• Like
Collaborative Transportation Management : Enhancing Supply ...
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Collaborative Transportation Management : Enhancing Supply ...

  • 1,474 views
Published

 

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,474
On SlideShare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
51
Comments
0
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Collaborative Transportation Management : Enhancing Supply Chain Adaptability & Resiliency Presented to: Symposium on Value Chain Adaptability Joel Sutherland May 9, 2006
  • 2. Presentation Objective Resilience: A notion borrowed from the materials sciences representing the ability of a material to recover its original shape following a deformation. Objective: Demonstrate how supply chain partners collaborate on transportation processes to become more adaptable to day-to-day demand changes as well as resilient in the event of major supply chain disruptions. Joel Sutherland, Lehigh University
  • 3. Agenda 2004 State of Logistics Collaborative Transportation Management Case Study-AutoZone Questions Joel Sutherland, Lehigh University
  • 4. 2004 State of Logistics
  • 5. Logistics Cost as a % of GDP U.S. GDP Up Logistics $ Up Logistics % Stable GDP $ Logistics $ GDP % $12.00 $1,040.00 10.00% $1,020.00 9.00% $11.80 8.00% $11.60 $1,000.00 7.00% $11.40 $980.00 6.00% 5.00% $11.20 $960.00 4.00% $11.00 $940.00 3.00% 2.00% $10.80 $920.00 1.00% $10.60 $900.00 0.00% 2003 2004 2003 2004 2003 2004 $11.0 T to $11.8 T $0.944 T to $1.015 T 8.6% to 8.6% Source: CSCMP, 16th Annual State of Logistics Report Joel Sutherland, Lehigh University
  • 6. U.S. Spent $1.015 T on Logistics in 2004 $47 B $250 B Transportation Warehousing Other Inv CC Shipper & Log Adm $82 B $636 B Transportation = $636 B (63%) Transportation = $636 B ((63%) Source: CSCMP, 16th Annual State of Logistics Report Joel Sutherland, Lehigh University
  • 7. $636 B Transportation by Mode 1% off o lly y 50% d 50% a d atte e oa 4% 5% 3% ro r x ma ruckl oxiim lll ttruck lo App iis ffu l App k s u 7% ttruc k ru c Truck Rail Water Pipeline Air Forwarders 80% Truck Transportation = $509 B (80%) Truck Transportation = $509 B ((80%) Source: CSCMP, 16th Annual State of Logistics Report; various other Joel Sutherland, Lehigh University
  • 8. Cost of Logistics Relative to GDP Logistics % of GDP Inventory CC % of GDP Transportation % of GDP 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 Source: CSCMP, 16th Annual State of Logistics Report Joel Sutherland, Lehigh University
  • 9. Collaborative Transportation Management Developed by the CTM Sub-Committee of the VICS Logistics Committee www.vics.org/commit.htm#Logistics_Committee
  • 10. Collaboration Defined • Collaboration is more than cooperation. Collaboration requires that companies work actively together as one toward common objectives. • Collaboration includes the sharing of information, knowledge, risk, and profits/benefits in an agreed-to consistent fashion for all participants. Everyone involved must benefit or it is not true collaboration. • Collaboration entails understanding how other companies operate, how they make decisions, and what is important to them. Joel Sutherland, Lehigh University
  • 11. What is the Objective of CTM? Eliminate inefficiencies in the transportation component of the extended supply chain though collaboration to bring benefit to all trading partners Source: CTM Sub-committee of the VICS Logistics Committee Joel Sutherland, Lehigh University
