that make store deliveries can then pick
up loads from vendors and haul them to
the retailer’s DCs. He adds that the model
also has potential in the automotive sector, where raw materials are shipped from
a parts supplier located near an auto
assembly line to a plant where components are assembled. From there, the
components are shipped to the final stop,
where they are used to build cars.
Another drawback to the continuous
moves strategy is difficulty of execution.
Coordinating the many moving parts of
this type of program is a painstaking,
time-consuming exercise, and it doesn’t
take much to throw it off course, says
Clowdis. It’s rare for a company to have
such a flawless supply chain that it can
execute these demanding programs consistently, he adds.
Even advocates of the strategy acknowledge the difficulties of doing it right. “Few
companies have executed this successfully,” says Dawn Salvucci-Favier, senior
director of product management for the
services team of JDA Software Group Inc.,
a software developer that provides consulting and IT services to support the
Hershey program.
Salvucci-Favier says most of the failures
stem from a lack of coordination among
the supply chain partners. The strategy
works best if the program is run by a shipper who’s working with a core group of
dedicated carriers, she says. A continuous
moves strategy is less likely to succeed if
it’s coordinated by a third-party logistics
service provider that brings multiple carriers into the loop on a transactional
basis, she says.
Jim Butts, senior vice president of the
transportation brokerage giant C.H.
Robinson Worldwide, says market conditions also play a role. Interest in continuous moves runs highest when demand for
truck space exceeds available capacity or
when fuel prices are rising, he says.
Shippers under pressure to create efficiencies and to secure reliable carrier capacity
have a strong incentive to make such programs work, he explains.
In an environment where demand is
slack and fuel prices quiescent, however,
the benefits of continuous moves may not
outweigh the costs and risks of embarking
on what often becomes a major
redesign of a shipper’s distribution
process, Butts says. “Most shippers
are able to achieve their goals of saving money on freight costs without
such an elaborate approach” as continuous moves, he says.
Salvucci-Favier disputes the
notion that a continuous moves
model can only work under certain
market conditions. “Regardless of
the capacity and fuel situation,” she
says, “Hershey and others will be
able to lower operating costs and
improve efficiency with a program
like this.” ;
