The Digital Supply Chain podcast

The impact of Covid on logistics - a chat with A. Duie Pyle's John Tillison

November 23, 2020 Tom Raftery / John Tillison Season 1 Episode 87
The Digital Supply Chain podcast
The impact of Covid on logistics - a chat with A. Duie Pyle's John Tillison
Show Notes Transcript

One aspect of the supply chain I haven't talked about for a while is logistics, so I invited John Tillison onto the podcast. John is Senior Vice President Sales and Marketing for A. Duie Pyle, a US based logistics company. We talked about the impact of the pandemic on the logistics industry.

Also, because A. Duie Pyle has been recently recognised by Heavy Duty Trucking for having one of the Top Green Fleets, for the 5th year in a row, we talked about some of their hybrid, and electric trucks.

This was a really interesting episode of the podcast. I thoroughly enjoyed it, I learned loads, and I hope you do too.

If you have any comments/suggestions or questions for the podcast - feel free to leave me a voice message over on my SpeakPipe page or just send it to me as a direct message on Twitter/LinkedIn. Audio messages will get played (unless you specifically ask me not to).

To learn more about how Industry 4.0 technologies can help your organisation read the 2020 global research study 'The Power of change from Industry 4.0 in manufacturing' (https://www.sap.com/cmp/dg/industry4-manufacturing/index.html)

And if you want to know more about any of SAP's Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please don't forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

And remember, stay healthy, stay safe, stay sane!

John Tillison:

Highly unusual, though, that now we're in the business, we're historically an industrial carrier now all of a sudden we're delivering toilet paper to homes.

Tom Raftery:

Good morning. Good afternoon or good evening wherever you are in the world. This is the Digital Supply chain podcast, the number one podcast focussing on the digitisation of Supply chain. And I'm your host, Global vice president of SAP. Tom Raftery. Hi, everyone. Welcome to the digital Supply chain podcast, My name is Tom Raftery with SAP. And with me on the show today, I have John. John, would you like to introduce yourself?

John Tillison:

Good morning, everyone. My name is John Tillison. I'm the senior vice president of sales and marketing at A. Duie Pyle. A Duie Pyle is a logistics and transportation entity based about twenty five miles northwest of Philadelphia, Pennsylvania.

Tom Raftery:

Great. Thank you for joining us, John. Twenty twenty has been a weird year. I think we can all agree. And, you know, I think there's been a massive shift in the way people are now doing shopping, for example, a huge shift to people getting stuff from Amazon. And we've seen the the rise of Jeff Bezos, his personal wealth of of the back of that. We've seen lots of people now shifting who had never bought online before buying online. That's got to have a massive impact on your organisation.

John Tillison:

Yeah, it has. And if if I could take a few minutes and just kind of go back in earlier in in twenty twenty. So for our company and really if you look at the macro economy, we were a reflection of that is its economy and through the middle of March was really quite robust. Right. Are the economy. If you wanted to go to a hotel, fly on an aeroplane, make a reservation at a restaurant, you have to do that in advance. The airports were full, the hotels were full, the restaurants even on a Tuesday night. If you try to get in a certain restaurant, you couldn't even get near it. So but even I saw 20, 20 kind of start to change. Even my wife and I had booked a cruise in late for late February, and we started to receive alerts from the cruise line saying that we just when you enter the cruise terminal, you're going to have to verify that you have not been to China. So it's like, OK, no problem. Hadn't been to China. It had no desire to go to China at this point. So we cleared that, went on the cruise and returned the first day of March. And that's when you really started to hear about much more about this whole covid. And from a business perspective and our business levels, we were up through the middle of March, about five shipments per day, on average, five percent shipments per day on average versus the same period in twenty nineteen. Our revenue was up about ten. Well, by the time we got to the end of March and this was the extreme impact of of covid, we went from up five percent in gross on shipments per day to negative forty percent shipments per day. So and of course we've never seen this before, never experienced this before. We're where the economy basically went into lockdown. So everyone had to you couldn't go into work. I could. I could still come into the office and many of my co-workers could because we were considered an essential business. So you had a waiver. However, if you are not if you didn't fit one of those categories, of course, you were locked up and you were at home. And all the businesses, the gyms, the restaurants, airports and everything like that were, you know, for the most part were shut down. So so from a company perspective, that caused us to have to furlough up to I think it was around five hundred employees we furloughed and was a voluntary furlough day then, you know, to to really match the the direct impact of covid and and the and the business levels of the decline in the business level. So now over a period of time, the company we started to recover as the spring as you get into May and June to the point where we are furloughs ended for the most part by July 1st. So where our business levels had returned to the point where we could bring all those employees back to work, that was that was aided by some areas of the economy. We. We enjoyed new new business from companies that were in that health care or that protective the gowns and the gloves and that type of business, we were able to kind of backfill some of our lack of volume in other areas in the industrial side of our business with the health care side of the business. So so the impact, like most companies, was very, very drastic, very fast. And then there was this period of recovery to the point. Now, today, we're actually above our business levels versus the same time last year, which is a good sign.

