How seven companies of all shapes, industries, and sizes, transformed their transportation and logistics operations through the use of technology.
A multitude of technological tools ranging from point solutions such as load planning and routing tools to end-to-end transportation management systems are helping companies of all shapes and sizes—large and small, local and global—optimize their transportation and logistics operations.
“Technology drives better results, or improvements, in many ways,” says Greg Johnsen, vice president of GT Nexus, Alameda, Calif., which provides hosted, on-demand software for global logistics and supply chain execution.
“We now have a communications backbone in the Internet that did not exist too many years ago, and technology that is well-suited to be deployed over the Internet to connect partners beyond the four walls of their operations,” he says.
Companies doing business around the world can now tap technology that is designed to be deployed globally, rather than patched together.
“Traditional technology applications were designed for a specific company, with all the users located within the four walls of that company,” Johnsen notes. “Many of today’s applications are deployed across companies, with users spanning organizational boundaries.”
As a result, he says, “the technology has to understand that these users are from different companies. Sophisticated rules and permissions govern the data they see.”
Technological advances enable transportation tools that are more secure, flexible, and dynamic than ever before. “New technology based around web services, for example, allows systems to send and receive information securely,” Johnsen explains. He defines web services as technology that allows these systems to communicate with each other.
“Open standards mean companies can afford to do more with less capital, whether it’s their own or their vendors’ money,” says Marc Mitchell, transportation practice director, Enterprise Information Solutions Inc., Downers Grove, Ill.
When deciding what type of technology is right for your operation, look closely at business processes to understand what you’re trying to accomplish through technology, advises Johnsen. “Fully understand the business requirements at hand, then think about how technology can solve those problems,” he says.
Understanding your current process is critical to achieving good results from technology. Ask questions such as: What’s the current and future state of my transportation and logistics operations? What processes need to change? How does technology enable that?
Technology won’t work without good data. “Data is the lifeblood of supply chain platforms,” Johnsen says.
Making data quality a high priority is imperative. This involves tracking the data’s accuracy, completeness, and timeliness, then working to address quality issues, particularly with supply chain partners—suppliers, carriers, and forwarders.
“If you don’t have the tools to see data quality, and the mechanisms for improving it, your systems will never be optimized,” Johnsen notes.
Quality data, optimized processes, and keen focus—combined with the appropriate technology and sound change-management strategies—help companies optimize transportation and logistics, whether they use intra- or intercompany solutions, for domestic and/or global operations.
Here are seven companies that transformed their transportation processes through strategic technology implementations, resulting in reduced costs and increased efficiencies.
GET A LOAD OF THIS: P&G OPTIMIZES PLANNING APPROACH
More than a decade ago, The Procter & Gamble Company, Cincinnati, recognized that it needed a way to address axle weight management, overweight accessorial charges, and delivery delays that stemmed from suboptimal trailer loading, says Robert C. Wuerdeman, global physical distribution manager for the consumer products giant.
A manual planning approach that included use of generic loading plans worked adequately for P&G until the early 1990s.
“The mix of products and our one shipment-one delivery structure were pretty simple to execute,” Wuerdeman recalls. As the company moved to more diverse products and multiple delivery distribution programs, however, managing axle weight grew more difficult.
In addition, “the increased complexity and diversity of products required personnel to spend more time determining how they were going to load a trailer,” which dampened internal productivity, he says.
To address the situation, P&G turned to Warehouse Optimization LLC, a systems developer based in Franklin, Tenn., for assistance in developing a truck loading software system that would maximize cube/weight utilization, manage axle weights more efficiently, and reduce the time required to load trailers.
The need for such a tool is not universal across the corporation, Wuerdeman explains. Some business units, such as P&G’s paper products and fabric care business units, have fairly standard and consistent products with straightforward planning needs. A truck loading tool, called AutoLoaderT3, is used by business units with diverse products and complex multistop delivery programs, and by facilities operated by third-party logistics providers.
Automated trailer load planning “is markedly more effective,” Wuerdeman says. Not only does the tool use an expert, rule-driven planning engine, “the solution is repeatable,” he explains; such consistency is not necessarily the case with manual load planning.
Increased productivity, elimination of accessorial charges for overweight loading, reduced product damage, and improved customer service are some of the benefits P&G experienced with the load planning tool. P&G has commercialized the AutoLoaderT3 tool, making it available to other companies through Warehouse Optimization.
P&G is currently implementing a new version of the tool. “The original load planning tool was an offline tool that sat between the order management system and the warehouse management system,” Wuerdeman notes. “Orders that came in for sites using the load planning tool went into the system, which generated a report that was matched with the loading documents.”
