Delivering on the Customer Promise

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Delivering on the Customer Promise

Event overview

In September 2016, supply chain professionals from around the world gathered in Orlando, Florida to share their knowledge, research and insights. Hosted by the Council of Supply Chain Management Professionals (CSCMP), the conference was the ideal forum for Ryder to showcase its leadership in dedicated transportation and supply chain solutions, while featuring two premiere customers in a panel discussion.

What it takes to run an integrated, responsive supply chain

As today’s automotive industry expands, its operations and presence across many major global regions, supply chain processes are continually evolving within the LEAN framework to satisfy customer expectations, order flows and materials fulfillment.

And in the retail sector, refreshed distribution strategies and omni-channel commerce are proving effective for companies to achieve high-touch deliverables with lower costs.

We look at the state of these processes and how they are revolutionizing the supply chain to get goods to market sooner and efficiently. Read on to learn how Ryder’s partnerships with True Value and FRAM play a key role in furthering this LEAN model, and where supply chains are headed in 2017.

Panel Speakers

Supply chain innovation is critical to e‑commerce success

As online commerce is now a way of life, many customers expect their goods to be delivered within 24 to 48 hours. A handful of e-commerce giants raised customer expectations for fast, inexpensive or even free shipping, along with real-time delivery updates and easy returns. Competitors that can’t follow suit could find themselves on the sidelines.

"We are living in the ‘now economy’," said Abhinav Shukla, senior vice president and chief operating officer at True Value, a co-op of hardware stores across the United States and around the world. "All transactions have some kind of online component."

With 60 percent of home improvement transactions beginning online, "consumers are demanding flexibility and quicker deliveries, and they are using digital means to conduct and complete transactions," Shukla said.

Meeting greater expectations

For many businesses, supply chain reengineering is key to helping them meet these increasing demands. That could include adopting LEAN operational processes to reduce cost and complexity, to support innovations like omni-channel commerce, which unites sales and fulfillment across both web and brick-and-mortar outlets. The goal is to get goods to customers as quickly, accurately and inexpensively as possible, by whatever means they choose.

Not that it's easy. A recent survey of 148 supply chain executives by Peerless Research Group on behalf of dedicated transportation and supply chain solutions provider Ryder and "Supply Chain Management Review: found that increased customer satisfaction and service expectations were their top challenge, followed closely by on-time fulfillment and lack of supply chain visibility.

The answer, said John Diez, president of dedicated transportation solutions at Ryder, is to "create continuous improvement opportunities and deliver savings going forward."

Lead by example

One way is to partner with an expert. Ryder helped FRAM, a top oil filter producer in the automotive industry, refresh its distribution strategy and manage costs. The partnership specifically arose out of changes in the retail industry and a need to improve on-time delivery, said Steven Crowthers, director of distribution, North America at FRAM.

Ryder shared the same logistics principles with FRAM that make it successful in its own business, such as expedited order fulfillment and the use of analytics to produce end-to-end visibility in all processes. Overall, Ryder’s supply chain solution implements LEAN principles to create a culture of continuous improvement, engage and empower employees and ensure a more effective distribution and operations process.

Shorter time to market

Among many initiatives, FRAM added new technologies and incorporated automated processes into one of its distribution centers, removing multiple touch points to shorten the delivery time to the customer.

And now, "we’ve got a really LEAN transformation and a mature distribution site," Crowthers said. The partnership showed FRAM that "gaining predictability in your business and starting to understand your retail customer’s behaviors is critical in being able to be flexible within your four walls of your distribution center. Having Ryder there gave us that flexibility to ‘flex’ when needed."

Today, "we are shipping single filters directly to the consumer’s home, or directly to store. That is a huge model shift from a few years ago."

LEAN approach, ample results

Through omni-channel distribution and LEAN processes, Ryder has seen similar results with other partners, "not only on the warehousing side of it at two locations, but also in managing inbound and outbound transportation. It brought a lot of benefit, and satisfied [FRAM’s] customers’ customers," said Steve Sensing, President of Global Supply Chain Solutions at Ryder. "That transparency and collaboration really changed the relationship."

Sensing emphasized that a LEAN approach involves communication between partners for real-time decisions, a collaborative and supportive employee culture and a positive customer experience. For example, Ryder and FRAM participate in joint financial reviews and yearly operations planning. "Our goal is their goal—we know what we have to do from a savings perspective, we know what our annual budgets are and we know what we can do from a transparency standpoint," Crowthers said.

Analytics match supply with demand

In another fruitful partnership, Ryder and True Value have worked together closely for several decades. In 2015, True Value added to the relationship by outsourcing its distribution and fleet operations.

"A recent example where Ryder helped us solve a critical challenge was in developing an app, with which our retailers can track incoming deliveries and get notifications of any changes," Shukla said. "That can actually help them optimize their labor and manage their business more effectively."

By matching supply with demand, analytics can support time and money saving processes like cross docking, where incoming supplies are almost immediately converted to outbound shipments, reducing inventory carrying costs. Cross-docking can cut shipping times by up to 40 percent and reduce needed storage capacity by as much as 38 percent, according to Ryder.

