Transportation Improvement Plan (TIP) USA Truck. Research Paper

Transport Improvement Plan: USA Truck
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Introduction
USA Truck Inc. is a transportation company that provides truckload carrier services to businesses in the United States of America. According to the Transportation Topics, USA Truck Inc. is the 26th largest truckload carrier in the United States of America. The company was established in 1983 by Arkansas Best Corporation as CPI which was renamed after three years to its present name. This was due to the deregulation of the trucking industry by the Interstate Commerce Commission (ICC) that required organizations to buy rights to specific routes and charged high rates for full “truckload” compared to less-than-load (LTL). The deregulation allowed trucks to move to any route without any fee. With the removal of regulations, trucking companies attained flexibility in route scheduling. In 1988, USA Truck became independent following the purchase its purchase from Arkansas Best subsidiary ABF Freight by its six executives. Its headquarters are located in Van Buren, Arkansas. USA Truck embarked on improving its operations and minimizes costs by saving on interest and depreciation. This was achieved by operating with a low tractor-to-trailer ratio of 1.7:1 against the industry’s 2.3:1. In order to grow the company embarked on retaining its drivers by in an industry with higher turnover rates by creating conducive working environment and paying them with higher rates compared to other companies. USA truck considered this as an important aspect in providing quality services to its customers. USA Truck went public in 1992 with an initial offering of 1.2 million shares.
The company has facilitated the movement of load from one place to another for various organizations. It provides transportation services to a number of Fortune 500 companies. Additionally, it provides services to 25% of the Fortune 100 companies with more than 90 of its top 100 customers utilizing various services that are offered by the company. USA Truck has more than 4,500 employees where 29% of its workforce comprises of veterans.
Services
USA Truck provides transportation and logistics services such as dedicated contract carriage, truckload, and intermodal and brokerage spot market in North America. This helps business owners to move their loads or deliver cargos to their customers. The company provides full-load and less-than-load (LTL) services for medium and long haul distances with specialities in just-in-time deliveries. The company also provides refrigeration services to companies that need them. USA Truck serves the entire USA states; Canada (Quebec and Ontario); and Mexico through Texas. Additionally, USA Truck transports dry van commodities such as glass, paper and paper products, manufacturing materials, automotive parts, retail merchandise and aluminium.
Supply Chain
According to the company, it has two supply chains as part of its service delivery to its customers. They include an intermodal and third party logistics (3PL). According to Portland State University “Intermodal freight transport is a system for transporting goods, particularly over long distances and across international borders, which uses a combination of two or more individual modes such as road haulage and rail freight, or road haulage and inland waterway barge, to achieve the most economical, efficient and environmentally-friendly delivery offloads to their destination.” From this definition, it can be said that intermodal transportation is the use of multiple modes to transport loads. On the other hand 3PL is the use of third party logistic providers to fulfil the deliveries. A company gets orders, contracts a third party organization with the necessary equipment or capabilities to fulfil the orders. It is that simple. The third parties receive the inventory from the manufactures or customers and deliver them to their destinations and they have an extensive expertise in the transportation industry (Hugos, 2018). The use of third party carriers can be integrated into the intermodal system.
How the Supply Chain Supports Organizational Goals
The supply chain strategy adopted by the organization ensures that it provides sufficient carrier space to its customers. Consequently, it enables the company in discovering the potentials of its supply chain through the development of logistic networks and strong relationships with their clients (Heizer, Render & Munson, 2016). This enables the company in helping its customers to adapt to market trends by making decisions that satisfies their needs. Moreover, the expertise and experience of the third party carriers enable the company maintain its top position and attain a competitive edge in the industry (Bienstock & Stafford, 2015).
Strengths of the Supply Chain
* Utilize a stronger resource network – Intermodal and third party carriers offer a variety of resource networks that provide significant advantages to the company (Rushton, Croucher & Baker, 2014). By utilizing the resource network of third party carriers, various aspects of the supply chain can be executed and optimized in an efficient manner that will reduce costs. Third party carriers may utilize certain relationships with the company which may lead to timely service and minimization of certain overhead costs. Therefore, contracting third party carriers enables the company to thrive by using certain resources that maybe unavailable to it.
* Utilizing flexible and scalable of services – Integrating third party carriers and intermodal into the supply chain enables the company to scale transportation, space and labor based on the needs of the clients (Sugie & Park, 2013). This helps the company to transition smoothly between the on and off peak market periods and utilize various resources when they are needed. Additionally, the utilization of these types of chains, the company has been able to enter into new territories easily. Utilizing third party carriers and intermodal supply chains helps the company scale in accordance, since they provide resources that support its growth into new territories. USA Truck has expanded its operations to Mexico and Canada due to the help of its supply chain.
