January 2002 | Case Studies | I.T. Toolkit

Elogex: Holistic Logistics

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A web-based TMS looks at inbound and outbound, within and beyond the enterprise, for opportunities to optimize freight.

It's called a transportation "network," but we often forget what that metaphor means—a system of interlinked threads reaching in all directions. Executives at Elogex, Charlotte, N.C., say most transportation management systems (TMS) look at too few threads in a company's network.

Surveying the TMS market a few years back, the company found that "the solutions that existed only optimized outbound freight, for a single location," says Todd Buelow, product manager at Elogex.

Some collaborative transportation systems look at multiple locations for opportunities to create continuous moves and thus reduce rates. Some help companies save money by sharing transportation assets with other firms. But none of those systems, Buelow says, has the breadth and depth to manage the entire transportation process, including both inbound and outbound moves.

Elogex aims to do it all—or nearly so.

"Elogex is looking to take a holistic approach to transportation," says Adrian Gonzalez, senior analyst, e-business and supply chain at ARC Advisory Group, Dedham, Mass. "The vendor's strategy is to consider the logistics functions that most companies require, and to offer most of them, "he observes.

The web-based Elogex Network offers traditional TMS functions such as routing, rating, tendering, tracking, and tracing. Like some of its competitors, it sends alerts to the relevant parties when goods don't move as expected.

Beyond that, Elogex offers two features meant to distinguish it from other TMS solutions. One is a group of functions for managing logistics with suppliers. The other is the ability to build continuous moves by cooperating with just about anyone available—suppliers, other shippers within the enterprise, and other Elogex customers.

Elogex launched the Elogex Network in December 2000. It operates on a hub-and-spoke model; the hub is the Elogex customer that implements the system, and the spokes are its suppliers and carriers. Users access the system through their web browsers and can integrate it with legacy systems.

Because Elogex is an application service provider (ASP), customers and their partners don't need to install any software to participate. The hub company pays a subscription fee based on the number of sites and suppliers it has and its shipment volume. Some Elogex customers absorb the full cost of the system; others pass along part of the cost to suppliers and carriers, on the premise that they benefit from the solution as well, Buelow says.

Inbound Visibility

The "supplier logistics relationship" capabilities make the Elogex Network especially attractive to the food and grocery industries, Buelow says. Without such a system, "they don't have visibility of shipments coming in from suppliers, and that creates havoc, especially around times when they run a sale for a particular product. If the truck arrives a day late, they miss that whole sale opportunity. Or if the truck arrives on time but is short 10,000 pounds, again they will have a problem."

"Historically, a lot of retailers have systems to manage their outbound transportation, but very few have invested in a system to manage inbound," says Travis Parsons, Elogex president. "That's the next layer of opportunity for retailers in the marketplace today, across many verticals."

The Elogex Network allows the hub firm to maintain a routing guide and use its rules to determine how suppliers ship its products. After a supplier creates a shipment in the system, the shipper views the hub company's preferred carriers in order of priority. The system chooses the carriers based on the hub company's business rules and negotiated rates.

The supplier electronically tenders the shipment to the first carrier on the list. If that carrier declines or doesn't respond within a specified time, the system offers the load to the second carrier. Most carriers receive e-mails alerts when new tenders arrive; Elogex can also send alerts to portable wireless devices. If the supplier skips the first carrier on the list, that fact will appear in a report of non-compliant activities.

That's a big benefit to large companies, which might have a dozen people dedicated to managing supplier compliance, Buelow says. "If we can reduce that overhead a little, that's a big savings," he notes.

Why not simply make it impossible to skip the first name on the list? "In many cases, the supplier may have a good reason for going to the second carrier," Buelow says. It's a mistake to hard-code rules into software, because there are always exceptions that can only be handled manually, he notes.

The system can also catch shipping errors before the goods go out the door. If the quantity the supplier enters in the system is too small, for example, "the Elogex customer can be alerted that they're about to short- ship an order," Buelow says. "Or if the order has a target delivery date of today, and they try to schedule an appointment for tomorrow, we can also alert the Elogex customer."

The appointment scheduler built into the system addresses what Buelow terms a huge problem in the grocery industry. "Dispatchers spend about 40 percent of their time scheduling appointments, and carriers spend about three and a half hours per shipment dropoff just trying to unload," he says.

In the scheduler, the Elogex customer can set up receiving and shipping hours for individual locations, indicate what kinds of goods can be handled at each dock door, and reserve certain hours for carriers who arrive on a regular schedule.

When a hub company tenders freight for outbound shipments, the process is similar to the one suppliers use for inbound. The major difference is that internal users see a rate attached to each carrier on the list. They also see any carrier that offers an opportunity for a backhaul or continuous move.

In designing its asset-sharing functions, Elogex honed in on the fact that in a large organization, the right hand rarely consults with the left hand on transportation. "Historically, there has been poor collaboration between the different divisions," Gonzalez says. Even at the same location, a company might use two separate systems to manage inbound and outbound freight.

"You have inbound managed by procurement and outbound managed by manufacturing," Buelow says. "Outbound doesn't have a view of an asset coming into the facility, so they can't turn around that asset. Instead, they call a carrier to send a truck and perform the outbound."

Many companies have no idea how many opportunities they miss to share assets internally, or to share with their suppliers, Buelow says. "We're talking to one company now where more than 70 percent of its shipments have the opportunity to do continuous moves."

For companies that want to forge ongoing collaborative relationships with other firms, Elogex offers a consulting service. "We can take a company's shipment data for the year, run it through a continuous move simulator, identify the lanes where they match up with particular companies that are already on our network, and provide that information to the two parties," Buelow says.

When a carrier accepts a load through the Elogex Network, it can indicate when the truck will become available again. The system looks for opportunities to pick up another load at the same location or within a pre-determined radius of the dropoff site.

One of Elogex's newest customers is Kroger, the nation's largest grocery store retailer. "Kroger wanted a single TMS that would help find cost-savings opportunities across different divisions. Kroger chose a web-based system so it could deploy the technology rapidly across divisions," Parsons says. "At the same time, Kroger is looking to use our system to manage the inbound transportation process and work more closely with its supplier base."

Along with other improvements, Kroger expects Elogex will help it better manage the way it schedules and receives inbound freight deliveries into its distribution centers and manufacturing plants.

"With our application, Kroger expects to significantly reduce the inefficiencies associated with current manual appointment scheduling by allowing vendors and carriers to schedule delivery appointments online," Parsons says. "Deliveries are balanced throughout the day to help get trucks in and out as quickly as possible while efficiently utilizing dock doors and warehouse labor."

Users who need only the simplest level of implementation can get up and running on the Elogex network in two or three weeks, Buelow says.

Most hub companies, however, want to create shipments with data taken directly from an enterprise resource planning (ERP) system or other legacy system.

"With the integration, it's usually 30 to 60 days," he says. It's a short time to wait for such a potentially large payoff.

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