Ocean Spray leverages software to manage inbound logistics
Company's doubling of spend drives move to TMS
David Hannon, Managing Editor -- Purchasing, 5/19/2005 2:00:00 AM
If you're looking for a strong proponent of technology's ability to help manage complicated logistics operations, look no further than Doug Ward, inbound transportation manager at Massachusetts-based food products maker Ocean Spray. Three years ago, Ocean Spray struck a deal with food products giant Nestle to manufacture its line of Juicy Juice beverages, which would effectively double Ocean Spray's business. While it was a great deal for Ocean Spray as a whole, the challenge to the logistics organization was that the raw materials that Ocean Spray would be buying as well as its inbound freight would basically double.
"We got a lot bigger pretty much overnight," says Ward. "That helped us leverage more spend in raw materials and in freight. But it also increased our need for a system to manage these shipments better. Our existing processes were not ready for this kind of increase."
Most of the raw materials Ocean Spray buys are fruit concentrates that come into its plants in bulk tanker trucks. Its other major spend areas are packaging materials (shipped truckload from suppliers) and cranberries, which are shipped direct from the bog to Ocean Spray facilities, making them difficult to track. Four years ago, Ocean Spray made a conscious effort to gain more control over its inbound freight including carrier selection, negotiation and shipment tracking and leave less of that work to its suppliers. (Currently, the company controls about 80% of its inbound freight). The economic benefits of that effort were clear, but the process of managing the shipments—especially in light of the alliance with Nestle—was going to be a challenge with the existing resources and processes.
Ocean Spray concluded that automating more of its inbound logistics processes through technology could help the company manage the new business coming online and gain more control and visibility into all of its inbound freight. To that end, Ocean Spray evaluated several transportation management systems and eventually signed on with Nistevo of Eden Prairie, Minn. Ocean Spray implemented the web-based tool a year ago which lets Ward assign carriers into the system. When an order is placed to a supplier via Ocean Spray's ERP system, the freight is automatically tendered to the selected carrier through Nistevo at the same time (via an EDI message). After an established time frame, if the selected carrier does not respond, a second carrier will receive the tender.
"If a carrier realizes he missed a load, they will usually make sure it doesn't happen again," says Ward. "This system is very effective in that way."
When a carrier accepts the load, it can go into the online system and schedule a pick-up and drop-off time that works for both carrier and dock, based on Nistevo's dock profiles. The automated process eliminates the series of phone calls to carriers and dramatically reduces leadtimes and process times, a strong benefit to a company doubling its business over-night. In fact, the Nistevo system can even tell the carrier who to ask for when dropping a shipment off at a plant, instead of the driver having to ask who is responsible. The improved visibility and performance-rating capability also lets Ocean Spray drive more of its volume to its core carriers for better pricing discounts and higher service levels.
Ward still has the 25-point list of objectives created when the company implemented Nistevo and refers to it often. For example, the ability to define the scope of the freight spend was a benefit high on the list prior to implementation. Using a central system to tender all freight captures the spend more accurately and evaluates where trade-offs can be made or where it makes more sense to let a supplier handle the freight management. The improved visibility has also let Ocean Spray identify some synergies between its inbound and outbound shipments for even further savings.
The improved visibility of freight has also given Ocean Spray more control at its own plants, which has helped support the company's continuing move toward a lower inventory model. "Our plants now have clear visibility into when a shipment is coming in and who is carrying it," Ward says. "So buyers and plant managers don't get so anxious and expedite shipments too early, which can cause backups and increase our costs dramatically. Buyers can use the system to check status of shipments and purchasing can use the data to drive carrier and supplier contracting strategy."
Carriers gaining more volume based on performance and cost are happy with the system and those losing business, according to Ward, are happy with the data-heavy wake-up call. There is less misinterpretation because the historical data is in the system and can be presented to carriers to back up decisions.
The next step in Ocean Spray's TMS journey is to move to an automated payment system and eliminate paper invoicing. But Ward says his advice to companies implementing a TMS is to roll it out in well-planned phases and not overload internal users with too much at once. "For example, I really want to get onto this automated payment system, but I have to be patient and make sure we do it at a time when our users are ready for it and will be able to use it well. Change management is always a challenge. I try to present new processes in a way that users can see where it will eliminate some mundane tasks and make their lives easier."
For a second case study on Robert Bosch's use of software from 3PL Meridian IQ to streamline logistics, go to the logistics channel page at www.Purchasing.com/logistics.
Juice up the packaging buy
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06/14/2007Ocean Spray Cranberries
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