Super-Sized Solution For a Mid-Sized Enterprise
Pacejet gives manufacturers and distributors a more commanding view of their operations, plus the tools to act on what they see.
Many medium-sized businesses are so pressed for time, they focus only on tactics and not on strategy, says Ronald Lee, vice president of marketing and business development at Pacejet Logistics.
For a manufacturer scrambling to get each order packed and shipped, "dealing with shipments one by one is the most expensive way to handle orders," he says.
But that's exactly the way many companies handle shipments when they don't have the wherewithal to consider more than the carton at hand. "Companies don't think about the synergy they could get by viewing the entire flow of materials out the door," Lee says.
Pacejet Logistics in Dublin, Ohio, and Tempe, Ariz., has set out to solve logistics problems like these, which plague mid-sized manufacturers and distributors. The company's Logistics Resource Management (LRM) suite includes transportation and warehouse management modules, and a system for conducting e-commerce.
Pacejet was formed in 2003 when MAPICS, a vendor of enterprise resource planning (ERP) software for manufacturers, acquired technology vendor Frontstep, then spun off its logistics and distribution software business. Because Pacejet's roots are in the ERP world, its developers understand the back office and know what it takes to meld those functions with logistics solutions.
"We can point to a long history of helping companies run their complete operations," Lee says. "And when we talk about integrated transportation, we're really talking about extending ERP with these new capabilities."
When it started as a separate company, Pacejet was already serving customers with an enterprise distribution system. It was also working to develop its LRM suite, "which is really our focus now," Lee says.
TMS: Have It Your Way
One of the first companies to benefit from the new software is Nieco Corp., based in Windsor, Calif. Nieco manufactures commercial, automatic broilers, selling them mainly to fast-food chains and their franchisees in the United States and abroad. Its broilers cook up meals at restaurants such as Burger King, Carl's Jr., Hardy's, Red Robin, KFC, and Taco Bell. Nieco also sells spare parts for its broilers, shipping them to distributors and service centers, and directly to customers.
Nieco implemented Pacejet's Transportation Management System (TMS) in the spring of 2004 to help plan and execute its outbound shipments. It installed the software to replace another logistics system, which the company had employed for about a year and a half.
The previous system "didn't work well," admits Ed Kirk, Nieco's information technology manager. "It didn't keep the rate tables up to date. It didn't handle fuel surcharges. It didn't do shipment consolidation, and it didn't interface cleanly back to our ERP system."
Serving as a development partner, Nieco helped Pacejet work out the details of integrating the TMS with an ERP system. Nieco uses SyteLine, a system originally developed by Frontstep and now owned by MAPICS.
Nieco's Wish List
Nieco also suggested features and functions the TMS should provide. For example, "We asked for current rate tables and for fuel surcharge capability," Kirk says. "We asked for a certain look and feel for the screens to make it easy for the shipping department to use the system. We asked for the TMS to be structured around a flexible process so we could change it if we needed to."
Along with managing the mechanics of shipment preparation, Pacejet's TMS offers Nieco the chance to think strategically about its freight for the first time, Lee says.
For example, the TMS automatically consolidates shipments. In the past, Nieco's employees were so busy picking, packing, and creating labels, "there wasn't any time left for someone to say, 'Gee, this box is going in the same direction as this one. Maybe we should put them together and save money on freight,'" he says.
With some logistics applications, "if you ship order by order just off the system, you'll get unique shipments, even if you make 20 shipments to the same carrier each day," Kirk says. "So you have to go through and manually add up those shipments. Then you somehow have to find a way to calculate the rate for the consolidated shipment."
But Pacejet's TMS does all the consolidation and rating automatically, "providing a fair price to customers when Nieco charges them for their freight," he says.
The system consolidates shipments dynamically, watching incoming orders throughout the day, and freight scheduled to move out that month, for opportunities to combine shipments.
Besides cutting transportation costs, Pacejet's software helps Nieco quickly calculate those costs for customers before they place their orders. This is a particular benefit to overseas customers who are shopping for broilers and need to know the full landed cost.
"Before, we had to calculate transportation costs by getting quotes from carriers," Kirk says. "Now we do in five seconds what used to take us a full day."
On the tactical side, one benefit Nieco sought was a streamlined shipping process. "The paperwork for shipping domestically and internationally continues to grow more complicated, and it's difficult to retain expertise in the shipping department," Kirk says.
With a good percentage of its customer base outside the United States, Nieco has to file documents with multiple customs authorities and keep up with changes in their requirements. For shipments to Canada and Mexico, the company has to file paperwork required by the NAFTA treaty. It must also create bills of lading and other documents that carriers require.
Since it started using Pacejet's software this spring, Nieco hasn't stopped producing paper. But the TMS now completes the forms automatically, incorporating data drawn from the ERP.
"We used to do all the forms by hand, for every shipment. With the forms generated automatically, instead of someone making a career out of it, that's an instant benefit," Kirk says.
Users can import standard documents into the TMS, then customize them. "The system allows users to adjust documentation that they need based on the countries and customers they're working with," Lee says, so they can meet the demands of both customs authorities and customers.
That kind of flexibility is especially important to mid-sized companies that "aren't always supply chain masters," Lee says. "They sell to a lot of companies much bigger than they are."
When it comes to logistics, "large companies impose a lot of restrictions on mid-sized ones, telling them which carriers to use and how to format their documents," he says. "We help mid-sized companies put those kinds of rules in place, so they can consistently follow the rules that their bigger customers tell them are important."
Companies that want to take a step beyond automated paperwork can use the TMS to conduct electronic commerce based on EDI or XML, Kirk says.
They can also use Pacejet's TMS to feed information into carriers' shipping systems, instead of moving to a different interface to do business with specific carriers. For Nieco, Pacejet integrated its software with the UPS WorldShip system. The vendor also offers integration for shipping with FedEx and some LTL and truckload carriers.
Pacejet's TMS is a "web-native" system, which means users access it via the Internet, although a customer may run the software on its own premises, as Nieco does.
"Among mid-sized companies, there is still a mix—some want the software and the database in their facility, others want us to host it for them," Lee says. Pacejet can configure the system either way, but in both cases, end users access the application via a browser and don't need any software installed at the desktop.
In the future, this web-native architecture could allow Nieco to collaborate more closely with European suppliers who drop-ship spare parts to Nieco's customers in that region, says Kirk. Accessing the TMS over the web, those suppliers could make their own transportation arrangements, using rate data and other information in the system.
Nieco might also eventually implement another Pacejet application, the Advanced Commerce Catalog, which allows companies to develop an e-commerce tool for selling products over the Internet. "We're considering that system because it will allow us to do order entry and order fulfillment on the Web," Kirk says.
Through integration with the TMS, Nieco can provide shipping quotes and estimated times of arrival to customers who buy its products online.
"A customer can get much more specific information about not only the cost of an order, but also the status—where it is in transit," Lee says. "Companies that don't take a more holistic view of logistics wouldn't necessarily know where to get that answer."
That holistic view is key to the way Pacejet distinguishes itself from competitors. "Our ability to provide a suite of web-native applications and integrate with ERP systems, and our understanding of how transportation works is what we think is unique," Lee says.