Time-Critical Transport: Devising a Master Plan
Time-critical shipping doesn't have to be expensive, inefficient, or wasteful—as long as it's all part of the plan.
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Expedited transportation was once considered either a luxury—a high-cost service reserved only for the most urgent shipments—or a last resort for when something went seriously wrong in the supply chain, and an expedited shipment was the only fix.
But today, the game has changed. Companies of all sizes utilize time-critical transportation for ongoing, continuous, planned shipments every day, for a variety of reasons and broad range of products.
"The word 'expedited' scares some people, because it sounds expensive and outside a typical transportation budget. But that is no longer the case," says Rick Mathews, vice president, specialized services for YRC Freight, an Overland Park, Kansas-based less-than-truckload (LTL) carrier that offers several expedited and time-critical services.
While companies still frequently use expedited services as a rescue mission when an unplanned event threatens their ability to meet a delivery window, many businesses are choosing time-critical service as a regular part of their transportation management strategies. These services guarantee shippers the velocity they need to meet their customers' deadlines, while also helping with cargo safety and security, and providing high levels of service.
"Expedited services carry the negative connotation that something has gone wrong. But companies are now using expedited services as a mode of choice in instances where speed is critical and they need a high frequency of tracking—often because of the nature of the products being shipped," explains Greg Aimi, director of supply chain research for advisory firm Gartner.
"It's important to differentiate that these are planned shipments," adds Aimi, who prefers to call the mode 'assured shipping.' "These companies are not expediting in a negative context; they are using a high-speed transit mode because it makes the most sense for their needs."
Take Adplex, for instance. The Houston, Texas-based direct marketing and communications firm prints weekly grocery sales circulars that are inserted into newspapers, found at the front door of grocery chains, and sent directly to consumers' homes. The circulars ship each week under strict deadlines—after all, last week's sale items are of no use to this week's grocery shoppers. So Adplex works closely with Richmond, Va.-based carrier Estes Express Lines to ensure that its time-critical freight always arrives within the necessary delivery window.
When shipping to the mail houses that distribute its circulars via direct mail, Adplex uses Estes' time-critical guaranteed service. This arrangement has saved the company from costly headaches, says Gordon Culler, transportation manager for Adplex's Greensboro, N.C., facility.
"If our freight does not reach the mail house in time to meet the bulk mailing schedule, then each piece has to be mailed individually, which is extremely expensive," Culler explains.
Adplex ships hundreds of thousands of pieces at a time to the mail houses, so the cost of solo mailing quickly adds up. Missing the bulk-mailing deadline also disrupts the mail house's production schedule. "Failing to make these deliveries on time is not an option for us," Culler says.
Who Needs Speed?
Using assured shipping as a mode of choice is becoming more common for companies that depend on speed, as well as for firms that need tight control over products in transit. Shippers with a need for speed include pharmaceutical companies transporting bio-molecular materials for clinical trials, for instance. And companies looking for tight control of shipments are often those transporting potentially dangerous goods, such as hazmat items and/or high-value goods including jewelry, electronics, and high-end apparel.
"The key to deciding whether assured shipping is the right mode is looking at the value of the goods or the value of the transport of the goods. This lowers the ratio of the cost of transportation to the cost of goods," Aimi explains. "Choosing a high-speed and highly traceable transit mode makes sense if transportation cost is low relative to the value of the goods. In these cases, you don't want your goods to flow through a looser, more risky supply chain."
Time-critical is also the mode of choice for many manufacturers for whom just-in-time assembly lines, lean inventory strategies, and the frequent need for replacement parts combine to make extremely tight delivery windows the norm.
"The automotive industry, for instance, is a large user of time-critical freight because auto plants keep little inventory on hand, and run a tight schedule on their assembly lines," explains Danny McPherson, vice president/general manager, Nations Express Inc., an expedited carrier based in Fort Mill, S.C. "Any delays in inbound shipments can cause the line to go down."
For global manufacturing firm Stanadyne, spending extra on freight to help customers avoid the expense of shutting down a production line is more than worth it. Stanadyne—which manufactures diesel fuel systems, injectors, pumps, and fuel additives for the automotive and agricultural equipment markets—counts on Nations Express to ship time-critical parts directly to customer production lines.
"It's very expensive to have an automotive line go down, so getting parts to our customers is always a time-critical matter," explains Guss Bodison, Stanadyne's global transportation manager. "And for us, time is also critical when we're receiving parts from vendors."
Nations Express handles a variety of time-critical shipments for Stanadyne, including inbound parts coming to the manufacturer's North Carolina facility, and outbound finished goods going to customer production lines across the country. Nations Express also takes shipments to the airport for Stanadyne customers that require air transportation.
Another manufacturer that relies on time-critical service as a regular part of its transport strategy is Kinze Manufacturing, an Iowa-based producer of farm equipment, including row crop planters and grain auger carts. Farmers purchase Kinze products from dealers; if a piece of equipment breaks down, the dealers expect Kinze to ship repair parts as quickly as possible.
