Global Logistics and Supply Chain Strategies - October 2008 - (Page 36)

transportation operations, but the near realtime information provided allows better decision making. “If managers have information about their shipments and orders at the point of decision making, they have much more flexibility in finding ways to lower costs in the warehouse or elsewhere in the business,” says Wyland. “With manual systems, you are flying blind.” The Aberdeen report clearly makes the case that best-in-class companies that have TMS or similar capabilities and good processes report that they are able to control shipping costs and often decrease inventory carrying costs. These best-inclass companies enjoy: • On-time performance of 95 percent or higher • Savings on transportation spend management averaging 8.8 percent • Expedited shipments of no more than three percent So why have so many companies failed to implement the technology or processes that have proven to be so effective? According to the Aberdeen survey, companies give the following four reasons for not investing in TMS technology: 1. We don’t know enough about the available solutions 2. We cannot get executive level support for these initiatives 3. Software integration is too difficult/ expensive 4. Upfront cost of the solutions is too high. Given the vast amount of information about TMS that exists in print and electronic form and that is presented at seminars and conferences, claiming lack of information is rather perplexing. As for gaining management support, the oil shock that has hit the world’s economies in the last year should certainly have been a wakeup call to even the most disengaged boardrooms. Nor do the last two reasons hold much water given the many deployment options that exist for TMS technology that can surely meet every company’s budget and resources. Large software companies such as Oracle, RedPrairie and Manhattan Associates offer powerful TMS modules as part of their much broader supply chain suites, which many companies have in place. Best-ofbreed software companies specializing in transportation, such as LeanLogistics and Management Dynamics, offer innovative TMS solutions. Even 3PLs are becoming sources of solutions that provide all the capabilities that their customers need for their transportation management. “Deployment options are so varied that just about any company should be able to find TMS capabilities that will show significant improvement,” says Wyland. He points out that transportation management is especially suited to software as a service (SaaS), which allows carriers, shippers, 3PLs, suppliers, customers and other parties to easily link to the same application and data with only a browser. Just as important, this on-demand approach minimizes the facturing facilities in Iowa and upstate New York, and both plants have attached distribution centers. Three DCs in Chicago, Atlanta and Southern California that primarily handle LTL orders and customer pickups are operated by third-party logistics providers. Barilla also owns the Wasa brand of crisp breads, which are imported from Germany and Sweden and distributed from a DC in New Jersey. Most of the pasta product is shipped via truckload from plant DCs to customer DCs. To save on transportation costs, the pasta manufacturer is planning to ship more customer deliveries by intermodal, which now is primarily used for “With SaaS, there is very little out-of-pocket cost and a tiny footprint in the corporate IT structure.” — Brad Wyland of Aberdeen Group cost and IT support issues because the solutions are often pay-as-you-go with little long-term commitment. “With SaaS, there is very little out-ofpocket cost and a tiny footprint in the corporate IT structure,” says Wyland. On-Demand TMS For example, LeanLogistics was among the first technology companies to offer a comprehensive on-demand TMS at the beginning of this decade, and it has been enhancing its offerings ever since to meet the needs of its customers. More recently, LeanLogistics was the first TMS software vendor to offer managed transportation services using their on-demand TMS solution. The company essentially acts as a 3PL for the customers that want to outsource non-core functions but still retain oversight of their transportation operations and strategic carrier relationships. Barilla America is one of the early users of LeanLogistics On-Demand TMS, and it has adapted its use of the technology to meet its growing supply chain needs and the available technology. Headquartered in Bannockburn, Ill., Barilla America is the U.S. division of the well-known Italian food company known for its pasta. It has manuintra-company transfers. According to Barilla America’s vice president of supply chain Sandra Evett, the biggest transportation challenge right now is rising transportation cost driven by fuel surcharges. The company is also starting to experience issues related to tightening capacity. Both fuel and capacity have an impact on the flow of goods and the cost of the flow of goods. “Transportation has become a much more visible business expense at the corporate level, and fuel is the driver,” says Evett. “Even with oil prices going down in recent weeks, diesel pricing has not followed and we have seen little reduction in fuel surcharges, so transportation costs remain very high.” Despite these transportation challenges, Evett believes that her company is well positioned to deal with them in part because of its commitment to constantly improving transportation technology and processes. For the past five years, Barilla has run its domestic transportation network using LeanLogistics On-Demand TMS. It implemented the software as a service solution in mid-2003. By the end of that year, it had all facilities operating with nearly all of the functionality available at the time, 36 OCTOBER 2008

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Global Logistics and Supply Chain Strategies - October 2008

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