Cross-posted at Food Logistics magazine February 6, 2013
Remember the grandfatherly Shawshank Redemption character Brooks Hatlen – incarcerated since youth – lamenting his new life outside, on parole, in a letter to his former prison-mates saying, “The world went and got itself in a big damn hurry”? Well, it’s true!
Supply chains are being called on to become more efficient and responsive to keep up with the demands of ever stiffening competition. And sorry, Brooksie, but the pace is only accelerating; especially when it comes to the food supply chain. Yet it wasn’t until recently that shippers began to really embrace the agility enabled by optimization software.
So why weren’t shippers in a “big damn hurry” to adopt optimization and what made them come around?
Back in early 2010, Walmart instituted “must arrive by date” (MABD) compliance guidelines to improve their supply chain reliability and which penalized shippers unable to deliver within a (typically) 4-day window. It didn’t take long for competing concerns to adopt this new MABD standard to “keep up with the Waltons’” high standards for product freshness. As if dealing in perishable product weren’t stressful enough, ag-producers and other food shippers scrambled to find ways to ensure quicker, more efficient deliveries.
Well, what food shippers viewed as aggravation, transportation management solution providers saw as a spur to innovation. IT solution providers serving the supply chain industry had already been experimenting with algorithmic programs to optimize freight, routing and even entire transportation networks, for years by the time Walmart imposed MABD. Early innovators fielded commercially available optimization tools, but were met with the characteristic resistance to change. But it wasn’t until shortly after Walmart changed the rules that adoption rates for optimization tools began to really take off.
Shippers now had a compelling reason to take a chance with transportation management systems (TMS), automated freight optimizers and network optimization tools.
The MABD was a catalyst for today’s high rate of adoption for TMS and optimization software. In fact solution providers even developed configurable options for considering MABD in addition to things like transit time and delivery date; and best-in-class optimization software can look at MABD windows when doing optimizations.
What many shippers were not inclined to look at through the prism of technology – i.e. ways to leverage automation to shorten delivery times and improve transportation efficiency – have become the focal point of their attention as the penalties for inefficiency grow too big to ignore. Add to this, rising fuel costs and falling capacity and the business case for TMS and optimization software has become nearly indisputable.