The latest version of AutoLoaderT3 is being integrated with P&G’s proprietary warehouse management system, and will have task management functionality, enabling orders to be picked in the sequence of loading.
The tool will have greater flexibility for managing products within orders, according to Wuerdeman. “The original tool treated each stop as a unique delivery, even if multiple orders were delivered to the same location. We’ve allowed the tool to have more flexibility to sequence the stops and mix unit loads for greater rideability,” he says.
The tool’s new in-transit damage avoidance capability takes into account whether unit loads or pallets should be loaded wide or narrow, checks height profiles, and signals for installing inflatable dunnage when needed.
“The truckload planning tool attempts to optimize orders that are already written,” Wuerdeman says. “P&G is now looking at having a truckload building tool on the front end, in conjunction with our order-taking/management tool, to optimize at the front end rather than the back.”
GOOD GREIF: TRACKING AND CONTROLLING ASSETS
Truck trailers are an integral part of Greif Inc.’s Industrial Packaging & Services division’s delivery process. The company direct-loads steel, fibre, and plastic drums off the manufacturing line into a waiting trailer. It drops trailers at customers’ locations, where they may stay for weeks, even months.
With a mix of 4,000 private, dedicated, common, and committed trailers in its fleet, Greif—a leader in industrial packaging and services—needed a way to track and manage its assets.
The need became critical as acquisitions significantly expanded the company’s asset and customer base. About two years ago, as part of a transportation network analysis, Greif began seeking a solution to help track, locate, and manage its trailer fleet assets, which are assigned to about 50 plants in the United States.
“There’s a tremendous overlap between plants; some serve the same customers, many of whom are chemical manufacturers and agricultural food-related producers,” notes Rick DeVore, director of global logistics for Greif.
A customer may be served by multiple plants—for example, receiving a trailerload of steel drums from one plant, and a trailerload of fibre drums from another.
“Managing where all these trailers come and go is virtually impossible in a manual world,” notes Adam Galliers, Greif’s fleet manager. So the company began its search for a technology solution that would provide asset visibility, and enable it to track, control and maintain its trailers centrally.
The first step was to define requirements. With such a large fleet, the technology’s cost was an important factor.
In addition, the technology’s powering mechanism was key. “Sometimes, the trailers sit untethered,” DeVore says. That ruled out tracking systems whose power replenishment relies on the trailer being connected to a tractor.
Installation mode was another important selection criteria. Some tracking systems must be installed on empty trailers and require special wiring. This would take Greif’s trailers out of circulation for several hours, an unacceptable solution for the lean operation. With these selection criteria in hand, the Greif team considered a short list of potential solutions, ultimately selecting a satellite-based Global Locating System (GLS) from SkyBitz, Dulles, Va.
“The SkyBitz GLS uses a lithium battery that doesn’t rely on the tractor for a power source,” DeVore says. No special wiring is required for the unit, which is installed on the roof of an empty or loaded trailer.
In the first half of 2003, Greif conducted a small test. “The initial test was for 14 units in the Houston area,” DeVore says. “We had a positive response, which led to a larger test of about 200 units. As those units were installed, we began to see all the possibilities, and began developing the business case for how the system could be expanded.”
Word of the new solution spread among the plants. “Our plants started talking to each other about how Houston’s tracking system was used to control their trailer fleet,” Galliers says. The solution was accepted quickly, and is being rolled out across the company. The SkyBitz system converts physical locations into latitudes and longitudes, and uses landmarks such as customer location.
“We pulled customer information from our ERP system and fed it through the SkyBitz system to create a laundry list of landmarks instead of having to enter them manually,” Galliers explains. “If we drop 10 trailers at a particular customer, the system tells us once a day, ‘This trailer is at XYZ customer, a tenth of a mile away from the landmark.'” Trailers are broken into groups, so they can be viewed by plant, by customer location, or as a whole.
“The pilot showed a lot of promise as far as asset management,” DeVore says. In addition to enabling increased asset management, security, and control, the tool enables Greif to see how long a given asset has been sitting at a specific location. Using dwell time reports, Gallier’s team can follow up with plants on the status of various trailers. Plant personnel can also use the reports to monitor customers’ trailer use.
“We can use the technology to help customers buy from us more effectively,” DeVore says. “These benefits will become increasingly defined and tangible as we become fully automated.”
Tracking assets intelligently just makes good business sense, DeVore says. “In today’s environment, operating with lean supply chains, asset management and customer relations are critical. You’re operating blindly if you don’t have the technological tools to create asset visibility.”
