A Day in the Life of a Transportation Manager
Spend some time with the professionals who get business in gear.
Responsible for planning, executing, and optimizing transportation strategies and operations, transportation managers often find themselves on the firing line from the moment they begin work until the time they head home—and beyond.
To better understand the challenges transportation managers face and the vital role they play in daily business logistics activities, we asked three professionals—each in a different industry—to tell us about their work, including their tasks, responsibilities, and challenges. Here are their stories.
Ken White, Inbound Logistics Manager, Staples
Responsibilities: Manage domestic vendor collect inbound moves, as well as shipments between Staples' distribution and fulfillment centers
Challenge: Process 1,200 purchase orders each day
Tool of the trade: Transportation planning software
Improvement strategies: Encourage marketing to plan shipment-friendly store fixtures and promotional items; spread inbound shipments over a week or two, rather than over just a few days, to ease strain on warehouse crew and capacity; optimize cube space when shipping replenishments
FILED UNDER "D" FOR DETAILS
Staples' brand promise is to "make buying office products easy." Ken White, inbound logistics manager for the Framingham, Mass.-based office products retailer, does everything he can to stay true to that philosophy.
White aims to make his part of Staples' transportation operations as efficient and problem-free as possible. White's department is responsible for all of Staples' domestic vendor collect inbound moves. "We use two different sets of vendors: collect and prepaid, with each type in equal numbers," he explains. "My department is responsible for the collect fees."
White also manages all shipments moving between Staples' distribution and fulfillment centers. "My department handles all the freight into, and transfers between, those buildings and some direct-to-customer shipments as well," he says.
Those shipments total about 50,000 truckloads a year that fall under White's responsibility. "In this department alone, we process about 1,200 purchase orders a day," he says.
White and his team rely on a variety of technology support systems, mostly homegrown creations. Most important is the Staples Partners Web site, which allows vendors to input order information.
"Through the Web site, vendors tell us their shipment sizes and we let them know how we will ship their product," White says.
Although Staples maintains its own private fleet, White uses approximately 10 truckload and five LTL carriers, as well as a package delivery service. "The Staples fleet delivers to customers, so that's the responsibility of the outbound logistics team," he notes.
Information on nearly all the inbound freight White handles is entered in JDA Software's transportation planning tool. The software helps White squeeze maximum efficiency out of his operation. "We try to align vendors within regions so they can ship on the same day," he says. "That allows for multi-stops and multi-pickups with other vendors."
In addition to shipping various kinds of retail merchandise, moving store fixtures is another of White's major responsibilities. He works diligently to ensure that the items, ranging from shelving to lights, are handled as efficiently and cost effectively as possible.
In response to fluctuating fuel prices and a tougher retail market, White has worked more aggressively during the past few years to cut costs. Store fixtures and promotional items are an easy target for improvements.
"I'm working with the marketing team to ensure they consider transportation when they're planning items," he says. "We've also talked about not having all shipments coming into the DCs the same three days, but instead spreading them over a week or two, depending on the volume."
White is also focusing on replenishments. "I'm working with the people who issue the replenishment orders every week so that they fully utilize the trailers, making certain they maximize cube and order in pallet layers so that the product is stackable," he says.
With so many responsibilities to meet, it's key that White stay focused. "When you manage transportation, you have to pay attention to the details," he says. "That's where the savings hide."
Jeff Mandell, Inbound Transportation Manager, H.J. Heinz Company
Responsibilities: Ensure that the company's transportation partners maintain required service levels for inbound raw material shipments; balance cost and service requirements
Challenge: Adapt to low raw material inventories caused by the agriculture industry's challenge
Tool of the trade: Transportation management system
Improvement strategies: Give incumbent carriers opportunities to contract for revamped services; adapt to changing production schedules and sourcing locations to support product demand; coordinate transportation activities with other corporate departments
KETCHING UP WITH SERVICE REQUIREMENTS
There's a lot more to Heinz than ketchup. While the $10 billion, Pittsburgh-based global food giant sells 650 million bottles of its iconic ketchup each year, 15 different brands account for more than two-thirds of the company's annual sales.
Jeff Mandell, Heinz's inbound transportation manager, works daily to ensure that the company's various transportation partners maintain required service levels for all inbound raw material shipments.
"The absolute minimum requirement is delivering what's wanted, where and when it's wanted, and ensuring that the product maintains the quality and integrity it had when it left the supplier's dock," Mandell says.
