Supply Chains that Rock Around the Clock: A Hard Day's Night
They should be sleeping like a log, but Penske Logistics is working like a dog through storms and shakeups to make sure shipments arrive on time.
When you manage a complex supply chain, you learn to expect the unexpected, at any time of day or night. Variables from nasty weather to bad information can trigger breakdowns in customer service and manufacturing.
Companies that work with third-party logistics (3PL) partners get to share the pain when unexpected situations arise. While many manufacturing and retail companies don't have the bandwidth to handle catastrophic logistics breakdowns, 3PLs put forth a continuous effort to solve complex challenges.
In their arsenal, 3PLs pack experience and operational knowledge, extended transportation relationships cultivated over time that enable scalability and variability, and technology that customers might not necessarily have. This is their core business.
Underlying all the knowledge, expertise, and technology are the people behind the 3PL, and their determination to work 24/7 to solve any logistics or supply chain problem that arises for their customers.
Inbound Logistics got a firsthand look at such a 3PL, and met with many of the company's unsung heroes who rock around the clock until issues are solved, while offering their customers choices all along the way.
Based in Reading, Pa., Penske Logistics helps customers overcome logistics and supply chain challenges using a results-oriented approach. Penske often tailors supply chain services to a customer's unique operations, and production and market demands.
But sometimes those challenges are beyond anyone's control. Take the weather, for example. When a major weather event, such as a hurricane, is predicted, most people rush to the grocery store to stock up on bread and milk. Penske stocks up on detailed and well-coordinated contingency planning and transportation assets.
"When a bad storm is predicted, our first course of action is to develop a contingency plan based on who and what will be affected," explains Sunita Patel, senior manager of LLP operations for Penske Logistics. "We assess the risk up and down the supply chain for our customers. We identify their suppliers and manufacturing plants in the affected area, and determine who we need to communicate with during the storm."
Suppose, for example, that a storm is brewing in the Southeast, with 10 inches of rain and flooding predicted. "We geofence the suppliers in the affected area, marry that up against the route structure, and export the information to a master schedule," Patel says. "At that point, we bring internal and outside assets into the mix—the carrier management team, network design team, and load planners—at different levels and intensity."
Most suppliers operate on a static ship schedule, so Penske knows each supplier's route and what day of the week it ships. After determining what day the storm will hit, or when the heaviest rain will occur, Penske pulls out the contingency routes for those days, and begins communicating that information to the customer.
After Penske pulls the material ahead, one of two things happen: The material arrives at the plant, or goes to a cross-dock earlier than expected. Because Penske and its partners work in concert to support the customer from this point forward, it's all about communication. Penske alerts the carriers to plan to make their pickups ahead of the storm, and then contacts the suppliers to let them know they have to pull ahead.
"And we don't just tell suppliers to pull ahead three days' worth of material," Patel says. "We give them specifics: Pull ahead your Wednesday/Friday route into Monday, or ship your Monday route, but also ship your Wednesday and Friday routes on Monday."
Everyone Knows It's Windy
In late October 2015, Hurricane Patricia grew from a tropical storm to a Category 5 hurricane in just 24 hours. With maximum sustained winds of 200 mph, the storm mostly affected Central America, Mexico, and Texas.
Because the storm grew and moved so quickly, and conditions were constantly changing, Penske shifted into contingency planning mode around the clock. Continually reviewing progress with its customers, the tracking teams stayed on top of the pull-ahead shipments, plus the regular shipments, to make sure all customer deliveries were made on time.
"A separate part of our tracking team provided hourly updates on shipment location, status, and delivery time," adds Patel.
Hurricane Patricia was truly a 24/7 monitoring event. Penske's carrier management teams tracked the storm around the clock, and made regular calls to customers to ensure the contingency plan was working. Because of the team's extraordinary efforts, Hurricane Patricia ended up having only a minimal impact on customer supply chains.
THE LONG AND WINDING ROAD
What happens during a longer-term weather event, such as Hurricane Katrina or Superstorm Sandy, where a huge portion of the United States is affected for more than just one day?
"For Hurricane Katrina, we did an exercise similar to Hurricane Patricia, but broke it up into smaller chunks and regions of areas impacted," Patel says.
