LPS   Logistics & Procurement Services, LLC




INSTITUTE OF MANAGEMENT
ACCOUNTS




             “Freight Management”
   ...
LPS   Logistics & Procurement Services, LLC




Objective

   IMA Mission Statement:
            “To empower accountants a...
LPS   Logistics & Procurement Services, LLC




Agenda:

   Brief Overview LPS
   How Do You Measure Freight Cost?
   W...
LPS   Logistics & Procurement Services, LLC




Logistics & Procurement
Services “LPS”

   Who we are:
      We are a mana...
LPS   Logistics & Procurement Services, LLC




LPS Service Mission


    “To be our customers independent, transparent, ...
LPS   Logistics & Procurement Services, LLC




Our Service & Approach


   We fully oversee and manage the process of se...
LPS   Logistics & Procurement Services, LLC




Our Expertise:

     “Service-Providers”        “Service-Providers”       ...
LPS   Logistics & Procurement Services, LLC




LPS Customers Include:

 • Fortune 100 – 1000

 • Manufacturing

 • Retail...
LPS    Logistics & Procurement Services, LLC




How Do You Manage Freight
Costs? (COB)
   C – Level Visibility          ...
LPS   Logistics & Procurement Services, LLC




Who Is “Responsible” & Who
Has “Authority” For Freight?
   What Drives Yo...
LPS   Logistics & Procurement Services, LLC




Basics – Freight
Management Challenges
   What Information Do You Have?
 ...
LPS   Logistics & Procurement Services, LLC




Options To Manage
Freight Costs

   Resources – Reward – Balance Paradigm...
Customer Case Study Discussion:



   Status Quo” Customer—- Legacy services and costs with primary focus on daily operati...
Customer Case
Study Discussion:   LPS  Logistics & Procurement Services, LLC
                                             ...
Customer Case
Study Discussion:   LPS    Logistics & Procurement Services, LLC
                                           ...
Customer Case
Study Discussion:
                    LPS Logistics & Procurement Services, LLC
                            ...
Customer Case
Study Discussion:   LPS   Logistics & Procurement Services, LLC
                                            ...
LPS   Logistics & Procurement Services, LLC




Key Freight Management
Considerations

   “COB” – Can You Measure & Repor...
LPS   Logistics & Procurement Services, LLC




Thank You !


         Questions & Answers


         Contact Us:
        ...
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Institute Management Accounts Presentation Apr/10

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"Freight Management Basics" From a Finance Functional Approach Apr 2010

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Institute Management Accounts Presentation Apr/10

