Ep. 16: Boosting Supply Chain Efficiency Through Must Arrive By Dates with Greg Plemmons & Chris Kelley of OD

Speaker A: M welcome to Cargo Shorts, brought to you by Old Dominion Freightline. I'm your host, Samantha Jones. The concept of Must arrive by dates has become a cornerstone for retailers and supply chains alike. Born out of the need for efficiency and precision, Must Arrive by dates or MAVDs mandate that freight must be delivered within highly specific time windows. Initially implemented by big box retailers, pharmacies, hospitals and grocery stores have all seen significant adoption of the practice as well. While MABDs help streamline staffing and inventory management, they also impose strict penalties for non compliance, presenting significant challenges for shippers. Understanding and navigating these requirements is essential for anyone involved in the movement of goods Today. To talk more about the evolution of must arrive by Dates, I'm joined by two subject matter experts, Greg Plemons, Chief Operating Officer of Old Dominion Freightline, and Chris Kelly, Senior Vice President of Operations of Old Dominion Freightline. Greg, Chris, it's great to have you on today. How are you guys doing?

Speaker B: Doing great. Thanks for having us.

Speaker C: Excellent. Great to be here. Snapper.

Speaker A: Well, absolutely. Thanks for letting me host this conversation. I'm looking forward to it. It's a trip, uh, down memory lane for me. So anytime I get to talk about LTL these days, it's exciting. I have a couple of questions I want to ask you guys today if it's okay. But really excited to talk more about the concept of MABD dates. Not because it's just that exciting to everyone I think, but because it's something that we have seen continue to gain traction and evolve and just become topic, um, that nobody can avoid if you're involved in retail supply chain these days. So for anyone who maybe doesn't really um, have a lot of background or experience yet with MABD MABDs. I just want to kind of set the stage for the rest of our discussion today. Greg, would you kind of give me some of your thoughts on what are MA bds? How did they come about? Um, what have we seen going on in the last few years and just kind of help us stage set a little bit.

Speaker B: Sure, you're right, it, it's a concept that has gained tremendous traction. I think we'll continue to do that for a while. MABD is, is short for Must arrive by dates in that different retailers have different names for mabd, but essentially it's any shipment that is required to deliver within a certain window. It arose, I guess it really began with Walmart. It's kind of the pioneer of the concept. Uh, they actually term, they use the term otif or on time in full. But Essentially they were the ones that began associating scorecards and penalties or non compliance with the delivery windows that they set for their uh, for their vendors. It's just a way for them to manage their inventory. Obviously they have massive inventory at any given time and so it's a way for them to manage that inventory, keeping inventory levels as low as possible, scheduling their carriers to deliver. But it's grown from its beginnings with Walmart to really right across the retail spectrum. Pharmacy vendors, grocery vendors, even the medical industry and others, uh, are now involved uh, with mabd.

Speaker A: Sure. And I think it's kind of um, it follows the trend where I always say that shippers have the opportunity to kind of um, start trends and drive compliance within trends as well. And so um, they're the companies that are moving goods, they own the supply chains. Right. And um, as suppliers, um, or vendors into those larger retailers, we, we try to do our best to evolve and innovate and comply. So I think shippers do a great job of educating themselves to learn what is expected of them by their retail vendors. I think maybe it's a little harder for them to understand what is going on behind the scenes with their chosen carrier partners because that's not always something that is discussed very openly. So Chris, I was wondering if you could kind of walk me through operationally. What are things carriers do when they pick up an MABD shipment and what is that journey of that shipment, um, and the various touch points along the way before it makes it to its retail destination?

