August 2001 | Case Studies | I.T. Toolkit

Web Solution Delivers Best of Two Worlds

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Double Click: a web-based service offers do-it-yourself optimization and 3PL support.

Software implementation was not on the To-Do list when USF Surface Preparation Group (USFSPG), LaGrange, Ga., set out to reduce its freight costs. The company's plan was to outsource transportation management to a third-party logistics provider (3PL).

Along with parent company USFilter and multiple corporate divisions, USFSPG checked out numerous 3PLs. But at the end of its search, instead of signing on to a pure outsourcing arrangement, the company brought in something new—a hybrid service and technology solution that promises the best of two worlds.

USFSPG plans to outsource much of its inbound transportation to Clicklogistics, Billerica, Mass. But the company is also putting Clicklogistics' web-based transportation management system (TMS) in place to help in-house transportation managers make better decisions. Between USFSPG and the other divisions of USFilter, the implementation eventually will cover more than 100 facilities.

Under the new arrangement, Clicklogistics "helps manage our freight to the extent we want them to handle it, without totally running our business," says search committee member Dave Molnar, manager of logistics at USFSPG.

USFilter, part of Vivendi Water, is a $4.5-billion provider of water and wastewater treatment products and services. The Surface Preparation Group makes equipment and supplies for cleaning a broad range of surfaces, from the hulls of ships to airport runways to glass and plastics. USFSPG ships goods into and out of 73 facilities in the United States, including factories and distribution centers (DCs).

Doing Their Own Thing

The company started looking for a 3PL because logistics managers at its facilities lacked the information they needed to make effective transportation decisions. Employees assigned loads without always considering transportation contracts. On the inbound side, suppliers often chose carriers themselves, passing along higher-than-necessary costs.

"Every entity was doing its own thing," Molnar says. "There was no tie-in, and poor historical recordkeeping. We did not have any data to see what our needs were and where we were spending our freight dollars."

USFSPG selected Clicklogistics at the end of last year and became the trial user of the new Clicklogistics Online TMS. In March, USFSPG started testing early releases of the system for outbound freight at a small number of sites. It is now implementing a full-featured version at numerous locations, and hopes to start using it for inbound shipments in August, Molnar says.

Clicklogistics Online got its start when Cardinal Logistics Management, a 3PL based in Concord, N.C., spun off its non-asset-based logistics and technology division into a separate company. After getting USFSPG and a few other customers up and running, Clicklogistics started selling its web-based system in May.

As an application service provider (ASP), Clicklogistics does not require TMS users to purchase software. Shippers access the system through a browser and pay for the service either by transaction or subscription.

By contrast, a company that implements a well-known, traditional TMS package might pay $1 million or more for a software license and implementation services, says Thomas Sanderson, Clicklogistics' CEO. A company could also conceivably spend six months installing the system before reaping any benefits. "With a transaction or subscription pricing model, shippers see a better match between the benefits they get out of this system and the timing of their payout," Sanderson says.

In USFSPG's outbound operation, Clicklogistics Online takes customer order data from a facility's inventory management system, then uses file transfer protocol (FTP), extensible markup language (XML), or electronic data interchange (EDI) to transmit data between the customer's enterprise system and its own database. Users can view orders and create shipping documents without rekeying information.

Once the system has the shipping information, employees can use it to locate the best carrier, based on service requirements and cost. The process takes seconds, compared to the time spent on a phone getting quotes from three or four carriers per load, Molnar says. Also, by displaying only the carriers that are the best choices for the move, the system takes human error out of the picture and makes sure the company always gets a good deal.

Gaining Clout

USFSPG expects Clicklogistics Online to boost its buying power by giving more freight to a smaller pool of core carriers. "If you give a better volume of shipments to a carrier, you get a better price, and more reliability," Molnar says.

Sometimes Clicklogistics appears as one of the potential carriers on the list. This can prove helpful if a shipper needs to move freight between two points it doesn't ordinarily serve and doesn't have a negotiated tariff, Sanderson says. "We'll pop up, potentially, as the 'carrier' of choice; we function as a broker in that situation."

When the employee selects a carrier, Clicklogistics Online automatically tenders the load and, if it's accepted, schedules the pickup. As freight moves, the system displays freight status updates. Carriers can send status messages via EDI or enter Clicklogistics Online and use a web form to update status information.

Besides identifying carriers that offer the best rates for a move, Clicklogistics helps USFSPG consolidate less-than-truckload (LTL) freight. Because all of its facilities will have access to the same carrier database, the company will be able to optimize loads across facilities and suppliers.

With the system implemented for outbound traffic at just a few location, USFSPG has already seen significant savings. "In one of our facilities in Texas, we saved an estimated 46 percent on freight costs over four months," Molnar says.

As it looks toward automating its inbound transportation, USFSPG expects to see even greater savings as its own core carriers pick up freight from suppliers, rather than letting vendors handle shipping.

"You might have five suppliers in Chicago that ship to you. You could have them ship five different days of the week, or two of them ship the same day, or three of them ship the same day, by different carriers. If you took the Click program, you could consolidate and optimize those loads back to our facility," Molnar says.

In the long term, USFSPG plans to outsource more of its inbound freight management to Clicklogistics; it will continue to use Clicklogistics Online to manage outbound freight in house, Molnar says. If the company likes, it can make the transition to outsourcing gradually. Clicklogistics Online includes a feature called Task Assignment that allows users to hand over individual tasks to the 3PL on the fly.

"The path that brought USFSPG to Clicklogistics is not unusual," says Eric Scholar, vice president of marketing at Clicklogistics. But not all searches end happily. Sometimes service providers propose business processes that the shipper doesn't want to adopt, or a shipper gives up on 3PLs and turns to technology because different groups within the company can't agree on a single outsourcing solution, he says.

"If a manufacturer or retailer wants to look at how it can improve operations, it is looking at an either/or situation," Sanderson says. It can use technology to improve the way it manages logistics processes, or it can choose a 3PL. "In either case, there's a fair degree of risk, and a high degree of up-front cost before you really know whether it's worked out."

"The ability to offer both 3PL services and technology," Scholar says, "gives customers flexibility they did not have before."

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