Tom Raftery:

OK, and how do you handle that volatility?

John Tillison:

Yeah, well, you you have to pay very, very close attention to to your to to your volume. You have to make drastic changes. As I said, with the with the furloughs, we had to to cut staff and and really reduce our hours. So and again, it was a snap backwards and then a fairly robust recovery, highly unusual. Been doing this over 30 years. Certainly I've never seen you know, I've been through ups and downs in the economy in two thousand eight, you know, the mid eighties, late 90s and things like that. But never saw I never saw anything like this, like this quick snap in the economy.

Tom Raftery:

OK, and you say it's back up at the moment. How do you how do you think it's going to go over the next few months, given that we're going into winter now and numbers are rising again? What what what are your projections for that?

John Tillison:

Yeah, we're having to watch it really closely. So in the Philadelphia area, they just the Philadelphia metro metropolitan areas, they just shut the restaurants and the and the and the gyms back down. So they had they had been open about 50 percent capacity for the past few months. So things were beginning to turn somewhat normal. However, now with the rise in the Covid, that's just an example where things are have started to snap back somewhat. Hopefully they won't shut the economy down like the government did earlier this year. I don't I don't expect that. But to your point, though, it does bring concern as we close out this year excuse me, enter into next year. We just went through a presidential election, so that shook things up. You have a new administration coming in and they may have some different ideas that may impact the economy. I guess that's still to be determined. So we're in our budgeting process right now and looking out and we're we'll probably budget four, five percent growth next year that's relatively conservative.

Tom Raftery:

Yeah, because as I as I said at the outset, you know, more and more people will be ordering online. So companies like yours will presumably benefit from the increase in home deliveries that that should bring.

John Tillison:

We've absolutely seen an increase in our in our percentage of shipments that are now delivering. They're bypassing retail outlets and are delivering directly to the homes. And if I could touch on that, just as a as I think is a great example for especially here in the United States. So back in March, when there was the lockdown order that came out, we saw something highly unusual, where now everyone, they shut the schools down, universities, people were travelling, the restaurants were shut down. So everybody everyone went to the grocery store, bought toilet paper. So now you have this phenomenon where toilet paper all of a sudden was in very, very short supply at the retail outlet because so many people were we're having we're having now to work at home the the the producers of toilet paper, of course, for allocating X amount to to offices and hotels and restaurants and the like. And and now all of a sudden they had to change their supply chain and move that inventory and reconfigure it for for retailers and grocery stores. And that's a that's a quick pivot that that takes a while. So because you have the grocery stores, you have from a supply chain perspective, you have smaller sized orders. Right. When you go get you buy a roll of toilet paper, you know, there's eight, 10 rolls. And the when when hotels buy toilet paper, they'll buy a skittered toilet paper. So so from a supply chain perspective, it makes it very, very difficult for them to to certainly couldn't forecast. We didn't see this thing coming. And then then they have to pivot their production lines and their supply chains in order to meet this new demand of empty store shelves in in grocery stores and things like that. And that took about a month to two months for that really to to kind of equal back out and from a. Logistics supply chain perspective from how it impacted us today, do we pile because we saw an increase in our home deliveries of toilet paper, amongst many other things? Right. So because people were buying toilet paper online and that became very difficult for a period of time where you couldn't even buy it online. So but highly unusual, though, that now we're in the business. We're historically an industrial carrier. Now, all of a sudden we're delivering toilet paper to homes. So that's that's that's just a world of of Covid and really how we've had to had to adjust to to the new well, hopefully not the new norm, but the new current anyhow.