Speaker C: Sure, Samantha. The operational uh, standpoint, a normal LTL shipment and MABD shipment. From a travel standpoint, from a network standpoint, there's really not a tremendous difference. Um, you know, physically the freight's going to move in the same paths, it's going to go the same places. It's the technology behind it, it's the uh, planning behind it, the pre planning of what is the delivery window. And each one of these is different. Rather pick your big box retailer or your grocery chain or even some locations and different DCs within the same company, they all can have different. While the overall program is the same, it must arrive in a certain window. Um, there are different requirements for how that appointment is set, what time to arrive, what the procedures are. So it's really knowing what that Constantee needs in order for that NABD shipment to be successful upon delivery. That's really the major difference between MABD type shipment and a regular LTL shipment is that delivery piece, are you delivering it within that window and according to the specifications of that particular location. So we have a team when shipments are billed. Uh, we obviously have unique identifiers. We have an entire program built around various levels of compliance. There's not a one size fits all type service for this. So it depends on which service you've chosen, kind of what level of follow up goes with that. And that's just due to the different complexities of uh, different consignees. So once it gets in that system then we work through that based upon what level of service is selected and uh, what those requirements are to make sure that we are reaching out, um, and working with the consignee. Whether it's delivery portal, whether it's an online delivery schedule. Some are old fashioned. You still do call and talk to somebody and set up times to uh, swap trailers or drop a trailer, the arrangement that we had.

Speaker A: So the shipment is still going to travel like a normal um, shipment would. But then the trick is because MABD is all about on time, not early and not late. It's how they respond at that delivering facility to ensure that they're being perfectly compliant with that strict delivery timeframe.

Speaker C: Yep, that's correct.

Speaker A: Greg, what do you think shippers need to be considering when they're selecting their transportation partners who are moving these shipping shipments that have these mabds, um, and require the appointments and the strict arrival times?

Speaker B: You know Samantha, in order to grow their business with retailers, shippers really must receive good scorecards, right? And uh, every vendor is rated on their performance in several key areas. So they not only have to provide a quality product at a fair price, they also must deliver to the retailer within a specified window and in perfect condition. And that's where the importance of uh, partnering with Bali transportation providers comes in. Obviously shippers have to choose a carrier that's going to pick up and deliver consistently on time in a good condition. So key metrics are on time, pickup on time, delivery claims ratio and so forth. Those are really table stakes if you will. And they're typically pretty readily available through the industry. Beyond that though, it's important to understand that uh, carrier relationship with the retailer. Right? They approved or preferred, do they live, unload or do they drop trailers? Are they connected electronically for appointment scheduling? Let's face it, some retailers are challenging to deliver to and so it's important to partner with carriers that uh, that know how to sort of navigate those challenges. I would say go digital to the extent that you can, uh, make those digital connections with your carrier so that data and information flows smoothly. Sort of streamline the shipping process, reduce errors and sort of allow for precision tracking and accountability. Work with a carrier that has a good track record, long experience doing time and window based shipping and the carrier that's resilient enough to deal with the unexpected. Because in shipping there will always be the unexpected, particularly this time of year as we record this, uh, just coming off of a major snowstorm that affected most of the country. And work with a carrier that has a robust digital receipt system that uh, that you have access to incorrect fines, chargebacks and so forth happen from time to time. And so we need to be able to quickly verify that your load arrived on time in full so that you can dispute those incorrect uh, fees and charges when they have to. It's important for the shipper's relationship with their customer, the retailer to get that extra shelf space or to it even comes down to negotiating price um, between a shipper and a retailer. So all those things are pretty important when you think about what carrier to trust your shipment with.

Speaker A: Yeah, I've heard of um, the shelf positioning before. Your uh, scorecard can impact if you're on the bottom or right there in the middle. Um, and so there's lots of things that I'm sure actually does have a big impact on um, even companies revenue if they're not maintaining those scorecards. Also remembering times we were in retail transportation and you wouldn't think it would happen but we'd get asked to as an LTL provider to go in and recover a shipment from in transit and say well where are we picking it up from? Is it a, you know, a shipper receiver? No, it was another LTL carrier's dock because it ended up getting shipped with a provider who wasn't approved uh, or preferred with a retailer. And I think that happens more times than we realize because shippers are constantly growing and expanding their retail footprint. That's the goal. They would, they'd like to break into new markets but then there's a learning curve when you do. And so making sure that you're careful with your partner, uh, selection and looking into who is preferred, who is approved by these retailers. Um, so there's a lot of pre planning that comes with unfortunately not just your first step into retail but each additional retail partner you continue to partner with um, requires careful planning and partnerships.

Speaker B: Very true, Chris.