Since joining Heinz a little more than two years ago, Mandell's prime function has been to serve as a change agent. "I've been charged with overhauling the Heinz America inbound raw materials network," he says.
When Mandell assumed his post, the job was heavily weighted toward supplier routing. "No centralized group was monitoring service levels or capturing cost information detail for the corresponding loads," he says. "The cost was hitting the procurement department and affecting purchase price variance, but nobody pulled back the reins on it."
As soon as he arrived on the job, Mandell's team began collaborating across the different parts of the organization to turn things around. "We worked with the procurement group to identify the supplier base, where they were sourcing material, and how it was being shipped to our locations," he says.
Mandell's initial focus was examining the choice of transportation modes. Every transportation element has a cost element behind it, but for Mandell, carrier service was the most important factor. "I was looking at whether facilities were receiving the required inventory to support production," he says.
It has been a battle to optimally balance cost and service. "In some cases, we found that balance," he says. "The modes being used by incumbent carriers and suppliers made sense."
MAKING PARTNERSHIP A PRIORITY
As he reshaped carrier practices and relationships, Mandell offered existing partners opportunities to fit into the revamped transportation network. "We gave the incumbent carriers every chance to maintain a portion, or in some cases, all of the business, and contract directly with Heinz corporate," Mandell says.
Mandell was careful to understand the burdens shouldered by all the network's stakeholders. "We had to consider the production facilities' raw material inventory limitations, ordering practices, and frozen ordering schedules, as well as the suppliers' ability to meet our requirements," he says.
Mandell also made a commitment to acknowledge and adapt to inevitable obstacles and challenges. "We put standard practices in place, but we also had to make sure we were flexible and could respond quickly to any kind of production change," he says. Inventory discrepancies at key locations and occasional quality issues with suppliers were problems that could be anticipated and handled.
"Flexibility and the ability to adapt to changing production schedules, sourcing locations, and co-pack locations to support product demand is important," he says.
A transportation management system (TMS) enables Mandell and his team to continuously evaluate shipments. "If a facility orders small quantities—a few pallets, every other month, for example—we don't use a truckload provider on those shipments," he says. "We'll go with an LTL carrier."
Mandell currently supervises four core LTL carriers—two national and two regional. "Our truckload carrier network consists of about 100 providers, the majority of which are asset-based," Mandell says.
The TMS helps Mandell consolidate LTL shipments. "We can optimize loads when it makes sense from a required delivery date and capacity standpoint," he says.
Mandell's transportation resources are currently being stressed because Heinz is operating at the lowest raw material inventory levels in company history, a result of ongoing agriculture industry turmoil. He feels that his organization's service commitment is helping the company cope with the difficult situation as best it can. "We strive to achieve an optimal balance of service and cost," he says.
Like most transportation managers, Mandell's work is evolving because of a growing need to coordinate transportation activities with other corporate departments. "Our work with the procurement department has been invaluable," he says. "Moving forward with electronic freight payment, we will work closely with finance as well."
Mandell also stresses the importance of communicating and cooperating with business partners. "The supplier communications and relationships that we've developed have played a significant role in helping achieve our goals," he says. "Their willingness to work with us as partners, and not just a customer to be served, has helped us in transitioning and overhauling the Heinz transportation network."
Ted Lunsford, Strategic Initiatives Lead, Transportation and Logistics, American Electric Power
Responsibilities: Manage and negotiate carrier contracts for the company's inbound and outbound freight
Challenge: Extreme weather events can damage equipment, requiring expedited shipments for repairs and replacements
Tools of the trade: Online routing guide and load posting software
Improvement strategies: Evaluate freight pay data for clues to more efficiently manage material movement and cut costs; work with internal supply chain partners to identify savings opportunities and gain feedback on carrier performance; create a transparent, closed-loop process that tracks orders from placement to shipment to payment
BRIGHT IDEAS AT WORK
With nearly 38,000 megawatts of generating capacity, American Electric Power (AEP) ranks as one of the nation's largest electricity generators. The Columbus, Ohio-based utility also owns the country's largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.
For Ted Lunsford, AEP's strategic initiatives lead in transportation and logistics, daily work involves managing and negotiating carrier contracts for inbound and outbound freight, including internal shipments moving between company locations.
