In today's frantically-paced world of logistics, not many would argue that there are tremendous pressures facing organizations. These pressures are wide-ranging, but typically focus on freight rates and fuel. Relying on quarterly and annual data to review carrier rates and carrier relationships does not provide sustainable savings opportunities because those costs are changing daily and weekly. Companies are focusing more and more on new, sustainable solutions to automate and streamline processes as well as open the lines of communication and share on-demand visibility with all parties involved in their supply chain.
For example, according to one leading industry analyst, consumer packaged goods (CPG) companies are not only seeking greater visibility across their supply chains but also want more and closer collaboration with their transportation partners. They want to work more strategically with vendor partners to devise and implement proven strategies to improve their transportation processes - and their businesses.
At a recent industry event attended by an array of transportation directors, vice presidents of supply chain and C-level executives from leading CPG companies, Lora Cecere, an analyst with Boston-based AMR Research kicked off the meeting by asking attendees to enumerate the most pressing issues and trends they are facing today. Their top of mind concerns included:
• Overall Cost Management
• Truckload Capacity, Market Conditions
• Changes in Network Tours (both inbound and outbound)
• Budgeting for 2010
Driven by economic pressures, CPG companies are laser-focused on driving cost out of the supply chain. Beyond that, companies are clearly focused on sustainability efforts to drive out the waste when planning and designing the supply chain for the 2010 market.
It's important for third-party logistics providers to supply data and business intelligence to its CPG customers to help these companies "move the needle" on cost management, as well as service improvements. It is clear that today's CPG organizations and leading 3PL providers are focusing on taking visibility to a new level. After all, visibility is not effective if it only occurs briefly every few months. Instead, meeting daily or weekly to review data to analyze and track can go a long way towards positioning for tomorrow's fuel, carrier, route and consolidation decisions. This allows customers to measure sustainable practices, improve processes and make better decisions, especially when capacity is tighter and service levels might be taking a hit.
Corrective actions should be put in place. Uncovering the root causes for failed deliveries or pickup helps 3PLs open up the lines of communication. Carriers don't want to disappoint their shippers; so in essence, the data drives these conversations to find out the issue, which leads to closer collaboration to decide the course of action. When companies can apply the time and resources for meeting consistently and raising the level of awareness, their service levels and ability to sell more to customers is off the charts. Things will always occur, but a good third-party logistics provider will work to ensure its customers' business is aligned strategically and make sure to steer them back on the right path.
Recently, the Sam M. Walton College of Business held the Fall Supply Chain Management Research Center (SCMRC) Symposium on the campus of the University of Arkansas. At the conference were approximately 60 people, many of whom work in the CPG industry at companies such as Colgate-Palmolive, Unilever, Campbell's Soup, Kimberly-Clark and Nestle.
On the agenda, as expected was, "Sustainability." What is sustainability? One definition states: sustainability is the method of using a resource that meets the needs of the present without compromising the ability of future generations to meet their own needs. On a personal level, at home, that could be using only cold water to wash clothes, switching to compact fluorescent light bulbs, using reusable grocery bags or buying concentrated detergent.
In 2005, Walmart laid out company goals that included a sustainability plan. Since then, Walmart has accelerated and broadened its commitment. Earlier this year Mike Duke assumed the helm of the world's largest retailer, and he also took on the role of Walmart's chief sustainability officer. In mid-July, Duke announced Walmart was stepping up its commitment once again, by asking questions of its suppliers. Walmart asked 15 seemingly simple questions - but only simple on the surface. Most questions address greenhouse gases, solid waste and water use. (To see a copy of these 15 questions, go to http://walmartstores.com/FactsNews/NewsRoom/9277.aspx)
During the SCMRC Symposium, attendees were asked a few of these questions including:
• Do you know your company's greenhouse gas emissions?
• Do you know how much solid waste is generated by your company?
• Do you know the total water usage of your facilities?
A shocking 75 percent of the respondents answered "no" to all three questions. This sample shows there is tremendous opportunity to improve upon when it comes to sustainability.
What will happen once the questions are answered? That's the unknown, for now. But rest assured the thought process includes a sustainability index that will become a permanent fixture on supplier scorecards. This index will measure the environmental and social impact of a product across its entire life cycle. In addition, this also has a direct impact on CPG customers being able to sell to retailers.
What can CPG companies do? For starters, work closely with their third-party logistics provider who can share benchmarking data. A 3PL working with multiple CPG companies can provide insight on how a CPG company and its industry peers are measuring up. For example, a 3PL can share a data point that shows: the number of miles ran inside CPG customers' network on SmartWay carriers, what percentage of volume is on SmartWay carriers, and how many miles are not on SmartWay carriers? If there's a gap, the CPG customer can see it and choose whether or not to give more volume to SmartWay carriers.
Having the ability to share data like this with CPG customers, allows a 3PL to collaborate closely and play a strategic role in strengthening relationships and sustainability efforts - such as, reducing miles with transportation optimization and getting CPG companies certified with SmartWay carriers. These are all valuable ways to obtain better visibility and reduce overall costs - a must for succeeding in today's economic climate.
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