Speaker A: I would have to imagine that there's probably a lot of added pressure when mabd shipments run into challenges like a snowstorm, uh, that Greg just mentioned or some type of weather event, uh, or disruption Outside of the norm. So what processes or tools do carriers generally put into place to mitigate for any unexpected slowdowns that might cause um, delays for these shipments?

Speaker C: Well you know any of these shipments especially you know we have a specialized program for that. So these shipments are individually tracked and the key is to know when you really need to deliver it. You have that window then that can give you some flexibility. Honestly uh, in these weather delays you might have a multi day window, um, or morning or afternoon type window. So that allows us if we know when that delivery is scheduled, uh up front, uh we've pre planned that and are uh proactive putting that in the system. It allows us to move it so that it hits those spots mabd shipments. Any type of special delivery requirement shipment is moved with a priority in most carrier systems. I know it is in, in ours. And so that way we're able to make those weather issues or traffic issues or um, even there's times where we're supposed to pick up a shipment on a specific day and the shipper doesn't have it ready yet. We have the ability to be flexible um and to be able to meet those needs to still make it there within those window. Uh, that's needed due to some of the various services that we offer. So while it can be challenging, we, we do it every day. Um, you know the key is to partner with carry with robust level of services that can give you options when something unexpected happens. Like Greg talked about before, there will always be production delays, weather delays, um, you know, cut your teeth in ltl. You know if there's one thing about freight it's uncertainty. Can't control the weather, you can't control these external factors. So you have to be able to adapt and recover and have that 99% on time living to make sure your

Speaker B: scorecard is in effect.

Speaker A: Yeah, I did, I uh cut my teeth in ltl operations in Kansas City and like last month they shut down every highway in the state of Kansas uh for extreme blizzard conditions. And I was very grateful that I have since removed myself from freight operations because I'm sure that was a stressful couple weeks.

Speaker C: Yeah, I remember looking at our weather ah map. Uh we have a ah large weather map here that all the highway conditions and were all right.

Speaker B: I, I know the day you refer to.

Speaker A: I, I have another question I'd like to ask you guys. Well I probably have a couple more but let's um, can I ask for some examples? Um, do you guys have any stories maybe or examples you can share of Customers who have had to transition to um, abiding by mabd, uh, restrictions. What helped them with these transitions and just any takeaways from these experience as you've watched shippers kind of evolve through stepping into the space of having to navigate retail with mabds.

Speaker B: Yeah, there are any number of stories we, we could share without naming names. You, you touched on something earlier about rescuing shipments, you know, that are stuck with another carrier or whatever the case may be. Those happen often for us. You know, we have a preferred position with most of the major retailers and so those are sort of pretty commonplace for us where we are asked to sort of save a shipment, if you will. We literally hear stories and conversations with customers every day about the change that their scorecards, the improvements their scorecards have uh, made after signing on with our he may be the program. Uh, the thing that sticks out to me and I guess a change that I've really noticed over the last few years is that it seemed in the beginning when Walmart first kicked this thing off and then others began jumping on board with mavd, it seemed that the people we were, people we're dealing with, the carrier decision makers, were not necessarily aware of the fines and chargebacks or even the scorecard that they were receiving. It seemed to be the sales and marketing teams that these shippers that you were dealing with these fines and having these conversations with the retailers that has changed and is continuing to change. I think now they realize it's, it's the, it's not just the price on a freight bill, the carrier decision makers, that is the total cost of transportation, which includes obviously any fines that they might pay. And some of these fines can be 3 to 5% of the cost of the, of the goods or what the shipper sold, uh, to the retailer. And so that eats into their margins considerably. So, so I have seen that sort of evolve over time where the decision makers that we deal with, uh, are now fully aware for the most part of the importance of scorecards and business, the impact of chargebacks and fines on their bottom line.