True Value currently serves more than 4,000 locations across the United States, and it wants to make them as competitive as possible. Its omni-channel efforts include allowing consumers to order a product online and pick it up at a nearby store. Eighty percent of True Value’s online orders are sent to retail locations.

The bottom line lesson from these partnerships is that, in the era of 24/7 e-commerce, supply chain and logistics are no longer just routine, back-of-house operations that don’t need to evolve. Constant innovation in these areas is critical for companies of all sizes that do not want to get crushed by the handful of giants that dominate online commerce. "It’s becoming a differentiator," Diez said. "More companies will look to outsourcing to drive out cost and create flexibility in their supply chains."

How tech innovation is transforming shipping and logistics

A handful of Fortune 500 e-commerce giants have forever changed expectations when it comes to customer service. Need a blue Corinthian vase shipped overnight to Little Rock? Hand warmers to Cincinnati in 48 hours or same-day deliveries in Manhattan? No problem.

Or maybe it is, if you're one of thousands of retailers or manufacturers who must now find ways to keep up with these innovators and the changes that are transforming logistics, ordering and fulfillment at hurricane velocity.

The good news for those that aren't run by a tech industry billionaire is that cloud-based services, connective technology and analytics are giving companies of all sizes access to sophisticated supply chain and shipping solutions with quick return on investment. And by partnering with specialists in third-party logistics, businesses don't need to hire legions of technology experts to operate them.

It all starts with order management. The warehouse needs to know about an order the moment a customer hits the buy button, usually through an order management system from an independent software developer. These have been around for years. What's new is that businesses can now get up and running on these in days, not months (or even years) through the cloud.

Community cloud

For example, a major Seattle-based online merchant gives third parties, even competitors, access to its cloud-based order management system for a relatively small usage fee that can be paid with a credit card. The system supports the Java Message Service or its open source cousin, Open JMS, to communicate with a range of commercially available warehouse management systems.

The web has forced many companies that previously only shipped in bulk to adopt direct-to-consumer sales. That means having to accept and process orders in quantities as small as one—like our Corinthian vase.

Or an engine filter for your car—in addition to delivering palettes to its stores, auto parts giant FRAM must now ship any one of the items from its 12,000 stock keeping units directly to a customer's door. "Imagine having to manage that inventory level and accuracy to ship that one unit to the consumer's home," said Steven Crowthers, director of distribution, North America at FRAM.

True Value, which serves independently owned hardware stores across the United States and internationally, is also facing new fulfillment and shipping channels. It needs to get goods to stores or directly to consumers faster than ever. "There are escalating expectations," said Abhinav Shukla, senior vice president and chief operating officer at True Value, noting that the company must now deal with "hundreds of thousands of item and location combinations."

Thirty-six percent of supply chain executives surveyed by Peerless Research on behalf of Ryder and "Supply Chain Management Review" identified order complexity as a one of their biggest challenges.

Insights from analytics

FRAM partnered with Ryder to reengineer its logistics and fulfillment operations to keep up with e-commerce and omni-channel demands. Order management systems now communicate directly with the warehouse, which features innovations like automated wrapping stations and robotic palletization.

True Value tapped Ryder in part for its analytics expertise. Analytics are key to creating a fulfillment operation that can run at internet speed. The latest systems are so sophisticated in forecasting demand that some companies are actually picking and packing goods before an order is received. "That's going to be a key trend as we go forward," said Steve Sensing, president of global supply chain solutions at Ryder.

It's one thing to get orders ready to ship—then they need to get to the customer. Technology is stepping in there as well to speed things up and eliminate paper work.

Global positioning systems are not new, but they are more powerful than ever when combined with force multipliers like analytics and connected devices. Analytics software can analyze routes and driver tendencies to recommend ways to optimize fuel consumption and reduce idling. Trucks can connect to systems that automatically generate interstate fuel tax reports and other forms for internal and Department of Transportation (DOT) requirements, using software like Ryder’s FuelReceipt app.

Revolutionary road

Lastly, shippers are increasingly looking for ways around the driver shortage that is plaguing the trucking industry. There were 48,000 fewer drivers than available jobs in 2015, according to the American Trucking Associations. To combat this, Ryder offers many incentives to recruit and retain drivers, such as signing bonuses and cash prizes for top performers.

Technological innovation will play a major role in alleviating this pain point. Truck manufacturers and shipping companies are investing heavily in driverless truck technology. The Obama administration in September released road rules for automated vehicles and some states have authorized use of driverless trucking platoons, where one automated big rig follows the other. Those are signs that the technology is about ready for prime time. HIS automotive group predicts that driverless truck sales will hit 60,000 vehicles annually by 2035.

The bottom line is that manufacturers, retailers and shippers face more challenges than ever. Fortunately, they've got a wealth of new tools at their disposal.

For further coverage of this panel and insights from Ryder, click here.

Discussion Video Panels

  • Discussion Videos: Panel I: Watch executives from Ryder and FRAM discuss how refreshed distribution cuts costs.

    Discussion Videos: Panel I - Watch executives from Ryder and FRAM discuss how refreshed distribution cuts costs.

  • Watch executives from Ryder and True Value discuss how to achieve high-touch deliveries with lower costs.

    Discussion Videos: Panel II - Watch executives from Ryder and True Value discuss how to achieve high-touch deliveries with lower costs.