Asset, Non-Asset and Blended Services – putting the right solution together for you
The supply chain management system is faced with constant change, resulting in challenges for both the logistics provider and manufacturer. A slow-growing economy, the shortage of quality drivers and simple supply and demand are the major reasons that require manufacturers to remain flexible and fluid in their supply chain management.
In order to stay competitive and keep up with demand, today’s shippers need to work with a logistics provider that offers options, including the flexibility to keep product moving when and where customers need it, in a timely and efficient manner. Depending on the needs of your business, asset, non-asset or blended services can provide the best results. What logistics solution will work best within your supply chain, and bring the most efficient and cost-effective results for your business?
These services employ a logistics provider’s trucks, trailers and drivers to move product, eliminating the need for shippers to retain a fleet of trucks. Many times, shippers can’t afford to retain their own fleet and/or they don’t have the personnel to manage this highly complex logistics system – their expertise is found in the manufacturing of product, not logistics management.
When you establish a relationship with an expert logistics provider who brings their asset utilization service to your business, the result is effective capacity management and consistency with equipment and drivers. Logistics providers commit a certain level of assets and ensure they are busy at all times, preventing additional expense. Manufacturers can concentrate on creating the best product, and not how it will be moved from point A to point B.
The non-asset services provided to a shipper are those hired from the open market. In cases where a shipper’s capacity changes over time or demand for product has peaks and valleys, shippers hire trucks and drivers on an as-needed basis.
Many times, shippers develop a comfort zone where their assets are being utilized consistently, for example, at 60% capacity; if at any time the shipper goes above that capacity, the open market, non-asset service is utilized to accommodate capacity outside the norm. The non-asset option creates a cost effective solution for shippers with fluctuating logistics needs.
As the name implies, blended services provides an effective combination of both asset and non-asset services to customers. This service typically utilizes one logistics provider, Dupré for example, that manages the full supply chain for customers. Depending on customer needs, and the established relationship between logistics partner and shipper, assets cover a previously agreed upon committed level of capacity; if additional trucks and drivers are needed, the same logistics partner utilizes non-asset services.
The blended services model is easier to manage. Manufacturers work with one point of contact and any issues or changes that come up with capacity needs are managed by the logistics partner. This creates a more cost effective, efficient supply chain for the manufacturer.
Determining which solution best meets the needs of your business requires consideration of a number of factors that influence whether you use asset, non-asset or a blended form of logistics or supply chain services. Manufacturers need to balance their shipping needs based on cost and the potential risks involved in transportation.
- Capacity needs and volume– What is the normal ebb and flow of capacity within your business? Depending on your needs, and the volume
of product you produce, will determine which services are most efficient. A continual supply of product may mean a steady, consistent use of assets;
if there is not enough volume and activity, a non-asset or blended service is more cost effective.
- Safety and efficiency– Does your business manufacture a product that is high value or high risk? Partnering with a logistics company that provides assets and expertise in this area can take away expense and potential risk for your business. In addition, your logistics partner provides an effective supply chain system at a reasonable cost; resulting in less expense versus your capital investment in this service.
- Specific equipment or handling needs– Are there materials produced in your facility that require special handling or specialized equipment for transporting? Utilizing the assets ofa logistics company that specializes in chemical and/or hazardous materials transportationcan mitigate risk, and provide the specialized trucks and equipment, as well as expert drivers to move your product efficiently and cost-effectively.
As you decide what ways to best utilize the services provided by an expert logistics partner, it’s critical to assess your asset or non-asset needs, or a blend of these services. In addition, capacity, safety, equipment and cost also need to be factored in to determine the most efficient and cost-effective supply chain that will deliver the best results for your business.
A Success Story
Here at Dupré, we’ve had the pleasure of working with a number of businesses to determine the best logistics solution. When we started working with a large chemical distribution company, they were concerned with inefficiencies of their private fleet. Management recognized that replacing or supplementing their existing fleet with an outsourced dedicated fleet would reduce the administrative burden associated with operating their own fleet and allow the reallocation of capital resources to their core business.
To be considered as a potential provider, Dupré Logistics would be required to include the movement of hazardous materials waste product within the network as part of the operational solution. Dupré Logistics’ experience in safely transporting hazardous materials and waste was quickly recognized, placing the company in a leadership position to develop an all-inclusive, dedicated model.
Dupré’s supply chain experts developed a solution that included the ability to manage the distribution from regional hubs into the customer’s local branches; and the reverse logistics involved in safely collecting and transporting hazardous waste from branch facilities back to regional hubs for disposal.
The distribution pattern also provided backhaul opportunities, which created gain share revenue for the customer to offset empty miles where applicable. Management positioned at the customer’s primary distribution operation would oversee the daily activity and drive efficiency into the multi-state supply chain.
The overall impact resulted in a cost-neutral conversion for the customer while eliminating the administrative task involved in managing a private fleet. The elimination of responsibility for managing a driver base including recruiting, fuel, maintenance and exposure to liability allowed the customer to reallocate capital resources to their core operating business which focuses on growth. Since inception, the transition has been seamless and the customer’s ability to focus on their core business has driven growth at an annualized rate of 15%.
To stay competitive in today’s global economy, it’s imperative that manufacturers accurately assess their logistics and supply chain management needs. Utilizing the asset, non-asset or blended services provided by an expert logistics company can result in cost savings and a more efficient supply chain management solution.