June 2006 | Case Studies | Casebook

PET Project Improves Railcar Tracking/Tracing

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Amcor PET's peeve was inaccurate data on inbound rail shipments. A new automated tracking/tracing system got the company back on track.

You come in close contact with polyethylene terephthalate (PET) all the time, and probably don't know it. In fact, you have likely held a PET product in your hands sometime today, and may have even touched it with your lips.

This may sound scary, but it shouldn't. PET is a packaging product that is widely used for food and beverages, including carbonated soft drinks, bottled water, dressings, spreads, and sauces. PET is also utilized by agro-chemical industries and manufacturers for applications ranging from carpeting, to fiber filling for clothing, to pallet strapping.

Amcor PET Packaging, headquartered in Manchester, Mich., is one of the world's leading PET packaging solutions providers to the consumer products industry. The company has approximate annual sales of $2.3 billion and employs 5,800 people at 50 manufacturing locations and 20 on-site operations in 20 countries worldwide.

Amcor PET Packaging is a subsidiary of Melbourne, Australia-based Amcor, a $4-billion global packaging company. Besides PET, parent Amcor provides packaging solutions in flexible plastics and specialty cartons, as well as closures (lids) and distribution services.

PET containers are a growing part of the global packaging market, says Charles Adamczyk, Amcor PET's supply chain analyst. That's due, in large part, to the material's desirable consumer characteristics—it is lightweight, shatter-resistant, inexpensive, resealable, and recyclable. The high-clarity plastic material is manufactured from various oil and gas industry by-products, particularly ethylene glycol and terephthalic acid.

Righting the Rails

Amcor PET ships PET containers to worldwide consumer products manufacturers—including many household name brands. Yet the company has experienced some of its most critical logistics challenges on the inbound side.

"Inbound rail shipments are crucial to the manufacturing side of our business," says Adamczyk. "We needed to gather more efficient and accurate inbound rail information."

Taking advantage of the mode's low cost and reliable service, Amcor PET depends on rail shipping to move resin—its basic raw material—to a dozen production facilities in the United States. The company counted on its suppliers to help track and trace inbound rail shipments.

"It was easy for us," says Adamczyk. "All we had to do was pick up a phone to check on a load's status."

But a growing need for timely and accurate shipping information, including status updates and histories, forced the company to reexamine its existing methodology, which began to fall apart as annual railcar loads passed the 12,000 mark. By 2004, the situation was rapidly reaching crisis level.

"It got to a point where we assumed that information we received about incoming rail shipments from within our company was incorrect," says Adamczyk.

Unpleasant Surprises

Bad data caused all sorts of unpleasant surprises for Amcor PET managers. Shipments would suddenly appear out of nowhere, while critical deliveries arrived late. The company was often forced to arrange costly expedited truck deliveries to plants that were in danger of running out of inventory.

"It was an unacceptable situation," recalls Adamczyk.

With its bottom line at risk, Amcor PET decided to automate its system as quickly as possible. To continuously collect and supply rail shipping information, the company called in Railinc, a provider of real-time, interline rail data serving the North American transportation industry.

Railinc, headquartered in Cary, N.C., was charged with developing an information service that would give Amcor PET managers instant, understandable, timely insight into the status of each railcar headed toward its facilities.

"We wanted an intelligent, yet simple way to track railcars from our resin suppliers to our plants," says Adamczyk. "Railinc was best positioned to provide this information."

Creating a reliable and accurate tracking/tracing service for Amcor PET posed a unique challenge for Railinc. Consumer products companies have long used real-time logistics tracking to follow shipments of high-value products as they travel from manufacturing facilities to retailers' warehouses.

But using the technology for inbound, low-value raw material shipments—particularly over slow rail connections—was something new.

"Considering all the benefits such a system could offer, it made sense to provide Amcor PET with tracking and tracing capabilities," says Richard Flynn, Railinc's assistant vice president of marketing and sales.

Overcoming Complexities

The service made economic sense, but that didn't mean developing and deploying the technology would be a slam-dunk. The North American rail system is highly complex, designed around routes and practices geared more toward 19th-century factories than 21st-century manufacturing networks.

As a result, one railcar carrying a resin shipment destined for one specific Amcor PET facility may be routed over track controlled by several different rail lines during its journey.

Railinc's expertise lies in untangling the often-Byzantine routes and schedules of hundreds of long- and short-line railroads, ranging from the largest Class I carriers to the smallest switching and terminal companies.

Amcor PET chose Railinc to help it keep a finger on its inbound rail logistics pulse, Adamczyk says. "Railinc has the capability to put different segments of information from various rail lines under one umbrella," he explains.

