December 2003 | Case Studies | I.T. Toolkit

EMJ Extracts Execution Excellence

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Transportation system aims to turn plans into profitable reality for flatbed shippers

The logistics and sales departments at Earle M. Jorgensen Company (EMJ) used to struggle with a language gap. "We talk in loads, they talk in purchase orders," says Pam Barnes, manager of transportation and logistics at the metals distributor in Schaumburg, Ill.

When a sales rep wanted to know the status of an order, much got lost in translation as logistics staff tried to figure out which load in transit included that item. Perhaps the most important thing to fall through the cracks was productivity.

"We'd end up having to track back through paper files to find loads," Barnes says. "We'd have to ask the salesperson a lot more questions about where the purchase order was coming from, where it was going, and when it was moving. Then we'd dig through paper files to find that information, to find the right carrier, to be able to contact the carrier and find out the status of the load."

Today, sales and logistics staff have an easier time exchanging information. EMJ has integrated its purchase order system with a transportation execution system from BestTransport, Columbus, Ohio.

"When sales reps ask us for a specific PO, we can now push a few buttons and locate the load it's on," Barnes says. Logistics staff can then quickly learn the status of the item through the BestTransport system.

Time saved answering questions from sales reps is just one benefit EMJ has seen since it started using BestTransport's web-based system in 2001. The technology also gives EMJ a better picture of its supply chain and its transportation patterns, Barnes says. In the future, that could help the company find opportunities for better freight rates.

EMJ is "a grocery store of steel," says Frank Travetto, the firm's vice president of merchandising. Its product line actually extends beyond steel, encompassing aluminum, carbon, brass, and other metals sold primarily in tubes and bars. Customers include manufacturers of durable equipment such as Boeing, Caterpillar, John Deere, and Harley-Davidson, along with companies that make parts for those firms. EMJ distributes its products through 36 branches in major cities throughout the United States and Canada.

Team Needs Tools

The company started its search for transportation management technology when officials there decided to stop using third-party logistics providers. Instead, they would build an in-house team to handle inbound and outbound logistics. That new team needed tools beyond the telephone and fax to support its activities. "We needed a repository, a database, to be able to maintain history on our loads, or tender loads to carriers," Barnes says.

EMJ chose BestTransport because "its functionality was more state of the art" than other systems, with screens that were easy to understand and navigate, Barnes says. "Also, some of our major suppliers were already using the tool. We figured that eventually we could integrate with them more easily by using the same tool they used."

On the spectrum of transportation management functions, estTransport concentrates on the execution end. Working from a transportation plan a company already has in place, it triggers actions that move freight according to established business rules. When things don't go as expected, it provides tools for shifting to Plan B or C.

"For example, if you know you want to choose the lowest-rate carrier to move a given load, how do you know that carrier is always going to say yes? They're not," says Mark Shary, BestTransport's president. "You need some way to deal with the less-than-ideal plan, which is what experts in the organization, such as Pam Barnes, are there to do. And they could use an automated boost."

The BestTransport suite includes:

  • Contract Manager, for managing the details of relationships with carriers through a web interface.
  • Tender Manager, for tendering loads to carriers.
  • Status Manager, for scheduling loads and tracking their progress from pickup to delivery.
  • Best Rate/Best Move, which automatically allows carriers to offer lower rates to certain customers for freight that presents opportunities for continuous moves.
  • Lane RFQ, for requesting quotes and other information from one's own carriers, or from any of the 2,500 carriers on the BestTransport network.
  • Knowledge Manager, for obtaining reports on freight activity, carrier performance, costs, and other management data.

Officials at BestTransport decided to focus the system on transportation functions that offered the greatest value, Shary says.

For example, they concentrated on truck transportation rather than other modes. "It's the largest component and one of the most fragmented. And it tends to be the most human-intensive," Shary says.

They decided to emphasize methods for driving down freight rates, and to include a function that automatically triggers a freight bill. Instead of waiting for an invoice and conducting an audit, the shipper can use the agreed-upon rate logged into the BestTransport system. If nothing occurs during the move to change that rate, BestTransport simply transmits the figure to an accounts payable system, which then generates payment.

"This is a huge overhead savings opportunity" compared with the old method, "where you might have armies of accounts payable folks trying to figure it out, or you might have to outsource it," Shary says.

Scheduling Precise Appointments

Carriers also use BestTransport to schedule appointments on the shipper's dock. This will offer a particular advantage next year, when drivers have to start counting wait time in their hours of service, Shary says. Carriers are more likely to accept loads from companies that make precise appointments, so they can quickly get their drivers back on the road, he says.

Most trucking companies that use BestTransport are flatbed carriers. The network evolved this way because BestTransport started out serving shippers in the metals industry, which mainly uses flatbed equipment. Once the network developed a critical mass of such equipment, it began to attract shippers with complementary loads, such as forest products and packaging.

Because of this focus, shippers that join the network often find that most of their carriers already participate. That was the case with EMJ, Barnes says.

Pay by the Drink

BestTransport hosts the system for its customers, who either access it through a browser interface or integrate it with an existing management system. Carriers pay a flat fee, as little as $25 a month, to use the network. Shippers pay by volume, incurring a fee each time a carrier accepts a load.

"They pay by the drink," Shary says. "If they don't see the value, they don't pay."

When EMJ first joined the network in 2001, "we initially used it simply to tender loads to our carriers and have them accept the loads and return tracking information on their pickups and deliveries," Barnes says. A year later, the company integrated BestTransport with its purchase order system.

"Now the two systems talk with each other, and we're able to get more specific purchase order information to deal with. We can pass the information to the carriers so they can pick up the right freight and we can more easily track it," she says.

Barnes queries the system to get reports. For example, when she needed to know how many loads a certain carrier had delivered to one of EMJ's branches in the past three months, "within 10 seconds I was able to put in specific parameters to get that information," she says.

This kind of information can translate directly into savings. For example, one of the company's suppliers was using its own carriers to deliver freight to EMJ. Having seen a few of the freight bills, Barnes realized that some of EMJ's carriers on the BestTransport network could do the job for less.

"I was able to go to the buyer, show him some numbers and say, 'We need to start moving this freight for you because this is the kind of money we can start saving.' We converted over, and now we're moving those loads," Barnes says.

EMJ has not yet used the Contract Manager or Lane RFQ modules, but with BestTransport to provide a better view of the company's transportation patterns, Barnes expects to use the RFQ function in the future.

"If I can say to a carrier, 'I have 50 lanes for you to look at, give me pricing,' I'll probably wind up getting better rates than if I say I have 12," she says. The system helps her determine which lanes to offer to which carriers.

BestTransport helps shippers develop core carriers for very specific needs, Shary says. "It tells you who your core carriers ought to be."

When a large shipper tries to develop the ideal mix of carriers without automation, "it's unwieldy," he says. "You think of core carriers maybe by geography, or maybe just by plan or overall organization. This allows you to do it lane by lane."

By helping a logistics department put its plans into action most effectively, Shary says, BestTransport "takes good transportation people and makes them great."

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