Hurricane Katrina, one of the most destructive storms to ever strike the United States, moved ashore over southeast Louisiana and southern Mississippi in August 2005. Days, weeks, and even months after the hurricane struck, many facilities in the impacted regions suffered continued downtime; while other facilities were completely lost. Through it all, Penske stuck firmly and continually to its contingency plans.
"Penske was able to keep inventory flowing by establishing backup suppliers, moving equipment, and using our data warehouse to pull whatever additional information we needed to help customers make contingency decisions," says Patel. "Without our plan, some companies might have gone out of business, given the extensive damage and long recovery period."
When the unexpected supply chain meltdown happens, having a skilled logistics partner with the assets, bandwidth, experience, and on-demand access to an extensive network of transportation assets is gold. But it doesn't end there. Penske distills the experience and insight it gains from managing these events for its customers, and puts it into an operational knowledge base to help improve planning and reduce costs for the next time a weather disaster strikes.
Eight Days a Week
Supply chains don't operate on a 9-to-5, five-days-a-week schedule. Production lines run around the clock, and unexpected events happen at all hours. The integrated nature of logistics operations means a small anomaly, delay, or problem upstream will cascade downstream, causing exponential challenges or problems. Customers do not want to wait for a solution.
Given the increasingly rapid pace of retail and manufacturing operations, logistics and supply chain managers never truly clock out. They carry their smartphones and tablets with them, and are available around the clock until supply meets demand, no matter what time it is. Their 3PLs are in it for the duration, too.
Penske traditionally has partnered with its customers, and aligned its services with them to meet their needs. When customers began requesting 24-hour coverage, Penske established a Premium Freight team, a 24/7 operation.
"Our customers wanted to make sure that they're not just pushing buttons or waiting for somebody to call them back when they have a supply chain problem," says Tony Bryant, LLP manager, Penske Logistics. "Within this team, we have 24-hour coverage; that's weekends, that's holidays. If you call our center, you will talk to a live person. Somebody answers the phone and says, 'Hello, this is Penske.'"
Part of that 24/7 on-demand execution capability includes managing information, which never sleeps. Through discussions with customers, Penske found that they wanted more visibility into time-critical loads.
"Now as we bring in new customers, we're able to stabilize their process, look at their needs, and then manipulate that process to provide on-time delivery, and quick turnarounds," Bryant says. "With our group, most of the loads we receive are within six hours. So we need to pick those up quickly."
Not only does this division build relationships with customers, it also establishes partnerships with carriers. "We want to make sure that our core carriers are available when we need them," Bryant says.
"Every single load that we receive is a big deal," he says. "You can deliver 99 shipments on time and do everything right, but miss that one shipment and the customer will be upset."
The Premium Freight group currently handles several customers, each with their own distinct requirements. Some of the businesses are seasonal, and some are not, so Bryant's team sees a lot of fluctuation in loads coming through.
To enable around-the-clock tracking and provide shippers with visibility into their shipments, Penske developed an application called Hot Board. Team members input reminder times and match them against a mileage band that tells them when loads need to arrive, and what needs to be tracked next. The most recent shipment that should be tracked goes to the top. "Once we track it, it falls back in line, and we continue to track it until that shipment delivers," Bryant explains.
Because many logistics professionals run their operations from their phones after they leave the office, Bryant's team sends alerts out to some customers in a format that easily displays on their cellphone.
"They can see all the information at once—when the shipment was picked up, when delivery is expected," he says. "We also include information on the driver's location at that given time—city and state—and how many miles out to delivery."
When customers contact the Premium Freight group with a request, the first thing team members determine is how quickly they can get the shipment there—and give customers all the transportation options available—whether it's air, charter, ground, or other mode. "A lot of the decision comes down to delivery and cost," Bryant says. "Is the pain worth the price?"
Bryant's team doesn't wait for a shipment to develop into a problem; instead they track it incrementally across the process. Then they can take corrective action or offer the shipper alternatives.
"Shippers want options," Bryant says. "We give them every option we possibly can to get their shipments delivered. And, as that load goes in transit, we also monitor it using a six-step audit process. So when that update comes in, not only do we check to make sure that the mileage is correct, we also check back to the previous update to make sure the driver drove the specific amount of time.
