Every day, on calls with Cleo customers, I am learning first-hand how leading supply chain-driven businesses are adjusting to the COVID-19 pandemic. In this blog series I share insights about how companies in various industries are responding. Their agility is remarkable, and something we can all learn from. Hope this helps everyone think differently.
Blog #5 – Third Party Logistics
Listening recently to one of our customers, a multi-billion-dollar 3PL (third-party logistics) provider, I learnt first-hand that the logistics industry is undergoing a massive shift due to the COVID-19 pandemic, and how they are responding to it. The company I spoke with specializes in cold chain logistics, which involves distributing temperature-sensitive products, such as food and grocery that can perish or lose shelf life if not properly stored and transported.
With multiple business units ranging from retail distribution, freight brokerage, and cold storage, to foodservice distribution, its business has seen massive growth in demand overall since the onset of the pandemic. This has been especially fueled by spikes in food distribution and freight brokerage businesses. Based on various estimates, food and beverage shipments and shipments of consumer packaged goods surged in February and March. The rates have also gone up significantly due to widespread trucking capacity shortages across the U.S.
The company expects e-commerce-driven business to become a significant part of long-term demand due to a drastic shift in consumer behavior. Even when the economy finally opens back up, this company expects a majority of the food demand from restaurants to shift to food delivery, as well as quick in/out places, and home cooking. This is fully expected to drive a sustained uplift for the company, simply because they are hyper-focused on capacity planning, e-commerce enablement, and ecosystem integration technology, and that agility is what enables them to create value by shifting with demand channels.
How it Keeps Up With Demand
Unlike many other companies who are struggling to efficiently manage the supply and demand shocks that they are currently experiencing, this 3PL has flourished. And the company has flourished due to a number of reasons.
From leadership onwards, the business has strong managers who have responded swiftly to manage demand spikes through intense dedication, working 12+ hour days six or seven days a week over the last month or so. It’s the classic case of leading by example.
Agile Supply Chain Mindset
The company has instilled an agile SCM (supply chain management) mindset, with the right strategies to go along with it so that they can nimbly redeploy people and resources as needed across different functions. For example, with lesser demand in food service distribution and surging demand in retail distribution, the company has retrained and redeployed many of its workers from service distribution to warehouses in order to meet the demand spikes in retail distribution.
World Class IT
As far as its in-house systems and environment go, this company made an investment in its IT organization so it can develop on the fly software solutions that effectively manage demand shocks, rather than resorting to inefficient manual approaches.
This 3PL provider has made smart hiring choices that allows it to scale up e-commerce operations and meet the accelerating demand in e-commerce channels.
Finally, the company is leveraging its multi-year investments in ecosystem integration capabilities to deliver a tailored supply chain integration solution. Those solutions include automating Load Tender to Invoice processes for its freight brokerage division, and optimizing Order to Cash process for its retail distribution division.
More than anything else, embracing ecosystem integration technology shows just how critical a modernized platform is in managing the demand that has been unleashed by the COVID-19 pandemic. In these fast-changing times, supply chain agility is the key to sustained business continuity.
As always, please reach out to me on LinkedIn with any questions or comments that you might have. And refer to Cleo’s COVID-19 FAQ guide for more suggestions to help you navigate these difficult times.