  • 12. CTM Improves Profits & Leverages Assets Comments • CTM enables improved service levels and on-shelf availability across the board Increased Sales • Shippers and carriers with CTM capabilities become "go-to" parties for major retailer events Improved Profitability • Opportunities exist to minimize/eliminate costs associated with miscommunications across the extended supply chain, e.g.: Reduced Costs – Expediting/last minute shipping – Poor truck utilization – Freight bill and shipment administration • Collaboration facilitates better use of transportation CTM Improved and warehousing assets for all participants, e.g.: Opportunity Transportation – Continuous moves Asset Utilization – Shared warehousing – Fewer fixed assets Improved • The ability for participants to take a system-wide view Inventory of supply and demand minimizes unnecessary Balance Sheet Reduction inventory Performance • Better communication between partners creates the Improved DSO opportunity to reduce DSO Joel Sutherland, Lehigh University
  • 13. CTM Opportunities Exist Across Four Key Transaction Areas Transaction Area Collaborators Description Periodic process between a shipper and a Capacity Procurement Shipper Carrier carrier to arrange for transportation capacity -- may include the use of a transportation marketplace Receiver Proactive control of inbound goods flow and Inbound Management management of transportation by the Shipper receiver Carrier Receiver Aggregating truckload freight across multiple locations or divisions of a company or Shipper Integrated Movements across multiple shippers Carrier Ability to solicit capacity from other Transportation Shipper select/core carriers Marketplace Carrier Joel Sutherland, Lehigh University
  • 14. What is CTM? CTM Eliminates Inefficiencies (Waste) “Lean” “Lean” TQC TQC VMI VMI Motion Continuous Continuous Inventory Errors JIT JIT Waste CPFR CPFR Improvement Waste Improvement Six Six Time Space ECR Sigma ECR Sigma “Pull” “Pull” Joel Sutherland, Lehigh University
  • 15. What is CTM? CTM is a Holistic Process Private Private Rate Rate Inbound Inbound Marketplace Marketplace Negotiation Negotiation Management Management Routing Routing Standard Standard Yard Yard Backhaul Backhaul Management Guide Guide Reengineered BOL BOL Reengineered Management Dock Dock Business Business Scheduling Scheduling Continuous Continuous Move Move Appointment Appointment Scheduling Scheduling Process Process Collaborative Collaborative Mode Mode Terms Terms LTL LTL shifting shifting Conversion Conversion Joel Sutherland, Lehigh University
  • 16. How to do it? Information Technology Essential to CTM Role of Information Technology Comments Advanced technology is essential to Advanced technology is essential to successful CTM playing three successful CTM playing three important roles: important roles: Information technology (IT) by itself is Information technology (IT) by itself is • Enables CTM by providing the • Enables CTM by providing the not enough to lead to successful not enough to lead to successful necessary tools to make necessary tools to make collaboration. Firms must know how to collaboration. Firms must know how to collaboration feasible e.g.: collaboration feasible e.g.: use IT to reap the benefits of CTM. use IT to reap the benefits of CTM. – Real-time data transfer; – Real-time data transfer; Human contribution, through data Human contribution, through data automated communication automated communication analysis and information utilization, is analysis and information utilization, is • Supports collaborative inter- • Supports collaborative inter- where the true benefits of IT lie. where the true benefits of IT lie. organizational relationships e.g., organizational relationships e.g., Therefore, the enabling and supporting Therefore, the enabling and supporting – Reduction of transaction – Reduction of transaction role of IT to CTM processes can only be role of IT to CTM processes can only be costs/risks with automated costs/risks with automated realized if the technology is employed realized if the technology is employed process process effectively effectively • Provides the opportunity for • Provides the opportunity for outsourcing of core logistics outsourcing of core logistics processes between CTM logistics processes between CTM logistics partners partners Human contribution…is where the true benefits of IT lie.
