April 2009 | Case Studies | Casebook

Logistics IT: GoodSource Finds Instant Gratification

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A food distributor's new technology serves up its broker's freshest rate quotes, without the need for phone calls or emails.

Electronic communication has unquestionably helped speed business transactions. But while some companies are content using "good enough" communication tools, others, such as Carlsbad, Calif.-based third-party food distributor GoodSource Solutions, push technology to the limits to get the most accurate and up-to-date information via the most convenient delivery method.

One example: GoodSource Solutions' salespeople in the field no longer have to call or email logistics brokers to lock in rates. They can do it via a proprietary software package that links the company's transportation management system (TMS) with the broker's system. In addition, GoodSource management knows that bills of lading and billing are accurate, and that the broker constantly monitors individual shipments.

GoodSource Solutions serves niche and specialty application markets that are consistently challenged by budget constraints, including schools, correctional institutions, relief organizations, and non-profit food agencies. The distributor offers its more than 3,500 clients unique products tailored to their needs.

GoodSource procures products from about 300 leading food processors around the world, including Kraft, Hunt's, Sara Lee, Rich Products, and Wesson. It partners with some manufacturers to produce made-to-order GoodSource and Tools for Schools branded products, and offers money-saving Special Buys, which include inventory liquidations and products with cosmetic imperfections.

About 85 percent of GoodSource's shipments are frozen LTL, with the rest split between dry-only and combination dry and frozen shipments. While much of the food that GoodSource sells is shipped directly from the manufacturers to customers, the company also operates seven "Mixing Centers" around the nation (Turlock, Calif.; Emmett, Idaho; Dallas, Texas; Chicago, Ill.; Scranton, Pa.; Atlanta, Ga.; and Winterhaven, Fla).

These centers provide weekly or monthly deliveries to customers, enabling them to receive mixed products (including a combination of dry and frozen foods) on a single truck. This flexibility allows customers to reduce on-hand inventory volumes.

WHAT'S IN THE BOX?

The challenge of moving all this varied product falls to Dan Versace, GoodSource's director of logistics. Before joining GoodSource, Versace worked for Georgia-Pacific, as well as for 3PLs and distributors, where part of his responsibility involved managing warehouse regions.

When Versace joined GoodSource, the company wasn't large enough to work directly with large LTL carriers, so it turned to brokers. Today, GoodSource ships freight via mainline direct carriers, but also works with a number of brokers across its entire national network. These brokers handle an important shipping function: billing.

"We put third-party billing responsibility on the brokers to make sure that the bills are correct when the suppliers ship," explains Versace.

In these instances, GoodSource purchases products from suppliers and arranges for them to ship directly to customers. "We may not be directly involved in the shipping," he states. "As a result, we aren't supplying bills of lading."

In early 2006, just prior to Versace's arrival, GoodSource added CaseStack Inc. to its list of service providers. The Santa Monica, Calif.-based third-party logistics provider operates 12 warehouses and office locations in seven states—Arkansas, California, Georgia, Illinois, Oregon, Pennsylvania, and Texas. "We handle some refrigerated shipments, but the majority are dry," reports Rhea Levin, senior account manager for CaseStack.

ROOM FOR IMPROVEMENT

While its relationship with CaseStack was successful, GoodSource was looking for something more. The distributor realized that a key component of maintaining cost-effective pricing was the ability to control shipping costs, while at the same time providing fast, efficient delivery. The company sought ways to reduce costs and increase sales, as well as meet customer demands for high quality and low prices.

One of the first places GoodSource looked for opportunities to streamline processes was in its initial interaction with CaseStack. Because GoodSource places orders and arranges for brokers to handle the transportation, it is essential that the bill of lading is correct when the product ships. This ensures proper billing processing and class information, and that all special delivery instructions are accommodated.

"The shipping process for GoodSource requires coordination and careful planning with meticulous attention to detail," explains Levin. "We have to make sure the shipper, which is neither GoodSource nor CaseStack, puts accurate information on the bill of lading, or uses our bill of lading, so each step is coordinated with the exact details."

In the past, GoodSource and its brokers, including CaseStack, handled all transactions manually. "Every time we worked with a broker, we had to call or email to ask for rates," states Versace. "Every arrangement was a one-time deal."

ADDING TO THE TOOLBOX

Soon afterwards, GoodSource implemented a TMS provided by Cary, N.C.-based MercuryGate. With this new technology, GoodSource saw the opportunity to streamline interaction with CaseStack. "We asked CaseStack how to get its rates into our system," recalls Versace.

The answer was simple enough. "We installed CaseStack's rate optimizer software application into GoodSource's TMS," says Levin.

GoodSource, in turn, implemented an updated software program that integrates CaseStack's rate optimizer with its own Web interface. Now, salespeople in the field can retrieve the relevant pricing information from their own Web site, which increases efficiency and saves time. The Web-accessible rate optimizer allows CaseStack and GoodSource to focus attention on customized receiving and timely deliveries.

"Now, every time we put a request for a dry LTL load into the system, our TMS pings CaseStack's system, and we get back a rate, just as if we had made a phone call or sent an email," says Versace. "We can tap any CaseStack origin combination, so wherever we do business with CaseStack around the country, we can access its rates."

SPEED AND ACCURACY, DELIVERED

The new technology has also improved billing. "GoodSource has strict rules governing how products leave its warehouses," says Levin. Because it is important to make sure billing is correct, and going to the right place, GoodSource would either put CaseStack's third-party information on its bills of lading, or use CaseStack's bills of lading. This posed a challenge initially.

"Sometimes, vendors sent shipments to GoodSource, but the distributor doesn't handle receiving," Levin explains. "We now track all orders closely, so we know if there are any billing problems the day after a product is shipped."

Since implementing the new technology, GoodSource has streamlined its process for locking in rates, reduced costs per unit by multiple cents on the dollar, and experienced sales growth.

"With CaseStack, we don't have to deal with phone calls and emails," says Versace. "We know when we get a rate, it is right. We know the shipment will arrive on time. We also know that billing will be done correctly. In sum, it is easy, and we are confident of the results."

END OF AN ERROR

When rate discrepancies arise, they are usually related to an unusual location or destination combinations that haven't been tapped in a long time. But GoodSource has been pleased with the way CaseStack handles these errors. "If we end up with an incorrect price, CaseStack updates its system and we don't experience that specific problem again," says Versace.

GoodSource can't say the same of all its brokers. It still gets past-due bills, sometimes as old as two years, a result of the brokers not processing the bills of lading accurately and/or not notifying the carriers correctly. "With CaseStack, this doesn't happen," states Versace. "The systems currently work well together."

CaseStack's consistent service is another benefit. "It takes care of details," Versace says. "CaseStack might as well be an asset-based carrier; that's the kind of service it provides."

With its new interactive technology, GoodSource gets up-to-date and accurate information conveniently, and knows that bills of lading will be correct and shipments will take place as planned.

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