Outbound Logistics: Think Outside of the Trailer
By Susie Sterling, Supply Chain Solutions Director at LeanCor
Shipping Produce via Rail Can Be Lean
To facilitate a lean fulfillment stream for our outbound logistics customers, we strive to achieve the perfect order. The perfect order is determined by the “8 Rights” - we want to deliver the right product, in the right quantity, to the right place, at the right time, in the right quality, from the right source, at the right price by providing the right service to our downstream customers. Whew!
Yes, it’s just as hard as it sounds. This is what keeps lean logistics practitioners busy - day in and day out! The task becomes increasingly interesting when it comes to shipping produce (fruits and vegetables) – the commodity mostly coming from the breadbasket of our country: sunny California. I recently visited distribution centers in the Central Valley, among them an expedited rail cross rock. Walking the Gemba and observing the substantial amount of planning and knowledge going into unloading trucks and reloading the contents to temperature controlled rail cars, I thought of the Lean Supply Chain – the perfect order as defined by the customer.
Let’s say I’m preparing dinner for my family. When I look at the lettuce, carrots, potatoes or apples I’m buying, what I see as value is FRESHNESS - the only thing I’m willing to pay for. That means that the outbound logistics of these products need to be quick and agile and free of many storage points and handoffs. Short transportation lead times are paramount.
The Secret Equation to Freshness
The question arises: what transportation method would you choose? Truck? Rail? What is the right service that keeps the cold chain uninterrupted from harvest, to delivery, to my shopping basket? What is the right price of outbound transportation as truck capacity fluctuates over the year? I learned that this expedited rail service, a unit train that never gets split up during its journey, can leave Delano, CA and reach Rotterdam, NY or Jacksonville, FL in 5 days. Product can be distributed just in time to the stores on the east coast. Now that’s fresh lettuce!
How much does this method of outbound logistics cost, you ask? Any logistics professional would. This is where it gets interesting: it will not be your cheapest option all the time. During off season, trucks will be your cheaper bet. However, during produce season, when truckload prices are 2-3 times of their normal rate, expedited rail will be the obvious choice. I would even venture to say, that with the right volumes, yearlong collaboration between growers and rail carriers will be the right choice – previously negotiated flat rates create stability and standardization in the outbound logistics network and the entire system will benefit – especially the end customer.
So what is the secret equation to the lean outbound logistics of fruits and vegetables? It is innovative ideas, collaboration across players in the supply chain, focusing on the total cost of fulfillment and not on the traditional silos and nodes in outbound logistics. And remember: the value of every process step is defined by the customer – that’s what makes a perfect order. If the customer values freshness, then fast transportation and high velocity might be worth paying for. So keep asking: Is my customer willing to pay for this?
The trick is to answer honestly and act accordingly.
Posted by LeanCor Supply Chain Group
LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.Facebook LinkedIn Twitter Google+