We interviewed Dave Tu, President of DCL Logistics to ask what has changed operationally for them during COVID-19. He shared his thoughts on trends in ecommerce, and how he’s pivoting DCL’s long-term strategy to meet the changing market. He reiterated that DCL is committed to customer success and his team manages to keep up with customer order volumes in four specific ways: not compromising on customer SLAs, dedication to operational flexibility, increased communication, and commitment to innovation and new technology. Above all, he says, “My highest priority right now is the DCL staff, because if we don’t have healthy employees, we can’t meet our customer needs.”
The COVID State of Business and Future Trends
There’s been an obvious shift towards ecommerce business. With everyone staying at home, online ordering has only increased. Dave predicts, “I think there’s going to be more drop shipping. It’s also possible that companies will be shifting away from Amazon to other dot.com channels, which will diversify the market of online ecommerce platforms. What I can say for sure is there will be more ecommerce and B2B volumes moving forward since this whole situation is changing people’s purchasing behaviors.”
To meet these market shifts, Dave and his leadership team have had to pivot the business. DCL has been able to remain fully operational and they are continuing to keep up with customer needs. These are the four ways DCL is meeting the surge in order volume in the last two months.
Not Compromising on SLAs
The service-level agreement (SLA) that DCL has with each customer dictates the shipping terms from the DCL warehouse. For example, an SLA might determine that all product orders that are in by noon are shipped out that same day.
If you’re shopping online these days you’ve seen that all companies have a shipping caveat, that products may take longer than usual to get to customers. Dave says, “When this started, we had one week that we had to tell the customers we might be a bit behind on SLAs. But we caught up very quickly because behind the scenes we are always proactively maneuvering to not compromise on their SLAs.”
SLAs are a core component to DCL operations because customers are DCL’s number one priority. “We are able to uphold the SLAs during this time because we do that at any time no matter what,” Dave explains. “Our customer SLAs are really the north start for us, if the order is in by hour-X we need to ship it out by that day. We are always following that north star, it’s in the DNA of this company, so everyone knows that it’s their ultimate goal.”
In the past two months the ecommerce order volumes have increased by a magnitude of four. The DCL operations and leadership team have had to think more strategically about how to meet the capacity. Dave says, “We can’t just add more people to each shift because we need to keep our employees healthy and safe. We’ve had to think more long term: what’s the more scalable strategy to how we’re going to handle this.”
Optimizing resources is what allows DCL to remain flexible in this time, and that ultimately helps them get the job done for their customers. Dave explains, “You also have to be in tune with the labor market and understand what’s happening with the show rates. They are very different in California than in Louisville. In one place you might call in ten people and five show up, but across the country it might be reversed.”
The solution that has proven successful is changing the timing of warehouse shifts to maintain a lean staff (for safe physical distancing) while still having enough staff to move the big order volumes. As a specific example, the Louisville warehouse runs seven days a week which has always been the case, but the times that warehouse employees are working changed. Dave shares, “We know from pre-covid times, if there’s a material increase over the weekend we just put extra staff on the shift on a Monday and get everything done. Now we’ve shifted to allow a little more flexibility without increasing our costs. The weekend team is there for four days but for fewer hours each day; they now also work on a Monday where we see a dramatic increase in volume, and they overlap with the regular weekday team which helps add more continuity.”
It’s this kind of strategic adjustment that typically wouldn’t seem necessary, but it’s been a silver lining because these different hours have provided more flexibility to handle the volume increases. Dave says, “Even if we go back to pre-covid volumes, we would keep it as is because it helps us.”
Increased Communication and Assessment
“It seems strange to say but I think overall communication has improved,” Dave says. “It’s increased and become more focused, both internally and with customers. This time has created more connection with customers to meet their needs and concerns.”
This global shift has inspired many companies to renew (or create!) contingency plans. It can be one of the most important, yet non-critical additions to a business strategy. “I think a situation like this has really accelerated people to push contingency planning, and execute what they had in their mind all along. As an example, we’ve had a couple of customers who always wanted to divide up their inventory between California and Kentucky. Because of this pandemic they’ve decided to do it right away. And we got them up and running within two weeks.”
Inventory strategy is one of the more significant ways DCL can provide guidance for companies. “We help them determine if shipping out of two locations is going to be realistic and pragmatic. Because it’s not something you can turn on with a switch—it requires communication, planning, and strong leadership. We go through a pretty disciplined project management coordination, so we have to really help them understand what the options are.”
Use of New Technology and Robotics
DCL is a forward-thinking 3PL, dedicated to using technology tools that create efficiencies and enhance their customer’s experience. In Q3 20120 DCL launched its first fulfillment robot in their Fremont facility. The plan is to deploy several more in the Louisville facility later this year.
The benefit of working with robots is that automation enhances quality and accuracy. Plus in the current COVID-19 situation, it’s helpful to have fewer staff in the warehouse without sacrificing volume and productivity.
Dave says, “The other benefit to the robot is that we are learning a lot of different types of applications for the robots. Our intention for the robots was initially ecommerce picking only, but we are interested in applying some of the technologies to other areas of the warehouse.”
The introduction of robotics and automation in Fremont is only the beginning. The team is strategizing about how to apply conveyor and scanning technology in other areas of their facilities. These will only improve their systems by limiting human error and maximizing the speed and accuracy of their order fulfillment. DCL has always been committed to using new technology to ensure the highest quality and efficiency support for their customers.
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