Make Your Transportation Network and Your Supply Chain More Nimble

It goes without saying that keeping your customers satisfied is the key to keeping your business running smoothly.

And there are two keys to keeping customers satisfied – providing excellent customer service and delivering goods on time.

Sounds simple. But for many businesses, it’s easier said than done. The truth is, getting trucks and drivers isn’t as simple as it once was.

A serious driver shortage is making it tough to get safe, qualified drivers. According to the ATA, driver churn for large truckload fleets is currently over 100 percent and at a five-year high for smaller truckload fleets.

Studies peg the current shortage at between 20,000 and 25,000. That number is expected to reach 239,000 by 2022. Compounding the problem, the people behind the wheels of your vehicles are driving more than your trucks – they’re driving your business and your customer relationships, so you want them to be experienced, qualified and people-driven too.

Meanwhile, freight capacity is harder to get, as the economy recovers and demand grows.

Carriers who downsized during the recession are reluctant to invest in additional capacity, leaving shippers in a tight spot. With more shippers than available freight capacity, trucks and capacity are harder to come by as well.

And, of course, there’s fuel to think about. Fuel prices continue to trend upward, making budgeting and cost control difficult at best. At close to $4.00 a gallon, it costs somewhere in the neighborhood of $1,000 to fill up an 18-wheeler with diesel. For many motor carriers, fuel has surpassed labor as the largest operating expense. And supply volatility can disrupt even the most solid operations.

These are just the macro-economic conditions impacting transportation decisions. There will always be the routine daily challenges that stress your fleet to deal with: constant fluctuations in consumer demand, changes in staffing requirements, new service needs, new store openings and more. All of these conditions make it tough to keep up with seasonal peaks and valleys. And maintaining or renting extra equipment or hiring drivers for peak periods can be expensive and inefficient.

Given these challenges and more, do-it-yourself transportation isn’t the best option for many businesses. And that’s driving a growing migration to dedicated transportation models. Which one is right depends on a host of factors.

What Does It Mean To Be Nimble?
As businesses get more sophisticated at using master data management to predict and manage demand, agility is becoming a key component of a high-performing supply chain.

Within this context, being nimble means having the flexibility to ramp up or down to meet anticipated and real changes in demand, staffing and service requirements.

It means being able to redirect resources as new locations open and close without having to worry about securing assets like drivers, vehicles and distribution space. Being nimble also means less risk and impact on the supply chain resulting from unexpected events like natural disasters, supplier issues or new ways of doing business.

Case in point:
How a dedicated transportation solution helped CVS pharmacy open new markets, improve on-time delivery and react quickly to changes in locations and volume trends (see video above).

With 7,500 CVS pharmacy stores, 26,000 pharmacists a growing network of MinuteClinic retail medical clinics, CVS pharmacy is America’s number one pharmacy healthcare provider. When CVS wanted a flexible transportation solution that would help cut costs, improve on-time delivery and deliver a custom mix of products to more geographic regions, the retail pharmacy giant turned to Ryder.

The Ryder Dedicated™ solution combines the right drivers and equipment with support for private fleets.

Services include financing, preventive maintenance, emergency roadside assistance, administrative support, insurance, fuel and safety. Ryder also helped CVS expand coverage and strategically locate distribution centers in the continental U.S. and Puerto Rico.

The partnership delivered multiple benefits, including improvements in on-time delivery to 99.1% for the first stop and 98.8% on subsequent stops, improved cube and trailer utilization, driver training and route & load optimization, less idle time and out-of-route miles, better customer service, fast delivery, expansion into new markets and simplified regulatory compliance.

Do-it-yourself or dedicated: which transportation model is right for you?

So how do you make sure you have the capacity you need when you need it – without paying too much for freight or keeping equipment on the sidelines? The first step is to optimize your network. And again, that means thinking differently about where you get capacity. Do-it-yourself transportation isn’t the best option for many businesses. A dedicated model may be the better choice if you have:

• Unique or complex distribution requirements

• High-value or high-security freight that requires special vehicles and/or handling

• Complex routes with multiple stops

• Rigorous service level agreements

• High driver turnover or problems dealing with the growing driver shortage

• Need for additional services like warehousing

So, what exactly is a dedicated transportation solution?

A dedicated transportation solution combines vehicles, drivers and equipment with other value-added services allocated to the specific needs of one customer. Dedicated solutions typically include an element of customization in the form of specialized vehicles like flatbeds or refrigerated vehicles, specialized equipment for loading and unloading, expertise in handling high-value or high-security freight, backhaul revenue-sharing opportunities and more.

Destination dedicated: 5 reasons a dedicated fleet may be the way to go

As we mentioned, a dedicated transportation model makes sense in certain situations and not in others (for example, if you don’t have significant two-way transportation flows).

However, the business case is increasingly strong. A dedicated model can help you drive efficiencies by optimizing the use of assets, routes, networks and technology. Here are five ways a dedicated fleet can help you improve efficiency and customer service. With a good dedicated solution, you can:

• Offload driver shortage worries. With a dedicated fleet, shippers can offload worries about driver recruiting, training and retention. The dedicated provider takes care of driver sourcing and staffing, from hiring, training and incenting to ensuring CSA compliance and may even provide engineering and network optimization expertise to deliver goods with fewer drivers.

• Get products delivered on time. With a dedicated fleet you may be in a better position to get products to their destinations when and where they’re needed with less damage and on-time delivery rates of up to 99.9%.

• Deliver standout service. As the primary contact with your customers, a qualified provider will go beyond delivering goods and materials and serve as an extension of your company. The right drivers can help you build relationships, and will even go as far as unloading and installing products.

• Shift fleet responsibility from common carriers: get maximum uptime on the road and reliability for time-critical customer deliveries.

• Get more flexibility: in addition to a base dedicated fleet, many dedicated providers work with preferred carriers, leveraging their procurement power to combine affordable capacity with expert management services.