April 2008 | Case Studies | I.T. Toolkit

Welch's Juices Up Logistics Data

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An analysis tool helps put the squeeze on transportation costs.

Since 1869, the Welch family has been extracting delicious juice from Concord grapes. Last year, Welch's got help extracting better supply chain intelligence from its information systems. That assistance comes from a new software application, the Consumer Packaged Goods (CPG) Solution from Oco Inc., Waltham, Mass.

The idea that Welch's needed an analysis tool emerged last September, when the company started using its new Oracle enterprise resource planning (ERP) solution. That system managed a great deal of data; company officials started to wonder how they could tap that wealth of information to gain a deeper understanding of transportation operations.

"We decided we needed better visibility into our cost structure and order patterns," says William Coyne, director of purchasing and logistics at Welch's in Concord, Mass. "With that improved visibility, we would be able to achieve efficiencies and cost savings."

But with a separate application still handling freight payments, and a legacy system storing years' worth of historical data, it wasn't obvious how managers could pull together the reports they wanted to see.

"We had freight cost information residing in several different systems," Coyne says. "We were struggling to find a more efficient solution for reporting and managing that information."

Bill Copacino, president and CEO of Oco, had done some consulting work for Welch's in the past. One day, he called to ask if he could demonstrate some new software. "It occurred to us immediately that this was the solution we were looking for," Coyne says.

Oco provides a variety of solutions that synthesize data from separate information systems, creating reports based on any metrics the user wants to see. Early this year, it introduced three new products for mid-sized companies, one of which is the CPG Solution. Welch's is using the application's transportation module.

Oco developed these products in part because some companies have trouble assembling data from disparate systems.

"That's one reason the Excel and Access database tools proliferate across companies," Copacino explains. "Companies are dying to pull together data from different sources so they can analyze and integrate operating and financial data."

A Fast and Easy Solution

But reports created in Excel and Access are less than ideal, Copacino maintains.

"They're hard to share across the company, and present different versions of the truth," he says. "People pull different data from different time frames, creating a solution that is neither integrated nor scalable. It's a critical problem common to all companies. And a fast and easy solution for middle-market companies was not available."

So Oco created one.

Oco offers its systems via the Software as a Service (SaaS) model, hosting applications for customers and delivering them over the Internet. It charges an initial setup fee plus a monthly hosting fee. It costs the same no matter how many people at a company use the system.

Welch's is using the CPG Solution to help manage the transportation of product from plants in Lawton, Mich., and North East, Pa., to a third-party distribution center in La Mirada, Calif., and directly from plants to customers.

Welch's also operates plants in Westfield, N.Y., and Grandview, Wash., but these facilities mainly produce bulk product for shipment to other juice producers.

In addition, Welch's works with co-manufacturers that produce about 20 percent of its product and ship it directly to customers.

Welch's started using Oco's CPG Solution in early February. Getting it running took about two months; a delay occurred because Welch's was not ready for a speedy transition, Coyne says.

Welch's own IT staff was committed to implementing the Oracle system; no one was immediately available to create a mechanism to extract the data from the system so Oco could use it.

Despite the delay, implementation was surprisingly easy. "Oco set up a session with us to learn our reporting and data structure needs," says Coyne. "Then it developed an application that met our requirements."

Oco follows a rigorous implementation methodology. "First we schedule a profiling session, which works to define a company's business requirements," Copacino says.

Oco's profiling tools help users understand all the data they want to capture and define all the ways they want to analyze and report on it. The profiling process takes about a week. Then, extracting, analyzing, and loading data requires anywhere from several days to several weeks. To give companies an idea of the options available to them, Oco first offers standard reports.

"Companies see their data live immediately, and get an early view of it," Copacino says. "That facilitates data quality and testing."

Next, Oco and the customer tailor the reports and create new ones. "Then, the largest portion of the implementation is testing and quality assurance," he says.

When that's complete, Oco runs the system with one week's worth of the customer's daily data feeds to ensure the solution works as designed. "Then it's time for user adoption and training," Copacino says.

Although Oco calls the output from its system "reports," that word doesn't do justice to the way the system displays information and allows the user to drill down into greater detail. "Each report acts as a mini data-mart or warehouse," Coyne says.

Achieving Nirvana

"The system creates the opportunity to take every bit of information on every order, bill of lading, and freight bill, and report on it in any way for any time period, for any single company or group of companies. It's like nirvana," Coyne says.

Almost as soon as he started using the system, Coyne told Copacino that Welch's already was getting a return on its investment. "On Tuesday, I said, 'I think we might be able to pay for this by Friday,'" Coyne recalls.

The system immediately helped Coyne figure out how to avoid logjams on the heaviest shipping day of the week.

"On most Fridays, we have more shipments to make than hours in the day," Coyne says. To handle the overflow, Welch's schedules employees to work overtime and over the weekend, which increases costs.

Using the CPG Solution, Coyne and his team examined the loads they were shipping on Friday. They discovered that many trucks were making internal moves—shipping product between facilities or transporting product that Welch's manages for customers. Welch's could ship those orders on another day of the week, Coyne says.

The new software also highlighted ways to optimize space on trailers. "We looked at order sizes and truckload weights and identified many opportunities to get more onto a truckload," Coyne says.

Efficiency Gains

Coyne is still exploring the system's features and benefits, but he expects it to identify additional ways to increase efficiency.

For example, employees who consolidate less-than-truckload orders into truckloads and schedule them for shipment currently take the information they need from paper order sheets. The CPG Solution could make that process paperless, which would save time and labor.

"It could gain freight cost savings, too, because it should be easier to see all the orders that are available to be consolidated," Coyne says.

Welch's isn't yet using the CPG Solution to analyze inbound transportation data, but Coyne says it would be easy to do so in the future. He also would like to let users view the status of incoming orders online. "That will allow us to report on-time delivery," he says.

Beyond that, Welch's is considering additional areas of the supply chain operation to analyze with Oco solutions. To decide, it also must consider the reporting capabilities built into the Oracle ERP system.

"We ask, 'What functions should we outsource to a technology vendor and what should we manage in-house?'" Coyne says.

Through this kind of planning, Welch's squeezes every drop of value from its resources.

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