Distribution Center Management Strategies in a Freight Capacity Crisis

A startling statistic was presented at the Chicagoland Food and Beverage Network (CFBN) meeting last week:

For every 9 truckloads ready to ship, there is only one available truck. 

There are a number of reasons for the freight capacity shortage in 2018, including the ELD mandate, shortage of truck drivers, a crumbling infrastructure, severe weather, and Amazon’s entry into the food and beverage market. The bottom line is there is a capacity shortage and this has increased freight costs for shippers and flipped the “customer is always right” adage on its head. The capacity crises has put the carriers in the driver’s seat.

Shipper-Carrier Relationships

Shippers are now courting carriers and individual truck operators so they can be sure the carrier will prioritize their shipment. Specifically, that they will arrive as planned and accept the shipment over the other 9 available truckloads requesting a pick up. It is now imperative that the truckload be ready to go when the truck bumps a warehouse or distribution center dock.

Detention is the commonly used by carriers as a slap on the knuckles for shippers leaving trucks waiting at the dock, however, it is a small cost compared to the cost of not getting your product to market. In today’s environment of next-day delivery, shippers are working to build consistency and a collaborative relationship with their carrier, as well as other shippers, by preparing for shipments and proving they can work together to ensure trucks will routinely collect the load on-time and get on the road.

Truck Capacity Shortage and DC Productivity

How do distribution center and operations managers make sure the load is ready to ship when the truck bumps the dock?

They take a close look at their productivity inside the four-walls and investigate the reasons for missing their productivity goals in preparing shipments.  A very common but hidden cause of workflow disruption is when workers are slowed by issues in the mobile data collections systems used in conjunction with warehouse management systems that direct picking, packing and shipment operations.

Small delays of only seconds, repeated over many picking or packing tasks, can have significant negative impact by decreasing the total number of packed and ready pallets or boxes overall. These mobile system delays cost companies $3000 per mobile worker per year in labor and IT support.  Adding to that number the cost of detention and repeated missed shipments that negatively impacts the relationship with their carriers, escalates the cost of mobile delays to numbers shippers cannot sustain.

Strategies for Shippers

Planning, communication, collaboration and visibility are generally important in managing the supply chain. To be successful with all of this, technology plays a major role, as many in the CFBN breakout sessions stated.

Required technologies include transportation and warehouse management systems along with mobile data collections monitoring systems that allow warehouse and distribution center workers to be more efficient and provide visibility to management of where productivity is lagging. With knowledge and communication comes the ability to adjust and adapt, and get the desired consistency of readiness to build a mutually beneficial relationship between shippers and carriers.