What can we learn from disaster?
Now, you might be wondering, why should I care about a freight company's bankruptcy? Well, it's not just about the company itself. The Yellow Freight bankruptcy is an example of how businesses can struggle and even fail when they can't keep up with the ever-evolving market. First, the company faced fierce competition from other freight transportation companies. Additionally, changes in the industry and the rise of new technologies added to their troubles. What lessons can we find in our Supply Chain that Yellow missed?
Track Your Freight With Technology
Extend your visibility of your inventory and customer connections. A quick understanding of “Where is my Stuff?”, can reduce customer disruptions at a time of crisis. Stand alone Transportation Management Systems can be expensive but provide tremendous data to improve service levels and control costs. Simple Automated Protocol Integrations (API) with carrier systems can help extend visibility at this critical part of the Supply Chain. Low costs options also include direct access into carrier systems.
Check Your Partners' Financial Health
Financial stability is crucial when choosing partners and suppliers. The Yellow Freight bankruptcy reminds us that even seemingly reliable companies can face unexpected financial troubles. Regularly assessing the financial health of your partners can help you identify potential risks and take appropriate measures to protect your own business. Setup quarterly meetings with your key suppliers and vendors. These meetings should have a set agenda that include topics:
Performance in Key Metrics and KPI’s
Issues supported with data
Corrective Actions from the previous quarter
New ideas or concepts to help improve the relationship
Look for indications of labor unrest, requests for shorter payment terms, or payments in advance of services or goods provided. It can be tough to find these signs in smaller private companies. Simple activities like driving by a vendor facility and observing cars in parking lot can provide an insight on business conditions.
Benchmark Your Suppliers
Review secondary or smaller vendors that could provide similar services as your key suppliers. Use Requests for Information (RFI’s) to find details from new potential suppliers. This process will help provide new technologies or improved costs from new or growing vendors. A better understanding of the market will help set and reinforce expectations of current suppliers.
Changes In Culture Or Size
Watch for quick growth or acquisitions by your vendors. Yellow executed tough acquisitions in 2003 purchasing competitor Roadway and USF in 2005. The combination of these large networks and back office systems placed tremendous stress on the organization.
Added Organizational Levels
Most labor in the trucking industry is not controlled by unions. The union at Yellow added levels to the organization structure. Other Yellow competitors did not have these factors to complicate day to day operations. The Teamster relationship with Yellow management grew contentious through the end of the business. These relationships drove higher costs and introduced risks of work stoppages.
Please leave us a comment on the questions and issues you are having with your business and supply chain. We will use your feedback to create future posts. Check out how we help solve Supply Chain problems here.
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