From diversifying routes to and from the U.S. or reevaluating logistics provider partnerships, brands are reassessing how they approach disruptions in their supply chains.
An exporter of more than 100,000 containers per year out of the U.S., Midland, Mich.-based material sciences company Dow hit a bump in the road in the third quarter last year. The Ralph Lauren partner had to throttle back on manufacturing when it couldn’t get enough goods through the ports, especially in the U.S. Gulf Coast.
Shenna Bennett, global logistics director, integrated supply chain at Dow, noted during the Reuters Supply Chain USA event in Chicago on Wednesday that this wasn’t just a ports problem, but an inline issue as well, including slowdowns that impacted rail and drayage.
But as West Coast disruption emerged after union dockworker contract negotiations began last year, Bennett said that moving cargo through the region’s ports became that much harder.
“We diverted to other ports,” Bennett said. “We’ve not completely diverted all of our volume back. This gets back down to ‘How do we make manage risk?’ One of the ways that I do that, with all the containers that I have going out, is diversifying the ports that I use, because I have to make sure that I don’t have to take down a polyethylene plant. I just can’t do that again.”
Although Bennett said Dow’s chain is getting back to normal, she stressed that manufacturing planning and control (MPC) processes should always be prepared to weather the next disruption like the war in Ukraine and escalating tensions between China and Taiwan.
This call for flexibility extends to transportation planning, with Bennett saying that the chemicals company has visibility on more than 90 percent of its shipments, which Dow makes accessible for customers on its website.
“We’ve been focused on digitally connecting—particularly from an export perspective—all of the stakeholders and the folks that participate in that process, so that we can parallel process and we can understand quickly where we have issues that really streamline operation,” Bennett said. “That’s been really helpful for us. It’s just the name of the game—ecosystem, connectivity and collaboration [are] the key to delivering the next phase of supply chain.”
Sleep Number peels back curtain on its supplier decision making
Mattress manufacturer and seller Sleep Number is currently overhauling its own network in service of the customer experience. After listening to consumer feedback, the company realized it was better for product innovation in complex areas such as mattress cooling and heating to ensure all parts were assembled ahead of delivery into the customer’s home.
Despite manufacturing the beds in-house, Sleep Number buys electronics and other components overseas from Tier 3 suppliers, further putting pressure on the company to source high-quality inventory.
“How often are you delivering with quality at the rate that you said you were going to deliver?” said Ashley Yentz, vice president, supply chain strategy and material flow, Sleep Number, during a session at the Reuters event.
Yentz said the company partners with truckload carriers, and leverages the brokerage market to take advantage of down periods in the market. But she said Sleep Number is aiming to secure more contract rates than the traditionally brokered spot rates, based on what’s happening in the market.
Mustafa Cokol, director, global logistics and transportation at Amazon brand aggregator Thrasio, believes the relationship between companies like his own and freight carriers is much more open than it was before the pandemic.
“It was very hard to reach out to the carriers, they wouldn’t really talk to you,” said Cokol. “They had their rates and then you could negotiate on it. But as everything is shifting right now, it’s a shippers’ market, so we have more control from the shipper side.”
In the case of Sleep Number, the mattress company is now taking a lane-by-lane approach to how it assesses the quality of its logistics service providers, measuring the partnerships via various data metrics including service level trends and tender acceptance. From there, the company takes a “planned versus actual” approach, according to Yentz, to understand whether rates paid are within the ballpark of initial spending forecasts. It might also ask if there’s room to negotiate on rates based on the market.
“We’re looking at it on a daily basis of where we can tweak our lanes, and it’s not necessarily to go back to that carrier,” said Yentz. “It potentially means that we need to adjust how we’re routing that freight to maybe better match between us and the carrier from a quality perspective.”
Both Sleep Number and Thrasio use vendor scorecards to assess their suppliers, the execs said, as a way to both measure their relationship over time, open up conversations on a regular basis and inform future purchasing habits.