Manage Supply Chain Fluctuations with Dedicated Transportation Services
COVID-19 has stressed the supply chain, exposed vulnerabilities, and provided valuable insights into the role a trusted supply chain partner can play during times of crisis. Those within Penske's dedicated contract carriage division have helped customers smooth out the supply chain and are working with them on the next phase as the country reopens and supply chains are affected once again.
"Because of COVID-19, we saw supply chain needs for essential businesses surge while those of non-essential businesses dropped off. As a dedicated provider that has a diversified customer base, we have options during these times and can flex both up and down to meet our customers' needs," said Tom Scollard, vice president of dedicated contract carriage for Penske Logistics.
Ramping Up and Down
Having a dedicated provider with a diversified portfolio can ensure shippers have the resources they need even in normal times.
"We've had a strategy of diversifying our customer base and building density within our network so we can cross utilize our dedicated resources to ebb and flow with different customers' peak seasonal needs or surges," Scollard said. "In the case of the pandemic, we had the grocery sector see incredible surges, and we were able to shift resources from non-essential businesses that didn't need the same level of capacity they once did. That benefits both sides."
Penske has been conducting modeling to understand how different industries are going to come back, to what degree they're going to come back and when. "We'll be sharing that with our customers for informational purposes," Scollard explained. "We can say, 'The return may look like X for your industry, and it may look like Y for yours.' We are using our resources to develop good information and intelligence for scenario planning."
As the economy reopens, Scollard said he expects non-essential businesses to start-up in phases. "We can balance the work as we taper down essential businesses that are returning to normal," he said, adding that dedicated fleets can provide stability, which is especially valuable in an uncertain market.
Engineering Efficient Routes
Networks may not look the same as the economy reopens. "Volumes will not switch overnight," Scollard said. "Where a truck may have been full in the past with five or six stops, today, because volumes are ramping back up, it may take ten stops. There will be a need to re-optimize networks and re-engineer them based on volumes."
Moreover, products' final destinations may have shifted. "The longer we're in this, the more we're probably going to see channels change. We are already seeing restaurant suppliers looking for new channels to sell their products and the automotive industry making respirators," Scollard said. "We may be going back to more manufacturing in the United States. This could be a really interesting time of completely reinventing supply chains."
Penske Logistics can provide a high-level review of its customers' shipments and provide detailed data and specific "what-if" insights to help its customers optimize their networks. Scollard said Penske will work with customers as they determine their new normal. "If we work with a customer and have three scenarios of ramp up, that might take three engineering designs to get through each phase. We have the engineering capabilities to get the most efficient model possible."
Meeting New Requirements
An added challenge of operating during the global pandemic has been giving truck drivers the tools they need to stay healthy and comply with local and state requirements for mandatory personal protective equipment, which has been difficult to find due to increased demand.
"Having a nationwide footprint and operation, we're out front delivering to the hotspots. When we needed masks, we were able to procure those and get them distributed to our operations," Scollard said. "The whole team at Penske has been collaborating to keep our associates healthy, so we can have trucks that are maintained and fueled and drivers to fill those trucks and perform every day."
Attracting and Retaining Drivers
Truck drivers are still a scarce resource and are in high demand, and Penske devotes significant resources to attracting and retaining drivers. That is especially important given the average age of a driver today. "There is a large population of drivers over 60 out working every day. They might decide they don't want to come back, and that would leave a pretty huge void," Scollard said.
Additionally, those shippers that aren't coming back online as quickly as others may find their drivers have taken employment elsewhere. Scollard said Penske has continued to focus on its drivers to ensure it has the talent needed to keep trucks moving.
Scollard said Penske's experienced executives are focused on supporting customers. "The pandemic has shown how important it is to have a partner who has your back," he said. "Our team here at Penske has shown we can deliver during the toughest of times. We have the leadership, resources and commitment to do the tough things in business."
This could be an ideal time for those not using dedicated contract carriage to consider how it could be beneficial. "If you were a business that struggled with your supply chain or distribution network, you might want to think about where you want to make changes," Scollard said. "The new, novel coronavirus has exposed vulnerabilities and identified opportunities for improvement. We're here to help, and we want to help you get back to business."
Making the Move to DCC
The Guide to Dedicated Contract Carriage, a detailed guide to selecting DCC providers published by Penske Logistics, can help you decide if a dedicated solution is right for you. Download your free copy today.
By "Move Ahead" Staff