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Home » an expert hand at the wheel
enroute

an expert hand at the wheel

July 1, 2009
James A. Cooke
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Diversification may not be for everyone, but for Gibraltar Industries, it proved to be a prescient move. In the mid '90s, management at the Buffalo, N.Y.-based metal products maker decided the corporation had become overly reliant on business from the U.S. automotive industry. Over the next decade, Gibraltar pursued an aggressive diversification campaign, acquiring a string of smaller companies in order to expand into markets like building and construction products, farm equipment, and hand tools.

In light of recent developments, Gibraltar's decision to lessen its dependence on the auto industry is looking more prudent by the day. But the strategy has also created some complications. For one thing, the spate of acquisitions resulted in a sharp rise in the number of private fleets operated by Gibraltar companies. As the fleet tally rose, so did the associated challenges— including truck availability, trailer utilization, and empty return trips. Eventually, it became clear that the corporation was going to need some outside help.

"Gibraltar had grown through acquiring building products companies, all of which had their own trucks and fleets," explains John Wagner, Gibraltar's corporate vice president of supply chain management. "We weren't getting the optimization on the loads like an expert in the field no matter how we tried. So we decided to outsource this [so we could] do a better job and tap into a wider network of backhaul opportunities."

In fact, one of the corporation's building products companies had already tested the outsourcing waters. About five years back, Jacksonville, Fla.-based Southeastern Metals Manufacturing Co. (SEMCO) had turned over management of its private fleet to a third-party logistics service provider (3PL).

SEMCO, which had hired the third party to address problems like lack of truck availability, was happy with the 3PL's performance. Nonetheless, Gibraltar decided to go with a different service provider when it expanded the outsourcing program. With fleets scattered throughout the country, it wanted a 3PL with a national presence.

After weighing its alternatives, Gibraltar chose a national player, Ryder Logistics of Miami, Fla. Under the arrangement the two parties worked out, Gibraltar owns most of the trailers, but leases the trucks from Ryder. Ryder maintains the equipment, and the drivers who operate the trucks are Ryder employees.

Today, Ryder Logistics manages a dedicated fleet of more than 50 trucks at four locations within Gibraltar's Building Products Group. Besides the SEMCO operation in Jacksonville, Ryder oversees fleet operations for Appleton Supply Co., which makes roofing and other metal products at a plant in Appleton, Wis. It also runs a fleet for Dot Metals, both at the company's manufacturing plant in San Antonio, Texas, and its distribution center in Houston. In December 2008, Ryder began taking over the operations of a nationwide fleet run by another Gibraltar subsidiary, Alabama Metal Industries (AMICO). Once Ryder assumes full control of AMICO's fleet, which is expected to be by the end of 2009, it will be managing 65 percent of Gibraltar's private fleets.

Cut costs, boost service, repeat
When it turned over its fleet management to Ryder, Gibraltar set three overall goals for its new partner. First, it wanted to stabilize fleet operations at various locations to improve service. Second, it wanted to reduce or eliminate costs. Finally, it wanted Ryder to pursue ongoing opportunities for further cost reductions and service improvements across multiple Gibraltar divisions.

To that end, Ryder instituted a number of efficiency programs. For example, at the SEMCO facility, which services distribution centers in Atlanta, Miami, and Lakeland, Fla., Ryder developed an order monitoring system that has improved the load planning process. In the past, SEMCO had little advance notice of upcoming orders, which meant it was often left scrambling to manually assign loads to trucks at the last minute. Now, when a customer places an order, that order is entered into a computer system, which then groups orders for optimal routing and load building.

At Appleton Supply, Ryder instituted a dynamic fleet routing application to improve shipping efficiency. Since the orders come from different customers in different locations, the fleet is unable to operate fixed routes. In the past, that lack of predictability made efficient routing difficult.

Under the new arrangement, when an order comes in, Appleton Supply determines whether there's product on hand in inventory. If there is, the order goes to Ryder for routing. If not, Appleton fabricates the item, notifying the warehouse when it's available for shipping. Ryder's routing application takes those make-to-order shipments, optimizes them for shipping, and then tells the warehouse what items to ship together on what day. As a result, Appleton's fleet has gone from an average of six stops per load to 12.

In addition to maximizing the daily fleet routes, Ryder has worked with Appleton Supply to improve trailer utilization and cut its transportation cost per pound. Among other initiatives, Ryder and Appleton designed special racks for Appleton's trailers that can accommodate 20- to 30-foot metal roofing strips, which are particularly vulnerable to damage during shipping. The racks, which can be collapsed for backhauls, have allowed Appleton Supply to get more weight on each flatbed truck. Since the racks were put into use, the average load per truck has risen to 25,000 to 30,000 pounds from 18,000 pounds, an increase of 40 percent.

Gibraltar and Ryder have also begun working together to find backhauls for the fleets, whether the loads come from Gibraltar sister companies or from outside sources. Ryder has implemented a global positioning system on all of the trucks, giving it up-to-the-minute visibility of the vehicles. As a result, it's now in a position to seize the opportunity if a load becomes available.

Costs down, service up
The outsourcing arrangement with Ryder has allowed Gibraltar to rein in its shipping expenses. In fact, Wagner reports that the corporation's freight costs are now on a par with or lower than they were with for-hire carriers.

The third party has also improved fleet performance, enabling Gibraltar to meet tight delivery windows from exacting retail customers like Home Depot and Menards. On top of that, the company has seen improvements in its order-to-delivery times. The 3PL also provides Gibraltar with access to real-time transportation metrics to guide improvement strategies.

Finally, Ryder has helped Gibraltar increase its backhaul revenues, which has helped offset rising fuel and transportation costs. Before contracting with the 3PL, Gibraltar wasn't taking full advantage of backhaul opportunities, Wagner admits. Ryder, however, has made a big push in that regard, he says, often going the extra mile to find a load. In addition to canvassing other Gibraltar locations to locate suitable freight, he says, Ryder takes the added step of using its brokerage arm to locate outside loads.

Transportation Trucking Private Fleet
KEYWORDS Ryder
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Jamescooke
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.

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