* Continuous improvement and optimization of the supply chain – These types of supply chains enables the company to make adjustments and improvements to its supply chain to meet the needs of its clients by leveraging the efficient and cost-effective systems of the carriers (Wagner & Sutter, 2012). Additionally, they enable the company to restructure its supply chain and utilize various technologies to ensure that goods arrive in their destinations at the expected time. Some third party carriers have implemented certain solutions such as the Kuebix TMS software which analyzes and monitor various aspects to identify and eliminate inefficiencies in order to streamline the transportation process. Therefore, contracting third party carriers has enabled the company to ensure that there are continuous improvements in its logistics and supply chain. Moreover, this has enabled USA Truck to maximize its profits, improve time deliveries and improve services to its customers.
* Free-up valuable time and capital – Using intermodal modes and third party carriers enables a company to free up time and money for other processes by eliminating the need for investing in technology, transportation modes, and staff in order to provide required resources in the supply chain (Jayaram & Tan, 2010). Additionally, third party carriers help the company in minimizing certain mistakes that maybe costly allowing it to develop a string network that has higher returns and fewer risks. Moreover, they save time and capital that is required in order for vital steps in the supply chain to be executed. The company does not need to worry about them since they are taken care of by the third parties.
* Utilize professional supply chain expertise – Most of the third party carriers are knowledgeable on the best practices in the industry. Additionally, they are updated on the current trends in the industry in order to improve service delivery to their customers (Zacharia, Sanders & Nix, 2011). Therefore, utilizing third party carrier services enables the company to leverage the supply chain expertise from the third party carriers while it focuses on its core competencies. Therefore, they enable the company have confidence that all the logistics are taken care of by a reliable contractor and focus on other important aspects in order to improve service delivery to its customers.
* Optimizes driver capacity – USA truck has been facing the challenge of shortage of truck drivers which is affecting the whole industry due to various reasons such as increasing number of retirees and fewer recruits. Additionally, the recent regulations that limit the number of hours drivers are required to be on the road and other safety regulations have worsened the situation. On the other hand, the increasing costs due to higher rates that are paid in order to attract drivers has made in-house supply chains expensive and intermodal and third party carriers attractive due to their cost efficiency for companies. Since driver shortage is a major challenge especially in long distances, intermodal and third party carriers utilizes the capacity of local trucks to ensure that the goods are delivered to their destinations in time (Deveci, et al., 2015). This strategy has enabled USA Truck not to worry about the drivers which are vital in the supply chain processes since they are handled by the third party carriers that they contract. This allows the company to focus on other aspects improving service delivery to its vast network of customers.
Weaknesses of the Supply Chain
However, although these strategies appear to be perfect, there are many weaknesses. First, it may lead to loss of control over certain transportation functions. The strategy of using third party carriers in the supply chain puts them in control of the business function which has the most impact on the customers and their satisfaction. This leads to another weakness of losing the skills and infrastructure that the company’s in-house logistical team may need should the relationship with the third party carriers become untenable. Getting the transportation function back to in-house may prove to be difficult when the company has lost the required knowledge. Another weakness of this strategy is it may be difficult to find a reputable and trustworthy carrier to be responsible for improving the company’s image and customer service. Another weakness is that the cost factor is not clear in the long-run. In the short run, this strategy may be cheaper but be more expensive in the long-run compared to when handling all the transportation functions in-house when in-house functions are efficient and effective.
Metrics of the organization
The main metric that the organization uses to utilize its supply chain is the sales revenue which helps it to determine if it is making a profit or loss. The results enable the company to strategize on how it can manage the supply chain. Another important metric is the monthly recurring revenue which enables the company to determine if it is attracting or losing customers. Moreover, the net profit enables the company measure the quality of services offered by USA Truck. In general, sales growth enables the company to estimate the amount of profits that it is likely to get from the new transportation strategies (Christopher, 2016).
Another metric is the cost of customer retention or returning clients which play an important role in strategizing its supply chain.
Initiatives
The initiatives that the company has implemented to support its supply chain include the installation of Electronic Logging Devices (ELDs) that records the status of the truck (Hickman et al., 2017). This enables the company to ensure that customers get their goods in time. This innovation has made the routes safer (Rafter, 2019).
Second initiative is the use of third party carriers who are contracted to deliver goods to customers. This initiative helps to solve the issue of driver shortage which is a major challenge facing the company.
Additionally, the organization has implemented tracking devices that enable it to monitor goods while they are in transit (Miler & Bujak, 2014). This initiative minimizes theft cases guaranteeing customers the safety of their goods. Moreover, they are increasing the number of trucks to provide more space for their customers making it difficult for clients to miss space at any time. Additionally, they have implemented a training initiative for its employees to equip them with the required skills and knowledge to meet the needs of their customers.
Initiatives to Consider
Another initiative is delivery through the Internet of Things which has been embedded into all industry and has revolutionized ho...