Managing a Network of Decentralized Distribution Centers

A national wholesale distributor case study

Managing a Network of Decentralized Distribution Centers

A national wholesale distributor of heating and air conditioning supplies was struggling to manage its complex supply chain and maintain high levels of customer service, which is a top priority. With over 20 decentralized sites spread across five states, communicating delivery needs between sales staff, professional drivers and each distribution center was creating challenges. Additionally, the distribution centers had no set routes, making planning difficult. Compounding the problems, Department of Transportation violations were impacting the distributor's ability to meet its customers' delivery needs and creating liability concerns.

The distributor turned to Penske Logistics to help streamline and improve its deliveries to warehouses, houses, job sites, apartments and businesses. The partnership has allowed the distributor to improve customer service, reduce the size of its in-house fleet and tap into dedicated capacity. Utilizing Penske's expertise also enabled the distributor to focus on its core business rather than transportation concerns.

Improving Communication

Creating a positive experience for the distributor's customers started with improving visibility and communication. Success within the supply chain depends on connectivity, and Penske's ClearChain® technology suite ensures everyone involved in a shipment has visibility into what is happening. That knowledge results in better service and a high-level, connected view of the supply chain, as well as granular specifics related to each delivery.

Better visibility helps streamline deliveries and makes it possible for the distributor to schedule shipments with confidence. Before Penske, there was a disconnect between the corporate office and the sales team. Often, members of the sales team would schedule deliveries to happen at the same time in different locations, which was not possible for the delivery team to achieve.

Offering guaranteed delivery times and fulfilling orders is particularly important for the distributor, given the highly competitive nature of the HVAC industry. Now, with Penske, all sales team members, as well as members of the corporate team, have visibility into scheduling so deliveries can be scheduled appropriately — allowing delivery guarantees to be met.

Emphasizing Customer Service

By enabling the exchange of real-time data, logistics operations are easily accessible to authorized personnel. The ClearChain technology, coupled with the expertise of Penske's associates, provides insight into each shipment.

ClearChain has several applications that have been designed to optimize driver management as well as remove any blind spots from the final mile in a delivery, which is a crucial step in driving customer satisfaction. Through the increased visibility Penske provides, the distributor is able to communicate delivery status with its customers.

ClearChain captures and uses GPS data on carriers' loads, enabling Penske associates and their customers to see where any carrier is at any point in time. The information feeds into the operation management dashboard, which sits on top of the transportation management system and aggregates all of the data, pulling everything together.

Because Penske tracks location information in real time, associates can monitor the status and can communicate if a load is falling behind with a time estimate. If necessary, Penske's logistics experts can identify the delay as a potential concern and communicate with the customer to figure out the best course of action to minimize further disruptions.

Much of the reporting is automated, which means no one is waiting for a driver to update the system and drivers can focus on driving rather than manually updating information. ClearChain uses data from a truck's electronic on-board recorder to monitor engine as well as driver performance while a truck is in operation.

Tracking loads, whether through on-board GPS or a driver's cell phone, also ensures the accuracy of what the driver is doing and forces them to follow that prescribed route, which is the most cost-effective route. Because the distributor delivers to construction sites, drivers can be tasked with delivering to an address that doesn't exist yet, and Penske's routing technology can help keep deliveries on track.

Eliminating Equipment and Driver Concerns

To ensure it could make deliveries, the distributor had a large fleet, keeping extra equipment for backup in case a truck was down for maintenance. While the company has kept some of its equipment, it has been able to reduce its fleet by 40 percent, reducing its capital expenditures. Penske Logistics supplies the remaining trucks and is responsible for maintenance and compliance.

Penske also hires and manages professional drivers for the company. Because drivers provide "white glove" service as part of the delivery offering, highly trained, trustworthy and customer-focused drivers are required. Penske takes on the human resources and management responsibilities, allowing the company to focus on their core competencies.

Managing Costs

The distributor's parent company uses transportation-as-a-cost-of-sales as a metric to compare business units, so managing costs is critical. ClearChain technology allows Penske's customers to centralize their data, giving them the ability to see and understand their total transportation spend.

The technology has also helped optimize the network and streamline deliveries, driving overall cost savings. Moreover, the distributor saw added value in efficient, professional drivers that arrived at its customers' sites on time.

As part of its communication, team members from Penske Logistics and the distributor meet regularly to discuss metrics, data analysis, priorities and plans. The increased visibility enables data-driven decision making, and regular meetings give both parties clear direction for the future.

"We're an extension of the customer's business. They must feel like we are representing their business and not our own,"
—Andy Moses, senior vice president of sales and solutions for Penske Logistics

Andy Moses
Andy Moses is senior vice president of sales and solutions for Penske Logistics. Prior to this role, he was vice president of sales at Penske Truck Leasing. Moses has more than 25 years of experience in the transportation industry, serving in product and sales leadership positions with both Penske Truck Leasing and Rollins Truck Leasing. A Six Sigma Master Black Belt, Moses earned a bachelor's degree in accounting from Brooklyn College and a master's degree from Pennsylvania State University in leadership development.