Ryder Archives

Guest Commentary: Dusting Off Dedicated

Guest Commentary | By Dan McHugh • 01/25/2011

Just before the holidays, I received a letter from a very kind gentleman, a collector of replica trucks decaled by many of the well-known carriers and transportation providers in our industry. And yes, you guessed it, his Christmas was going to be ‘just perfect’ if he could get a replica Ryder truck to complete his extensive collection. I was much obliged to fulfill his request, and it got me thinking about all the ups and downs we’ve seen in our industry in the past two years. We’ve got capacity, we don’t have capacity. Customer service, seasonal flexibility, safety and the new CSA 2010 standards, card check legislation, carbon emissions and new engines, and…well, the list goes on. Simply said, trucks are not only important to this collector, they have come to mean a lot to our country, our livelihoods, and our economy.

Shippers have a wide range of transportation service options available to them from logistics companies, including transportation management, dedicated contract carriage, freight brokerage, load planning, order management, intermodal, and many others. We’ve evolved from “Which one is best?” to “What strategy for the transportation options is the best?” In fact, many companies are choosing something of a hybrid or an integrated services model – blending Dedicated Contract Carriage, to achieve optimal service and resource utilization, with Transportation Management and Brokerage for flexibility as demand shifts and changes, especially during seasonal times. Regardless of the mix, the case for outsourcing transportation services is more compelling today than ever before.

With the introduction of CSA 2010, the advantages and disadvantages of owning a private fleet have been pushed to center stage again. Companies are compelled to evaluate whether ownership really makes sense as safety and risk management have re-emerged as Boardroom priorities. While outsourced Dedicated Contract Carriage can feel like an ‘all in’ alternative, it really does address the often administrative and burdensome activities around vehicle maintenance, driver recruiting and training, insurance and security. And when it comes to the safety performance of drivers, many private fleet owners face a moral imperative, as accidents and other incidences create risk, danger and have steep penalties.

In the recent recession, if there’s one lesson that the financial press has preached, it’s that cash is king. With capital tied up in private, aging fleets and the unforeseen maintenance costs they incur, coupled with the rapidly rising driver salaries due to the driver shortage, companies should consider turnkey leasing or Dedicated Contract Carriage as an alternate strategy. The right network strategy can even improve the day-to-day cash flow and inventory turns by taking ‘whole days’ out of the order-to-delivery cycle, and also allow for more flexibility in production or manufacturing.

What’s perhaps most interesting across all of these topics, is that despite the incredible innovations in technology–from GPS tracking devices, driver and truck monitoring systems, and sophisticated route design software–one thing has endured, and that’s the pivotal, critical role that customer service plays in any transportation solution. Customer service, many of our clients would argue, is the single biggest legacy of our industry. In almost every setting where a truck is being used to transport goods to market, the driver is the “face to the customer.” Drivers are the ambassadors of a company’s brand, the brokers of the relationship. Your customers soon realize that the delivery service is dependable and predictable, and this allows them to focus their energy on other areas of their business.

Maintaining these types of customer experiences can be tricky, so let me share a few insights on the types of service and delivery models that lend themselves well to an outsourced transportation solution:

High or exacting service levels are present, such as tight delivery windows and short order-to-delivery commitments;
Goods that need to be transported in specialized equipment, such as large, expensive industrial equipment, booms and cranes that come with their own set of high safety requirements.
Products that need to be handled with extreme care (e.g., glass distribution or liquid gasses);
Product that requires specialized handing and unloading in a specific manner either at the point of origin or destination (e.g., stocking shelves at a retailer location).

These characteristics typically translate into a need for specialized, highly skilled and trained drivers to handle the product and related safety concerns very carefully. In addition, pre-trained back-up drivers can provide much needed coverage for Paid Time Off and seasonal periods. Without back-up driver options, private fleet owners are often forced to maintain a higher than needed driver count.

As we all look towards 2011 with high expectations for a prosperous new year, and just like the gentlemen who wrote to me with his Christmas wish of a Ryder replica truck, now may be a good time for business owners to take a new look at their transportation function and see what they really need to complete their collection.

Dan McHugh is Vice President of Business Development for Ryder’s Dedicated Contract Carriage (DCC) business segment. In this role, Mr. McHugh is responsible for supporting NAFTA-related sales efforts and developing the DCC division. Mr. McHugh most recently held the position of Group Director in Ryder’s DCC operations team, where he ensured the successful implementation of DCC services for key Ryder customers. In his 16 years of service with Ryder, he has demonstrated a proven track record of results.

