Supply chain disruptions keeping you up at night? Take heart. Here are five ways you can help restore order (and sanity) to your third-party logistics program.
Services that were typically offered by third-party partners are drying up because of both labor shortages and increased throughput in facilities. People across the industry are increasingly hearing, “Sorry, we’re full.”
But a more accurate statement might be “We are labor-force restricted and must adhere to our core in/out services to keep the supply chain moving with as little labor as possible.” So far starters, be sure to dive deeper with your partners and establish if the “space shortage” is really a labor shortage. Then, develop solutions together that will drive program compliance to your standards. Finally, provide forecasting to ensure ongoing service excellence. Here are some ideas to help you make it all happen.
Be sure to dive deeper with your partners and establish if the ‘space shortage’ is really a labor shortage.
1. Know your program data. Carriers and 3PL cold storage facilities are operating at full labor capacity. Just because there is space on trailers or in cold storage freezers does not mean there are enough laborers to perform the loading, transport, unloading, and verification of freight. When bidding out a new program, check in with warehousers and clearly define program needs. Beware of carriers and cold storage providers that do not request details about your potential program. Managing labor includes understanding new program distribution, turn rates, pallet heights, pallet weights, release methods, and inventory rotation methods, even down to the average lot size within the program.
2. Transparent forecasting prevents headaches! Once a program launches, the ongoing detailed work begins. Provide your carriers and cold storage providers weekly forecasts extended out at least a quarter, up to a full year. Give your third-party logistics providers all you can about surges in both load velocity and seasonality of standing inventory. Ideally, forecasting should provide visibility to surges on an annual basis. If high- and low-water marks are not addressed well in advance, there is a risk the carrier cannot cover loads or cold storage will be full. Your partners should address your inventory anomalies and explore how they dovetail into their other customer forecasts. In today’s labor climate, no one “holds” space or keeps drivers on standby.
3. Simplicity is gold. Although there is a perception that cold storages are all “full,” the reality is that they are not taking on complicated programs in many areas because of labor and dock efficiency challenges. A program that surges by 60% in Q3 or Q4 — the traditional heavy shipping periods — may struggle to find space more from a lack of available labor than lack of space. In the past, onboarding seasonal staff was less challenging.
Are you asking the cold storage to rotate your product by expiration date when “first in, first out” logic would suffice and expand the field of 3PL partners? If you must be rotated by expiry, first verify the expiration date is even listed on the pallet. Nobody can read individual case labels under frosty film wrap. Find out if it is plainly listed Day/Month/Year as opposed to encryption. Producers are rapidly adapting to include a scannable tag right off the production line to streamline this process. This tag saves unloading time and eliminates potential inaccuracies which often occur with handwritten or wrongly decoded encrypted dates.
If you don’t provide such a tag, it may be time to convince your team to develop a labeling process that is readable by non-proprietary RF (Radial Field) scanners. Otherwise, strongly consider first in, first out. Make it simple and you will find more facilities that find the capacity for your program. Capacity is a multifaceted concept that considers both space and labor based on your program profile.
4. Getting products closer to your customer base (pull-through distribution) is the only feasible way to run anything just-in-time. Domestic ports have been stressed for both space and drivers for several years now. The dredging of ports and vying for the larger vessels has resulted in increased “bunching” of container work at ports. This has been exacerbated by a rise in imported goods to counteract domestic production struggles. Experts anticipate surges as overseas products become available once again.
Cold storages at the ports are often full for inbound scheduling weeks in advance. Additionally, these port-based cold storages may be scheduling three- to four-weeks out for an outbound appointment. We believe this coming October and November may require more than 30 days to get an outbound appointment. To reduce lead time and lower out-of-stocks, consider positioning some inventory out of port facilities and closer to your customers. Further inland should provide quicker release turnaround. Work with your top customers to obtain input on geographically advantageous areas to create product pick-up hubs.
5. High labor services are best performed by your teams (in-house).
Placarding/labeling pallets: While simple, this can complicate and slow down delivery. It takes time for customer service to get the right shipping information, print up labels, and convey to the loaders where labels should go. This delays the outbound dock considerably. If your customer insists on pallet labeling, see if your production can affix these labels at production to save time for everyone.
Case picking: In cold storage, the product is in racking and often 40 to 70 feet in the air. Case picking cannot be performed this high. Therefore, every pallet picked must be pulled down from the racks, film cut, and hand stacked to a new pallet. Then, the original, minus the cases “picked,” is put back into the racking. This is very labor intensive. Can your team order full pallets and case-pick at your facility? If so, you may find more partners willing to bid on your program. If SKUs are not selling a full pallet, are they integral to your program? “Choice quantity” has not been the challenge since the pandemic, but out-of-stock product has. Better fill rates might require dropping slow movers from your inventory.
Are you asking the cold storage to rotate your product by expiration date when ‘first in, first out’ logic would suffice and expand the field of 3PL partners?
Re-boxing: This service of repacking existing cases to a new count has been a regular request in both retail and foodservice channels. Traditionally, these line workers who re-box are very specialized labor similar to “lumping service.” Re-box labor has primarily been gobbled up by the producers. Bid any re-boxing program out early, and don’t assume cold storage can supply such services before asking — even if you know they performed it in the past. Staffing agencies have been out of re-boxing labor in several markets.
Quick freezing/blast freezing: This is another high-labor activity. If your team has the labor to put the inserts between the layers of the product, doing so will save you money and you will find more facilities that can handle your blast business. There is a lot of labor (and cost) in cutting pallet film, then restacking each pallet with inserts in each layer. It requires a lot of space in the freezer staging area. Once the product is frozen solid, those inserts still need to be pulled from each pallet and then the pallet must be secured for transport with new stretch wrap. A facility must have excess labor to carry out any sort of blast or quick freeze. Lowering the labor constraints on your quick freeze program will increase the number of facilities willing to supply this service.
Cross-docking: Cross-docking services are very “handling-centric” in terms of revenue generation. On an annual basis, a 1,000-pallet program turning six times per year uses the same labor to unload and load as does a 50-pallet cross-docking program turning every three days. However, it will generate far less storage revenue. Avoid cross docking, if possible. Investigate the possible advantages of moving your inventory to a facility that can help you avoid the need for cross docking. Step back and look at your supply chain model and determine if it needs re-engineering.
Charles Betts is national sales manager at Fort Wayne, Ind.-based Interstate Cold Storage, a subsidiary of
Tippmann Affiliated Group.
