How quick thinking and collaboration by two logistics partners saved the day for one lucky manufacturer.

Shipping snafus are bound to happen. Some are relatively small while others are potentially damaging in terms of lost revenue and/or customer relationships. The defining factor comes down to how well the players react to the situation.

The best stories are those that not only heighten the drama with the proverbial ‘call in the middle of the night,’ but also end with both a success and ‘lesson learned’ for the future.


 

The set up

Damage Recovery Systems (DRS) provides returned goods management services for food and consumer packaged goods manufacturers. The company operates nationally with regional processing centers and its own transportation fleet.

C.H. Robinson formally launched its Reverse Logistics offering in 2006. On occasion, they are called on by DRS to help with transportation when DRS experiences an overflow.

Not long ago, a high-profile manufacturer and key DRS client launched a national program that involved handling case lot returns from customers.

“These products were to come to the DRS regional center; they were going to be handled by another common carrier that had been selected by the manufacturer for this program,” explains Tom Conoscenti, Executive Vice President of DRS. “After about 3 months of planning, conference calls, and meetings, we launched the program. However, from the start the other carrier was not able to perform,” says Conoscenti.

There was a lot at stake and the situation was urgent. The carrier’s inability to transport customer returns to the DRS facilities for processing meant data wasn’t flowing back to the manufacturer and customers weren’t getting their credits.

Conoscenti recalls getting that initial phone call from his contact at the manufacturing company. “He told me he hadn’t slept in three nights and asked if we could help. I immediately replied, ‘Yes, we can.’”

While an affirmative reply may have been automatic for Conoscenti, his next thought, which was to contact Bob Iaria, Reverse Logistics Manager at C.H. Robinson, was more deliberate.

The two had shared a conversation just months earlier, and Conoscenti knew that C.H. Robinson would be the best partner to help out.

“I called Bob right away and said, ‘We have an opportunity. Can you help us?’ He also said, ‘Yes, we can.’ And the amazing thing was that within 24 hours we had freight moving,” says Conoscenti. “We were able to do this because we had been receiving the return instructions for the customers via the manufacturer, while the other carrier just choked and had gridlock in their system. We were able to redirect the information by fax to the reverse logistics team at C.H. Robinson for the first few months. Consequently, we converted that flow of data to a daily EDI feed, which continues to this day.”

Trying to switch gears overnight to accommodate a massive program such as this particular manufacturer’s, which already had a backlog accumulating, could have easily swamped many logistics companies.

Iaria compares the situation to a recall. “You had about 150 different customer locations that were itching to get that freight off their dock and get their credit, and they were growing more and more impatient, so we needed to move pretty quickly.”

For starters, Iaria credits his company’s IT systems for easing the information flow. “The technology that we have allowed us to get these orders into our system very quickly.” That same IT capability was instrumental in getting the freight moving. “We were able to utilize C.H. Robinson’s proprietary technology to perform carrier selection. A lot of the shipments were LTL, so while the manufacturer had initially looked to one carrier with one network, we were able to flex and utilize the right carrier in each region that we had worked with on other programs. In addition, we already had EDI relationships with a lot of these carriers, so communicating and dispatching out was pretty easy. Our systems and tools allowed us to get Bills of Lading and return paperwork to the manufacturer’s customers as well.”

Surprisingly, Iaria says that temporary staff was not needed to accommodate the sudden influx of orders.

“At C.H. Robinson, we pride ourselves on being able to not only flex when it comes to carriers and equipment, but on staffing as well, depending on what type of market season we’re in. It was definitely an ‘all hands on deck’ couple of days, but we were also able to tap into a shared operations resource group within the company.”

According to Iaria, he was “quarterbacking” to oversee that the entire operation was running smoothly, including the numerous phone calls that had to be placed to each customer informing them of a change in the game plan.

“With our staff making the calls and helping sort out the confusion for the customers (who had expected another carrier to make the pickup), we were able to effectively provide DRS what they were looking for. In turn, it made the manufacturer’s customers happy too, and they let the manufacturer know.”

The visibility provided by C.H. Robinson’s system, which allows customers to get status updates on their shipments and print reports, among other things, was the icing on the cake.

