Combining logistics planning and execution: As SCM systems become better at providing the real-time data necessary to manage a supply chain, they also become better at predicting future needs and orders. Eventually, real-time execution systems are anticipated to have the capabilities that incorporate long range forecasts, plans and schedules into real-time execution systems, and will reduce the need for the advanced planning/forecasting systems used today.
Industry leaders are aligning themselves with these new SCM solutions that streamline the supply chain and optimize customer intimacy. The last decade has demonstrated that replacing inventory with information is not enough. Companies need to capitalize on inventory information by allowing their frontline operators to make decentralized, optimized decisions in real-time. The industry needs this new e-business visibility and execution solutions. A collaborative real-time supply web will give customers what they demand: faster response, better service and lower cost.
Warehousing, Transportation Trends
Cross-docking, the practice of receiving goods at one door of a facility and shipping out through the other door almost immediately without putting them in storage, is a growing trend in the industry. Nearly 43 percent of respondents have increased cross-docking practices in the past five years. For a third of respondents, the level of cross-docking has remained constant. Cross-docking shifts the focus from "supply chain" to "demand chain." For example, food stuffs coming into a cross-docking center have already been pre-allocated against a replenishment order generated by a retailer in the supply chain.
The U.S. truck transportation industry is experiencing a national shortage of truck drivers that has become a limiting factor in the operations of many food companies. In fact, more than 25 percent of respondents cite the driver shortage as being a major challenge for them. Nearly half of respondents with private fleets (48 percent) reported using company drivers for 50 to 100 percent of their shipments. Roughly another quarter (24.7 percent) use company drivers for less than 50 percent of their shipments. Nearly half (45.8 percent) of respondents use owner/operators to haul less than 25 percent of their freight.
Equipment ownership practices ran the gamut from "full-service leased equipment" (27.9 percent) to "outright owned equipment" (25 percent) to "leased equipment to purchase" (11.5 percent). Many who answered "other" used a combination of these options.
For those who do operate their own fleets, how much equipment do they have? More than half of respondents (51.5 percent) have less than 50 tractors, with 29.8 percent reporting less than five. Roughly a quarter (26.2 percent) of respondents have more than 50. More than half of respondents (55.4 percent) have less than 50 dry trailers, and, of those, 36.5 percent have less than five. Approximately one quarter of respondents (24.3 percent) have 50 or more dry trailers. Respondents owned even fewer refrigerated trailers. Nearly half (43.3 percent) own less than five, and only 23.1 percent own 50 or more.
Respondents definitely use smaller-sized shipments for their partial shipments. For 45.1 percent of respondents, outbound LTL shipments were typically less than nine tons. Another 30.8 percent shipped from 10 to 29 tons this way. The median shipment size is 15 tons. Inbound LTL shipments are even smaller. More than half of respondents (56.4 percent) report shipment sizes of less than nine tons, and about a quarter more (26 percent) have shipments of 10 to 29 tons. The median shipment size is just five tons.
A sizeable majority of respondents (58.3 percent) say that they backhaul—which is critical for minimizing costs and maximizing use of their assets, particularly with the current high diesel fuel costs. Of those respondents who backhaul, the greatest number (21.1 percent) say they achieve fewer than 10 percent. Some respondents have great success with 17.1 percent saying they achieve 81 to 100 percent of their backhauls.
Food shippers are interested in developing collaborative relationships with third-party logistics providers who create leaner, more efficient logistics practices within their supply chain. Nearly two-thirds of respondents (63.5 percent) outsource some or all of their transportation. Less than a third (27.9 percent) do not. Many of those who do outsource rely quite heavily on their partners.