Speaker A: I'm so glad you brought that up because I was actually um, thinking about that a little bit earlier how this isn't just something that stays confined to transportation teams. Um, mabd dates have a huge effect on sales teams, account management teams that are actually holding these relationships with these retailers. Even if there's a promotion and they want to get in some type of seasonal product from you and do some type of rollout or extra, you know, sale, they're going to come and Ask the sales. They're talking to sales. And sales is like they're promising, they're making commitments to deliver, you know, X amount of goods by X amount of dates in these locations. And that's all wrapped into their project. And then transportation doesn't deliver. There is a problem. Right, but transportation doesn't get the phone call from Walmart. It goes to, it goes to sales, it goes to leadership. And so it, it is something that um, needs increased visibility outside of just, um, transportation. I think as an industry we're evolving more with that. And then also excellent point on the fines. Um, for many years that was not something that was allocated back to transportation, um, on time, uh, delivery fines were lumped in with other fines that were difficult to even allocate to where the errors were coming up. And that can be a really, um, especially for, you know, shippers who are kind of breaking into this space maybe, or new markets with retailers. That can be a tough thing to do to allocate where those fines are coming from and get to, um, the bottom of it. But it's definitely a worthwhile task, um, to help figure out where you can improve. Do you have any thoughts on that?

Speaker C: Chris, you're spot on. One of the things that we see regularly is, to your point, doing the research up front and realizing this is part of the entire cost of transportation, the entire cost of the product. It doesn't do you any good to say, hey, I can sell, uh, my product to a large retailer for X dollars and I'm going to throw my normal cost of transportation on that. That's why when we all know in these types of situations, it's not your normal cost of transportation, it's normal cost of transportation. Plus, due to the complexities of those MABD type requirements, no matter what they call it rad nabd, otif, whatever, whatever it is, there's additional requirements. So uh, we see this many times where we're getting folks coming to us the uh, second time around who kind of learned their lesson, uh, hey, we tried to quote this out, uh, and run this in our normal LTL channel. It did not work. We know we're at risk of losing this project or not getting this project again next year, not continuing with the sale, um, and they're losing money on it, uh, because it was priced some way that didn't fit with what the actual cost of transportation truly is in the marketplace, no matter what carrier you use. So, you know, having great conversations with your carrier up front about what are really the operational requirements, what are really the types of deliveries that you're looking at. Are you able to do this as part of a normal sum? Um, you know, some of these customers, uh, will allow you to drop trailers in normal course of business, but they don't necessarily have all their shipments as MAB shipments. Some of their shipments may be just normal, uh, arrivals and others are MAB type, you know, required arrival type shipments. And you are often not able to mix those on a trailer. So you have different glitter requirements. There's things that you have to look at to make sure you know what your total cost of goods will be, including transportation, in order to, you know, keep that promise to your customer.

Speaker A: While I have you two gentlemen, I'd love to know what you think about, uh, as we move into the future. Do you think we will be seeing more or less of maybe feeling probably more. But do you foresee any changes coming, um, any type of innovations or anything that we should be thinking about as we look into the future of retail supply chains?

Speaker B: I think you're right. I think there'll be more and not less of this sort of mabd delivery window type shipments as we go forward. I think it's likely that things digitize even more and companies adopt tighter and tighter inventory standards, uh, stock management practices. So I think we can expect a nice long Runway with this concept. And honestly I think that bodes really well for a carrier like Old Dominion. It's been a focus for us for a long time and we've gotten pretty good at it. I'm actually excited to see things further progress on this front. And uh, you know, as Chris was speaking, it reminded me of something, I mean, uh, in an ltl world where we deliver multiple shipments to a particular vendor, the requirements are different even within different departments or different types of commodities within retailers. Right. So that presents a challenge for

Speaker C: uh,

Speaker B: shippers and for carriers just to understand what those requirements are. It might be that, uh, as Chris alluded to earlier, might be that not every shipment requires mabd level service and attention really can depend, you know, what uh, what department they're they're selling into. And so, you know, again, back to. It really is important for shippers to choose a carrier that's, that knows how to navigate these challenges, that has the relationships with all the major retailers and the flexibility. It's also a term that Chris mentioned earlier, I think really comes into play here.

Speaker C: And especially as the uh, economy picks back up here, uh, warehouse space, yard space at these DCs will get uh, more constrained. And so I think that will Continue the push towards more mabd turning that the goods in that warehouse quicker, turning their trailers on the yard quicker, uh, so they don't have to go out and get more warehouse space uh, for the additional uh, goods coming through. So I think this definitely will continue to grow as we see uh, a stronger economy here in the next couple of years.

Speaker B: Mhm.