Guest Commentary: Value-Added Services Bring Flexibility to the Supply Chain

Guest Commentary | By Steve Sensing • 09/14/2010

Evolving consumer behaviors have dramatically impacted the way retailers deliver products. From clothing, to cars, to computers, consumers have gotten used to getting the custom product they want, when they want it. Case and point: While Dell’s business model was one of the first to create a true build-to-order and direct-to-consumer supply chain, consumers today have the ability to buy just about any electronic device customized with the specifications they want, right down to storage space, color and ring tones!

As consumer preferences have become more personalized and complex, retailers are asking their suppliers and logistics providers to step up to the plate. This means more customized orders, tighter delivery windows, and an increased focus on retail vendor compliance. Couple these factors with an economic recovery on the horizon – suppliers to retail will have to be prepared to deliver more products, with complex configurations, faster and more often. As order-to-shelf cycles tighten, suppliers are looking for their logistics providers to help them keep inventories low, and fulfill orders at the last minute to better match consumer purchasing trends.

In order for suppliers and retailers to remain competitive in this changing environment, manufacturers can no longer allow products to be fully configured in Asia (or anywhere deep in the supply chain). This strategy creates the potential for lost sales and unwanted, aged inventory within the supply chain. A growing new strategy in the hi-tech/electronics industry is to postpone the customer specific configuration of the product as late in the supply chain as possible, increasingly at the third-party logistics provider’s dock.

This trend is resulting in a new wave of Value Added Services that retail vendors and their logistics providers must be capable of providing. Let’s use a hi-tech/electronics manufacturer as an example. The lines are often blurred between outbound finished good shipments from a hi-tech/electronics manufacturer and inbound orders for a retailer. This makes the work to ensure that the product is configured accurately – exactly the way the end consumer expects it – even more challenging. Many retailers have unique product configuration and shelf displays to differentiate them from their competitors. Consumers have very specific ideas of how a product should look and be packaged before they will make a purchase decision.

As a result, logistics providers need to develop Value Added Services that address these trends, enabling warehouse operators to package finished goods inventory to match a specific retail order, helping to eliminate or avoid costly vendor compliance charges, and increase retail customer satisfaction. Some of these services include:

Kitting: Building advance “kits” to merge with Finished Goods improves speed to shelf. By pre-building kits of components (for example, HDMI cables or specialized remotes) for a flat screen television via a “drop in the box” process, retailers can deliver TVs to consumers with the latest technology and customized peripherals.
Bundling: Involves the creation of unique combinations of components and peripherals to meet end customer demands at the shelf. For one electronics supplier, unique retail orders are delayed until the last minute prior to shipping, to allow the hottest printer and monitor combination to be bundled with the hottest laptop or PC.
Customization and Packaging: Encompasses the building of production runs of retailer specific configurations to meet changing demands of the end consumer, especially for special promotions of slow moving products to eliminate aging inventory. The customization and packaging process allows hi-tech and electronic suppliers to adapt to a very dynamic customer demand flow and improve bottom line performance by eliminating soon-to-be obsolete inventory.

To accurately fulfill more complex, customized orders, the best logistics providers are integrating lean principles such as continuous improvement, standardization, and quality into their operations that service retailers and retail suppliers. Further, the use of new technologies, such as voice-to-pick, are helping to improve inventory accuracy, order fill rates, shipment accuracy, and vendor compliance for retail.

As retailers become more demanding, we’ll see more top manufacturers maturing from discrete service outsourcing (Transportation Management, Distribution Management, and Dedicated Contract Carriage) to highly integrated solutions that provide end-to-end Value Added Services and technology solutions that create seamless handoffs and enhance customer satisfaction.

Steve Sensing is Vice President and General Manager for Ryder’s Hi-Tech/Electronics vertical, which serves Consumer/Commercial Electronic, Hi-Tech/Semiconductor, Telecommunication, Medical, & Appliance clients in the commercial and consumer arenas. Ryder is a FORTUNE 500 provider of logistics and transportation solutions.

What Doesn’t Kill Us, Makes Us Stronger: A New Model of Logistics Excellence

Guest Commentary | By Darin Cooprider • 08/11/2009

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.

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