"We send all our shipments via time-critical because our users depend on these parts to get back up and running," explains Renee Gunderson, senior shipping coordinator for Kinze. "During planting season in the spring, and harvest season in the fall, weather patterns dictate only a small time window in which farmers can get their work done. We need to get those parts to them immediately so they can get back in the fields and continue working."
To ensure its time-critical shipments arrive when needed, Kinze partnered with Estes and selected the company's Standard Time-Critical Guaranteed service. Items picked up by 5 p.m. are delivered the next day, with a delivery reliability that has exceeded 99 percent over the past two years.
Kinze sends 125 to 300 shipments per month via Estes' time-critical service, and receives a dedicated concierge who tracks and updates its shipments to ensure maximum visibility.
"Speed is necessary for us—it's part of doing business in this industry," Gunderson notes.
Meeting Short-Term Demand
Speed is also necessary for companies for whom seasonal or cyclical demand mandates time-critical shipments for certain products, projects, or seasons. A secondary supply chain of sorts exists for events such as new store openings, large product launches, and seasonal merchandise rushes.
"In these instances, companies use time-critical services outside of their standard supply chain, but in a more planned fashion than a traditional expedited move," Aimi explains.
Think of the recent launch of the iPhone 5, or hotly anticipated DVD releases such as The Hunger Games. Companies plan release dates for these items, and know they will need to ship initial stock—as well as replenishment items—within a tight time frame.
"These are periodic events that are not repeatable," Aimi says. "The first 10 sales days make or break a DVD, so the merchandise must be available on the release date—and when it sells out, the replenishment stock has to come in during that short window when demand is high. Otherwise, the retailers miss out."
These scenarios are familiar not just to entertainment companies. A wide range of industries experience periodic, non-repeatable events that carry a high demand for products during a short time frame. "Time-critical services are used frequently for instances that fall outside the normal supply chain," says Steve Mulloy, director of the Estes Solution Center for Estes Express Lines.
Mulloy cites the example of a nationwide home improvement chain that recently updated the point-of-sale and wireless solutions it uses in its stores. The company called on Estes to deliver truckloads of the new equipment to its various store locations.
Throughout the upgrade project, the equipment had to be delivered on the day of installation at a particular store—never early, and never late. "The customer didn't want the systems to arrive early because it was worried about damage—and if the equipment was late, then the company was paying an installation crew to sit around and do nothing," Mulloy explains.
Estes also frequently helps a major lawn and garden products brand when its volumes for the spring planting season exceed the capacity—and time frame —of its normal supply chain. "In some years, the growing season may start two or three weeks earlier than expected because of changing weather patterns," Mulloy says. "When that happens, this company needs additional time-critical shipments to get products to retailers while the demand is high."
Velocity with Extra Benefits
The peace of mind that comes with time-critical service has helped to make it a fast-growing transportation segment. And for an increasing number of companies, time-critical transportation is not just about velocity. Choosing a high-speed shipping mode brings other benefits as well, such as special handling, dedicated customer service, high-tech tracking and tracing, and added security. These extras are sometimes worth the cost of an expedited move, even when speed isn't completely essential.
"Some shippers use our services every day as part of their normal supply chain," says Mulloy. "These companies are looking for reliable, guaranteed LTL service."
Even if a shipment doesn't have to be delivered overnight, for example, companies may choose a time-critical service to take advantage of a guaranteed delivery time—and the bells and whistles that go with it. At YRC's Des Moines, Iowa, customer service center, for instance, a 17-person "resolutions team" is responsible for tracking from start to finish every time-critical shipment that is moving in YRC's network.
"When interruptions of any type occur, the resolutions team can quickly call the paying party on every shipment, explain what is happening, and review alternative options," explains Mathews, who notes that this process often helps shippers sending goods to retailers prevent expensive chargebacks.
That type of detailed attention also makes sense for shippers with high-value products that are a cargo theft risk. "There is an inverse relationship between the velocity of goods and shrinkage in the supply chain," Mulloy notes.
For Safety's Sake
Some time-critical shippers also select carriers such as Bolt Express, an expedited transportation provider based in Toledo, Ohio, for the safety of exclusive-use vehicles. Bolt ensures its time-critical customers' freight is the only cargo that will be loaded onto a trailer.
"There is no way that freight will be tampered with, mixed in with other goods, or potentially taken off at another customer's location," explains Chad Brown, director of time-critical services for Bolt Express. "It provides peace of mind for shippers with high-value freight, and it means that customers are in control—they know their freight will move from Point A to Point B without any interruptions."
In addition, time-critical freight is usually handled less frequently because it moves on more direct routes than regular ground service. "Less handling equals less damage," says Mathews of YRC, who notes that some shippers with sensitive items utilize time-critical just because of the reduced handling that is involved.