“DRS has regional warehouses and they need to know what’s going to be arriving on their docks every day. This visibility that we were able to give DRS gave them the information they needed to flex as well, which they needed in order to prepare for the wave of inventory that was coming in with this program.”




 

The silver lining

According to Conoscenti, the manufacturer was naturally “very appreciative” when the program was salvaged and customers were satisfied. “Interestingly, though, because of our relationship with them, they have always expected the highest level of service from DRS. They knew that we would find a solution, and we would execute. They are a manufacturer that puts a lot of emphasis on their own customer services-it’s a very important part of their business-so we have always viewed ourselves as an extension of the manufacturers we work with. What’s important to them becomes important to us.

“Coincidentally, last year this manufacturer experienced their first ever product recall-and it was a big one. Again, they turned to us knowing that we could handle the processing, the disposition, and the reporting. We also took care of some of the transportation with our fleet, but we also called in C.H. Robinson again.”

Conoscenti adds that since that initial event, the response and how it was organized “has become a model, a prototype, for other projects not only for this same manufacturer, but for many other product withdrawal events, like recalls and discontinuations, that other manufacturers initiate.”

As for the relationship between DRS and C.H. Robinson, says Conoscenti, “What started out as a vendor relationship between two companies has evolved into a strategic partnership.”

Iaria also recounts some positives outcomes and ideas that were generated from the initial event. Since then, C.H. Robinson has set up call centers within the reverse logistics team when needed to handle certain projects.

“We can publish dedicated hotlines for the customers to make it extremely easy for them. So over time, we’ve become better at handling a number of different customer requirements from a communications standpoint.” Iaria has also created customized scripts for the call centers to accommodate each manufacturer’s requirements.

Conoscenti also emphasizes the upside. “This event really allowed us to expand our relationship with this particular manufacturer beyond the scope of the initial project,” because the manufacturer was impressed with DRS’s excellent response to the situation coupled with the smart decision to call in C.H. Robinson for assistance.

“It really worked to the mutual benefit of DRS and C.H. Robinson,” he remarks. wt


 

Sidebar: Collaboration Keeps Risk in Check

Mitigating supply chain risk is an ongoing exercise. However when a disruption does occur, a successful recovery hinges largely on collaboration between the various partners, as the main article illustrates.

A recent survey by KPMG entitled, “Global Manufacturing Outlook-Relationships, Risk and Reach,” reinforces the importance of supply chain partners working together, whether it’s to combat the effects of a down economy or keep costs under control.

According to KPMG, the survey “showed that many of the world’s leading companies are applying new methods of supply chain management designed to weather an economic climate where various forms of risk have become the norm. These new approaches-more strategic than tactical-could well emerge as best practices.

“In interviews with bellwether companies such as Philips, Leggett and Platt, Rolls-Royce, U.S. Steel and Tata Chemicals, it becomes clear that new supply chain strategies are emerging.”

Some companies are “forging stronger relationships and engaging in collaborative innovation with suppliers, strategically investing in key suppliers or bringing parts of the supply chain back in-house. They are also applying a mix of both regional and global supply sources to achieve the best combination of speed, quality and cost,” states KPMG.

“It used to be that sourcing decisions rested on routine considerations like who could make the best component for the best price,” explains Andrew Williams, Asia Pacific Head of Diversified Industrials for KPMG. “This approach worked when there was little variability in input costs. Now, leading supply chain strategies must involve detailed scenario modeling to determine the appropriate response to a host of volatile elements. The most successful companies will be those who build adaptability and flexibility into their supply chains.”

The desire for deeper relationships was evidenced in the survey. “Having stronger and deeper relationships is critical among leading companies with 53 percent of respondents expecting to enter into more long-term contracts, but with fewer suppliers,” KPMG notes.

“More important than the duration is the depth of the partnerships. Over half of the respondents plan to collaborate more closely with suppliers on product innovation and development, research and development (R&D), and cost reduction. Such collaboration appears to be a preferred approach among the top performers.”

KPMG’s Williams adds that, “Viewing the supplier relationship as a strategic partnership helps top performers ensure certainty of supply, improve demand planning and fine-tune the mechanism for getting product to the customer.”