Distribution, Whirlpool & Trucks

By: Taylor Mason

The trucking industry provides an essential service to the US economy. Having first-hand experience in the trucking industry working at Penske Truck Rental and Leasing, I have come to the realization that as the economy continues to expand, trucking companies have been put under more pressure than ever to keep up with ever-growing freight demand. Indisputably, transportation is one of the most important physical distribution function. Furthermore, with any disruption in the trucking industry we would have no way of transporting over ten billion tons of various commodities throughout the country.

I recently came across an article in the Wall Street Journal by Robbie Whelan and Brian Baskin, entitled Drivers Ride High on Trucking Boom. I found this article to be relevant to this week’s course content as it discusses the implications that trucking has on distribution networking strategy. The article focuses on Whirlpool, a prominent manufacturer and marketer of home appliances and how more recently they have contemplated reconfiguring their supply chain in order to avoid rising transportation costs. Ultimately, Whirlpool’s goal is to get their products out the door in the most efficient and effective manner. Due to the location of their new distribution center in Chicago close to the railroad they have discarded the usage of trucks and have shifted towards loading their appliances directly on to trains.

It cannot be emphasized enough that the trucking industry has everything to do with the world’s distribution network. It is apparent that Whirlpool can be presented as both an expert power and a referent power within the industry. Although they possess fond knowledge of the industry, they have failed to realize how abandoning the utilization of trucks in total will effect their overall transportation of freight. Trains cannot deliver to half as many locations as trucks, which as stated by the article “carry some two-thirds of cargo nationwide.”

As explained in the textbook, logistics is a key aspect when it comes to supply chain management. There are several different characteristics that marketing managers need to take into account when determining the best way to approach the market. These include order processing, warehousing and materials handling, inventory management and lastly transportation. As my focus is on transportation, I find it crucial that companies pay close attention to their transportation management. Nowadays, many are arguing that the price of fuel and the rise in driver’s wages are the primary factors refraining them from using trucks to transport their finished goods. In the article, Jim Keppler, Whirlpool’s vice president of integrated supply chain even states “given the fact that the cost of transporting products over the road is rising, it has forced us to rethink our distribution network strategy.” Although this may be the case, transportation through trucks and other motor vehicles is the most flexible mode of transportation and the second fastest. Personally, when I order a product from an online retailer, I want it delivered to me as fast as possible.

Statistically, the trucking industry collects annual revenues of approximately $650 billion dollars. Businesses of all sizes have used trucks at one point or another to ship their products all over the country. It is imperative that marketers understand the importance of this industry in regards to the distribution network. When you put it into perspective, there would be no online retailing if you did have the transportation to get these products directly to the consumers. This would be a huge defeat especially with the recent growth of electronic commerce. More and more consumers are choosing to facilitate communication and use services that in essence allow them to avoid ever leaving the house. No matter what you may or may not think about the trucking industry it is the backbone to American retailing. Commercial goods will always require the trucking industry. Similarly to Whirlpool’s situation, as a developing and thriving business, time is of the essence. That is the central reason why people must comprehend the significance of the trucking role in our society and the complexity of life without it.

Source:

Whelan, Robbie, and Brian Baskin. “Driver’s Ride High on Trucking Boom.” The Wall Street Journal. The Wall Street Journal, 13 Oct. 2015. Web. 14 Oct. 2015. http://www.wsj.com/articles/drivers-reap-benefits-of-trucking-boom-1444728780

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13 thoughts on “Distribution, Whirlpool & Trucks

  1. Marisa DeLuca (@marisa___deluca) October 27, 2015 / 6:39 pm

    Is whirlpool cutting out trucks as a whole? Or do you think they could just be using the trains to get products to an easier central location due to their new distribution center. I think that using trains is something we haven’t seen for a while in the distribution of such a large company. I’m curious to see what Whirlpools final distribution plan will be.

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  2. Mark Lindquist October 27, 2015 / 11:16 pm

    I’m glad to see truck drivers being in high demand and getting pay raises. Boy oh boy, they earn it because without them nobody gets any goods on time. Trains is a solid mode of transportation as well and has been since the 1800s, but I remember watching the show Ice Road Truckers on the History Channel. It’s a reality tv show about a trucking/logistics company in Alaska, where the truckers can potentially be in danger on the road due to the elements. The show portrays truck drivers as vitally important people, who deliver desperately needed goods for people across a weather-ravaged state. Truck driver costs may be rising, but there’s no way that trains can produce the value that trucks can. Trains can only travel so far and are unable to reach all the nooks and crannies that trucks can. I can’t think of a major mall or retail store near a train depot. Train usage could go up, but trucks can only be cut so much until a significant logistics disruption is caused.