YES, WE HAVE OUR BANANAS
Chiquita Brands International Inc. is one of the world’s largest banana producers. The Cincinnati-based company sells approximately 130 million 40-pound boxes of bananas a year, in addition to producing, marketing, and selling other fresh produce. With perishable products and a global supply chain, optimizing its transportation network is a must for Chiquita.
Until about two years ago, Chiquita tendered loads to its ERP system’s transportation module. The company recognized it needed a more sophisticated system, and began testing the On-Demand TMS from Holland, Mich.-based LeanLogistics in a small business unit. Following a successful test, Chiquita rolled out the LeanLogistics TMS in January 2004, when it implemented a new version of its ERP system across the company.
Now Chiquita and LeanLogistics are implementing an integrated application that links the TMS with Chiquita’s Container Freight Management System (CFMS) and third-party payment system, Cass Bank.
“We’re in the refrigerated container business,” explains Deverl D. Maserang, Chiquita’s vice president, North American logistics and supply chain strategy. The company charges carriers a per-diem rate to use its containers for backhaul. Each lane is allotted a fixed number of days for banana delivery and container return.
Chiquita charges carriers an agreed-upon rate for additional days. Accounting for the container rental period and accurately capturing the number of days carriers had possession of containers has been a challenge.
The new integrated application, which will use LeanLogistics’ Supply Chain Monitor, will track milestone events and utilize defined metrics to identify time issues based on container pick-up and customer delivery times.
The system will also send proactive notifications of potential late customer deliveries and late equipment returns to port. The TMS will assign per-diem charges to carriers at the transaction/load level, allowing Chiquita to directly deduct container rental charges from the carriers’ freight bill.
“This system will provide full, complete autopay,” Maserang says. The TMS will act as the base component, connecting with the ERP, CFMS, and Cass. It will create a transaction with multiple line items, eliminating the need for invoices, and trigger an electronic payment to the carrier.
Chiquita expects to realize several cost-saving benefits, as well as a streamlined accounting process that enables faster payment and the elimination of rework associated with invoices. The new application, scheduled to go live in early summer 2005, will provide Chiquita and its carriers an enhanced ability to manage cash.
GLOBAL APPROACH LOOKS GOOD ON PAPER
UPM-Kymmene, Helsinki, is one of the world’s leading paper companies, with production in 17 countries. Products include magazine, fine, and specialty papers; newsprint; converted materials; and wood products.
UPM was formed through mergers and acquisitions of companies whose “logistics systems were historically based on local best practices and were heterogeneous,” says Frans Verwimp, UPM’s development director.
UPM decided to reshape its business processes—including logistics—based on global template principles, using standard processes on a global level with clear integration points between intercompany and external processes. The company sought to build supporting integrated systems that could be used globally. The target was to create higher transparency and efficiency, decrease costs, and improve service to customers, Verwimp says.
After an extensive review of potential solutions, UPM selected G-Log’s Global Command and Control Center (GC3) software to integrate its disparate transportation network under one umbrella. When it is fully deployed, UPM will ultimately manage more than 10 million tons of paper and wood product shipments per year via the solution. The web-based system provides a single data repository supporting multiple users.
“We will use GC3 and middleware for execution processes,” Verwimp says.
“Functional requirements were defined and agreed upon with line function representatives from all logistics regions, based on global process templates,” he explains.
A key user group of regional and functional representatives evaluated the system’s functionality and approved it. These key users have received extensive training on the GC3 solutions as well as the middleware, and will receive additional training in the coming months.
UPM, G-Log, and IBM Global Services are partnering to integrate the software into UPM’s supply chain to optimize shipments across every leg. The company is using a four-phased approach—design, training, integration testing, and a pilot implementation launch.
“We are currently in the integration testing phase, conducting tests with related systems,” Verwimp notes. A pilot market roll-out is scheduled for July of this year. Fully deploying the solution across UPM will take several years.
UPM has an extensive change management process in place to support implementation of the new processes and solution.
“Roles and responsibilities will change market per market after rollout in these markets has been completed and we have a stable operational environment,” Verwimp says. “We will take out non-value adding tasks, automate process execution to a higher degree, and integrate deeper with internal sales.”
While it’s premature to cite hard numbers, Verwimp says the company expects the new approach to bring “a higher degree of automation, increased transparency, and better service levels.” n
ROUTING RESULTS FROM WURST TO BEST
Piller’s Sausages and Delicatessen, Waterloo, Ontario, is a family-owned food service distributor that delivers high-quality European deli meats and sausages to customers across North America. Piller’s operates a small private fleet serving large grocery retailers and mom-and-pop stores in Ontario.