While AEP doesn't ship its core product—electricity—it does move all the material and equipment involved in generating, transmitting, and distributing electricity.
"We ship material such as light poles, photocells that sit on top of the light poles, and the meters installed outside of the home," Lunsford says. "We also shift equipment such as transformers, regulators, capacitors, wire and cable, and other materials. We move a range of commodities, shipment sizes, and weights every day."
AEP not only moves a volume of shipments, it also sends them over a wide service area. "We have contracts in place for most transport modes: parcel, LTL, truckload, flatbed, and expedited," he says. "We operate in 11 states in the Midwest and Southwest—from Michigan down to the tip of Texas." In all, AEP serves more than five million customers.
Lunsford and his team play a key role in the ultimate success or failure of AEP's freight management and cost control.
"We operate between 350 and 400 facilities, ranging from large power plants to small storerooms where we hold inventory," Lunsford says. Part of the company's internal logistics model is based on a hub-and-spoke system.
"We feed material from large distribution centers to small storerooms so it reaches facilities that are close to our customers," he says. "We're positioned so we can grab material quickly, enabling us to handle outages or service interruptions." When sharing inventory between facilities, the company uses contract carriers or its small internal fleet.
EXPECTING THE UNEXPECTED
Activity hits a peak whenever an emergency strikes or the unexpected happens. "We recently endured a round of hurricanes that hit our territory in Texas, Louisiana, Oklahoma, and Arkansas," Lunsford says. "In Ohio, Hurricane Ike knocked out power to more than 600,000 AEP customers. In these cases, expedited delivery is essential to get the right material to the right place at the right time."
Negotiating and managing carrier contracts is one of Lunsford's many responsibilities.
"I look for top-tier carriers that can provide great service, with minimal loss and damage, at competitive rates," he says.
With the exception of expedited-intensive emergency situations, time doesn't play a big role in Lunsford's responsibilities. "Our partner carriers do a great job of picking up and delivering material within one to three days—origin to destination—from almost anywhere around the country," he says.
Cost savings, on the other hand, are vital to Lunsford and AEP. "The big savings and efficiencies come from carrier compliance and identifying consolidation and mode-shift opportunities—from parcel to LTL, or LTL to truckload, for example," Lunsford says. "As primarily an inbound shipper, we don't fit the typical manufacturing or distributor model of operating within a hub-and-spoke system, moving product along the same lanes every week."
ON THE LOOKOUT FOR OPPORTUNITIES
The back-end of AEP's shipment infrastructure—freight pay data—helps the company spot hidden opportunities. "Freight pay data is the most important piece of our transportation management," Lunsford says. "That data holds a wealth of information to help efficiently manage material movement and control costs."
Simple logic embedded into AEP's online routing guide and load posting software, hosted by Memphis-based technology vendor CTSI Global, helps optimize transportation, making shipments as simple and seamless as possible.
"Our purchase orders include shipping instructions that guide the vendor to our Web site if AEP is managing the freight," Lunsford says. "The vendor enters basic information, such as ZIP codes and weight, online. Within one minute, the vendor has the information to contact the appropriate carrier by phone or electronically tender a load for pickup." On the back end, Lunsford uses CTSI's freight pay data and TMS tools to analyze shipping patterns, lanes, carrier compliance, and cost-savings opportunities.
Lunsford works continuously to improve AEP's transportation network. "Each year for the past five years we've made significant changes in how we handle increasing freight volumes and how we deploy our hosted shipping solutions," he says. In that time, his operation has evolved from a highly manual, operational intensive process to a more tactical and strategic group.
"Our goal is to have a transparent, closed-loop process from the time we place an order to the time the material and freight costs are paid," he says. "That includes proper routing, load consolidation, event management for material in transit, centralized claims processing for loss and damage, freight pay audit, and back-end reporting."
Ultimately, however, close working relationships with internal supply chain partners are also required to create efficiencies and cut costs. "We work with procurement and our suppliers to analyze opportunities for transportation efficiencies and savings," Lunsford says. "We also rely on our supply chain partners for feedback on carrier service levels and key performance data." Internal supply chain partners can also help pinpoint holes in transportation services that AEP may need to plug.
Despite the hectic nature of his work, Lunsford believes that patience is key when it comes to creating a world-class transportation infrastructure. "You have to take it one piece at a time," he says.
Ken White, Jeff Mandell, and other transportation managers would surely agree.