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  3. Ashleigh Sargent October 28, 2015 / 9:34 pm

    I read an article today about the company Convoy, and I think it is very relevant to your discussion of changes in the trucking industry. Convoy released an app and algorithms to act as a “middleman” between shippers and truckers. Shippers enter several factors (addresses, cargo weight, etc) into the app and then see a price for a particular job. A smartphone app then releases an alert to truckers which shows the fee for a haul. The purpose of this app is to hopefully eliminate issues of truckers and trucking companies finding work. Drivers using this app will hopefully get more transparent pricing and more jobs. Convoy will take a certain percentage of each transaction between the buyer and seller of each service. The aim is to charge shippers less and pay drivers more. The main issue facing the app developers currently is the estimation of cost. Location, cargo, and customer needs all play a role, so constant development of the algorithms may be necessary. I think an app like this could definitely help the trucking industry by hopefully cutting down on idle time for drivers and cutting down delivery time by quickly finding companies to move products. As technology continues to change, the shipping industry overall will likely see more changes like this to increase efficiency. Article link: http://www.usatoday.com/story/tech/2015/10/27/convoy-wants-slice-800b-trucking-business/74656484/

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  4. Melissa Santos October 30, 2015 / 8:32 pm

    I do agree with you, trucking plays a major role in the retailing industry. I think, often enough, we take for granted how easily accessible goods currently are. When I read your post, what immediately came to mind was the holiday season. As many do, I find it to be the most stressful and hectic time of the year. Fortunately, technology has simmered that stress by offering shopping online. This may be instant relief for the consumer, but when it comes to the trucking company, this is an added number of deliverable goods, and pressure. From Thanksgiving through Christmas, there is a huge increase in daily package deliveries. Now the pressure becomes: an increased volume of goods to be delivered, while also delivering them within a very specific time frame/delivery guarantee. Not only during the holidays, but all year round, the trucking industry is something I feel that we should truly appreciate. Additionally, due to its innovation, its so relevant to the consumer. The trucking industry has made life significantly easier for all of us not only during the Christmas season, but also all year round. They have enabled and helped us to receive goods (of all kinds) from all over the world. Thus, proving itself to be an essential service to the U.S. economy.

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  5. Tara Stuhr November 5, 2015 / 3:50 am

    I agree with the author on the importance of the trucking industry when it comes to the delivery of goods from not only just online retailers, but any sort of ordering from a brick and mortar store and/or e-business. However, I do believe that in the recent future, and its already becoming a visible technology, the trucking company will gain some competition in options of delivery. In this article, it shows that Amazon and Walmart are investing serious money for alternative ways of delivery. Walmart spokesman even said, ” ‘Drones have a lot of potential to further connect our vast network of stores, distribution centers, fulfillment centers and transportation fleet.’ “I am very interested to see how companies might use this updated technology or if they completely ignore it from lack of funds.

    Here is the article on Amazon’s drones:

    http://www.retailcustomerexperience.com/news/watch-out-amazon-wal-mart-prepping-drone-delivery-service-seeking-feds-approval/

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  6. Kimberly Martin November 7, 2015 / 2:04 pm

    Transportation is very important to a company’s distribution strategy. I also agree with Taylor that trucking is probably the most important mode of transportation for companies. So many goods get delivered by trucks every day and without them we wouldn’t be able to receive our goods, whether it is going to the store to purchase them or ordering online and having them be delivered, there has to be a truck involved in some part of the goods arriving to their final destination. Most items would need multiple transportation modes especially if they come from overseas. A truck will need to bring the cargo to a shipping dock to be loaded onto a boat and then a truck will pick up the cargo and drive it to a destination. I find it interesting that Whirlpool is using trains for one of their distribution centers. I think it is a good idea but, I do not think many companies would be able to just strictly use trains and no other mode. If a company is not located near tracks they still have to use a truck to get it to a spot where it can be loaded on the train. I don’t see a lot of companies strategically building facilities around train tracks or extending tracks to their facility for shipping purposes because there is less flexibility unless there is significant cost savings. Trucks you can send wherever you want, whenever you want. I can see some good if more companies started using trains though. They are more energy efficient and roadways may be less congested, but goods may take longer to arrive.

