Retail execs point to slowly-recovering economy, service, intermodal benefits at TransComp
November 22, 2010
A panel of shipper executives at the recently concluded TransComp expo, hosted by the National Industrial Transportation League, the Intermodal Association of North America, and the Transportation Intermediaries Association, shared their opinions on the economy, supply chain operations and future prospects in a wide-ranging discussion.
The session’s panelists included: Brian Hancock, Vice President of Supply Chain, NAR, Whirlpool Corporation; Mike Mabry, Executive Vice President Logistics and Distribution, Lowe’s Companies Inc. and Rich Wallace, VP, Director of Supply Chain Operations at JCPenney.
One of the early themes of the session was to put things into perspective when gauging what retail sales are doing, in light of this week’s announcement from the Department of Commerce that October retail sales were up 1.2 percent and have been up on an annual basis for four straight months.
Lowe’s Mabry was direct in assessing these figures, explaining that “we are bouncing along the bottom. Things are not getting worse; there are some signs of things getting better. Economists keep pushing out projections of when that recovery is. It is cautiously optimistic, and we are preparing for more of the same.”
Whirpool’s Hancock agreed with Mabry, citing a sluggish housing market, with fewer people moving and subsequently not making as many home improvement purchases.
“If you talk to all retailers, you’re almost always as good as your craziest competitor that are doing [whatever it takes] to move product…and you have to be able to adjust to it quickly in the marketplace,” he said.
When asked supply chain operations and inventory management changes they have made during the recession and since the economy has begun a slow recovery, Lowe’s Mabry said that pretty much any decision he makes revolves around transportation costs, which he said serve as the trump card
And over the last several years, Mabry said Lowes has spent a fair amount on intermodal, citing good service, available lanes, green, and cost-effectiveness, which make it a good decision and provide a needed service.
At JCPenney, Wallace said he takes a “tough look” at each lane, lane-by-lane, where there are opportunities.
“Service is paramount,” he said. “We have front-load and standard intermodal and premium intermodal service we use. One of the things that we need as we move forward is consistency, and that consistency of service is…key, because if we have a delay on an import shipment and is misses a vessel and we get delayed seven days, we cannot make it up on intermodal. We will have to use over-the-road truckload. That is not something we necessarily like doing, but we are very diligent at service vetting.”
Whirpool’s Hancock said he uses intermodal, rail, and truckload out of each company facility and always plans to have two methods for moving a load, due to the size of Whirlpool’s durable goods products, some which come from facilities manufacturing 20,000 items per day.
“You have to give yourself a lot of options,” he said. “Intermodal is a critical part because its service has improved to the point where it is a great option for us if truck is not there or if trucking has run out of capacity. We always have that steady intermodal flow.”
A poll of the session’s audience focused on what the strongest drivers of intermodal growth are. The top three responses were service at 48 percent, truckload conversion at 38 percent, and green/sustainability at 14 percent rounding out the top three.
All three respondents stressed that fact that service is paramount above all other factors, but they also noted it is often easier said than done.
JCPenney’s Wallace said that his wants to use intermodal more and more, adding that there are great sustainability benefits, but he noted that at the same time service cannot be sacrificed.
This is especially true, he said, when moving freight though the Midwest: “I would love to solve Chicago,” he said. Chicago at the moment is a huge problem due to congestion, which he did not have a year ago, due to lower volumes, and can add up to three days of extra transit time.
And going hand in hand with service is keeping a close eye on costs, the panelists noted.
“We take a look at the supply chain as a whole, and there are times when we take a look at the balance of costs and service not only on the transportation side but on the facilities side,” said Wallace. “We are always trying to eliminate waste in the supply chain…to the tightest degree we can, but having a little flexibility goes a long way in letting us take on a little more risk.”
Even with some extra flexibility, Wallace said there is still going to be waste in the supply chain, because anytime there is a product in motion and variability there is waste. Key in addressing this from a shippers’ perspective is making sure they know exactly what a customer needs to provide increased options.
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