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Viewpoint: Supply Chain Too Important to Ignore

Less inventory, lower operating costs, higher productivity - in other words, a much improved supply chain strategy, is becoming the rallying cry for your customers, large and small. As we showed in the last issue, the evidence of a direct link bet...


Less inventory, lower operating costs, higher productivity – in other words, a much improved supply chain strategy, is becoming the rallying cry for your customers, large and small. As we showed in the last issue, the evidence of a direct link between a company’s supply chain performance and its financial performance is now too strong to ignore.

Transportation, of course, makes up the lion’s share of supply chain expenditures for most shippers so their emphasis on raising the bar on supply chain performance will have an impact on everyone within the trucking community, from the president to the driver and O/O.

Without a doubt, there will have to be sacrifices, such as the one Muir’s Cartage had to make three years ago in order to help its largest customer, Home Depot, improve its operations. Home Depot’s consumer surveys were constantly showing that it had nailed down price perception, breadth of selection and location but it was no better than its competitors on service. The main reason: with day-time delivery of stock, Home Depot employees were spending 70 per cent of their time putting away stock and only 30 per cent of their time dealing with customers. The solution: a switch to nighttime delivery. A necessary adjustment for Home Depot but a dramatic change for Muir’s, whose drivers were used to picking up from vendors in the afternoon and delivering the next morning. The switch to the nighttime shift was a transition many drivers weren’t willing to make; Muir’s had to bring in new people. A sacrifice indeed for Muir’s and its drivers, but it allowed the Toronto-based carrier to continue its close relationship with what is arguably the best managed and one of the fastest growing retail companies in North America.

Carriers and drivers will also have to think beyond basic transportation services and forge deeper working relationships with their customers. Xerox Canada and the couriers that serve its national critical parts network serve as a good example. When the company looked to restore its financial strength through aggressive year-over-year productivity improvements, transportation was high on the list. Whereas before Xerox’s critical parts network was rife with wasteful non-standard procedures, now all of Xerox’s couriers across the country work towards the same delivery targets. And, to reduce the workload on Xerox’s in-the-field repair technicians and the inventory they need to carry, couriers contracted with Xerox are trained to have their drivers install some of the most critical printer supplies. To meet future customer demands, carriers will have to encourage a culture of innovation geared towards creating tangible supply chain improvements. A culture like the one developed by Ron Tepper at Consolidated Fastfrate. For example, responding to the growth of freight coming overseas from Asia, Consolidated Fastfrate has opened a transload centre in Vancouver and an intra-west trucking division. Once marine containers are destuffed, product that is destined for the western provinces moves direct with Consolidated Fastfrate trucks to its western destination, saving customers a good deal of time and shipping costs. You see before such a service existed, containers with product destined for western Canada were first shipped to Toronto. And Consolidated Fastfrate technology allows the carrier to receive the necessary Customs documentation directly from the overseas vendor or the shipping line and provide customers with shipment visibility as soon as the paperwork is received. That allows retailers to plan for the product to go directly to a store rather than going to a warehouse and incurring additional handling charges. In essence, meeting shippers’ thirst for consistent supply chain improvements will require carriers to think of themselves less as trucking companies and more as – to borrow the words of forward-thinking Scott Johnston at Yanke Group of Companies – facilitators of commerce.

– Lou Smyrlis can be reached at 416-442-2922 or lsmyrlis@businessinformationgroup.ca


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