  1. 1. LPS Logistics & Procurement Services, LLC INSTITUTE OF MANAGEMENT ACCOUNTS “Freight Management” 4-22-10 Presented By: Steven C. Hogan, President Logistics & Procurement Services, LLC (d/b/a “LPS”) “Your Transportation & Logistics Experts” LPS2010SM LogproTM 1
  2. 2. LPS Logistics & Procurement Services, LLC Objective IMA Mission Statement: “To empower accountants and financial professionals to become “trusted business advisors” “playing a driving role” in their organizations’ business success and advancing their careers.” (http://www.imanet.org/about_mission.asp (© 1997-2008) LPS Session Goals: Honor IMA Mission Statement By Providing Information On Freight Cost Management, Challenges, and Approaches Through An Interactive Presentation Approach. “Your Transportation & Logistics Experts” LPS2010SM 2
  3. 3. LPS Logistics & Procurement Services, LLC Agenda:  Brief Overview LPS  How Do You Measure Freight Cost?  Who Has Responsibility For Freight Costs?  Basic – Challenges To Freight Costs Management  Options To Manage Freight Costs  Key Considerations  Case Studies Q & A “Your Transportation & Logistics Experts” LPS2010SM 3
  4. 4. LPS Logistics & Procurement Services, LLC Logistics & Procurement Services “LPS” Who we are: We are a management service company that provides procurement expertise, consulting, and solutions to help our customers establish and manage supplier contracts that deliver better pricing, value and services. What we are not: A carrier, broker, intermediary, or transportation capacity provider… “Your Transportation & Logistics Experts” LPS2010SM 4
  5. 5. LPS Logistics & Procurement Services, LLC LPS Service Mission  “To be our customers independent, transparent, staff experts at securing the best costs and services for their supply chain operations.”  “Provide 10-30%+ operating cash savings for our Customers through our expertise in operations & procurement of transportation, supply chain, and 3PL provider services.” “Your Transportation & Logistics Experts” LPS2010SM 5
  6. 6. LPS Logistics & Procurement Services, LLC Our Service & Approach  We fully oversee and manage the process of selecting, negotiating, contracting, and monitoring of these services to strength our customers existing functions or implement new solutions. “Your Transportation & Logistics Experts” 6 LPS2010SM
  7. 7. LPS Logistics & Procurement Services, LLC Our Expertise: “Service-Providers” “Service-Providers” Methods & Administration Less Than Truckload Intermodal -Technologies Truckload USPS/Mail / Consolidation Transportation Mgt Parcel Private Fleet & Dedicated Supply Chain Visibility Rail Courier -Freight Audit / Payment Intermodal Expedite -Freight Terms Forwarder / US Customs Warehousing -Shipping & Handling Ocean Distribution Revenue Air / Expedite 3PL -Consolidation; Pooling; X- Rail Outsourcing Dock -Vendor Compliance -Routing Guides -Claims -Packaging “Your Transportation & Logistics Experts” LPS2010SM 7
  8. 8. LPS Logistics & Procurement Services, LLC LPS Customers Include: • Fortune 100 – 1000 • Manufacturing • Retail • Services “Your Transportation & Logistics Experts” LPS2010SM 8
  9. 9. LPS Logistics & Procurement Services, LLC How Do You Manage Freight Costs? (COB)  C – Level Visibility Management Information  Purchase “% $’s; Unit; Weight; Sale; Factors”  Sales /Period “  Customer / Market “  O – Operational Level- “Responsible/Authority”  Responsible/Stake Holder C Level + Services  Authority “COB”  Provider Base Rate; Accessorial; Fuel; Service (s); Distance; Volume;  Balance Sheet  Purchase & Sale Terms  F.O.B.-Covington, KY – “Freight Collect” – “Freight Prepaid” – “PPD & Add” etc 9
  10. 10. LPS Logistics & Procurement Services, LLC Who Is “Responsible” & Who Has “Authority” For Freight?  What Drives Your Company?  Sales / Marketing / Customer Service  Procurement / Supply Chain  Manufacturing / Distribution  Customer Service  Who Is Your Internal “Authority” On Freight?  Shipping / Receiving  Fleet / Transportation Manager  Transportation Operations / Procurement ? “Your Transportation & Logistics Experts” LPS2010SM 10
  11. 11. LPS Logistics & Procurement Services, LLC Basics – Freight Management Challenges  What Information Do You Have?  Metric (s) – Aligned To Primary Business Driver?  Where Can You Get Them  How Can You Improve Them  Discrete Transaction Detail / Profiles To Support Metric Evaluation  Service Level  Requirements  Volume  Stable / Standard Freight Cost Basis  Formalized Rates & Contract  Internal / External Technology Capture  Defined Service Levels “Your Transportation & Logistics Experts” 11 LPS2010SM
  12. 12. LPS Logistics & Procurement Services, LLC Options To Manage Freight Costs  Resources – Reward – Balance Paradigm Internal Expertise External Ability Resource Cost Time & Expertise Internal Resource Expertise & External Availability Capabilities Cost Strategy “Your Transportation & Logistics Experts” LPS2010SM 12
