Hurricane strength: 3PLs use software to smooth supply chain disruptions
By Jean Thilmany, contributing editor (thilmanyj@gmail.com) -- Manufacturing Business Technology, 11/1/2008 12:00:00 AM
As Hurricane Ike bore down in September and threatened to disrupt offshore oil supplies, manufacturers that source from the Texas area and use Ryder for logistics and transportation knew they wouldn't face supply chain interruptions, says Jim Moore, Ryder's VP of corporate sales.
That's because the same logistics software that ensures trucks are filled to capacity, on schedule, and routed in the most efficient way possible also can be used to dispatch vehicles from alternate locations when disasters loom.
Two supply chain execution specialists in particular—aforementioned third-party logistics (3PL) provider Ryder, and software provider Fidelitone Logistics—rely on logistics and transportation management software for fleet control visibility and cost containment.
Customers reap the benefits, says Steve Banker, director of supply chain management for Dedham, Mass.-based ARC Advisory Group.
“To control their fleets, 3PLs must have visibility into their trucks at all times,” Banker says. “If some of the trucks are running around empty or not filled to capacity, they would want to reroute them to where they have productive miles.”
|
|
During the past few years, some manufacturers have been pulling logistics back in-house to gain full control over supply chain execution. But industry experts concur: 3PLs still have many benefits to offer. |
For Miami-based Ryder, Hurricane Katrina was the first real test of its logistics management suite, which was then two years old, Moore says. Now five years into use, the suite tracks 50 billion parts at a reported 4,000 parts per second. This kind of visibility is vital when disruption occurs.
For example, a Corinth, Miss.-based manufacturer that supplies 70 percent of General Motors' (GM) wire harnesses briefly shut down after Hurricane Katrina hit. To keep everyone supplied, Ryder called upon the system to find alternative sources for the harnesses, and route trucks from the new dispatch locations in Canada and Mexico.
“We set up a small war room in the Detroit area where we took on the responsibility with GM to follow and track—down to the part level—any disruption that was occurring due to the Corinth supplier,” says Moore. “GM had no line shutdowns because our part information is real-time.”
Thanks to that real-time visibility, Moore adds, parts already dispatched from Corinth before the plant shuttered in light of Katrina could be taken into account when ordering parts from other suppliers.
And when the International Longshore and Warehouse Union in California threatened a strike last summer that would shut down West Coast ports, officials at Fidelitone Logistics, based in Wauconda, Ill., rerouted shipments leaving from California ports. Those shipments instead left from ports in Vancouver and Washington.
“We did quite a few things both technology-wise and logistics-wise to head that off,” says Tom Cook, head of information technology at Fidelitone, referring to potential supply chain disruptions resulting from the looming strike.
Cook and his team called upon Fidelitone's transportation management and warehouse management systems for the job. The solutions are tied to the company's ERP system, and out to the Web.
“Those interfaces gave us a better handle on the rerouting we needed to do,” explains Cook.
During the past few years, ARC researchers have seen manufacturers pulling logistics control back in house to gain full control over supply chain execution, Banker says. But 3PLs still have many benefits to offer, says Chuck Wheeler, eastern region operations manager for McJunkin Corp., a Charleston, W. Va.-based maker of pipe fittings. The company contracts with Ryder for transportation and logistics management.
“The lease arrangement simplifies our deliveries, and the costs are competitive to ownership,” Wheeler says. “It's difficult to put a price on the intangibles—like fewer mechanical failures, serviceability, and good customer satisfaction reports—but anything we can do to keep those measures in line is worth a great deal to the corporation.”
