Strategic management of transportation resources is essential for ensuring flexible capacity for peak season requirements and unique situations. Tendering consistent volume throughout the year at negotiated rates that properly compensate providers will pay dividends when driver and equipment availability are in short supply. These core brokers and carriers will return the favor by allocating scarce resources at reasonable rates to loyal customers for their incremental peak season loads.
Produce companies that lack consistent volume must make their freight attractive in periods of tight capacity.
Lund suggests: “To get the equipment you need, create driver-friendly loads with properly precooled product that is ready to go, with good pick-up and delivery times, and a low number of drops. Plus, you have to pay the market rates and avoid the unloading fees that make truck drivers crazy.”
Contingent capacity provides the flexibility to handle a “positive disruption” such as record crop output or heightened consumer demand for a commodity. Produce companies need not make capital investments in facilities for these infrequent or one-time events; instead, they should identify, visit, and qualify a small group of processors and third-party logistics firms to handle overflow requirements. This is a cost efficient strategy for creating supply chain volume flexibility.
Creativity
Innovation is another critical element of flexibility. When one issue is resolved, new ones arise that require different strategies and solutions. When combined with rapid product degradation and exacting customer specifications, the need for creative problem-solvers is crucial, according to Inestroza.
Our industry experts provided multiple examples of creative firefighting to maintain a flexible flow of quality product for consistent shelf life. Pepperl suggests using farms at varying altitudes and planting varieties that bloom at different times to spread the supply across a longer timeframe.
Harvesting product very early in the day or twice a day to avoid extreme temperatures is another option, notes Inestroza. And, sometimes orders need to be juggled and delivery schedules reworked to ensure that all customers get served when inventories are tight, adds Zehe.
Managing fuel expenses also requires a strong dose of creativity for companies with private fleet operations, as they must develop flexible capabilities and strategies to minimize the impact of fuel price volatility. Dr. David Menachof, the Peter Thompson Chair in Port Logistics at the University of Hull (Yorkshire, UK), highlights a variety of strategies to reduce fuel expenses. From an operations standpoint, he suggests: “A low cost option is a one-day fuel efficiency training course for experienced drivers. This can produce a 5 to 7 percent performance improvement in fuel economy. Also, if too many empty miles are being driven, work with a freight broker to generate backhauls [which] will partially offset the fuel costs for returning vehicles to the home base.”
Menachof also proposes creative financial strategies: “Hedging programs can be used to lock fuel prices for a set period of time. It prevents the fleet from being affected by future price increases.” Further, Menachof notes that “2014 tractor engines will be significantly more fuel efficient than current models; with a 1 percent increase in fuel economy worth approximately $900 per year and diesel fuel at $4 per gallon, a 10 percent improvement in fuel economy could amount to a savings of $9,000 per year for each power unit replaced. ”
Conclusion
Success in the fresh produce supply chain is not based on heavy standardization and repetition like a manufacturing operation. Produce companies and their supply chain partners must be adaptable to the realities of the weather, growing conditions, and external disruptions.
Fortunately, this ability to adapt is not about technology investments or asset accumulation; it is derived from a willingness to establish collaborative relationships, organize contingent capacity, and creatively
manage problems. Produce companies, both large and small, can leverage these flexibility building blocks to become more agile, service oriented, and successful.
