Does your company’s supply chain rely on a dedicated fleet of vehicles? Do you feel locked into that approach, perhaps owing to some taxing combination of tight delivery timelines, unique product requirements, or customer expectations? If this describes you, you’re reading the right blog.
You may not be as boxed in as you think.
IL2000 has worked with clients to transition away from dedicated fleet freight operations, improving their company bottom line while bolstering supply chain efficiency along the way. We’ll explain how.
But first, let’s voyage together to an out-of-this-world example of when transportation outsourcing becomes high-stakes.
To boldly outsource
In April of 2022, SpaceX blasted its Dragon spacecraft into orbit. Destination: The International Space Station. For this mission, NASA tasked SpaceX to transport a precious cargo, four intrepid astronauts. The crew is conducting a months-long scientific mission to further our understanding of materials science, health technologies, and plant growth in microgravity. Heady stuff!
But what the astronauts are doing up there aboard the ISS is only part of the story. The preceding chapter, how they got there, is equally extraordinary.
Dragon’s journey begins and ends in a bit over 8 minutes. Roughly 13,000 pounds and $845 million dollars' worth of space-age technology blaze through 76,000 gallons of liquid oxygen and kerosene to reach a stable orbit 254 miles above our planet.
Two and a half minutes into their journey, the astronauts feel their capsule shudder as the rocket hurtling them skyward separates, descending slowly back to earth for reuse.
At the six-minute mark, the second stage rocket separates, leaving the Dragon capsule, just an insignificant pellet of pressurized cabin and heat shielding, an orphan afloat in the vast vacuum of space.
With the craft’s solar array pulsing life-giving electricity into Dragon’s elaborate circuitry, the astronauts now sit back and watch (presumably with teeth clenched) as their weightless vehicle autonomously docks with the ISS through an intricate series of rocket bursts.
And behind all this stupendous lifting force and surgical precision, SpaceX designed Dragon to be “two-fault tolerant.” This means that if two critical systems fail – a statistically remote possibility – the spacecraft can still get the crew back to earth in one piece.
Dragon’s eight-minute blazing trail through the sky to the weightlessness beyond is a breathtaking feat of technology, engineering, and logistics. And with 31 missions to the ISS already under SpaceX’s belt, this is just a taste of things to come. The company’s vision for its Dragon class spacecraft is as simple and direct as it is bold and courageous: “Dragon: Sending humans and cargo into space.”
Anyway, setting space geekery aside, this is just a reminder that we’re witnessing life or death outsourcing at play here, over 250 miles above where you’re sitting right now. That we’re living this science-fiction reality is amazing enough. But it’s even more impressive when you consider that NASA’s crucial assets were safely transported to their new gravity-optional home via a third-party carrier. Think of the trust that entails! Imagine the systems NASA and SpaceX had to develop and rely on to share their expertise and data.
Why do that? Why would NASA rely on someone else to complete a mission-critical logistics operation on their behalf?
It turns out, the payoff for NASA is immense. The US space agency estimates that outsourcing with SpaceX and Boeing can save the program up to $30 billion, profoundly increasing its reach. For one of the most perilous transits imaginable, NASA is relying on commercial enterprise — boldly outsourcing, if you will — to get more done with fewer resources in less time.
Closer to home
Let’s get back to what transportation outsourcing looks like at the ground level. Across the years, we’ve helped many companies successfully traverse the difficult supply chain journey from dedicated fleet operations to a managed transportation solution. More often than not, the real question isn’t whether they should do it, but how to do it smoothly and efficiently. Our clients will typically know their dedicated fleet is a financial albatross, but they’ll be convinced that some combination of risk factors has them boxed in.
Here are some of the more common barriers IL2000 has encountered and how we’ve overcome them.
Delivery windows are too tight
Time sensitivity is one of the leading reasons a company doubles down on maintaining its own fleet. They may ship a product that rapidly spoils — food or pharmaceuticals, for example. Or the company may supply customers who place a high premium on Just In Time (JIT) delivery; the automotive industry is one sector that often runs on razor-tight delivery timeframes. The company needs its own vehicles, so their logic goes, to maintain tight control over a demanding delivery schedule.
IL2000 has helped clients achieve the same, or even greater, delivery reliability without the burden of maintaining its own fleet.
Take this Midwest-based paper packaging manufacturer that relied on its own short-haul trucks to ship time-critical packaging. We leveraged IL2000’s round-the-clock managed transportation services to phase out their fleet gradually. By going slowly, we kept risks low. Today, the company can ship faster and with greater reliability than they were able to achieve on their own steam.
The product is too specialized
The product itself can be part of the problem. A company might ship a fragile material that requires specialized handling in transit, or they may ship a heavy or hazardous material that takes dedicated equipment to on and off-load.
We worked with an office partition and glass wall manufacturer facing both these challenges. Their glass-based product could easily break in transit, and the merchandise had to be dropped off directly at the point of installation — a risky exercise without the right equipment. To deal with these challenges, the company invested in a fleet of specialized trucks with integrated lifting equipment operated by crane-certified drivers. Their solution worked, but only at an inordinate cost. Also, our client struggled to keep up with demand because they only had so many trucks and drivers.
IL2000 implemented a more flexible and efficient delivery solution. We identified suitable third-party carriers. Then we worked with the client to adopt a more efficient shipping approach. Customer orders could then be sequence loaded onto overhead crane trailers as multi-stop truckloads. We also consolidated shipments to four different LTL carriers and devised a driver transfer approach that allowed the company’s transportation workforce to operate at greater overall efficiency.
In under five months, we were saving our client over $8,000 in monthly freight costs.
The stakes are too high
Other companies have historically resisted moving away from a dedicated fleet because the business stakes are too high. Competition is intense, they reason. Customer confidence can turn on a dime, and the carrier marketplace is just too volatile to mess with. The company needs real-time visibility over their freight operations and they’re convinced that this level of control can only be achieved if transportation is managed in-house.
The alternative solution IL2000 offers combines deep BI, a fully customized transportation management solution, and a depth of decades of supply chain expertise offering round-the-clock logistics support. A centralized portal of LTL/Truckload carriers gives clients shipping options quantifiable by time and cost. Real-time status updates keep the company apprised of where their shipments are now and when they’ll arrive at their next destination. Our team of supply chain managers keeps clients proactively informed of shipment irregularities and will be actively working to find a solution in under 15 minutes.
By delivering accurate data and the expertise to use it well, we can equip clients with tools and insights to maintain an efficient operation without the expense of maintaining their own vehicles.
Be like NASA
If NASA can outsource the most hazardous and risk-prone aspect of a multibillion dollar operation to a third-party transportation carrier, you can probably get away with doing it too. We’ve worked with clients to transition from dedicated fleet operations to a robust outsourced solution, overcoming any delivery challenges that get in their way.
Are you ready to boldly outsource? Request a no-obligation supply chain analysis today.