When the enterprise is as wide as the country and the number of plants and shipments are large by any measure, getting control of the shipping function is critical to any company's success. Whether it's beefing up the bottom line, remaining ahead of the competition or just getting rid of otherwise cumbersome manual work, employing a transportation management system (TMS) proves to be the right step in solving these issues, and in getting even more functionality in the bargain.
Ben Cubitt, v.p. of supply chain at the Norcross, Ga., headquarters of Rock-Tenn Co. (www.rocktenn.com), is heading the company's effort to manage transportation through implementation of a new TMS. With tongue in cheek he explains that, "on the East Coast any place that two roads cross, we have a plant." Actually Rock-Tenn has six divisions and 80 plants across the country.
Rock-Tenn is a manufacturer of packaging products, merchandising displays and recycled paperboard. Its products include everything from folding cartons to corrugated boxes to protective interior packaging and point-of-purchase displays. The company's customer base includes Wal-Mart, Kraft, Proctor & Gamble, Nestle, Clorox and Del Monte.
Rock-Tenn's recycling division collects waste paper as well as plastic and other products. "Some 50% of the recycled paper goes to our own plants," explains Cubitt. "The other 50% goes to other customers and gets exported to China and other places. It's a good strong business." The company has more than 10 paper mills. All except one of them are recycling mills. Rock-Tenn brings in waste paper and turns it into a number of paper products.
Other company facilities include a large wood chip mill in Demopolis, Ala. Rock-Tenn's 25 folding carton plants produce the Microsoft Vista carton, as well as Chic-Fil-A, Dunkin' Donuts and Ritz boxes. There are plants that do laminating. The company has a corrugated division plus two folding carton operations in Canada.
This incomplete list of the company's operations provide a sense of the challenge that confronted Cubitt as he and the centralized freight group looked to rationalize the transportation piece of the company's supply chain puzzle.
"We have inbound, outbound, interfacility, cross border and more," he says. "We were decentralized. I call us collaborative now and we are moving toward central management. TMS is a huge part of that."
As a precursor to selecting a TMS provider, Rock-Tenn implemented a Cass Freight Payment system (Bridgeton, Mo., www.cassinfo.com) that improved data collection, processes and rate visibility. The company uses JD Edwards to keep track of its financials. The rest of its systems are a mix of programs. Most of the plants run custom AS/400 proprietary systems developed within Rock-Tenn, along with some third-party packages. Rock-Tenn managers eventually chose Transplace (Plano, Texas, www.transplace.com) as its TMS provider.
"We looked at all of the options when thinking of a TMS," recalls Cubitt. "At the end of the day we made two determinations. We thought hosted was better. But what drove it even more was we wanted to outsource the load control center. We didn't want to build that. We felt very good about a hosted ASP system for TMS, especially with 80 sites and six divisions. With multiple systems, that made a lot of sense. We wanted someone with a strong control center, one common system, one place for rates and one place for issue reporting. Transplace gives us a common TMS over all of that."
Cubitt places a high priority on establishing good relationships with carriers and implementing routing guidelines. "Even with 80 sites, we really had very little leverage with carriers," he notes. "The number of carriers we used was just astounding. Where we used major national carriers we wouldn't see the same ones across all six divisions. We've now gone through more than a year of rationalizing the carrier base, something that continues today."
Rock-Tenn is primarily a truckload shipper with a significant amount of rail. Cubitt is trying to increase rail and intermodal shipments substantially and thinks the new TMS will help in optimizing loads there. Since some of the company's LTL shipments tend to be large, there are opportunities to use the TMS to build truckload shipments from them.
Track and trace of shipments was an important feature to Rock-Tenn's selection of the Transplace TMS. The company's major customers "want us to have strong capabilities and to be able to provide information," notes Cubitt. "We need to know where our freight is and to be able to share cost and delivery information back and forth. That is a business requirement for us." TMS allows RockTenn to fulfill those needs.