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  7. Kristen Elizabeth (@baniak_kristen) November 7, 2015 / 7:33 pm

    I thought this article was extremely interesting because as a whole I actually never empathized on the process of ordering things online and all the work that comes along with the distribution of the products. Transportation is so important in the marketing process because there is an ongoing process with buying products online and then having these items shipped and handled to a specific place. I am wondering what whirlpool will do with their trucks and how they will fix their problems in the company. They could expand on another kind of transportation besides just trucks to fix the issue in their company.

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  8. Jameson Pinette November 9, 2015 / 1:36 am

    The blog post is interesting, yet find it falls a little short discussing how inefficient trucking is. Yes trucks are needed, yet the transportation cost for trucks versus other modes of mass transportation is quite expensive. Moreover the cost of freight is heavily influenced by the price of fuel, thus can be unpredictable. This is a form of risk some retailers/wholesalers would like to control. Trucking, a $650 Billion market, provides opportunity for transportation businesses to think outside the box. For instance, amazon is piloting the use drones to deliver packages right to buyers homes. This cuts many steps out of the logistics process and eventually will be more cost effective. If this was the 1800s or early 1900s, the same justification would be made for trains that is being made for the trucking industry within the distribution network. The transportation of goods is never going to go away, however there is a great deal of improvement that can take place to streamline the process.

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  9. Maheshwari Zala November 11, 2015 / 4:10 pm

    I agree with the blog post. I also believe if Truck stops america will stop. And talking about global business, trucking industry plays the most important role. All the industry depends upon trucking, be it a food industry, health industry or any retail sector. There would be hardly any sector which would not get affected if trucking industry is affected. Every grocery store, shopping center, car dealership, book­store or pharmacy gets their goods via truck. There are few companies like Whirlpool who can take advantage of rail to transport their goods. But majority of them use trucks which make US economy healthier.

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  10. Matthew E. Dulac December 2, 2015 / 9:59 pm

    Transportation is one of the most important pieces to any company today, especially in the retail industry. A large majority of goods today are delivered by trucks and I find it interesting that this company is attempting to use trains. While I do think that trains are one of the most efficient ways of transportation, I do find it interesting that this company is willing to spend significant money to change how they bring products in and bring products out of the facility. It is interesting how Whirlpool strategically has their plant around train tracks but this is different from most companies who would need to specifically pay substantial amount of money to make this possible. Trucks are the more efficient way to transport items but it will be interesting to see how this strategy works out for Whirlpool and if other companies will follow suit in the future if it works their supply chain.

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  11. Kedar Gandbhir December 3, 2015 / 10:58 pm

    I agree with Matt and the blog post. Trucks play a key role in the transportation of goods and to eliminate them would be foolish. Whirlpool strategically placing their plants next to railroads is a very interesting and effective form of transportation but I am not sure how they will manage such a shift in transportation.

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  12. Michelle McNall December 7, 2015 / 1:59 am

    Transportation is a crucial part of the B2C marketplace and from a CSR standpoint, in order to be a sustainable business, companies must consider which delivery methods are most efficient for business and the environment. While trucks may not be the most environmentally friendly form of transportation, I still do not think there is a way to eliminate the use of trucks completely nor do I think that it would be a good idea to eliminate trucks from the equation. Great presentation, Taylor!!

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  13. Rebecca Armstrong December 10, 2015 / 5:27 pm

    This article had many interesting points and I agree that transportation is a very important key factor in businesses. Even though there are many costs that come along with the transportation industry it is very demanding. There are many different option in transporting goods to businesses and to consumers and as Michelle said, businesses need to determine which is the most efficient and effective way to receive their products or ship them out in a timely manner. The increase in demand especially during the holiday season is going to push the transportation industry to their limit and consumers probably do not realize how much they rely on the trucking companies to get the products in a timely manner. The transportation industry is a more behind the scenes of the final product. I really enjoyed the article and the points that were brought up in this discussion.

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