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12/10/2010 8:00:00 AM Write a Letter to the Editor Write a letter to the Editor

Opinion: Collaborative Distribution

By Chris Kane

Chief Customer Strategy Officer

Kane Is Able Inc.

This Opinion piece appears in the Dec. 6 print edition of Transport Topics. Click here to subscribe today.

Drive safer. Pollute less. Maintain capacity. Articles on these and other industry pressures — particularly dire predictions of a driver shortage — fill the pages of transportation industry publications. But I believe there is no looming capacity shortage and there are plenty of truck drivers, even after we lose more than 200,000 drivers through CSA, as some experts predict.

The problem is not capacity or manpower or the number of tractor trailers or how much weight they’re allowed to carry. The problem is that trucks across America are driving around half empty. Why? Because the small and midsized companies that account for a huge portion of shipments lack the scale to ship in full truckloads.

The current company-centric model for consumer packaged goods (CPG) product distribution is broken. Tens of thousands of manufacturers create their own separate, inefficient lines of supply — all moving to precisely the same mass retailers. The waste inherent in such a model is appalling. It’s like taking an expensive limo to the airport, only to find that six of your friends were booked on flights the same afternoon, and you could have shared a shuttle bus.

We need to abandon this fractured, company-centric model and create its 21st-century successor — a shared infrastructure for product distribution. I call it simply “collaborative distribution.” That’s when manufacturers share warehouse and trailer capacity for products destined for the same retail distribution centers (DCs). Done right, the strategy can cut distribution costs up to 35% and will take enough trucks off the road to reduce carbon emissions dramatically and ease the driver shortage.

True collaborative distribution is a great deal more than consolidating loads for the last leg of the journey to the retailer. It means major changes for all parties up and down the supply line.

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