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 #7 - Logistics
One of our customers is a mid-sized logistics company based in the Midwest, with business units across trucking, 3PL, and rail. The company’s objective is to optimize a customer’s entire network by providing supply chain solutions, warehousing and distribution, rail services, and final delivery to ensure an unparalleled customer experience.
With its own asset base of trucks, trailers and drivers, it controls the quality of its end-to-end services which very few companies can match. The company serves the automotive, food products, paper goods, and general commodity products industries. The company’s two core differentiators are:
- Leveraging the company’s heavy assets to provide exceptional customer service
- Optimizing a customer’s entire network with a total logistics solution for its warehousing and logistics needs
With the advent of COVID-19, some parts of its business have been impacted differently based on the industry and service lines. For example, automotive has been most impacted since many of the auto companies’ production operations are shut down until early May.
On the other hand, the rail service line of business has been extremely busy due to growth in shipments for paper and packaging products. Overall, dedicated fleet lines are less impacted (mainly because it is a variable cost impact with the fixed cost covered); in contrast, the OTR (over the road) irregular freight service line is more impacted due to the pandemic.
When the going gets tough, the best companies get going. By deftly navigating the immediate cost structure and cash flow needs during COVID-19, the company’s leadership is focused on three growth strategies to strengthen its category position and enhance its market leadership when emerging from the downturn.
1. Reoptimizing Service Lines
First, the company has dedicated itself to reoptimizing service lines to focus on those industries that are thriving most, such as food, paper, and packaging, while skewing more towards having a regular, dedicated fleet versus a non-dedicated, irregular fleet. While it is difficult to change on a dime, through a combination of leadership at the top, strategic relationships with customers and equipment lenders, this Cleo customer can respond in an agile manner that is better than many of its peers.
2. Integrated 3PL
Second, dovetailing with the general growth of e-commerce, the company is seeing tremendous potential in integrated logistics. They are doing this by bringing in heavy assets in trucking, adding freight brokerage capabilities, as well as warehouse facilities, to provide deep integration into customers’ systems. Owning its own assets as a lead logistics provider already differentiates this company, and that distinctiveness is augmented by the way it builds out its brokerage capabilities to effectively stand apart in the market.
Also, as its customers’ advance technologically, especially with e-commerce, the methodology for notifying them as a 3PL of inbound workload is usually based on API integrations that connect, for example, an e-commerce store with a fulfillment center, in addition to traditional EDI.
3. Leveraging Technology and Ecosystem Integration
Third, given that many of its own customers are operating globally, the need to increase supply chain visibility and reduce risk, improve velocity and reduce costs – all at once – is mission critical for its business sustainability. The company realized a few years ago that in order to achieve this, it needed a common technological solution.
Hence, the company invested in key technologies to provide a common platform to drive growth and customer experience, specifically:
- Truckload Management Software System
Provides real-time tracking information to customers, and its mobile communication utilizes tracking capabilities and geofencing to automate pickup and delivery information, preventing service failures.
- Warehouse Management Software System
Efficiently manages inventory through data-driven capabilities.
- Ecosystem Integration Platform
Helps the company efficiently handle EDI and API-based integrations with its customers and internal systems. Further, the integration platform has enabled it to roll out collaboration and real-time visibility capabilities to its customers to increase customer loyalty, drive retention, and enable cross-sell and up-sell.
Finally, another solid differentiator for the company is that its leadership team promotes technology and has made the commitment to constantly train its people on the advances in technology. The company not only focuses on customer solutions and fulfills customer supply chain needs, but also provides data to better inform employees and involve them in the day-to-day business by drawing on its inventory and supply chain data.
Given the continued growth in online business, and by striving to continuously improve its ability to rapidly bring on warehouses at strategic locations, the company has enhanced its same-day delivery fulfillment model to drive predictable growth and expansion. The company has also seen particularly notable growth during the pandemic in its West Coast operations, which points to excellent geographic expansion potential outside of its core Midwest market.
Overall, the company is doing an excellent job of reformulating its business strategy during the COVID-19 pandemic. Despite the disruption it is experiencing in some of its markets, the company has taken bold steps to set itself up for renewed growth and profitability as the inevitable economic recovery takes hold in the future.