Speaker A: Yeah. And I think you brought up economics. I'll just add this a little bit too because that's what's an area I love. I think we went through an interesting transition over the last few years where we had this just in time inventory model and then Covid made people adopt a just in case inventory model and that didn't go so well for some balance sheets. After that kind of the buying fell a little shorter than the inventory stocking had and retailers were under a lot of public scrutiny to work through that. And so now we're kind of, I don't know, I don't know where we're at exactly. I wouldn't say we're fully back to adjusting time but I would say that I think it re emphasized and why they want to hold to an MAVD type of stock structure and continue to advance and hopefully improve that too as they learn more about it. But it's very important for these retailers to be careful with what type of inventory they're holding, how fast they're turning product and so they're. I think there's some good intentions there. Right. And what they're trying to accomplish. I don't think mabd dates were set out to be um, a terrible thing. I think it brings kind of organization to what could otherwise be a chaotic space and they're incentivizing compliance. But um, it becomes the job of any good vendor or customer, um, partner to figure out how to help um, achieve those, achieve those requirements that are set out.

Speaker B: Yep. Samantha, I think the pendulum is swinging back and will continue to as the economy recovers and capacity tightens in our industry and in the retail within the retailers warehouses this was. And we're heading back in the direction of tightening standards. So I, you know, if I could offer some advice to the shipper that's looking to, you know, that's selling into retailers. Just communicate with your carrier early, early and often, you know. And really as, as you're planning your production, if you see changes in the production schedules, you know, really communicate that kind of information to your carrier so that they are able to plan. And I think everybody will be more successful with uh, better sharing of information and the Idea is to, for us at least, is to make sure that our customers, the shippers, are successful. We want them to be, uh, able to sell more and more to these retailers. Uh, good for everybody. And so communicate early and often we'll do the same. And I think together we're all win.

Speaker C: The importance of early data, electronic data getting us, you know, the orders going out, the load, uh, that files so that we can plan ahead. Um, as business picks up and inventories, uh, you know, tighten up, it's more critical than ever. Then we get the product out there and the more advanced notice even the same day that we can get, as opposed to just finding out what's on that drop trailer when we go pick it up and find out it's an MAVD date that has a short window on it. Um, you put your spot on, Greg. It's critical they communicate.

Speaker B: Yeah. That holy grail there is really the electronic bill of lading that flows right into our billing rating systems. And m, even more importantly than that, or earlier than that, I guess, is right into our planning systems. Right.

Speaker A: Which is in and of itself a newer advancement, is it not? The electronic bill of lading that's come about in the last several years?

Speaker C: Yeah, it's really taken off the last several years with the standards.

Speaker B: Yeah, we're talking with all our customers about it. You know, it's super important for our planning and no, we're able to load more directs, reduce handling, improve on time, performance and all the good things that flow from early data.

Speaker A: Yeah. If you are a shipper listening, I would just love to give a little piece of advice here myself. Reach out to Greg or Chris on LinkedIn and say, hey, you said something I don't know everything about. I want to know everything about that. So, gentlemen, thank you so much for being here with me today. I think I'm going to have to wrap this up, but I could talk in my BD dates all day if you let me. So.

Speaker B: Yeah, me too. Yeah, it's been a pleasure.

Speaker A: Yeah, the pleasure has been mine. Thank you both and thank you for listening. If you want to learn more about Must Arrive by dates, be sure to visit odfl.com forward/to read OD's guidance on the topic how to handle Must Arrive by dates with precision. While you're visiting the OD Outlook section of the Old Dominion Freightline website, be sure to download OD's most recent whitepaper, how a new generation of Data analytics is Reshaping shipping to stay up to date on key trends with insights on the state of global supply chains and how shifts in sourcing have brought manufacturing closer to home. If you enjoyed this episode, be sure to check out our full Cargo Shorts podcast series. You can find us on Spotify, Apple podcasts, Amazon Music, SoundCloud, and YouTube Music. You can also leave us a comment on Spotify. Please rate and review, share with your colleagues, or drop us an email@ah marketingdfl.com visit the od Outlook section of the Old Dominion freightline website@odfl.com odoutlow look where you can find additional information on this topic. Thanks for listening.