Insights from Ryder Innovate 2014

Consumer Goods, Food & Beverage
November 17, 2014

The first Innovate: A Ryder Idea Exchange was an exclusive gathering of more than 50 industry experts, analysts, and senior executives from Walmart, YRC, Culligan International, LLamasoft, Tompkins Supply Chain Consortium, the Environmental Defense Fund and others.  Adrian Gonzalez, President of Adelante and an industry analyst, was the moderator for the event and facilitated several panel sessions and group discussions. Innovate -Event-Food-BeverageHere are some of Adrian’s observations from the Ryder Innovate sessions, in his own words.

Greater expectations

The big reality in the retail industry today is that consumer needs and expectations are very different than in the past. Two executives from Walmart, Debbie Hodges (Vice President, Supply Chain Services) and Greg Forbis (Senior Director, General Merchandise Transportation & Special Projects), highlighted that customers are embracing different methods of buying goods and services: they are shopping online more (growing about 17% annually), using mobile technologies (up to 70% are shopping on smartphones), living in more urban areas, driving less, and visiting different store formats (not just Supercenters, but also the smaller Neighborhood Market, Walmart Express, and Walmart to Go stores). And then there are the fulfillment trends: free and fast delivery, buy online and pick-up at store, and the ability to schedule a specific delivery day and time.

The open question is how to best meet those consumer needs and expectations. For Walmart, the answer depends on aggressively growing both its physical and digital assets.  Walmart also recognizes that it needs to close the gap on the digital side too, which is why the company plans to increase its investments in e-commerce moving forward.

Sustainability, sustainability, sustainability

Jason Mathers (Senior Manager, Environmental Defense Fund) discussed the 5 Principles of Greener Freight, and provided real-world examples of those principles in action. It’s clear that many of the actions transportation and logistics professionals are taking in the name of continuous improvement, cost reduction, and/or process efficiency — such as mode conversion and network redesign — often provide sustainability benefits too.

Several attendees also asked about the role of natural gas vehicles – we see many companies testing and investing this technology, including Ryder and several of its customers.  Jason believes natural gas vehicles will ultimately play an important role over the long term, but more work is required, especially upstream in the process (that is, in preventing methane from escaping during the production and delivery process) to maximize the environmental benefits.

Carrier capacity

Is tightening capacity a short-term trend or the beginning of a new normal? Both James Welch, CEO of YRC Worldwide and Dave Belter, Vice President of Transportation Management at Ryder, believe that despite the cyclical nature of the industry, a new normal is emerging due to all of the regulatory changes that have occurred or are pending, and the growing difficulty in finding and retaining drivers. “We have to go through 20 to 30 applicants to fine one qualified driver,” explained Welch, with emphasis on qualified.

Future vision of supply chain design

Toby Brzoznowski, Co-Founder and Executive Vice President, LLamasoft, together with Gary Allen, Vice President of Solutions and Execution Standards at Ryder), positioned Supply Chain Design as “the third discipline of supply chain management,” where companies create models to represent the structure and policies of their existing supply chain; use advanced analytics to find a better or more appropriate future state; and continuously run what-if scenarios to test new strategies and to react to changing market conditions.

The belief is that supply chain design is becoming more operational and real-time versus a one-time event and the tools are becoming far more advanced, accessible, and affordable compared to other enterprise software solutions.  What’s happening is that best-in-class companies are either developing supply chain design competency in-house or expecting it as part of outsourcing relationships.

More Innovate: A Ryder Idea Exchange events are planned for 2015; dates and locations will be announced. Stay tuned! To read Adrian’s entire recap of Innovate: A Ryder Idea Exchange, click here.

Adrian Gonzalez is a trusted advisor and leading industry analyst with more than 15 years of research experience in transportation management, logistics outsourcing, global trade management, social media, and other supply chain and logistics topics.

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