Unilever Maintains Flexibility
For handling 50,000 shipments each month, Mary Lane, director of transportation for Unilever US (www.unileverusa.com) notes that it wouldn't be possible to manage the volume if it had to be done manually. Responsible for all transportation in the United States, Lane deals with both inbound and outbound. "A large portion of our manufacturing is done by co-packers," she explains. "There are at least 100 origins in the network."
As Unilever's website explains, "No matter who you are or where in the world you are, the chances are that our products are a familiar part of your daily routine." Familiar brand names include Hellman's, Lipton's, Bertolli, Knorr, Vaseline, Pond's, Dove and Surf.
Unilever uses SAP as its main IT infrastructure. Most of its warehouses that aren't outsourced to third parties have a Red Prairie warehouse management system. For all of its domestic freight, the company uses an on-demand TMS from Lean Logistics (www.leanlogistics.com).
"What we like about the Lean Logistics tool," explains Lane, "is that we have both a centralized and decentralized environment. So, we have some plants and manufacturing facilities that actually manage their own freight and do their own tendering. We also have a centralized tendering group here that does a large portion of the tendering. We needed an environment that would work across multiple processes where we have some plants that do it themselves and tender based on time-sensitive production. The on-demand system allows us to work either one of those options."
Unilever maintains its routing guides with the Lean Logistics tool and allows the provider to manage them. That means that the company's plants are limited as to whom they can tender loads.
"The TMS really helps us corral those costs and maintain process integrity," says Lane. "We have a very automated tendering process that is run by the TMS. We only have to handle the exceptions. It gives us the benefit of an automated process with better controls, more aligned processes across our facilities and gives better integrity of data." It also allows Unilever to maintain good relationships with its carriers in all of its facilities since they are all treated the same.
"We are very promotionally driven," explains Lane. "The TMS allows us to more proactively plan for those promotional activities so we can maintain and manage spikes in our business as opposed to just struggling to gain capacity when all of a sudden it has to ship tomorrow."
Peter Stiles, Lean Logistics v.p. strategy and marketing, explains. "Unilever had a promotional schedule that went out six months," he says. "But they weren't translating that into anything that went into the traffic area. So when they ran a promotion, they might have a 20% volume spike. The traffic people would find out at the last minute and would be scrambling to try to get coverage.
"One of the things they did, that we consider to be a best practice," he continues, "is they went to forecasting with their carriers. They took their promotional schedule and started translatingit into a volume by lane schedule. Next they figured out in which lanes they were going to move. It was necessary then to broadcast the capacity needs to the carriers weeks in advance. As a result Unilever found they could accommodate things like 20% volume increases in a given week with no glitches whatsoever, because they gave the carriers advance notice."
Unilever uses the data it receives from the TMS to gauge whether its carriers are meeting its key performance indicators. "We are able to measure our on-time availability for our customers," explains Lane. "So we are holding our carriers—and our customers hold us—very accountable."
Lane has found a nice side benefit from the use of the new transportation management tool. "We've got the ability to significantly improve our consolidation opportunities," she claims. "We've been able to reduce our LTL spend and increase our truckload weights in order to better utilize our capacity."
IBM and i2 Join Forces in TMS Offering
Under the agreement, IBM's Global Business Services consultants will apply their knowledge of hosting services and transportation best practices to implement the i2 FreightMatrix solution. i2 and IBM will also collaborate on commercial development for industries including manufacturing, retail, and third-party logistics providers.
As part of the expanded alliance, IBM will provide server and infrastructure management support for i2 FreightMatrix to help automate application hosting and management and provide a scalable platform for hosting the solution. The i2 offering is delivered to customers in a subscription pricing framework and is available globally for both the enterprise and small-to-medium businesses.
A TMS With A Twist
Though it tracks the movement of freight, this software works for both large and small railroads and manages a wide range of activities that are unique to the rail transport. Those activities include the automatic blocking of cars, distributing customer notifications, generating charges, calculating demurrage and issuing work orders.