We all know that there are ebbs and flows in the transportation market, but one thing that always remains the same for transportation and logistics executives is their focus on managing costs and making sure they have the capacity they need, when they need it. If you view capacity assurance as a competition with other shippers, what do you need to do to make sure you come out on top?
“Capacity assurance is critical,” said Jeff Baxter, Director of Supply Chain at Pilot Chemical Company in a recent episode of Talking Logistics. “Cost is important, safety is a must in the chemical industry, but dependability can provide a competitive edge and it’s becoming more and more important as businesses are pushed for efficiency and they carry less inventory, so they rely on their suppliers to be dependable. If you’re not dependable, then that gives your customers a reason to look for other suppliers. So one of our goals is to be a dependable supplier and we rely on CLX Logistics [Pilot’s third-party logistics partner] to achieve this goal.”
I liked the connection Jeff made between capacity assurance and customer satisfaction and loyalty. Simply put, if you’re not able to reliably and consistently meet the delivery requirements of your customers because you don’t have sufficient and reliable transportation capacity, you will ultimately lose customers and market share, especially in this highly-competitive business environment.
Pilot Chemical strives to be a “carrier friendly” shipper, taking various steps to keep carrier assets moving and well-utilized, as Baxter explains in this short video clip:
Ed Hildebrandt, Senior Vice President, Global Business Development at CLX Logistics (a Talking Logistics sponsor) also participated in the conversation and he elaborated on some of the points he wrote about in a recent guest commentary titled “How to Protect Your Carrier Assets During Capacity Crunch.” In particular, he discussed the use of a dedicated virtual fleet as a capacity assurance option, which they have set up and manage for Pilot Chemical. Watch the short clip below for more details:
Hildebrandt wrapped up the conversation by offering these words of advice, using their relationship with Pilot Chemical as an example:
With Pilot, there is an integration of all the stakeholders — customer service, logistics, plant operations, sales, and us as their 3PL — and we meet on a regular basis to discuss issues that come up, changes that might create a surge in transportation capacity demand, they inform us of plant shutdowns or issues that might impact production so that we can proactively notify the carriers and not have their assets tied up if we’re not going to use them.
As a shipper, you need to make sure that your logistics organization has a seat at the table, getting information early [about changes that could impact capacity requirements] so that you don’t end up living in The Land of Surprise. Most of the shippers we do business with, at the logistics end, are constantly surprised and what happens is you build a group of superheroes [across all stakeholders that get the job done despite the challenges and time constraints], but if you take advantage of that too often, it demoralizes the organization.
I encourage you to watch the rest of the episode for additional insights and advice on this topic, then post a question or comment and share your perspective!