Fuel consumption represents nearly 37% of average per-mile trucking costs. In today’s time, with the advancement of technology, more and more companies are tapping in to technologies that allow for better risk management to improve efficiency and lower the risk of avoidable scenarios that were once considered “the cost of doing business.” Many large companies such as Procter & Gamble and Whirpool have begun working with companies such as Breakthrough Fuel, which work with many shippers across the country to help provide strategy on fuel management.
Clients using Breakthrough Fuel’s model only pay actual fuel costs for particular routes on particular days, this allows for a savings on fuel consumption. Breakthrough Fuel also has multiple locations from which a manufacturer can ship from which allows manufacturers to ship based on distance from their destination or the cheapest trucking costs. To help aid in the transfer of shipments, there has been mass improvements to inventory tracking such as with the use of radio frequency identification (RFID) technology.
With the use of RFID technology and GPS, shippers can know exactly where a certain item is within a container. This use of RFID chips helps alleviate errors in packaging and shipping such as when working with
parts for bigger items. Think about a time where you will be able to place all of your groceries in a shopping cart at the supermarket and as you walk out, an RFID scanner will automatically scan all your groceries for you and display a price for each item without the hassle of you having to wait in line. With the use of RFID technology I really believe that soon that is how our shopping will be. What do you think are some other good uses for RFID technology?
Firms that ship in less-than-truckload (LTL) amounts need to make sure that they are shipping goods quickly in order to meet the high demand from their customers. This idea of using LTL services provides shippers a way to send out shipments more quickly but at a higher price. With the use of RFID technology, a shipper can carry multiple loads from different companies and be able to manage and control where each individual package gets delivered. Say Walgreens and Dominick’s both need a certain brand of product, the manufacturer can use a logistics management company such as MIQ Logistics to make sure that their product gets to both Walgreens and Dominick’s stores in a certain location with the help of RFID chips to track and monitor the packages. Certain transportation companies even provide their drivers with mobile devices to manage the inventory within their truck. Shippers are working on delivering shipments damage free, within a reasonable amount of time, and with confidence that their shipment will arrive in the right location when needed.
What can you see as the advantages or drawbacks to using the LTL technology described above? Do you see any ways of improving this system?
“Science Comes To Shipping.” Fortune Magazine 8 Apr. 2013: S1-S4. Print. (Also available here: http://www.timeincnewsgroupcustompub.com/sections/130408_Freight.pdf)
4 thoughts on “Taking the guesswork out of Supply Chain Management”
I do not see any drawbacks with the LTL in any case. I work for a transportation and storage company, and we already use a form of this. When customers store their items at our ware house they are put into specific areas which correspond to their storage dates. Although we do not use RFID chips for their items, management knows exactly when and where they need to be moved at any particular date. When moving out of the warehouse, the customers load may be placed onto a truck which may be carrying others items which can be delivered on the way to another destination. Yes I do think that this process of (un)loading and inventorying would be easier with the RFID chips and it would cut back on the lost or broken items but is it really a cost effective way of managing items in the warehouse that I work in?.. Probably not.
I believe one of the possible drawbacks of less-than-truckload strategy is that it may not be cost-effective for smaller transportation companies. The company mentioned in the article, Con-way Freight, has 425 locations in North America and 30 years of experience. Smaller companies don’t have the luxury of having so many locations. Because of this, they will have to drive much further to their supply locations. Since their trucks will sometimes only be half-full, they may not make enough money from the shipments to cover these extra transportation costs.
I was at work one day and ringing out a transaction for an engineer who was working on making this RFID technology go through. He said they are overcoming some challenges with it but sooner than later they will make it work. I’m really looking forward to this technology to change management in many companies. I think overall it will be very cost-efficient for companies and also time efficient. The lines at the the stores will be much shorter and will move along faster! As long as LTL services are concerned, I think it depends on what the size of the company is. Although it may make things move faster, it may be costly. Hence, I believe that that the LTL services will be an advantage to the larger companies but not the smaller companies.
I have been waiting for this sort of technology to be developed for years. I used to manage a warehouse of couture gowns. Special orders would be delivered from China mixed in with stock orders. The custom orders would often get unpacked, put away, and then sold to another customer before anyone realized the mix up. Or worse yet, the order would get put away incorrectly and was virtually impossible to find in the massive warehouse. The GPS tag would allow the order to be found easily if misplaced. Also with the ‘shopping cart’ style scanning device the dress could be located in the box before it was ever touched.
I do not see any disadvantages except for the initial expense to implement the technology.