In the CPG industry, supply-chain collaboration once meant manufacturers working with customers or suppliers. Today, CPG companies increasingly are collaborating with their competitors as well, says Paul Lomas, vice president for the CPG vertical at Ryder Supply Chain Solutions.
"It is not unusual for us, as a third-party logistics provider to CPG companies, to see manufacturers work together to reduce empty miles on the road or to look into sharing warehouse facilities and even transportation capacity," Lomas says. "Those dialogs didn't occur three to five years ago."
Collaboration among manufacturers works best when the products involved have similar characteristics, says Lomas. "They don't have to be the same type of product, but you get the most synergy and benefits if the products are compatible in terms of being able to sit in the same area of the warehouse or share the same trailer," he says. As an example, he cites such products as cereal, hardware and hand tools as being very different but compatible. Moreover, these are products that may be bound for the same mass merchandisers and can contribute to highly efficient truckloads, with heavier items like hand tools anchoring the load and lighter items like cereal topping it off. "With this type of product combination, transportation capacity gets much more fully used," says Lomas. "If companies do that enough times, repeated over and over, they will need fewer trucks and incur less cost, while improving the environment. So the benefits of collaboration extend well beyond the financial area."
Third-party logistics providers are well positioned to facilitate this type of collaboration, Lomas says. "This isn't to say that companies can't do this on their own, but it can be easier with the involvement of an external partner, and the benefits will start flowing a lot faster."
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