Transportation executives in the consumer goods industry face serious challenges today. They include rising fuel costs, decreased capacity, driver turnover and technology integration, among others. How these executives react will impact the overall success of their companies in this increasingly competitive environment.
To get a picture of the positive steps taken to confront these challenges, Food Logistics put together a roundtable discussion. The participants included one wholesaler, one retailer, and three manufacturers:
- Mark Foster, vice president of supply chain, Supervalu Inc., Minneapolis;
- Bill Parry, vice president of logistics, Giant Eagle Inc., Pittsburgh;
- Pat Johnson, vice president of logistics, Land O Lakes Inc., Arden Hills, MN;
- Eric Meister, director of supply chain services, Barilla Ameri-ca Inc., Bannockburn, IL: and
- Rick Kent, transportation sourcing manager for North America, Procter & Gamble Co., Cincinnati;
What is the biggest challenge that you are facing today?
Kent: Our biggest challenge is developing the right new capacity that meets our growing business needs in a reliable and cost-effective way. This is part of our overall effort to reinvent the supply network from the store shelf back to be more responsive to consumers and our retail customers.
Our on-time delivery has decreased the past two years largely due to industry dynamics such as driver turnover and rail congestion. Primary carrier load acceptance, a key capacity measure, has declined too. We are increasing our capacity by expanding our core carrier base and growing successful incumbents. We are also re-optimizing our mode mix by growing dedicated fleets and increasing intermodal in the right corridors. Mode optimization is the cornerstone of our cost reduction strategy.
We are using optimization technology to evaluate carrier proposals that are engineered to maximize carrier asset utilization. These engineered solutions take the form of national dedicated fleets, regional dedicated fleets and/or packages of lanes that complement one another. This technology allows us to maximize utilization while minimizing the amount of business we ship in the one-way or un-engineered segment.
Meister: The greatest challenge we face today is balancing carrier capacity availability, cost and performance. With carrier capacity being tighter than ever, it has become critical to be a preferred shipper with your carrier base so that you have access to competitively priced capacity when you need it. This means driving inefficiencies and costs out of the process for both shippers and carriers and partnering with carriers that recognize that value.
Parry: With rising fuel costs, fuel is getting a lot of attention and is definitely a topic that we will continue to closely monitor. However, we are focused more intently on ensuring driver safety, and we are committed to having the safest private fleet in the nation. At the same time, we are continuing to become more efficient with our deliveries through activity-based pay and driver labor standards.
Our ability to achieve the efficiency levels we currently experience, as well as the goals we have in place for the future, is largely a function of our ability to implement appropriate and innovative technology that supports our strategic plan. Our technology consists of computerized routing, electronic fuel data recording, on-board computers, tractor and trailer tracing via radio frequency, cellular and satellite, electronic invoicing, electronic signature capture, radio frequency loading and unloading of goods, engineered labor standards and incentives reported daily, and an electronic dashboard.