"If we check a shipment that's on a four-hour schedule, for example, and the driver only went 100 miles in those four hours, we want to know what went on. Where is this driver? Why is this driver driving slow? It could be the driver took a break, or some other reason. But we need to know that so we can communicate it to the customer. When customers look at their updates, they want to know where the disparity is."
All the checks and balances Penske has in place allow them to catch issues quickly. "If we know a driver drove only 100 miles, and he was due to deliver within the next hour but he's farther out than we expected, we can contact the customer to let them know that their shipment will not deliver at 5:00; expect it to deliver at 7:00."
In some cases, customers are able to change the production line, and focus time and assets somewhere else. They may be able to wait for their shipment without any downtime. Penske's information gives customers the flexibility to determine what to do, once they know that a load will be late.
The Premium Freight team deals with daily challenges such as a truck breaking down, or drivers hitting bad weather. They rely on a set of best practices to see how they successfully handled situations in the past.
"There are times where new things happen," Bryant says. "But a quick decision backing every action goes a long way. Sometimes, especially when dealing with an expedited shipment, we have only a small window. We have to make a fast decision, and provide those options as quickly as possible to the customer."
In the Midnight Hour
In 24/7 operations, sometimes the clock works for you, but sometimes it works against you.
Bryant recalls the time when a customer shipped a load LTL, then contacted Penske because they needed it expedited. The end user in Virginia was going to shut down if Penske couldn't redirect the shipment and get it there next day.
"First we contacted the LTL carrier and asked where this freight was," Bryant recalls. "They advised us the freight would be at their North Carolina terminal. So we scheduled a carrier in there without a problem."
However, when the carrier arrived, the North Carolina terminal advised that the shipment was not there. After some checking, Penske discovered that the freight never caught the outbound truck from the LTL carrier's Mississippi terminal. So, it canceled that load, and rescheduled a carrier to go to Mississippi.
This put a wrinkle in the expedite plan because Penske went from delivering this shipment in 4.5 hours to now delivering it to its destination in 12.5 hours. Penske gave the customer options—same-day air; charter; or ground transportation.
Once the customer made the decision, Penske contacted the terminal in Mississippi to advise they were sending a carrier for ground expedite. That's when Penske discovered that the shipment was finally loaded on an outbound truck going back to North Carolina. Unfortunately, it was sealed, and the trailer could not be opened.
"At that point, we decided we had to cancel that truck, and rebook it, now in North Carolina. We did get the track number for the LTL carrier," says Bryant. "We followed that truck to make sure it was going to deliver on time."
But when the driver that Penske booked arrived at the Charlotte location, again, the shipment wasn't there. Fortunately, inclement weather had delayed the LTL driver by only two hours. Penske was able to get the truck loaded quickly, and delivered the shipment about one hour after midnight.
"The customer did not have a line down situation, which was excellent," says Bryant. "But we did have to chase that freight around to locate it."
Bryant recalls another situation when a shipment was not as elusive; however, it posed its own challenges. Like the previous situation, a shipment that was originally slated for standard service needed to be expedited. Penske called the standard carrier to cancel this load because it had now become an expedite.
That's when Penske was notified that the standard carrier had already picked up the shipment, and the driver ran out his hours, so he went to a truck stop 10 miles down the road. Once the driver went on break, he couldn't move the trailer because of hours-of-service regulations. The regulatory clock started ticking.
"We started looking at some of our standard options: Did the carrier have a driver in the area? Could he just take the trailer back to the customer location?" Bryant says. "Nothing was available, so we asked the expedited carrier we secured if they would take the trailer. But they didn't want to, due to liability issues, which we understood."
Bryant and his team continued to spin their wheels, trying to figure out anything they possibly could do to get this shipment from the truck stop back to the customer without having to wait for the end of that driver's 10-hour break.
"Talking about grasping at straws; we finally found a tow truck that could come in and grab the trailer," Bryant says. "We breathed a sigh of relief."
But that wasn't the end of the story. The customer's plant was closing within the hour, and Bryant's team had to help them understand that this was a "hot load" for their end user. The customer ended up staying open long enough for Penske to get the truck towed back to the facility, where the shipment was offloaded, reloaded with the expedited carrier, and on its way.
"That was a tough one," Bryant admits. "We owned that problem for about eight straight hours."
In these examples, and countless others, Penske pulled out all the stops, and worked around the clock to serve its customer and its customer's customers.