Make Every Penny Count

Companies are reigning in logistics costs. Here's five that are putting money in the bank.


To date, the company has seven of its 10 primary shipping sites in the United States operating with the software. "We built our value prop around transportation cost savings with a target of 5 percent," says Michener. "We have been able to achieve that 5 percent and get our return on investment."

One of the benefits of the new system, he adds, is the ability to track core carrier compliance and negotiate better rates. This led to additional savings and improved on-time deliveries, while nearly eliminating expediting scenarios.

Since deploying the application, it has switched focus from outbound planning to inbound planning. This has already paid dividends. For example, a year ago Newell Rubbermaid was importing 5 percent to 10 percent of its material. By the end of 2005, more than half of its manufacturing will operate in low-cost countries including China, Mexico and India.

Ocean Spray Turns To Inbound Management

Ocean Spray markets the leading brand of canned and bottled juice drinks, but it was lagging in visibility of its inbound orders and shipments.

In fact, the Lakeville-Middleboro, MA-based company's situation was full of inefficiencies. There was no existing management system in place, so there was limited order status visibility and no order history database. Ocean Spray had manual order execution and could not measure carrier compliance.

So, the company's logistics executives decided to deploy technology in its inbound operations and connect suppliers and carriers. To make the move easier, Ocean Spray subscribed to a Web-based transportation management solution called the Nistevo Network, developed by the Nistevo Corp., Minneapolis. By doing so, the company saved time and avoided adding costs for in-house infrastructure.

The goal was to optimize the inbound transportation function at Ocean Spray, according to Doug Ward, inbound transportation manager. "Specifically, the control, planning, execution and settlement of inbound packaging and raw materials," he says.

First, the company connected the various parties to the raw materials delivery system. Then, Ocean Spray could receive the status of in-transit shipments and be notified if any shipments did not meet the delivery schedule. It could also use the dock management scheduling to track equipment and schedules centrally.

Once on the network, Ocean Spray changed its carrier contracts from paper to electronic. This yielded many benefits. For example, it simplified the management, updating and tracking of lanes, insurance, freight costs, and identified the best carriers to use. Ocean Spray and the carriers each have access to one contract through the network. Rates and contract updates can be adopted online after the parties work out the details.

The network also provides discipline to order management and lead time compliance and promotes collaboration between shipping/receiver and carrier. It also automates the tendering of inbound shipments, taking into account contract commitments, costs and carrier ratings.

There are more benefits to be realized in the future, according to Ward. "A continued control and reduction in unplanned events that translate into savings, auto pay feature allowing a paperless environment, and dock door management," he says.

Pinnacle Foods Upgrades Transportation Management

Pinnacle Foods Corp. markets grocery products that are familiar household brands: Swanson, Vlasic, Mrs. Butterworth's, Log Cabin, Duncan Hines and Mrs. Paul's. The company was outsourcing much of its transportation operation to a network of third-party logistics providers.

The Cherry Hill, NJ-based company handles tens of thousands of shipments per year from manufacturing locations to distribution centers. The volume and revenues essentially doubled in March 2004 after merging with Aurora Foods following the latter's Chapter 11 reorganization.

With the merger, Pinnacle wanted an overall change in its logistics operation. It sought to reduce overall logistics costs for the refrigerated lines largely by bringing outsourced functions in house. The company also wanted to build a transportation infrastructure quickly and cost effectively.

To reach these goals, the company implemented a centralized transportation system using On-Demand TMS from LeanLogistics Inc., Holland, MI. The solution is designed to optimize daily transportation, manage daily changes to orders and shipments, and handle communication with carriers.

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