In the past, the distributor was not able to optimally sequence delivery routes, had no visibility into delivery activities, and used no benchmarks to measure productivity.
“The routing programs we looked at were outrageously expensive,” recalls Klaus Schraud, fleet supervisor. In 2003, Schraud began testing a wireless, web-based routing system from Cube Route, an Ontario-based logistics IT firm. Available on a subscription-based, “pay as you go” model, the visibility and routing service required no up-front capital costs, and could be implemented swiftly and easily.
“We ran a pilot for one month, with two drivers,” Schraud says. “I told them, ‘If you can work a TV remote control, you can use this system.'”
The results were nearly immediate, and Piller’s rolled out the solution shortly after the pilot.
The Cube Route service enables Piller’s to create routes with an optimal sequence, and tracks actual performance against an engineered plan. When Schraud sequences the routes, Cube Route provides a planned estimated time of arrival and tracks actual arrival time. Drivers use web-enabled cell phones to report exceptions—indicating they are delayed waiting for a check or available dock space, for example.
Schraud can look at a day’s performance for the entire fleet, and spot potential problems, such as locations where drivers consistently wait to unload. He provides this information to the sales department, and they contact customers to explore alternatives.
Schraud is evaluating Cube Route’s new GPS tracking system, which operates on Java-based, GPS-enabled wireless devices such as cell phones.
“It pulls up a map, in real time, that shows exactly where drivers are and have been, and which route they used to get to a delivery destination,” Schraud says. The system provides an accurate, real-time audit trail without the need for driver intervention.
VISIBILITY AND CONTROL COME ROARING IN
Food Lion LLC “needed more control and the ability to see all our inbound freight. We also wanted to get a better handle on tracking and tracing all movements,” explains Dennis McCoy, vice president of distribution for the company.
A member of Delhaize America, the U.S. division of Brussels-based Delhaize Group, Food Lion is one of the largest supermarket chains in the United States, with more than 1,220 stores in 11 states. Food Lion operates seven distribution centers: three in North Carolina and one each in Pennsylvania, South Carolina, Tennessee, and Virginia.
“In addition to seeking a control that handled all our freight activity and tied into our inbound scheduling activity, we wanted to align our activities at Food Lion with sister company Hannaford in the Northeast,” McCoy says.
Food Lion reviewed its goals for meeting current needs and future growth interests, and worked with Hannaford to evaluate mutual design needs. The companies decided that increasing visibility of freight activities would improve its position in procuring product, reducing lead time, and controlling product handling at its facility, explains McCoy.
Hannaford had been a member of the ONE Retail Network, an Internet-based on-demand supply network connecting retailers, suppliers, and transportation partners on a distributed transaction layer with network-wide visibility. “The network provided the ability to view a web-based solution’s actual value,” he says.
Food Lion is now in the implementation phase, and expects to be fully installed in the next few months. The company will use ONE Retail’s web-based order execution capabilities, automated transportation management, and “self-serve” appointment scheduling to manage orders and shipments at its DCs.
“We are identifying and developing the process changes we need as we move forward,” McCoy says. He expects these process changes to be minor, except that “all facilities will have the ability to view inbound freight more accurately than they do today.”
GAMBRO GAMBLES ON STANDARDIZED SHIPPING
Gambro’s Renal Products unit offers products related to renal dialysis, including equipment and disposables. The company ships products via truckload, LTL, and small package carriers.
“We operated a network of six warehouses, each with a stand-alone shipping system,” says Mike Neibel, distribution center manager for the Bedford, Ill.-based company. Each warehouse performed its own duties associated with keeping that system, including loading rates and routing updates. The warehouses maintained different workstations for various carriers.
In 2002, Gambro was notified that the vendor would no longer support the shipping system, so it began searching for an alternative solution. After evaluating nine potential systems, the company selected a single, enterprise-wide, network-based small-package processing system—iristaTransport, from Irista Inc. The system is loaded onto a Gambro server, with rates now maintained centrally rather than by each warehouse.
Gambro’s warehouse managers were concerned initially about the impact of a centralized system on functions such as print speed, Neibel says. But they recognized that working with the new system enabled them to leverage small package carriers’ hundredweight programs through increased volume.
Designated as a super user, Neibel worked with a project manager at corporate headquarters to ensure that the system would meet the warehouses’ operational needs. Training on the new system was done online. After an initial test phase, the solution went live in the spring of 2004.
“We got exactly what we expected,” Neibel says. “We had a compliant label, and fast print speeds, and we were processing packages as quickly as before.”
The standardized environment has yielded improved productivity, accuracy, and service without affecting flexibility.