Dedicated Drop – How a Modern Broker Can Fill the Gaps for CPG Companies
All Consumer Packaged Goods (CPG) companies navigate a competitive marketplace, with the most successful figuring out a long time ago that a well-run supply chain is the key. This has never been truer than today because the pressure to drive better margins and execute near-flawless delivery performance in the face of sky-high customer demand is what’s required.
The pressure felt from expectations of a seamless retail experience is placed squarely on the shoulders of every CPG brand’s transportation team. Some good news is that the logistics function is use to the pressure since most CPG supply chains have grown to meet constantly increasing requirements over time. Companies know that the ability to execute an efficient and high-performing supply chain is directly tied to its sales growth and profitability.
A common and effective strategy to provide that level of execution is using dedicated drop and hook networks. When leveraged correctly, such networks lead to advantages, including less production downtime and dock congestion, along with better employee utilization and on-time delivery performance. These benefits have led to the growth in popularity and reliance on drop and hook in the CPG industry. Yet, while companies already understand this, most don’t realize there’s room for improvement.
The missed opportunity lies in a misconception about constructing the best drop and hook network and how that limits its effectiveness. Many companies miss the potential of what drop and hook can do for them due to preconceived ideas about the right types of transportation partners to rely on.
How do most shippers build and manage their drop network?
Shippers have traditionally leaned on asset-based carriers to help manage their drop networks. This default choice is based on the idea that working directly with carriers that own the transportation assets will make it easier to control the complex coordination of equipment that is required. This assumption is understandable because a lot of communication is required between the facilities and carriers. However, this approach creates limitations shippers may not be aware of.
The disadvantages of relying solely on asset-based carriers
Traditionally, a drop-and-hook arrangement that meets the needs of most CPG companies will require a network of multiple asset-based carriers and include different agreements with all of the individual carriers. The time it takes to find and qualify partners and the expense of maintaining all the different relationships is more than many companies can manage. For those attempting to, unforeseen complications prevent them from realizing the significant benefits drop trailers can offer.
The one option CPG companies often overlook because it’s not a traditional approach is leveraging a digital broker's many strengths. Brokers increase shippers’ flexibility in the day-to-day because there are times that even the largest carriers do not have power or trailers to get equipment where the shipper needs it. With no equipment, there is no drop network. However, qualified brokers have expansive carrier portfolios greater than any CPG company's own.
What are some of the common misconceptions and concerns with brokers?
Many companies think brokers are often the best choice for spot moves but not for steady, consistent lanes. The latter is not always the case, although it’s fair to feel that a facility facing a constant flow of new carriers that are inexperienced with its freight might impact service. Or that not physically having control over its ‘own’ equipment might mean loads will go uncovered by a broker.
Four ways brokers fill the gaps in a CPG drop and hook network
- Access to Capacity. Modern brokers operate an extensive and vetted portfolio of carriers that ensure drop capacity, whether the need is to create a regional or national carrier network.
- Adaptability. A broker can help a shipper expand or adjust a drop and hook network when an asset-based carrier cannot. Brokers also enable a company to quickly modify its network without a new RFP as origins and consignees change.
- Smooth the Peaks. Brokers can vet and manage multiple carriers when volume spikes during peak times on high-volume lanes.
- Centralized Management – Brokers are a centralized contact for the customer to use for information, reporting, and issue resolution for anything in its drop trailer program.
Creating a better drop and hook network
Embracing a digital broker like Loadsmart as a better option for managing a dedicated drop trailer network requires different thinking. But there is a reason the new approach is an emerging trend for CPG companies. As a partner, Loadsmart will help build your network, preventing you from having to directly vet, manage, and communicate with many asset-based carriers.
The benefits of a drop network come more quickly with a broker partner while having a single point of contact simplifies communication for your logistics operation. Thanks to Loadsmart’s ability to build a complete drop trailer program through its network of carrier relationships, CPG shippers not only get access to carriers they couldn’t on their own, but they also benefit from continuity of knowledge about their business and the many common consignees many large CPG companies regularly deliver to.
Visit loadsmart.com to learn how to get started.