Build a Strategy That Works for Today and Tomorrow
Transportation and supply chain needs are constantly changing, especially in the current operating environment. Freight demand and capacity fluctuate, costs shift and customer expectations evolve.
Perfectly aligning supply and demand can be challenging. Overbuilding leads to idle assets and unnecessary costs. Underbuilding leads to missed opportunities and service challenges.
Rightsizing helps carriers and shippers align equipment and resources with actual business needs while maintaining the flexibility to adjust operations as those needs change. The ideal solution includes creating a core operation that supports consistent demand, then layering in flexible solutions to handle variability.
The Cost of Getting It Wrong
Many fleets and shippers make decisions based on peak demand or worst-case scenarios, which can result in equipment sitting unused during slower periods or in insufficient capacity when demand spikes.
Overcapacity and undercapacity both carry real costs, though they show up differently. Overcapacity is often visible in utilization data, such as trucks sitting in yards, trailers not moving or drivers without loads. Carrying excess capacity means paying for assets that are not contributing to revenue. Undercapacity often shows up in service failures, deferred maintenance and missed opportunities.
Rightsizing Requires Flexibility
Because business conditions change, rightsizing is not a one-time exercise. It requires ongoing attention and the right resources and partners at the right time.
As freight patterns change, customer needs shift, or new opportunities emerge, fleets and supply chains need to adapt accordingly. That requires visibility into utilization and demand as well as flexibility in how capacity is added. As part of the process, fleets should regularly evaluate whether their current vehicle-and-trailer mix meets their freight needs. That can include reviewing cab configurations, body types, engine specifications and trailer lengths.
Craft the Ideal Configuration
Building flexibility through a mix of owned, leased and rented equipment or scalable logistics services is one of the most effective ways to match supply and demand over time.
Different transportation solutions each play a role in a rightsizing strategy. Penske provides a range of solutions that help fleets and shippers rightsize their operations, including:
: Leasing helps establish a stable, right-sized baseline fleet that supports consistent operations.
Rental provides flexible capacity that can scale up or down based on real-time demand.
Used Trucks: Used trucks offer a cost-effective way to fine-tune owned capacity without over-investing.
: Logistics services help optimize networks and scale operations without committing to fixed infrastructure.
Measure the Impact Before Committing
Penske offers two tools to help fleets quantify the business case for rightsizing before making a commitment. The Fleet Availability Calculator shows the revenue impact of improving fleet uptime. By entering revenue per unit per day, fleet size and annual workdays, the tool calculates how each 1% gain in availability translates to additional annual revenue, helping fleets understand what idle or down equipment is actually costing them.
Additionally, the Life Cycle Extension Calculator helps fleets evaluate the cash flow impact of adjusting trade cycles. Extending a 50-unit fleet’s replacement cycle from five to six years, for example, can improve annual cash flow by $250,000, so that capital can be redeployed toward strategic investments.
Penske Logistics is a winner of the General Motors 2018 Supplier of the Year Award. In this image from left: James Bovenzi, GM executive director of demand/supply; Bob Black, Penske Logistics Mexico managing director; Stacy Schlachter, Penske Logistics vice president enterprise accounts; and GM's Edgard Pezzo, executive director of global logistics and containers.
Penske associates (pictured left to right) Angelica Hampton, Morgan Vogt, Colleen Walters and Chanley Keathley holding new dresses for the Daisie Foundation's Mother's Day makeovers.
With individual loads, ClearChain can drill down to the part-level details so people within the supply chain can see what is being shipped, where it is, compare the quantity ordered to the actual number that shipped, and track and trace loads to monitor their status. Penske also can configure ClearChain so customers receive real-time notifications related to loads, such as when a load is picked up, enters a certain geographical area or is delayed. The end user can choose an alert preference—email or text. This will allow the warehouse to be ready when a load arrives.
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Alex Graniewicz is the new leader for Penske Logistics Mexico.
The proliferation of technology to support supply chain management has created a high-stakes card game of decision-making for shippers as they design their IT road maps. Is it time to hold, fold or double down? Many shippers need to ask themselves these tough questions:
This illustration is part of the 2016 Third-Party Logistics Study: The State of Logistics Outsourcing. Visit www.3PLStudy.com to access the full study.