transportationreport DEDICATED/CONTRACT CARRIAGE
inventory management strategy. Unwilling to hold excess
product in their distribution centers yet loath to risk the
dreaded “stockouts,” retailers demand rapid replenishment
of smaller lot sizes, according to the report. As a result,
smaller CPG manufacturers that lack the volumes to justify
a full truckload are often forced to use frequent and more
costly less-than-truckload (LTL) service or else risk noncompliance sanctions, the report said.
In addition, deliveries often occur on staggered schedules,
causing gridlock at retailers’ loading docks, respondents said.
Co-loading with other mid-sized manufacturers to build
full truckloads could help matters for smaller shippers. It
would even benefit the retailers’ receiving operations by fostering delivery predictability and alleviating dock congestion.
In the report, 44 percent of larger shippers and 36 percent of
smaller ones said they have worked with the co-loading
model. Most expressed satisfaction with it, the report added.
Yet the model, known as “collaborative distribution,”
often gets short shrift from retailers.
John Slinkard, vice president of supply chain for Sun-Maid Growers of California, whose average order weighs
between 10,000 and 15,000 pounds, said he wants to implement—through his 3PLs—more fixed delivery schedules
with retailers. This would give Sun-Maid the stability it
needs to find compatible shippers with which it can consolidate loads. In so doing, Sun-Maid and other smaller shippers could achieve enough density to enable each to buy a
portion of a truckload run, rather than use LTL deliveries
that can cost three to four times as much.
However, retailers are leery of fixed schedules because the
process requires them to place orders far enough in advance
to give shippers and 3PLs time to arrange consolidations.
Because they might not have precise visibility into their
inventory needs at that point, retailers risk over-ordering
and then holding overflow inventory that could potentially
sit in their warehouses and DCs for months, Slinkard said.
KNOWING THE LAY OF THE LAND
The most recent report is interesting in that it is coauthored
by Brian J. Gibson, a supply chain management professor at
Auburn who is known for his deep relationship with retailers. Gibson leads an annual RILA supply chain study and
serves on its logistics steering committee. Gibson’s experience with retailers prompted Kane to ask him, along with
an Auburn colleague, Joe B. Hanna, to run the project.
Another unusual aspect is that larger CPG manufacturers—
