Cold chain capacity: Leaders discuss supplier collaboration amid COVID-19
Nearly 330 million Americans hoping to return to "normal" anxiously await a vaccine that ends the coronavirus nightmare. But even after a COVID-19 vaccine is approved and enters production, it still must reach all those people.
After all, it won't work while sitting in a warehouse.
That's where refrigerated carriers come into play, and Jeff Tucker, CEO of Tucker Company Worldwide, says all refrigerated supply chain stakeholders should start preparing now for the impact of the worldwide logistics effort to move a COVID-19 vaccine when it becomes available.
Capacity already is tight, he said during a recent Cold Chain Council webinar, so a logistics effort of this magnitude will affect how myriad cold products reach the market.
“If you have anything to do with temp control, you’ve got to be thinking about what is this humanitarian effort that we need to get accomplished going to do to my supply chain, and you’ve got to be prepared, because … I’m not sure anyone’s going to get away from that pinching their supply chain,” Tucker warned.
Tucker joined Luiz Barberini, Bayer’s Latin America operations manager, and Kevin Lynch, director of sales for QProducts & Services, which hosts the Cold Chain Council webinar series, for the virtual discussion entitled “How to Collaborate with CMOs to Boost Efficiency and Overcome Capacity Challenges in a Complex Supply Chain.”
The webinar was framed around Bayer’s relationships with its contract manufacturing organizations (CMOs), but the insights and best practices shared apply to all business partners in a company’s supply chain, the speakers said, including transportation companies, shippers, suppliers and third-party logistics firms, especially in an environment where everyone’s supply chains have been turned upside down by a global pandemic.
QProducts founded the Cold Chain Council in 2016 as a workshop-style platform for food and pharmaceutical professionals to gather, connect and discuss ongoing challenges, best practices and emerging technologies in the cold chain. The webinar series replaced live events this year due to COVID-19.
Relationship focused
Barberini said Bayer makes the most of its supply chain relationships by aligning with its business partners to promote innovation, and utilize lean and continuous improvement to drive efficiency and improve operations. And by building relationships, Bayer can better manage capacity and risk in an evolving climate. “It’s a very complex situation (with COVID-19),” he said. “We are trying to learn how to work again in this scenario.”
It’s important that partners share the customer’s vision for their business, instead of simply fulfilling a customer’s needs for products and services, likening the difference to fast-food service vs. custom meals by a culinary chef. “It’s a very different approach, and we must strive to work with companies and partners who share our focus,” he said. “Here is where we have innovation, when someone really understands your business and wants to work with you.”
The operations veteran with 30 years of logistics experience also said it’s important to remember the people when discussing concepts like lean improvement and Industry 4.0. Big data, autonomous robots, augmented reality and additive manufacturing are key building blocks, but companies still must rely on people to define processes, establish connections, and properly manage operations and supply chain networks.
Supply chains of the future will be smart, connected, teachable and agile, but they’ll still involve real, live human beings. “Keep one eye on the Industry 4.0, to navigate on the seas, but also look for the right people,” Barberini said.
Bayer starts by managing its supplier relationships with transparency, honesty and a commitment to sincere collaboration, helping ensure full engagement. And “when you have clear discussions with your suppliers, you can discuss capacity,” Barberini said. These discussions should include the total capacity partners can provide, competitors who share product lines, technology, time fences, on-time delivery and more.
Key relationship factors for Bayer include a CMO’s supply chain “involvement” vs. “commitment,” which he compared to a chicken’s contribution of an egg to a bacon-and-egg breakfast vs. the pig’s fully committed sacrifice. Partners must share key data to form a productive give-and-take relationship that goes both ways.
“You have to do your best so they can do their best,” Barberini insisted.
And remember: CMOs, 3PLs and suppliers are people, not simply tools to do the job. “We are all people, fighting the same battles and facing the same risks,” Barberini said.
Rollercoaster ride
Tucker Company Worldwide is the oldest privately held freight brokerage in the country, according to Tucker, who is a third-generation member of the non-asset-based, third-party logistics company that specializes in moving freight for health care, and food and beverage customers with its temperature-controlled services.
He said communication, collaboration, transparency and trust—all key factors for a pharma manufacturer—are equally important in the transportation world. His presentation included current market conditions and a case study comparing shippers, and steps to take to find success amid a capacity crisis.
“It’s been quite a ride,” Tucker said of 2020.
