TRANSPORTATION STRATEGY and TACTICS: Wholesale Distributor Supply Chain Assessments

by Johnny Dollar

We don't need no stinkin badges.jpgHey, so you are one of the thousands of small to medium sized wholesale distributors out there. And your company is doing just fine and the company line is, "we don’t need no stinkin’ help." After all, your owner/president had made the point clear, time after time, that no one knows our business better than we do. Right? But what if there is hidden operating cash out there just waiting to be harvested? Guess you’ll never know unless someone is savvy enough to check every once in a while. When was the last time your company had a serious Supply Chain anal exam?

If you want to get a sense of how Under Control your supply chain is, take a look at the last year-end financial results and compare them to your industry segment’s baseline profile. Most of you probably can’t find a copy of your company’s financial results because 1) you are a privately owned company, and 2) the owner(s) don’t share that kind of information with you. Therefore, you don’t have a clue how how your transportation strategy and tactics employed in the end-to-end supply chain impact operating cash flow—good, bad, or indifferent. Too bad, because in a crappy economy, you’ll never know the ship is sinking until the owner informs you that he’s just filed for Chapter 11. WHAT A SURPRISE THAT WILL BE, HUH?

So, Mr. Ops manager, or Mr. Supply Chain Director, or Mr. Transportation Manager:  if you are like most small- to medium-sized wholesale distributors (regardless of industry segment), what’s a smart guy or gal like you going to do? After all, Purchasing has all the Inbound under control since it is more convenient (and apparently more financially rewarding) just to purchase everything delivered and let the vendor take care of the inbound carrier. After all, they can do it cheaper than we can, RIGHT?

And You, Mr. Private Fleet Manager—there can’t possibly be any operational expense that can be cut or saved that would 1) improve the service capability of the delivery fleet and 2) add capacity to the fleet to handle increased customer demand, RIGHT? YOU’VE GOT IT MADE! Your customer routes NEVER change, do they? And your fleet is sized just right, so you never have any capacity issues, DO YOU? And perish the thought that a Fleet Routing System could be of any help in making your day any better than it already is. As Inspector Callahan said in the movie "Magnum Force," "A man’s got to know his limitations." And you are living testimony to the truth of that statement. Ain’t nobody going to upset your apple cart. You’ve  been running this fleet just fine for years now, without anyone’s help. You got the routine down pat. Change is a word that is not in your vocabulary. The only thing that would make you institute changes is the Boss. Keep him happy, and your life is bliss, RIGHT?

So don’t pay any attention to the rumor that your fiercest competitor just finished an end-to-end Supply Chain Financial Assessment, and that, as a result, they are now armed with information that not only tells them exactly where in their supply chain operations they need to make adjustments to improve operations and performance, but have also been able to QUANTIFY exactly how much making these changes will improve their Operating Cash Flow (i.e., add CASH to their bottom line) over the next 12 months.

YEP! And guess what they plan to do with that extra cash? Out-hustle your status-quo, lackluster little operation and KICK YOUR PROVERBIAL ASS in the marketplace. It’s not that they don’t think you are a great bunch of guys, they just want to help speed your journey toward Chapter 11—or better yet, send you flowers upon your demise!

So, even though you don’t own the company, that doesn’t mean that you can’t investigate what it would take to do a supply chain assessment, now does it? After all, the company and job you save might just be your own.

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