Tom Raftery:

So I mean, a lot of the home delivery vehicles are going to be powered by diesel and that's going to lead to air quality issues. And you guys are starting to roll out some electric delivery vehicles isn't that true?

John Tillison:

That's correct. In the in the in the large cities and in the boroughs, in New York City, in Manhattan and in the Bronx, we have a facility in the Bronx and they are private. That's where we're primarily running our or electric vehicles. So there are straight trucks. They have lift gates on them. The range of how far they can travel is still the technology is still not quite there. So there is some range limitations. However, over time, we certainly do expect that the that the technology will will compensate for that. And we continue to work with the manufacturers of the engines, the batteries and the and the and the OEM itself themselves on on that technology, because we do plan on seeing where a Northeast carrier. So certainly we have a lot of facilities. Right. In urban areas. And and the need for those electric vehicles over the long term from a sustainability perspective is is a is a key driver of our of our intentions are. Sure, sure. I mean, just to drive an electric vehicle myself. And the the shift to electrification is beneficial, I think, for cities, particularly both in terms of air quality and in terms of noise pollution. Yeah, exactly. So we were fortunate to be able to open up a brand new terminal in the Bronx. That's a facility that there hadn't been a new trucking terminal built in the Bronx in the city like that in over twenty five years. So you can imagine the permitting process that went into the approvals because no one wants that trucking terminal in their backyard, of course, because it brings traffic. So one of the ways that we were able to to convince the borough and the mayor's office was our our intention to have a robust fleet of electric vehicles moving in and out of that operation. Really only at night would the tractor trailers, which are continuous, will continue to be powered in the short term with diesel. They would primarily be coming in and out of there at night, bringing in the delivery, you know, bringing in the cargo that will be broken down and then put out onto the street during the day. And what conceivably will be then electric and all electric fleet. OK, so and to run the burrow's, you cannot run tractor trailers in the boroughs of New York, for an example there. It's primarily the delivery units are primarily freight trucks.

Tom Raftery:

Ok, and probably a naive question, but why were there no truck depots opened up in in the Bronx area for twenty five years?

John Tillison:

The cost of land is very, very high. So and again, no one wants no one wants trucking terminal in their backyard because of the there's already more traffic than the roads can handle and the bridges and things like that. So hats off to our on the trust in our in our ownership group that they were able to to pull that off.

Tom Raftery:

So, John, as I said, we're seeing that shift to online in your own customer base. Have you seen your customers adapting and shifting or have you seen any particular customers that stand out as leaders in this space who've gone online?

John Tillison:

