Supply Chain Execs Call for Better Planning After Superstorm Reveals Major Problems

This story appears in the Nov. 19 print edition of Transport Topics.

ANAHEIM, Calif. — Superstorm Sandy dramatized the need for better contingency planning to keep products flowing during a major disruption, a supply chain executive said at an industry meeting here last week.

The primary challenge was the difficulty in making local deliveries, said Brian Hancock, president, North America, of food distributor Martin-Brower LLC. Martin-Brower delivers 5 million cases of products annually, primarily to fast-food restaurants such as McDonald’s.

Hancock spoke at the National Industrial Transportation League’s TransComp and the Intermodal Association of North America’s Expo.

“If something bad happens, how do we bring [customers] back?” Hancock asked. “How do we become the first food source up and running?

“We did not recover fast enough [after Sandy] for the cold chain,” he added, referring to products that have to be kept within a 3-to-4-degree Fahrenheit range during shipping. “We were focused on transit time; we didn’t focus on what it takes to recover in an emergency.”

“Contingency planning is one of the biggest things we do,” said Hancock. “As supply-chain professionals, we have to plan for every kind of contingency.”

Meanwhile, fleets and their customers in the Northeast continued struggling to recover from the storm.

“Transportation networks in the Northeast U.S. remain congested and unbalanced,” said a Nov. 14 report by Robert W. Baird analyst Benjamin Hartford, who said that fuel-supply issues continued to plague some truckers.

Another issue Hartford cited was the lack of available equipment because some carriers repositioned their equipment out of the storm’s path and haven’t yet moved it all back.

In private comments, some fleets told Transport Topics that conditions remained difficult in part because intermodal chassis were scarce. One official said that truckers who are assigned to get New York-bound freight rerouted to other parts can only make one trip a day. That strains capacity because the driver and chassis can make just one trip per day, instead of three or four if they remained in the New York area.

In New Jersey, storm flooding  destroyed an estimated 1,000 tractors, mostly in port areas, and swamped chassis, cutting fleets’ ability to move cargo (11-12, p. 5).

Hartford’s report also said that spot trucking rates had begun to rise as relief and rebuilding supplies bound for the stricken area increased.

Hancock’s comments were made during a Nov. 12 panel discussing how consumer demands force supply chains to adapt.

Transport Topics Editorial Director Howard Abramson, who moderated the panel, said that “consumer expectations have risen sharply since the recession.”

He cited a McKinsey & Co. study that found two-thirds of executives were worried that their supply chains couldn’t adjust fast enough to changing consumer demands.

“It’s very much a different world,” said Hancock. In recent years, he said, shippers have redesigned supply chains to match buying habits of women, who make 70% of U.S. purchases.

Drawing an example from his past work in the appliance industry, when he was a vice president at Whirlpool Corp., Hancock said, “Where it used to be OK to have an appliance [delivered] in a week, now Mrs. Jones needs it today.”

Dick Smith, vice president of transportation for Sears Holdings, agreed that customers have become more demanding, tying that trend to “smart” phones and other devices that enable faster purchases.

“The customer is much more conscious of every aspect, from where a product is made, how it’s made, to overall sustainability,” Smith said. “We want to do business with companies that are very conscious of sustainability.”

Smith also cited examples of supply chain redesign that couldn’t be done “with the snap of a finger,” such as potential adjustments in product sourcing if the U.S. unfair trade complaints with China are pursued.

Fernando Cortes, senior vice president supply chain planning and logistics for Dr Pepper Snapple Group, cited the importance of having plants and distribution centers close to his customers’ markets to deliver products faster.

Cortes also noted the importance of more effectively managing the quality and supply of water, which is the main ingredient in his company’s soft drinks.