October 2011 | Case Studies | Casebook

CSA Compliance Through TMS: A Beauty of an Idea 

Tags: Transportation Management Systems (TMS), Safety

To comply with CSA 2010 regulations, global cosmetics company L'Oreal USA makes up a qualification program that holds carriers to high safety standards.

As a leader in the cosmetics and beauty industry, L'Oreal USA understands that consumer loyalty is based on trust and corporate responsibility. From product quality to sustainability efforts to supply chain security and safety measures, L'Oreal is committed to living up to consumer expectations. As part of that commitment to safety, and in its role as a large-volume shipper, L'Oreal recently implemented an innovative carrier-vetting program that helps ensure it uses only safe contract carriers to haul its freight.

Focusing on truck safety is vital because accidents involving tractor-trailers are common in the United States. In 2010, 500,000 large trucks and commercial vehicles were involved in accidents. As a result, 100,000 people were injured and 5,000 were killed, according to the Insurance Institute for Highway Safety.

The logistics sector continues to do its part to help bring down those numbers. Reducing incidents of freight damage, cargo theft, highway accidents, hazmat releases, and injuries to third parties is good business and good corporate citizenship.

For instance, the U.S. Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) issued a regulatory proposal to revise Hours-of-Service requirements for commercial truck drivers.

Then there's Compliance, Safety, Accountability (CSA 2010), an FMCSA initiative designed to assess and improve the safety performance of motor carriers and drivers so fewer crashes, injuries, and fatalities occur. CSA 2010 allows FMCSA to assess the safety performance of trucking companies, and gives the Administration the power to intervene in safety problems as soon as they become apparent. FMCSA will enforce compliance with interventions ranging from a warning letter to penalty assessments.

CSA 2010 represents one of the most significant and challenging changes the industry has ever faced, according to some logistics analysts, and requires that shippers work closely with carriers and other service providers to mitigate their risks and costs, and prepare for the impact of implementation.

"As a shipper, L'Oreal USA is responsible for verifying that our contract carriers adhere to the safety provisions they have committed to—including complying with Department of Transportation (DOT) regulations, maintaining insurance coverage, and achieving satisfactory CSA 2010 scores," says Brad Moose, director of corporate transportation for L'Oreal USA.

Moose is aware that image is everything when L'Oreal products are on the road. "If a carrier has an accident while transporting L'Oreal products, the public could potentially associate our company with that accident," he says. "Besides people getting hurt hauling our load, an accident can also be damaging to our reputation."

Shippers today are exposed to legal liability arising from the conduct of their carriers. When a highway accident involves a motor carrier, shippers can be held liable. Claims against shippers are growing more aggressive and courts are becoming more amenable to these claims.

In an effort to maintain CSA 2010 compliance, L'Oreal implemented a transportation program that includes tighter carrier management. The company purchases raw materials at their point of origin and manages the inbound freight in an effort to control its pipeline and manage spending.

"We have to manage high-volume, short-haul lanes with different lead times in addition to regular inbound loads and local shuttle moves," explains Moose. "We make a deliberate effort to be a responsible shipper and do due diligence with our third-party carriers to be CSA-compliant and meet carrier insurance and protection requirements."

TMS Gets a Makeover

To manage transportation, L'Oreal had already been using the UltraShipTMS transportation management system (TMS), a proprietary Web-based solution from third-party logistics provider Ultra Logistics, based in Fair Lawn, N.J.

Moose presented the idea that by adding a module to its TMS, Ultra Logistics could help L'Oreal, and other shippers, satisfy CSA regulations. That idea developed into the Ultra Logistics Carrier Assurance Program.

To develop the program, L'Oreal's first step was to give a list of its carriers to Ultra Logistics, which then created a vendor database and online profiles for each carrier. To create the profiles, the program solicits information from L'Oreal's carriers about their operation and infrastructure, such as size, number of terminals, drivers, and other relevant data.

All carriers undergo a comprehensive qualification process that includes: insurance verification; fraud and alias search; safety record review; operating authority and history documentation; a digitally signed carrier contract; third-party logistics references; and number of years in service, notes Nicholas Carretta, president of Ultra Logistics.

"We've expanded our TMS to meet the existing need of a customer," says Carretta.

The system proactively monitors carriers and receives immediate notifications of any DOT safety changes, motor carrier authority status, insurance policy details, base of operations location, and CSA 2010 scorecard. All the information is input to a database managed by Ultra Logistics, and the data is refreshed weekly based on the information culled from various government carrier databases.

"I want all the information I can get," says Moose. "If there are any updates to our carriers' status, Ultra Logistics notifies us immediately via e-mail. If a red flag is endemic, we know there is a deeper issue and can react accordingly—pulling that carrier from our network, for example."

They say that beauty has its price, but not in this case. Getting the Carrier Assurance Program up and running involved minimal start-up costs and a nominal monthly subscription fee, Moose notes.

"Because the solution is Web-based, there is no hardware or software to purchase," explains Carretta. "And, if a shipper is already using our TMS, we know who their carriers are, which reduces the cost for the database."

Attractive DATA

An added benefit of the Carrier Assurance Program for L'Oreal is that Moose has usage data on all 80 of the company's inbound carriers. He now knows exactly how many times a carrier is being used to transport product. "Like other big shippers, 80 percent of our carrier spend is with a small group of carriers," he explains.

"There is no doubt that L'Oreal has a much better handle on keeping costs down by finding lower price options, because the program gives Moose and his team visibility to why they are using a particular carrier for reasons other than cost," says Carretta. The idea, he says, is to mitigate risk and find the best carrier to partner with for the long-term.

With the L'Oreal Carrier Assurance Program in full force, Moose says he is now interested in adding another shade of color to its abilities by implementing a carrier contract archive that would serve as additional protection as L'Oreal and its carrier partners move forward.

"It's not about what's on the truck; it's a value-add for our business," says Moose. "Programs like this demonstrate to consumers that we've gone above and beyond."