A couple of weeks ago SCLA (Supply Chain Leaders in Action) held its annual conference in Fort Meyers, Florida. The event brings together thought leaders from a spectrum of companies including shippers, road carriers, rail carriers, ports, 3PLs, and software providers. It was my first year attending, and I was struck by the collaborative culture of learning and innovation among companies and competitors. My participation was in the transportation area, and I have summarized the event to help share the insights I took from the event.

Create an Innovation Culture to Drive Growth
With the ever-accelerating demands on transportation and increased volatility, it was refreshing to hear Robert Parker’s keynote session on “Driving Growth Through Innovation.” Given the critical role of transportation in the supply chain, and now transformation as part of the customer experience, it was a reminder for all of us to take a step back from the operational activities and position our transportation teams to not only support the growth but also to help drive it.

Innovation is not just an event. Robert pointed out how one of his CEO customers keeps strategic by taking one day a month to just think.

The session wrapped up with some core constructs in how laggards operate versus more innovative teams. These included:

  • Work in silos versus embracing cross-functional teams
  • Focus on incremental improvements versus developing breakthrough ideas
  • Reward risk-averse behavior versus encouraging risk-taking
  • Track operational-focused metrics versus monitoring systematic innovation measures
  • Develop an innovation department versus creating innovation culture –> everyone’s job
Accelerating Expectations and Demands on Transportation
One of the key aspects of SCLA is the peer groups that facilitate discussion and solutions around the issues that transportation professionals are dealing with. The transportation peer group raised a number of topics ranging from shipper strategies, being a shipper of choice, sustainability, private fleets, carrier strategies, driver retention, ecommerce/last-mile, and transportation technology.
 

The grouped recapped some of the issues impacting transportation in the current environment. With the trade war and increased tariffs, many shippers brought in inventory earlier; however, the late spring season is delaying sales and increasing inventories. Is this going to simply delay freight moves and sales, or will these inventories have to be held over until next year? Where is all the inventory going to go? On the capacity front, with the shift from last year’s “capacity crisis” versus this year, what impact is this going to have on the viability of carriers? Did some carriers take on costs (e.g., increased driver wages, fleet investments, ELD installations) that are now creating too much financial risk?

With this backdrop, shippers in the peer group outlined the issues they are working through and questions they wanted to address. These included:

  • How to apply technology to help address “the Amazon Effect”
  • How to measure the value of “faster shipping”
  • How to align with other behavior of stakeholders (merchandising, manufacturing, sales, etc.) with transportation
  • How to balance fleet and dedicated carriers with contract carriers and spot market

Additionally, the carriers highlighted the current issues they are dealing with, including:

  • Handling capacity and rating swings and insulate themselves from annual RFPs
  • Dollars aside, what do shippers want from an RFP
  • Next phase of ELD
  • New hair drug testing
  • Changes in driver training programs

 

Increased Uncertainty Requires More Collaborative, Fact-based Relationships
With the volatility in the capacity markets over the last 12 months, accelerating customer demands, and the increased uncertainty in regulations, it was the consensus that more alignment and information sharing between shippers and carriers would be of benefit. Furthermore, sharing metrics and data outside of the transportation department to ensure it aligns with other stakeholders such as operations, merchandising, etc. was also noted as important. This also ensures alignment in measuring how initiatives like faster shipping relate to sales and customer service.

One example highlighted a paper manufacturer whose mills are typically located in rural areas further from metropolitan-based customers. This limited the pool of carriers the company could leverage if it stuck to traditional one-year contracts. However, by digging deeper into the carrier networks and aligning with their needs, the manufacturer could put together three-year agreements, which built up carrier volumes and also allowed the carrier to develop complementary business, thereby making the overall business worthwhile. Also, by sharing data regularly at an executive level, the company achieved better visibility into the dynamics of the transportation market.

How Do You Measure Your Relationships?
At the conclusion of the conference, the key action for the team was to collaborate and define scorecards for both carriers and shippers. It will be interesting to see what metrics get included to measure how shippers, carriers, and brokers perform in this new world. Beyond core measures such as service, costs, and profit, I can see other factors such as flexibility, agility, and ease of doing business as items that become more prominent. What are the measures you use?