If nothing else, the tragedy in Japan has taught us a valuable lesson on how badly things can go wrong. Manufacturers around the globe have been awash with new thinking on how to manage a global supply chain that is, despite better technology, still remarkably delicate.
These changes can be seen readily in the relationships between manufacturers and the freight providers that deliver goods on both the inbound and outbound ends of a production line. Manufacturers are asking their freight providers to provide their insight into how they can escape future supply chain disruptions.
This trend, just one part of business continuity planning, is a showcase for how manufacturers are more commonly utilizing outsourced services to get their work done.
Value-added services from freight companies began in the downturn as a “point of entry for doing business,” according to Tommy Barnes, President of Con-Way Multimodal. The practice began in what he calls the “transactional” phase of the relationship, during which both sides began to more aggressively pursue cost-cutting measures.
Matt Hannah, Industrial Manufacturing Segment Marketing Manager with UPS, says that UPS has been pushing consulting-type interactions with their customers for years, and that most other freight companies have followed suit. Over time, the connections have become critical to their customers.
He says, “Now we’re having customers pick up the phone and say, ‘All right, here are our what-if scenarios. We need you guys to sit down with us and figure out what the transportation sourcing cost would be out of this country.’ We’ve been developing that expertise for years.”
UPS is even engaging with the U.S. Commercial Service, an arm of the Department of Commerce’s International Trade Administration, to help provide manufacturers with new avenues for their goods. Hannah says: “When customers say, ‘We’re really interested in finding additional markets for our goods,’ we can put them in touch with their local representative from the U.S. Commercial Service. They’ll sit down with the customer, and determine what kind of business they’re in.”
Understandably, this is often new territory for manufacturers when it comes to their freight providers. But both Barnes and Hannah are confident that the purely transactional dynamic will change — it needs to change. More complexity in the supply chain necessitates more thought, often beyond what’s capable from a single organization.
Because they supply manufacturers with their goods, freight providers want partners with solid business continuity plans. When the worst-case scenario becomes a reality, they can keep producing, which means continued freight business.
Barnes says that when a customer approaches Con-way about these types of services, “We’re going to look at their network through our central solutions team and determine what’s best for the potential customer and how we can best drive value into their organization. Value can be defined as business continuity, a high service level, or inventory management.”
Many describe business continuity as the necessary planning to ensure a production line doesn’t get shut down in the event of a natural disaster, but it can also involve the retention of knowledge. With the highly-skilled older generations retiring in ever-increasing numbers, many manufacturers would find a great deal of value in a freight company that has that knowledge built in.
Hannah made a comparison between retail companies and manufacturers when explaining why more should be looking toward these services for additional insight into their supply chain. He says that manufacturers are “years behind retail” when it comes to dealing with these major supply chain issues. The freight industry’s extensive relationships with major retail customers have taught them a good deal about how to mitigate risk.