, so capacity needs are dynamic. All of which means, you may need to think more creatively about where and how you get the access you need.
Say you’ve always used a for-hire common carrier to deliver goods and materials. Or, maybe you prefer to use your own private fleet. Or you only use a dedicated fleet from a trusted partner. In today’s complex and volatile business environment, that strategy may no longer work.
Today, keeping the wheels of business turning may call for an “all-of-the-above” strategy that taps into every available resource.
The case for a hybrid transportation solution
Ensuring you have the drivers, capacity and resources you need may require a hybrid solution that blends a dedicated fleet and procured common carrier.
By harnessing all the lanes in their networks and all the models available, savvy companies are capitalizing on the high service levels that dedicated drivers operating dedicated fleets can provide. At the same time, they can flexibly ramp up with procured carriers to accommodate volume spikes.
Could a hybrid solution take you further? Ask yourself these three questions:
- How stable is my transportation network?
- Do I understand what a hybrid approach looks like?
- Could my company – and supply chain – benefit from a hybrid solution?
What you need to think about
Thinking about switching to a hybrid solution? First, conduct a careful optimization analysis to identify the right strategy. A side benefit is that more frequent analysis of your transportation network can lead to continuous improvement.
So, as you consider potential cost savings and efficiency gains, consider operational constraints and maintaining service levels. You’ll also want to consider other factors too. Here are a few:
- Distance traveled
- Number of stops
- Type of equipment
- Returns and/or vendor pickups
- Stop constraints
- Gap between level of flexibility you have and what you want
- Issues with driver retention or empty miles
- Flexibility of customer delivery windows/size of shipments
Keep in mind you may have to make adjustments to get the efficiencies you want. For example, it might make sense to run a one-way lane with a common carrier one week and run the same lane with a dedicated fleet the next if products are being returned.
Striking the right balance
With a hybrid fleet and a little flexibility you can realize big returns. Organizations open to a dynamic transportation strategy (compared to a more static or fixed approach) typically realize tremendous gains in efficiencies and cost savings. At the same time, carriers are increasing their focus on reducing empty miles and right-sizing their fleets, which aligns well with shipper and provider objectives.
Ensuring that your hybrid solution delivers the results you want — an optimized transportation network and bottom-line savings — requires that you:
- Maintain a steady workload for dedicated drivers
- Have a knowledgeable operating team
- Have the right planning tools, systems and insight into the transfer of goods to set and meet tight delivery schedules
Flexibility and collaboration can deliver big returns
So how can you benefit from a solution combining a dedicated and for-hire fleet?
- Flexibility: it is normal for there to be peaks and valleys in demand over the course of a year. Being able to respond to unexpected detours can drive long-term improvements.
- Cost Savings: enabling lanes to change modes can deliver long-term benefits too. Shippers typically realize savings of between 5 and 10 percent with a hybrid solution.
- Transparency: centralized route planning and engineering simplify decision-making and process efficiencies, while improved visibility provides greater insight. Every supply chain is unique, so the right solution will tune technology to your unique requirements.
- Less waste: optimizing routes typically reduces the number of miles driven and the size of your carbon footprint, while making the best possible use of resources.
Does an optimized/hybrid transportation solution sound like the solution you need to improve fuel efficiency and realize cost savings? Remember, the key to any type of change is collaborating with groups across your organization, from purchasing to the shipping dock.
An integrated transportation solution that combines dedicated and common carrier fleets is do-able. The key is finding the balance that makes the most sense.
Scott W. Nemeth is a Group Director of Transportation Management (TM) at Ryder. He is a logistics and operations professional with 22+ years of experience in transportation management solutions, business development, implementations, product development and account relationship management. Throughout his career Mr. Nemeth has implemented and operated numerous TM solutions for customers across a variety of industry segments.