You mentioned earlier that we're seeing, as most LTL carriers are, a large increase in our percentage of overall deliveries going into people's homes. So this. This phenomenon had started even before covid that, of course, covid really impacted it and exacerbated the the the amount of that business. So companies like American Eagle Outfitters, that's a Pittsburgh based company. So about 10 years ago, American Eagle had built a distribution centre out in the Midwest area, the country, because they saw that consumers were going to want choices. So American Eagle is a is a retailer that really targets the demographic target is the fifteen to twenty five year old age group. So boys and girls and women. And so, of course, their tastes are very they change rapidly. So it can be a very difficult market for them to to satisfy. So you need a lot of styles, change colours, change trends, come and go. It's one of the most difficult retail scenarios there for from a forecasting perspective, because just tastes, and especially in that demographic change is very, very fast. So but they they did a nice job about 10 years ago building the distribution centre out in the Midwest that was just only supposed to focus on online deliveries. And again, I'm talking 10 years ago. So that was at the really more so at the beginning of where it became more mainstream. Amazon was really starting to gain traction. And so but so they just they built this facility and it was really only intended for online deliveries. Now it's morphed into some other things now. So but from an omni channel, omni channel distribution is where companies have multiple avenues in which to move their product through their supply chain. So from a consumer perspective, if if I'm a consumer or a customer of American Eagle, I can walk into the store and purchase the product at a at one of the retail outlets, I could go online and have them shipped to me. I could go to the store. And if they don't have the colour or the size, but they have the you know, the style that I like, the store can then order it and then shipped to my house or I could order it online and they could ship it to the store, which they like. Of course, the retailers like that, because then I put you into the store and potentially to buy something else. So but when you look at it from a supply chain perspective, that creates a lot of complexity because it's not it's different than the natural flow of goods and a customer's supply chain that moves from either manufacturing in this case could be imports into a crosstalk into a distribution centre. The distribution centre then moves those clothes that clothing those goods out to the retail stores. And of course, the retailer goes and then sells it to the consumer. Well, now you have this omni channel distribution scenario where the consumer, they're going to purchase the product, but it doesn't mean it's going to flow in the natural direction or fix direction of what it had to historically flowed. So it adds some complexity. And it's just one example where the Home Depots and the Lowe's in that space and so many other retailers are having to adapt to changing behaviour of customers who who have visibility to a broad range of products. They want it tomorrow and they want it in the style and the colour that, you know, that they that they need. So and it's it's really a challenge, especially in that in that retail space.

Tom Raftery:

OK. All right, John, we're coming up on the 20 minute mark, which is when we start to wind down this podcast. And my my second last question on this is always pretty much the same at this point. It's all of us. Is there anything I haven't asked you that you wish I had any topics? We've not touched on that you think it's important that people be aware of?

John Tillison:

Well, just from a from a company perspective, and I think it's a valuable lesson for any company in whether you're public or privately owned. A. Duie Pyle is a ninety six year old, privately owned. It's the same family. The Lada family has owned the company since its inception. And it's really the foundation of the company is on the is on the core values. There's there's six core values of the of the company empathy, candour, citizenship, service, integrity and profitability. And it really forms the foundation for really success of the company over the over the long term. So. Each one of those core values is is is closely coddled by all employees and embraced by all employees, and I think it's absolutely the foundation of how successful. Again, for ninety six years, the company has been and certainly expects to be over over many, many years. There's there's a a close from the family perspective. They pay very, very close attention to the generational pass over to pass along to the next generation. There's a lot of plans that have been in place and will be put in place to ensure that survivability so that our area, the country, especially in our industry, many of the family owned, privately owned family run trucking companies have gone by the wayside. They've either been purchased by public entities or they've just gone out of business. And it's primarily driven by that lack of a generational pass along to to the next generation where they they maintain those same core values, which are so critical to whether it's a do a or to really any organisation. So I can't stress enough how I value valuable that that is for four companies, be it again, public or private.

Tom Raftery:

Superb, superb. John, if people want to know more about yourself, are about A. Duie Pyle, or about any of the things we've discussed in the podcast today, where would you have me direct them?

John Tillison:

Yes. So they could certainly reach out to me, John Tillison, that's jtillison@aduiepyle dot com. Our website is aduiepyle.com. There's ample information and on the on the website and certainly then with the phone numbers and the the avenues in which to to engage our our various services. So which are very broad.

Tom Raftery:

Excellent. Thank you, John. Thanks again for coming on the show today.

Speaker:

Thank you Tom. OK, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains head on over to SAP dot com slash digital supply chain or or simply drop me an email to Tom Dot Raftery at SAP dot com. If you like to show, please don't forget to subscribe to it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.