  13. 13. Customer Case Study Discussion: Status Quo” Customer—- Legacy services and costs with primary focus on daily operations and execution, limited internal expertise in transportation and logistics and poor internal information to recognize and implement improvements. Costs are generally rising and unknowingly absorbed or passed on. “Routine” Customer—-Services and costs are updated to a schedule more reactively based on service changes, price increases, or internal events effecting operations, locations, and customers. Internal expertise exists without work tools, planning, or depth of knowledge and leadership visibility to achieve more than cost containment. “Challenged” Customer—-Services and costs are updated with specific internal expertise however the resources are used in a more formalized project mentality causing trade-off and completion challenges. Leadership visibility is good, cross-functional strength is poor or specific expertise to address larger scale improvements in process, policies, organization, technologies, network, and services leaving significant cost and service improvements unrealized. “Your Transportation & Logistics Experts” LPS2010SM 13
  14. 14. Customer Case Study Discussion: LPS Logistics & Procurement Services, LLC Customer Case Studies Building Materials Holding Com- pany “CFO” Seeks Fleet Cost & Transportation Savings CUSTOMER: Vertically Integrated Manufacturer Windows, Doors, Columns, And Extrusions • 6 Business Units • 11 Locations (12 U.S. Plants, 1 Plant In Ch ina) • 120 Tractors; 290 Trailers • Sales > $650M MARKET: LPS Multi Mode Transportation Building Materia ls Improvements Save $2.9M In Pur- chased Transportation Costs SITUATION: “ROUTINE” • Rapidly Rising F leet Transportation Costs • Legacy Driver Routes, Processes, & Use of One Way Transportation • Decentralized Transportation Spend and Man - agement “Within” SBU • Limited Senior Management Visib ility To Costs “Your Transportation & Logistics Experts” & Service Options Across SBU’s LPS2010SM 14
  15. 15. Customer Case Study Discussion: LPS Logistics & Procurement Services, LLC Customer Case Studies Building Materials Holding Com- pany “CFO” Seeks Fleet Cost & Transportation Savings LPS Multi Mode Transportation CRITICAL SUCCESS FACTORS: Improvements Save $2.9M In Pur- • Establish Transportation Council Approach chased Transportation Costs Across SBU’s To Manage Changes & Improve Team Approach • Reduce Fleet & Transportation Costs Through SOLUTION: • LPS LogproTM Leverage of SBU spend and services. • Truckload Bid-Contract • Establish Go Forward Sen ior Leadership Con- • LTL Bid-Contract trols & Management Scorecards • Ocean Bid-Contract KEY BENEFITS: • Network Analysis • Reduced Total Supply Chain Costs $6.5M, Elimi- • Route Utilization nated 25% Of F leet Assets • Decreased Purchased Truck load, L TL, & Ocean Transportation Costs 22% SERVICE DESCRIPTION: • Contracted To Source Fleet • Rationalized Plant To Cu stomer Market Service Tractor & Tra iler Equip ment & Area, Reduced Total Miles 8 % Services • Decreased Empty Fleet Miles 18% • Contracted Source Truckload • Established Strategic 3 Year SC Plan Consoli- Transportation dating 2 Plant Locations • Contracted To Source Import Ocean Transportation • Contracted To Provide Network Analysis, Route Rationa lization, & Transportation Technology “Your Transportation & Logistics Experts” Solution LPS2010SM 15
  16. 16. Customer Case Study Discussion: LPS Logistics & Procurement Services, LLC Customer Case Studies Automotive Supplier & Industrial Power Systems “COO” Cost Reduction Initiative—International Freight CUSTOMER: Multi National Automotive and Industria l Power Sys- tems Manufacturing Holding Company • 12 SBU • 28 Locations (North America, Asia, Europe) • Sales > $1B LPS Consolidates International Ocean MARKET: And Air Spend Across Diverse SBU Automotive Requirements Industrial Power Syste ms SITUATION: “ROUTINE” • Decentralized Import/Export Transportation Spend And Contracting Across SBUs • Limited Resources, No Specific International Ocean & Brokerage Expertise • Poor Executive Visib ility of Spend And Service “Your Transportation & Logistics Experts” Data Between SBUs LPS2010SM 16
  17. 17. Customer Case Study Discussion: LPS Logistics & Procurement Services, LLC Customer Case Studies Automotive Supplier & Industrial Power Systems “COO” Cost Reduc- tion Initiative—International Freight LPS Consolidates International Ocean And Air Spend Across Diverse SBU CRITICAL SUCCESS FACTORS: Requirements • Implement Inter Division and Suppler Routings • Establish Over 20 % Cost Reduction And SBU Participation So lution SOLUTION: • LPS Managed Services RESULTS: • Project Management ♦ Over 24% Reduction Of Ocean Transportation • LogproTM - Ocean/Brokerage And U.S. Customs Brokerage Costs • LogproTM - Import Intelligence ♦ 31% Reduction Air & Charter Service Costs ♦ Established Visibility So lution L inked To Master Planning And Inbound/Outbound ERP L ine Item SERVICE DESCRIPTION: Status • Contracted to source Import Ocean, Air Freight, And U.S. Cus- ♦ Established Vendor Co mpliance Routing & Re- toms Brokerage Services lease Controls • Contracted Provide Logprotm – “Your Transportation & Logistics Experts” “Import Intelligence Services” LPS2010SM 17
  18. 18. LPS Logistics & Procurement Services, LLC Key Freight Management Considerations  “COB” – Can You Measure & Report Sufficiently: C-Level; Operational?  Who has “Responsibility” and “Authority” For Freight Management?  Do You Have The Right Resources?  Can You Identify Your Reward to Resource Balance? “Your Transportation & Logistics Experts” LPS2010SM 18
  19. 19. LPS Logistics & Procurement Services, LLC Thank You ! Questions & Answers Contact Us: Steven C. Hogan President Logistics & Procurement Services, LLC P.O. Box 271 Verona, KY 41092 E-mail: shogan@logproservices.com Mobile: 859.630.6944 Office: 859.485.6994 “Your Transportation & Logistics Experts” LPS2010SM 19

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