Many time-critical providers also offer premium white-glove services, employing specially trained drivers who deliver, unpack, and set up goods at the destination point. For companies with time-critical freight that requires finesse, these solutions provide a win-win.
Optical firm Carl Zeiss, for instance, manufactures high-end diagnostic equipment that is time-critical and sensitive, requiring special handling at both pickup and delivery. The company's equipment cannot be shipped via air because air-pressure changes can damage the machines, so it utilizes Estes' time-critical ground service, which includes white-glove add-ons. Drivers deliver Zeiss' equipment to medical offices, uncrate the machines, plug them in, and perform tests on the data lines.
With so much riding on each shipment in the time-critical environment, how do carriers ensure that shipments arrive on time? The answer is a key pairing of technology and human capital.
Nothing can replace basic communication, says Danny McPherson of Nations Express. And that communication must be a two-way street between the carrier and the shipper.
"Communication about the shippers' exact needs and expectations—as well as GPS tracking for ground shipments and Internet tracking for air freight—is essential in meeting expedited time windows," McPherson notes. "With proper communication and tracking, carriers can be proactive if something goes wrong, instead of being reactive and causing a costly service to become a larger issue."
For Nations Express customer Stanadyne, that communication is a crucial aspect of time-critical service. In order to keep its own customers abreast of delivery status information, Stanadyne relies on continuous updates from Nations Express.
"I am alerted for every new status—when the driver reaches our vendor, when the package was picked up and dropped off at the airport, and the ETA to destination," explains Bodison. "Being able to pull up that communication 24/7 gives me peace of mind that our customers' time-critical needs are being met."
Getting What You Pay For
Time-critical shipments—and the benefits they bring to shippers—don't come cheap. Although premium service carries with it premium charges, many shippers see the extra cost as simply part of doing business in today's need-it-now transportation environment.
"When the bottom line is customer satisfaction, and getting your products where they need to be when they need to be there, the extra cost incurred with time-critical service is a small price to pay for success," notes Culler.
Another way to look at the cost of time-critical freight is to compare it against the expense of storing inventory. "Companies can either keep inventory on hand—which requires space and inventory cost—or reduce inventory and plan on increased transportation costs to operate in a just-in-time environment," McPherson explains, noting an increase in companies choosing the latter over the past few years. "Many businesses are opting against maintaining inventory, and instead working to find a reliable time-critical carrier that can provide a variety of options at a competitive price."
In addition, most carriers work closely with their top time-critical shippers—those that meet certain volume minimums—to develop cost structures that do not bust the budget. Bolt Express, for instance, can set specific cost-per-mile and fuel surcharge rates for shippers that wish to project their ongoing costs. It also works with all its time-critical shippers to help mitigate the impact of market fluctuations.
"Time-critical is more expensive than regular ground transportation, but it doesn't have to be cost-prohibitive," says Brown. "We know that cost matters. We also understand that our customers need a carrier they can trust to pick up and deliver their freight on time."
Other carriers have developed innovative ways to help time-critical customers cut transportation costs. YRC, for example, offers a time-critical weekend service that allows customers to ship out on Friday for Monday delivery—without paying a next-day rate. By using Saturday and Sunday as travel days, and counting them in the regular time-critical ground service cost structure, YRC lets customers skirt the typical expedited costs associated with Friday-to-Monday delivery.
For Conversa Solutions, a Michigan-based wireless software development company, the YRC Weekend Advantage service has been a huge cost-saver. By using Weekend Advantage, Conversa—which provides new software, branding, and packaging for old cellphones bound for secondary markets—can take the entire work week to process orders, and still count on getting its re-worked phones to customers before noon on Monday.
"To get the same schedule with most other carriers, we would be paying for a next-day priority service via air freight, and the costs would be exponentially higher," says Robert Reed, CEO of Conversa, which ships 20 to 50 pallets per month using the Weekend Advantage service. "The fact that we can ship out on Friday also really helps our workflow. Normally, for time-critical ground shipments with a Monday arrival, we would need to have our orders ready to ship out on Tuesday."
Shippers in Control
Shippers can also play a role in helping to control the costs of time-critical shipments, says Joseph Kost III, senior transportation manager with GE Appliance and Lighting. The company uses Estes to ship some time-critical shipments each day to large OEM customers in the Northeast and Mid-Atlantic regions from its DC in Charleston, Tenn. It counts on the speed to market that time-critical provides to effectively manage seasonal volume spikes, as well as its customers' just-in-time delivery expectations and low inventory levels.
"We work with our carriers to find strategies that avoid adding costs to their daily operations," Kost explains. "We do this by performing directional loading, and nose-loading specific customers; using dedicated geography by trailer; and making sure pallets are secured and properly constructed.
"These practices help offset the added cost of high-speed shipping by avoiding the practice of re-shipping due to damage," he says.
The bottom line? Shippers with a need for speed that plan ahead and make time-critical transportation an ongoing part of their supply chain are best positioned to meet the tight time demands of their customers, and reap the rewards of a premium service without busting their budget.