As the economy improves, transportation companies that struggled through the recession face a new challenge: providing customers with enough capacity and infrastructure to meet growing demand, says Ron Grove, vice president of supply-chain consulting with TZA.
In the post-recession era, many companies face the challenge of dealing with pent-up consumer demand, and the logistics requirements that go with it. Process improvement is key, says Grove. “They are now planning for growth,” he says, “and they’re behind the curve.”
There are many opportunities for improvement in the areas of transportation optimization, facility capacity, network planning and strategic network analysis. In addition, the tail end of the recession is seeing dramatic growth in omnichannel retailing, creating a whole new series of challenges.
Having tightened up their internal resources during the worst of the recession, companies might find it difficult to deal with the promise of new business. With so many jobs lost, “they don’t have the internal horsepower on the I.T. and facility-planning side to make a lot of the initiatives happen,” says Grove. “And their infrastructure is behind the times.”
Key pressures are being felt in multiple areas: people, technology, equipment and business processes. From an execution standpoint, most companies have warehouse-management systems in place that can meet current requirements. But they’re struggling on the transportation-management side, as they attempt to deal with increased volumes in multiple lanes.
For many companies, Grove says, it might have been three or four years since they last put their carrier contracts out to bid. There’s a need for mode analysis and the updating of routing guides to meet new and changing order profiles.
In addition, he says, companies are migrating toward regionalized distribution models, which shorten up transit time and lead to more responsive customer service.