  • 17. How to do it? How to Achieve CTM Benefits The value of CTM can be The value of CTM can be obtained through two obtained through two Carrier primary avenues: primary avenues: 1. Direct communication 1. Direct communication Supplier Buyer between Shipper(s), between Shipper(s), Receiver(s) and Receiver(s) and Carrier(s) Carrier(s) 3PL 2. 3PL facilitation of the 2. 3PL facilitation of the communication and communication and execution process execution process Source: Transportation journal, The Value of CTM, Summer 2003; John Karolefsky, Collaborating Across the Supply Chain, 2001 Joel Sutherland, Lehigh University
  • 18. How to do it? CTM Continuum Opportunity to add value through Opportunity to add value through CTM increases as multiple shipper CTM increases as multiple shipper networks are integrated, carriers networks are integrated, carriers Consortium are connected, and communication are connected, and communication Collaboration and execution capabilities and execution capabilities Multiple Shippers, Carriers are enhanced are enhanced Third party facilitation Information Hub Relationship management Value Partnership Collaboration Shipper, Consignee, and Carrier Shared forecast Committed capacity Trading Partner Visibility Collaboration Shared forecast by lane of traffic Automated transactions Traditional Vendor Transactional No visibility Level of Collaboration Joel Sutherland, Lehigh University
  • 19. CTM Case Study
  • 20. AutoZone’s Background Fortune 300 company - $5.7 billion in revenue annually Largest auto parts retailer in North America Founded in 1979 Listed on the NYSE in 1991 Key developments in Logistics began in 1996 Joel Sutherland, Lehigh University
  • 21. AutoZone’s Growth Stores 4000 3673 3500 3107 3000 Net Sales ($Billions) 2500 $6.0 5.7 2000 5.3 1500 1143 $5.0 1000 598 $4.0 500 $3.0 0 1991 1995 2002 2005 1.8 $2.0 0.8 $1.0 3,592 stores in 48 states and Puerto Rico $0.0 + 81 in Mexico = 3673 total 1991 1995 2002 2005 Joel Sutherland, Lehigh University
  • 22. Objectives Support rapid growth of company Use existing assets more efficiently Employ best available technology Provide visibility for all inbound flows Reduce transportation lead times Execute scheduled, time definite shipments Achieve competitive advantage Capture and retain market share Copyright 2002 Transplace Confidential, All Rights Reserved Joel Sutherland, Lehigh University
  • 23. Scope of Services Single point of contact Select, negotiate, contract, manage carriers Provide shipment status visibility Performance measurement and reporting Audit freight bills, pay carriers, bill Company ©Copyright 2002 Transplace Confidential, All Rights Reserved Joel Sutherland, Lehigh University
  • 24. Product Flow Before CTM Joel Sutherland, Lehigh University
  • 25. Implementation Process • Benchmark inbound freight costs –Convert freight terms from prepaid to collect • Establish product profiles –Products, cube, weight, stacking characteristics • Conduct detailed site location analysis –Operational business rules • Determine reliable transit times –Flows between vendors, DCs, and stores –Mode, route • Establish cross-dock methodologies ©Copyright 2002 Transplace Confidential, All Rights Reserved Joel Sutherland, Lehigh University
  • 26. Product Flow After CTM Joel Sutherland, Lehigh University
  • 27. Results Before CTM Before CTM After CTM After CTM • Vendors Controlled Freight • 77% of Vendors Converted to Collect • 85% LTL Inbound Shipments • <2% LTL Inbound Shipments • 1 Week Average Transit Time • 1.5 days Average Transit Time • No Pipeline Visibility • Complete Pipeline Visibility • Excessive Freight Damage • Freight Damage Nearly Eliminated • High Transportation Cost • >20% Transportation Cost Reduction • Growth Constrained • Significant Inventory Reduction • Poor On-Time Performance • 99%+ On-Time Performance • Poor Utilization of Private Fleet • 25% Increase in Private Fleet Utilization Joel Sutherland, Lehigh University
  • 28. Impact Enhanced Supply Chain Adaptability & Resiliency Total lead-time and lead-time variability reduced Visibility allows adaptive processes to be deployed Technology enables optimal day-to-day execution Inbound flows now in retailers’ control Ability to adapt and grow business enhanced by use of 3PL Joel Sutherland, Lehigh University
  • 29. ? ? ? ? ?