As Railinc set out to design a tracking/tracing service for Amcor PET, one prime consideration was making sure the technology worked with Amcor PET's existing supply chain management procurement system, Wesupply. Amcor PET relies on Coventry, England-based Wesupply's hosted software and support for both supply chain planning and electronic trading capabilities.

Wesupply was excited by the opportunity to help Amcor PET get a better handle on its raw material shipments, and suggested tracking railcars as a valuable component of the wider solution, says Wesupply Consulting Director Andrew Wood.

"This was a significant opportunity for Amcor PET to embrace a different approach to managing its inbound supply chain," he explains.

Wesupply also acts as a rail shipping information conduit to Amcor PET's SAP enterprise resource planning system.

"Our Wesupply, Railinc, and SAP systems communicate with each other to order resins from our supplier and schedule deliveries to the appropriate railyard," says Adamczyk. "The systems can also link individual orders to each respective Amcor PET location."

Thanks to Railinc and Wesupply's collaboration on the project, Amcor PET was able to begin tracking and tracing its inbound materials shipments in October 2004. Despite its complexity, designing, building, and deploying the system took only two months.

The System in Action

The Wesupply software kicks off the shipping process by calculating exactly how much resin Amcor PET needs at a particular production facility. It also determines when the product should be shipped.

Planners at each facility use Wesupply's recommendations to electronically place resin orders. Amcor PET's 12 plants are scattered across the United States, including locations in Allentown, Pa.; Lenexa, Kan.; Fairfield, Calif.; Orlando, Fla.; and Tumwater, Wash. The resin is principally supplied by companies in the Southeast.

Once an order has been shipped, Railinc's service goes into action. RailSight, the company's automated rail equipment tracking system, "pushes" rail event reports on specific equipment using information supplied by more than 460 rail carriers. Car location message and estimated time of arrival (ETA) data are available to Amcor PET within minutes of being reported to Railinc.

"Railinc picks up and records information as shipments pass through various junctions until they arrive at the railroad siding designated by the individual Amcor PET facility," explains Adamczyk.

As the shipment progresses along its route, Railinc automatically feeds updated information into the Wesupply software. "Railinc provides the 'raw' information on the location and ETA of each railcar," explains Wood.

The Wesupply software makes the raw data user-accessible by allowing status inquiries and providing continuously updated status screens. The information gives Amcor PET an up-to-the-minute view of each railcar's actual location and, most importantly, any changes to expected delivery dates.

"Railinc is invisible to Amcor PET representatives because they actually track railcars using Wesupply," says Adamczyk.

Once a railcar arrives at its final destination, several events are recorded, ranging from the shipment release to its actual placement at the delivery location.

"The final event will trigger acknowledgement messages that let all relevant parties know the shipment has been delivered," says Flynn. "The process then repeats again with each new rail shipment."

After each shipment is complete, Amcor PET planners can review the collected data to see where bottlenecks may have occurred during the railcar's journey. They can also analyze the data to learn which routes work best and to plan more efficient and cost-effective future shipments.

Besides smoothing the planning process, the technology also helps Amcor PET deal with shipment problems as they arise.

"Rail carriers make their best efforts to deliver railcars at the appropriate time, but that's as good as it gets," says Wood.

The information Amcor PET's new tracking/tracing system provides helps level the playing field by giving the company the chance to spot problems early. This way, it can work with rail carriers to resolve issues without wasting time.

"We now get a level of accurate insight that simply wasn't possible by collecting information from suppliers over the telephone," says Adamczyk. "That has been a big help."

Amcor PET's flashy new tracking/tracing technology may not be as cozy as the phone calls it replaced, but the system's high-quality data is already paying dividends. The company has cut transportation costs significantly by eliminating the need for emergency truck shipments to plants in danger of running out of resin. Reliable and timely shipment information has also allowed Amcor PET to slash inventory safety stock.

In addition, delivery lead times have gradually shrunk since the system's deployment. "We have achieved a five-day average reduction in lead time over the past 18 months," he says.

Yet Adamczyk isn't sure he can attribute the improved performance solely to the new tracking system. "Our suppliers may have given us incorrect lead time information, but after talking with them directly, I believe the rail lines are doing a better job, too," he says.

The only significant operational problem Amcor PET has encountered since the system's deployment was caused by suppliers accidentally entering incorrect shipper identification data.

"If a supplier misspells our name, for example, the system cannot locate or track that particular railcar," he explains. Fortunately, the problem only happened a few times, and Railinc was able locate the "missing" railcar in its database.

"I let our suppliers know they need to be more cognizant of their waybills," says Adamczyk. "Since then, we have not had an issue."

Railinc's service has made Adamczyk a firm believer in tracking/tracing systems. He's now working to win new converts to the technology.

"I've tried to convince some of our suppliers to upgrade to electronic tracking systems," he says. "These systems would benefit almost any company that wants to gain control of incoming shipments."

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