Global Logistics and Supply Chain Strategies - October 2008 - (Page 48)

points. “Where possible, these will be fed by intermodal service with a regional trucker getting the product to final destination,” says Sanderson. “Personally, I think we may see a lot of that truck distribution using natural gas vehicles,” he says. The scenario of stocking more inventories closer to consumption points is most likely for companies that built rapid replenishment networks, which rely on frequent small shipments, says Tardif. “The cost of daily shipments or expedited shipments to stores or warehouses has become just too expensive to justify, she says. “We see renewed interest in inventory optimization and the forward positioning of more inventories to meet service needs.” Jones believes that companies will be looking for more multi-client solutions as a tomers all trying to optimize their individual supply chains and the overall result is far from optimal. These partners need to realize that it’s one giant supply chain and it can only be truly optimized when each participant has visibility to what their partner is doing upstream and downstream and agrees to collaborate around that.” Asset Utilization Maximizing asset utilization to ensure, to the greatest extent possible, that trucks run full and via the most efficient route is another perennial opportunity to improve fuel efficiency and lower costs. One way to get there is through load optimization tools that help companies combine shipments into full truckloads or containerloads. The savings potential is great. For one of its “Network design is not just about where to put one’s facilities, but also which transportation modes to use” — Robert Schecterle of Aberdeen Group way to position inventory closer to the customer. “It will depend on the value of the product relative to transportation costs—as always, it’s a tradeoff. But as fuel costs make transportation a more heavily weighted factor, I think it will force companies in many instances to carry more inventory.” Combining inventory optimization with network optimization can help companies determine the best solution for their situations. But the ultimate answer to these issues lies further upstream, says Ferrell. “If you think about the way supply chains are built, you know that a lot of time and energy, in the literal sense, is being used to ship around a lot of stuff that is not needed. If companies spent time more on the inventory planning and demand sourcing side of the equation, they might find that they could make less. That’s where the real fuel savings are.” That can happen only with “a lot more collaboration and trust” than is typically demonstrated between supply chain partners now, he says. “We still have way too many shippers and suppliers and cusnewer customers, Menlo increased the average container and trailer load rate from 71 percent to 90 percent, Lehmkuhl says. “That had the same effect as dropping the price of diesel by $1.25 a gallon,” he asserts. Shippers have an important role to play here, says Jones. “They need to get rid of bad habits like sloppy ways of stacking pallets. They also need to really pay attention to the details of the size of pallets and the quantities they ship. Inefficiencies that used to be acceptable simply are not acceptable at the current cost of fuel.” Deadhead, non-revenue miles that occur when an unloaded truck has to travel empty to the next pickup location are particularly painful when diesel is $4 to $5 a gallon, says Jeffrey Potts, vice president at LeanLogistics, Holland, Mich. LeanLogistics provides an on-demand transportation management solution to many carriers and shippers. Because all these customers are on a common platform, LeanLogistics has visibility to the macro network, which enables it to identify opportunities for continuous moves, Potts says. “We have visibility into 20 million shipments a year across all of our customers. With that level of visibility we see lot of opportunities to create more efficient moves that none of our customers would be able to see or do on their own. You need the technology and the density to be able to do that.” With shippers, LeanLogistics looks at traffic patterns and identifies complementary carriers in the system “that are consistently putting empty capacity into that market. The other thing we do is to look at multiple shippers in the aggregate and identify ones with complementary freight lanes that allow us to run carriers in a dedicated fashion with very few empty miles and very high equipment utilization.” ArrowStream, Chicago, provides a similar service for its customers, most of which are restaurant chains like Applebee’s, Arby’s and Steak ‘n Shake. Scott Deibert, vice president of supply chain management at Steak ‘n Shake, says that in the past, when it asked carriers to quote a move from point A to point B, they typically would have to build in some premium for deadhead miles because they didn’t know where their next load would originate. “”Using ArrowStream to manage these moves has changed that because of its ability to combine the transportation needs of many similar customers,” he says. “ArrowStream is able to talk to the carrier, not just about a move from point A to point B, but also from B to C and on to the next move after that, and the next after that. It creates a series of consistent moves that can be packaged, which enables the carrier to offer a better deal.” He adds that this all is done with the permission of the companies involved. Transplace is another logistics provider that looks across its customer base for opportunities to balance carrier capacity with freight moves. “A big part of our value proposition to our carrier base is that we can keep their trucks loaded more fully than might otherwise be possible for them because we manage freight for so many different manufacturers and retailers,” says Sanderson. “We are able to leverage the size and diversity and density of that freight network.” Having the right technology also is critical, he adds. “Our technology enables us to know where all those trucks are going and to look within the network of freight to find other loads that will keep that truck moving.” Having good transportation manage- 48 OCTOBER 2008

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Global Logistics and Supply Chain Strategies - October 2008

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