Hurricane strength: 3PLs use software to smooth out supply chain disruptions

Two supply chain execution specialists in particular—Ryder, and Fidelitone Logistics—rely on logistics and transportation management software—and resulting visibility—for fleet control and cost containment. Customers are reaping the benefits.

By Jean Thilmany, contributing editor ( October 27, 2008

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 storms or other disasters threaten to strike an area.

Outsourcing takes the transportation and logistics onus off the manufacturer.

Two supply chain execution providers 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 where trucks are 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.”

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 potential supply chain disruptors emerge, Moore adds.

For example, a Corinth, Miss.-based wire-harness manufacturer that supplies 70 percent of General Motor ’s (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 efficiently route trucks from the new dispatch locations in Canada and even Mexico, Moore says.

“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 Corinth,” says Moore. “GM had no line shutdowns because we could get right in there—and because our part information is real-time.”

Parts already dispatched from Corinth before the plant shuttered in light of Katrina could be taken into account when ordering parts from other suppliers thanks to that real-time visibility, Moore adds.

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 physical-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 some 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.V.-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.”