Carrier Connection

Retailers are using network hubs to connect them to more than 1,000 suppliers and carriers.

A consortium of consumer packaged goods manu- facturers, retailers and carriers aims to define standard processes to streamline the flow of goods from suppliers through distribution centers to stores. It is a collaborative effort to standardize key logistics activities such as appointment scheduling at distribution centers.

So, who are these guys?

This new entry on the scene is the ONE Retail Standards Board from value network services provider One Network Enterprises (ONE).

“One Network was the obvious choice as the technology platform on which to define standards for multi-company processes because of the number of suppliers, retailers and carriers who have already adopted this network,” says Greg Brady, CEO of One Network Enterprises, Dallas.
A number of top retailers have created ONE Retail value network hubs, connecting to more than 1,000 suppliers and carriers, using infrastructure and Web applications hosted by One Network Enterprises.

Most logistics executives would be intrigued. But is this the real deal? “I think their efforts at trying to get more standardized processes and communication across parties should be applauded,” says Lisa Hebert, a transportation analyst with the San Francisco office of Accenture. “That is one of the big challenges right now: carriers don’t know what manufacturers and shippers are going to want, what the retailers are going to want, and vice versa. So, to the extent that they can click them through standards in place through this network, that’s going to be a big plus. You probably can sense a little bit of my skepticism, but it is something different.”

Let’s take a closer look at what’s offered. Suppliers and carriers use the same standardized tools and processes to work with any retailer on the network. The idea is to greatly improve their efficiency. Other retailers can create new ONE retail hubs and gain instant access to several suppliers and carriers already trained in and using One Network tools and processes. Carriers can coordinate pick up and delivery schedules because both processes are done using the same network and tools.

Because suppliers, retailers and carriers share the new appointment scheduling process on the same network, all partners gain new visibility to vendor-controlled freight as well as retailer-controlled freight. This provides 100 percent visibility of freight and associated orders in the pipeline, from the supplier to the yard and through the warehouse.

Publix Supermarkets appreciates this new appointment scheduling process. The Lakeland, FL-based chain, which has been involved with the network for two years, currently uses its own in-house appointment system. But Publix plans to pilot a version of ONE’s appointment system next quarter. It will contain changes that Publix recommended.

The network provides “the opportunity to increase the visibility of different links in the supply chain by having a holistic view of the different parts from procurement to transportation to delivery,” says Richard Schuler, vice president of distribution for Publix. “It gives us the flexibility to participate in as much or as little of their suite offerings as is right for our company.”

Going Live
What else has happened since the ONE Retail Standards Board debuted in April?

The company has completed process models from the order process to the DC delivery, and has built the technology behind it that spans both the software and network architecture. It has gone live with about eight hub retailers and nearly 1,000 carriers and CPG companies in the network. Some retailers include Kroger, Safeway, Publix, Spartan Stores and Food Lion, among others.

“The charter was to talk to us about the key business process—primarily from the supplier to the retailer’s DC and out to the store,” explains John Keenan, president of One Network Enterprises. “And then the key technology that we need to build, both on the software layer as well as the network layer, is the next-generation solution to lower the operating cost as well as incremental revenue primarily in the form of vastly lower stock outs.”

The logistics processes related to the consortium include order brokering, which sits atop the order management process to insure proper execution, appointment scheduling, capacity management and load tracking. There are three categories: demand, supply and capacity.

“Most companies manage their transportation by installing software in their organizations that their carriers, CPGs and various suppliers sign on and use to schedule deliveries to the DC,” says Keenan. “We don’t supply that software. We supply the network services. What we provide is a robust application for transportation management that we deliver as a network service with all suppliers and carriers already on the system. And so when we talk about the ‘network effect,’ we are talking about the rapid adoption that accelerates the online appointment scheduling.

“We provide a network service environment,” he adds. “The users on all three fronts—the retailer, carrier and CPG—are all coming into to schedule appointments at DCs. Typically after six months, we get up to 50 percent online appointment compliance. But Food Lion recently went live. In the first week, Food Lion hit 36 percent. In the first month, they hit 71 percent. They hit that for two reasons: Food Lion did a great job managing the project and all of their carriers and suppliers were on the network.”

The company doesn’t provide a warehouse management system (WMS). It interfaces to warehouse systems on the back end from many suppliers. On the front end, the firm also interfaces to many demand and order management systems.

Keenan is pleased with his track record. The company has nearly 1,000 customers that move about $8 billion worth of goods per month through its network to retail customers. He is even more optimistic about the future because of acceptance of the new technology.

“The adoption rate of the next generation architecture is accelerating,” he says. “Companies are breaking their silo mentality of the past with legacy architecture and looking to get to the next level. You cannot achieve the business process gains that companies want with yesterday’s technology. Our technology is robust and it’s proven. Our network ability to manage millions of transactions per month is proven.

Hebert of Accenture acknowledges that the network has a good number of clients, but she wonders about the amount of work each client does through the network.

“I’m always a little skeptical,” she says, “so the question is, ‘What are they using them for?’ Are most of those clients using only one part of the solution? If you look at the whole network information solutions that they have, there are multiple parts to it. So they can always say they have a thousand companies, but if they’re only putting 10 percent of the demand through, it starts to dilute that message a little bit. I always try to peel back to really see who’s doing what. How many companies use the solution in its entirety?”