Can Transportation Guys Do Supply Chain?

by Nico Scopelliti

Previously, I posed a question to our readers, fellow practitioners, and some LinkedIn connections of mine: "Can transportation guys do supply chain?" The responses I received were unanimously positive, perhaps because no one wanted to challenge the premise with a poorly thought-through argument based in prejudice and narrow mindedness. We'd see the same effect if I went out and asked if women are inferior to men—those who think so wouldn't admit it, for while individuals and even communities may hold such beliefs below the surface, society condemns their outward, explicit expression. The only responses I'd receive would therefore be those in favor of the socially acceptable position.

The positive responses saying, "Yes, a transportation guy can do supply chain," fell into two categories, interestingly enough. I've named them the "Component" argument and the "Universality" argument. We'll start with the former and then discuss the latter.

The "Component" Argument

If you've ever gone to see a doctor who was a specialist—for example, an ENT (Ear, Nose, and Throat, a.k.a., an otolaryngologist)—you've been served by someone who specializes in the physiology of one part of the body. But he is no less a doctor than say, a gastroenterologist, who focuses on the organs of the digestive system. And neither of these specialists is more a doctor than your general practitioner. They all went to medical school, they all did their residency, and they all were awarded doctorates. It's fair to assume that each of them has a fairly keen understanding of the human body.

Your throat and your stomach are individual components of a much larger system. Symptoms exhibited by one may be caused by the other. Let's say you sometimes wake up in the middle of the night because your throat is burning. If you visit the ENT and he has no knowledge of gastroenterology, he might not recognize that the pain you're experiencing is caused by a problem NOT with your throat, but with your stomach—namely, acid reflux disease.

Transportation is no different. When I asked transportation guru Mike Starling the question above, he responded, "Transportation guys have to understand how the rest of the supply chain works in order to be a contributing member of the team, helping to achieve the desired end result. That includes both meeting customer and internal needs, and containing overall operating expense by not creating 'added' expense as a result of the transportation support provided."

Mike went on to give me two examples. Let's say the transportation guy doesn't understand how warehousing operations work: "Imagine your carrier does not show up at the scheduled delivery time. This screws up the labor scheduling in the warehouse and could lead to the warehouse incurring OT, or have an impact on put away or cross dock operations. It could result in driver detention or demurrage charges if the warehouse is not prepared to unload the carrier when he shows up and makes him wait or go to the end of the line."

Likewise, on the outbound side: "If a carrier doesn't arrive on time, this could easily result in loading dock personnel OT, or worse, a delayed shipment impacting customer operations when the expected critical parts or merchandise does not show up. This will contribute to the customer incurring added operating expense, or even worse, a lost sale as result of our 'slow shipping'."

Mike gave me the bottom line from his perspective: "Transportation guys have to understand what the other SC guys are doing in order to be effective and efficient. They also have to understand the expectations and needs of vendors, customers, and the customer's customers. That, in effect, means they have to understand requirements that go beyond the basic definition of transportation to the "end-to-end." They must anticipate and plan for how to eliminate or mitigate any transportation issues that might crop up in order to help consistently optimize the end results of the supply chain efforts they are a part of."

But we know Mike is a transportation guy himself, so he's biased like me. What about somebody who himself is in charge of an entire chain?

Anthony Barnes, Supply Chain Development Manager at WineWorks, says, "Transport is a component of supply chain, so there is already a demonstration of relevant competencies. I would also suggest that if he [the friend I mentioned in a previous article] is looking for a role where dealing with transport is a key factor, no one understands transport better than someone who has lived it. It's the old 'poacher turned gamekeeper' scenario to a certain extent."

I love Tony's analogy of the "poacher turned gamekeeper." Why wouldn't you want a supply chain manager who is an expert in transportation? Someone who's worked on the carrier side, who knows how to deal with them and knows how they can be your best friend or your worst enemy?

A commenter who wished to remain anonymous makes a similar point, "Transportation is a component of logistics (how much or how little varying among firms, industries, and supply chains). So anybody doing strictly transportation has been a part of the overall logistics of the firm, just as an inventory analyst is, though they be quite distanced from transportation operations. Traditionally, over the course of a career, one might have been exposed to, and have had direct responsibility for, different aspects of the broader logistics at different times."

So, can transportation guys present with the skills and experience necessary to meet the wider discipline, or should they be relegated to lesser roles? I've acknowledged from the outset that I am biased. And, furthermore, we're speaking in broad generalities about people who make up a huge segment of the industry. Obviously there will be individuals who shouldn't be considered for a position beyond the functions they've already performed. Who knows … maybe that's even the majority. But to write them all off out of hand is, in my opinion, a mistake.

The "Component" argument is a strong one. But we haven't yet put the issue to rest. Next comes an even bigger gun...

The "Universality" Argument

I'll start with the bottom line:  transportation IS supply chain.

I propose that anyone who's been entrenched on the carrier side of the business has been engaged every day not only in a component of supply chain, but in supply chain itself, perhaps unwittingly, and likely without ever receiving any recognition for it.

To be clear, I am not saying that transportation is all there is to supply chain; that would be a gross mischaracterization. My argument is simply that transportation in and of itself is a form of supply chain, with all the demands of the traditional broad definition of the discipline. I assert that running a successful carrier requires just as much logistics acumen as shipping—and in some cases, more. To capture this line of thought, we may have to break down a few walls.

Would it be too much of a stretch to compare a Boy Scout hike with a manufacturing plant? Eli Goldratt and Jeff Cox did in "The Goal," and David Schneider applies their theories to distribution centers here. It all comes down to inventory, throughput, and operating expense. Inventory is the money you have tied up in the goods or services you provide. Operating expense is the money you spend to convert your inventory into throughput (and ultimately cash flow). Throughput is simply the rate at which you do so. The key to running a successful plant is to optimize those three elements of the operation. The hike through the woods demands the same level of management, albeit on a smaller scale. If Alex Rogo applied at your company for a position on your supply chain team, would you toss out his resume?

If Qin Linzi, proprietor of the West Lake Restaurant in Changsha, China (the largest Chinese restaurant in the world) submitted an application for the same position, would you point to her lack of experience in supply chain and turn her down?

Let's bring it closer to home. Would you be willing to go to North Platte, Nebraska and challenge any of the 2,600 some-odd Union Pacific people running the Bailey Yard by telling them that what they do isn't supply chain? This is a 24/7 operation that handles 14,000 rail cars a day, processes 8,500 locomotives a month, and repairs 750 of them in the same time. Name any function a shipper or even a manufacturer performs, and I warrant you its counterpart can be found on that yard.

A carrier's inventory is the volume/weight of goods it can move at any given point in time. It has to spend money to maintain and operate all the people and machinery involved, and its throughput is the rate at which it turns the inventory of shipped goods into throughput. To use two examples given to me by my new friend who inspired this series of articles, all things considered, how different is a marine terminal from a cross-dock DC? Does the theory of constraints not apply equally to a DC, manufacturing plant, and the loading of a container ship?

What happens when a distribution center can't fulfill a key customer's order within the required time frame? The same thing that happens when a locomotive breaks down on the tracks. (See the image at left for your answer).

The "Universality" argument is based on the premise that everyone among us, whether they realize it or not, is a logistician. We all run supply chains, and if a Boy Scout hike or Chinese restaurant isn't that far removed in concept from, say, that great supply-chain-cum-retailer known as Walmart, why would anybody be so quick to assume a transportation guy can't do supply chain?

Where do you stand? Have I made a compelling set of arguments, or do you remain unconvinced?

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