How Much Control do Supply Chain Operators have?
Businesses are working to maximize capacity and throughput all the time - but not all strategies to do so are the same. There are start-ups that focus on growth with an obsession to manifest the kind of returns dreamed up in boardrooms, but whose degrees of success depend on patience and execution. Then there are staples in various industries - Apple, Ford, Morgan Stanley, British Petroleum, and others that are looking for the same efficiency gains, but who are well into the middle of their corporate lifecycle and thus have cash, stability, and access to capital that enables them to do this. Deriving efficiencies - in these two examples - are mostly an internal function related to manufacturing costs, acquisitions, hiring, execution, etc. Supply chains are much, much more convoluted in the sense that for businesses that run them, so much is left up to things out of their immediate control. That’s not to say that the aforementioned companies live in a world where they have total control, hardly the case; but they have so much more than those working in logistics. Let’s elaborate.
There are a plethora of examples where control is utterly outside of the four walls of any given logistics business - AB5 and other laws that require near perpetual change for drayage carriers, rate changes in container shipping, incongruent and archaic software, driver shortages, government forced new technologies adoption, a lack of standardization (from reporting to rate qualification to operations), and much more. Some of the most tangible impacts to drayage carriers are well known - we won’t hash them out again here. The point is that so many other industries have more control over how their business functions in a given environment. Supply chain operators have so much more than just their business to run, they have to manage external factors and an ever-changing, multifaceted, dependent, and incongruent environment.
We at PortPro obviously think software is a good way to help mitigate this challenge, but the purpose of this post is to highlight how other industries have congruence that enable businesses to focus more on their own operations instead of something - anything - else. Of course there are a plethora of organizations that lobby the government, work with other namesake companies in a given industry, collaborate and consolidate their efforts, deal with changing environmental factors, regulations, etc. but there are less business mitigating factors outside of the supply chain and in other industries. Apple, for example, may deal with competitors, security, new markets, and the like; but at their core they’re worried about building innovative products most of the time where a drayage trucking company, by contrast, is worrying about their service as much as they are worrying about external factors and the constant pivot. Imagine if Apple had to focus on other factors outside of its control as much as it focused on R&D for its next phone or chip. We doubt they’d be the one trillion dollar company they are today if this were the case. We digress.
JOC published an article on the 24th that gives some good insight to this discussion - and we feel it's a well-balanced article accounting for all sides. The article is linked below, but the title tells a lot; NY-NJ port truckers tepid on Saturday terminal gates. The TLDR says that weekend gates have been offered in parts of the country to mitigate delays and congestion at marine terminals. In theory, this is a brilliant idea, but falls short of the real problem. The article outlines why this is the case and gives really concrete examples - chassis shortages, the inability to get drivers to work on the weekend, hours of service limitations, labor shortages, expense, etc. So, if a drayage carrier wants to go pick up a container on a saturday - how prohibitive do these things sound to you? Well, like us, I’m sure it sounds decently challenging and thus the opportunity of Saturday gates is hamstrung from the start. This harkens back to our point at the onset of this post - so much of the supply chain's control is out of the hands of any one body or business. Even the terminal in this case is beholden to the labor that works on their facility. The drayage carrier to their driver, their driver to hours of service limitations, their assets to other assets, and so this could go on and on. Again - the point is not that supply chains can be inefficient - this we know; it’s that they are inefficient because there is a lack of control for and within one's own business. The examples are endless, but we’d be remiss if we also didn’t mention a more common sense answer to the Saturday gate is to just run for 24 hours Monday-Friday. You’d get more buy-in from truckers & companies and it would be in line with what the government has outlined (months ago, we might add).
So what’s the concrete solution? To be honest, we don’t know just yet. We know that our software solutions are helping our customers derive efficiencies and capacity, and that we’ll continue to perpetually evolve and modernize like any good software company should to deliver value and growth. In addition to this, we’ll eventually build out new products that allow for better interconnectivity, but some things - like the intrinsic interaction between businesses and the control that they have - will require dramatically changing the landscape.
-Walker Banks, VP of Strategy & Business Development