Beyond the Four Walls: How Todays Logistics Service Providers Stay One Step AheadWeb Exclusive!

As a third-party supplier of transportation services, Transplace (Plano, Tex.) performs whatever level of outsourcing its customers are comfortable with. People at the central control center of Proctor and Gamble (Cincinnati) use the company’s software technology to award freight to available carriers. It works with plant managers at Chicago-based U.S. Gypsum’s 45 production facilities to manage the outbound flow of drywall and other products. Dedicated Transplace employees answer the phone, “Office Depot logistics,” or “AutoZone logistics,” showing just how closely linked they can be to their customer’s supply-chain management activities.

“Manufacturers and retailers, they’re looking for business improvement, whether that’s cost reduction, speeding up inventory velocity, better product availability at the store, service improvement, or visibility improvement,” says Tom Sanderson, president and COO. Because companies go through cycles of in-sourcing and outsourcing as markets, managers and strategies change, the company tries to keep customer relationships as flexible as possible.

To support each level of customer commitment, Transplace spends a lot of money every year on software development. Its technology focuses on transaction processing and optimization tools. For example, the company recently improved its capability to manage purchase orders through web-based technology, allowing retailers to issue purchase orders to vendors and have vendors release against those POs using a web interface. This allows the retailer to better manage orders with small and mid-sized vendors not equipped to handle electronic data interchange (EDI) transactions. It has also developed web-based technology to manage the bidding of overflow freight, freight that preferred carriers cannot handle because of capacity constraints.

Using such software tools and expertise, Transplace works with companies to improve inbound and outbound material flow. For example, 10 years ago 85% of AutoZone’s inbound shipments were less-than-truckload (LTL). This created long cycle times, a lack of visibility, unpredictable deliveries and high transportation costs, which limited the Memphis-based auto part retailer’s ability to grow. Transplace helped convert a major percentage of those supplier shipments to freight collect and established cross-dock operations at AutoZone’s distribution centers. These and other changes reduced LTL shipments to less than 2%, and cut transportation costs by 20%.

Such supply-chain infrastructure improvements make better use of dedicated freight capacity. Initial savings can be achieved by using a dedicated fleet that’s focused on delivering product to customers to carry inbound material flow from suppliers. This tactic can then be taken one step further.

“We take a lot of customers’ private and dedicated fleets and use those fleets to haul freight for other customers. It’s a win-win,” says Sanderson. He offers the example of Unisource (Norcross, Ga.), a distributor of commercial printing and business imaging products that operates a fleet of 2,000 trucks. When it’s feasible, Transplace is using this fleet to haul freight for other Transplace customers, filling what would otherwise be empty miles.

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