Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Supply Chains Still Have to Make the Human Connection

ClientForum

It can be difficult to assimilate the sheer number of new technologies and trends that are reshaping supply chains. And as we struggle to keep pace with these innovations, the importance of the human element can be overlooked. Yet the performance of people and how they interrelate remain critical, perhaps more than ever, to the performance of supply chains.

This emerged as one of the main themes during our two-day, fifth annual TMC Client Forum in Chicago earlier this month. Over 150 people from our shipper community and industry thought leaders gathered to network, share best practices, and talk about changes that are impacting supply chains.

3-D printing, delivery by drone, driverless trucks, and nearshoring are some of the developments that supply chain professionals need to keep tabs on. Adrian Gonzalez, President, Adelante SCM, summarized the innovations that impact the logistics industry.

Chris Caplice, executive director of MIT’s Center for Transportation & Logistics, introduced the human dimension by addressing an important question: Do higher truckload rates equal better service? The consensus was that such a correlation is questionable; studies indicate that there is no relationship between rates and key measures of performance such as on time pick up and carrier acceptance ratios.

Still, shippers can encourage mutually beneficial trading relationships with service providers. They can tighten the links between contracting, procurement, and operations, and pay more attention to fostering carrier loyalty, for instance.

A deeper understanding of the environment in which carriers operate also helps shippers put relationships with service providers on a firmer footing. Daniel Murray, vice president of research at the American Transport Research Institute (ATRI), discussed the latest issues that carriers are grappling with.

Hours of service (HOS) regulation, driver shortages, and the compliance, safety, accountability (CSA) government initiative were the top three industry issues in 2014, according to ATRI research.

A number of work-related concerns are tied to these issues. For example, ATRI has looked at the risk of truck crashes in terms of the time of day that these incidents are likely to occur. The number of crashes that cause fatalities and injuries tends to increase during daylight hours, from 0600 to 1800. Large trucks are spending more time on the road when traffic congestion is at a peak, increasing the likelihood of accidents. Injury and towaway crashes have increased over the last 18 months or so.

Rod Nofziger, CEO of the Owner Operator Independent Drivers Association (OOIDA), described the challenges faced by small-size carriers. According to the Federal Motor Carrier Safety Administration (FMCSA), more than 80% of trucking companies own 20 or fewer trucks. An analysis of OOIDA’s membership carried out in 2014 revealed that the average age of drivers is 56 years, 77% are married with children, they operate over 110,000 miles per year, spend at least 171 nights away from home annually, and earn an average of $54,000 per year. In 2013, some 49% of the carriers operated just one truck; these drivers are classed as independent owner-operators. The rest were mainly leased owner operators.

Given this type of working environment—and an increasing regulatory burden including the possibility of new rules, such as controversial speed limit mandates—it is perhaps not surprising that driver retention is a perennial industry problem.

OOIDA conducted a Shipper of Choice Survey in September of this year that covered 1,886 responses from members. The results make interesting reading for shippers, and reflect the demands on today’s truck drivers. Consistent and fast loading/unloading was rated as the top “shipper of choice” attribute by 83% of the respondents. Courteous, respectful, and honest dock staff was the second most important attribute, and the provision of parking before and after loading/unloading came in third.

Parking has become a major issue for carriers. An analysis of 1,400 driver surveys carried out by ATRI shows that public and private rest stops are equally as challenging when it comes to finding suitable parking.

Finding a place to park for trucks might seem like a relatively minor consideration in the context of a global supply chain, but on-the-ground problems like these add cost to freight operations and need to be addressed.

Our forum provides an intimate platform that allows practitioners to network with their peers from different industries who are dealing with similar supply chain challenges. We will take a more detailed look at some of them in future posts.

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