Tucker opened by describing his five stages of grief in a tight transportation market, and said we’re currently somewhere between bargaining and acceptance, while encouraging carriers, shippers and 3PLs to break the cycle of mistakes he sees companies make over and over as market conditions fluctuate.
“2020 has been a year where, all joking aside, a lot of us are dealing with a lot of issues, whether it’s depression or flat-out business challenges,” Tucker said.
The market was so erratic over the first ninth months of 2020, he said, “It feels as if, in a lot of ways, at least with regard to freight transportation, we’ve just experienced about a century of American history.” The early-April demand for toilet paper and other household items was the “Roaring 20s,” then demand dropped off, and rates reached historic lows, leading into a “Frankenstein” of the last four capacity crises in July.
“We’re at pretty historic times at the moment,” he insisted.
At present, Tucker continued, trucking demand continues to increase, reaching all-time seasonal highs, and leading to “skyrocketing” rates.
A recent measure of outbound tender rejections indicated nearly 25% of tenders from shipper transportation management systems were rejected by the No. 1 recipient, which is that carrier’s broker. That percentage is “painfully high,” he said, presenting carriers and shippers with extraordinary challenges.
To keep up with the pace of change, and increasing frequency of capacity crises, companies must anticipate and plan for supply chain disruptions.
“The pace of change is happening so rapidly that we absolutely, positively have to be anticipating it, and we’ve got to build supply chains that are durable enough and resilient enough to anticipate this change,” he said. “And I will look any procurement or transportation person in America in the eye and challenge them to say they’re not building resilient supply chains. I’ve got customers who’ve got outstandingly resilient supply chains, where their tender rejections are maybe 4% or 5% and they’re angry about that. Those are extraordinary performers. But those ones at 25%? Guess what, there are a whole bunch of folks less than 25% to bring that average to 25%, so there needs to be a change in the way we think about our partners.”
Collaborate and listen
As capacity is constrained, especially during a global effort to distribute a COVID-19 vaccine, temperature-controlled shippers increasingly must turn to small carriers to meet demands, Tucker said. But many large shippers, he insisted, haven’t learned that equally large asset-based carriers still are necessary, but their utility has faded.
Tucker also said the truck driver shortage really is a large-carrier crisis as more and more drivers gravitate toward smaller fleets. So shippers need forwarders and brokers to help them access all that capacity. “The problem is that’s not moving in the big carriers’ favor,” Tucker said. “It’s actually getting worse for the big carriers.
“There is a tremendous driver shortage,” he continued. “(But) it’s in those large fleets. There is a surge of drivers that have entered the marketplace, nearly 1 million in about a decade, but they’re not driving for those large fleets. So no matter how big you are, you can’t deal only with big and somehow have enough capacity.”
To keep freight moving in challenging times, companies need to take a more holistic approaching to involving supply chain stakeholders, including transportation, planners, security, 3PLs and third-party warehouse distribution. “With customers who bring those stakeholders together, and they really begin to understand the issues and work on those issues collaboratively, and understand that it’s going to take a little bit from each one to make this thing work, those are extraordinarily durable supply chains,” Tucker said.
As a service provider, Tucker says his team takes great pride in seeing someone adopt one of their suggestions for improving the supply chain, leading them to work harder and look for more ways to add value; and that feeling applies to everyone involved, helping to fortify relationships and strengthen connections.
To be an attractive shipper, he concluded, companies must care about capacity in soft and tight markets, and build redundancy that ensures supply chains can withstand the frequency with which “massive” changes are occurring in the marketplace. And as a non-asset-based provider, Tucker said he can’t only deal with large asset-based carriers and hope to accommodate all his customers’ requests with a “brittle” supply chain.
“When you’re constructing relationships, you’ve got to be thinking about performance, and not asset vs. non-asset,” Tucker said. “You’re going to have both of those in the mix. Ultimately, especially in temp control and especially in retail, it comes down to performance.”
Tucker also is chairman of the National Industrial Transportation League, which offers “Shippers of Choice Best Practices,” as a free resource available at nitl.org. The voluntary guide covers good business relations for shippers, receivers, carriers and drivers.
To view the full “How to Collaborate with CMOs to Boost Efficiency” webinar, go to youtube.com/watch?v=Iymup34H0uY&feature=youtu.be.
Visit tuckerco.com or qsales.com for more information.
