Transportation Best Practices: Sargento’s finely-aged TMS upgrade
July 01, 2011
Bottom line benefits
In shipping nearly 24 million pounds of Sargento products every month, the company has enjoyed what it says is a substantial reduction in administrative costs through the automated freight payment function of their new TMS. The logistics organization has improved its allocation of cost, and, in a major operational benefit, it has seen a 15 percent drop in the cost per pound of their shipments—excluding the cost of fuel.
Much of that has occurred by converting more costly LTL moves into full TL shipments. In fact, Sargento’s percentage of LTL shipments has dropped by nearly a 30 percent, according to Hartlaub.
“The opportunity for a company like Sargento to build TL moves should be second nature to an organization, but sometimes it’s hard to see the forest for the trees,” says Gene Nusekabel, transportation and logistics industry marketing manager for Sterling Commerce, Sargento’s TMS provider. “TMS is only as good as the planning you can do.”
With calls for a capacity crunch coming in trucking due to tougher new rules to crack down on unsafe drivers, Nusekabel says the real winners among shippers will be those with ability to access capacity during peak periods. “With capacity what it is, companies need their transportation arm to get out there as soon as possible to lock in equipment,” he says. “Planning is a commitment, and the real leaders in transportation planning need to be thinking about that. You can have a great supply chain, but it’s only going to be as great as your transportation carriers. If you don’t have capacity, you don’t have anything.”
Sargento is currently working on incorporating the movement of inbound freight into its TMS. According to Hartlaub, appointments and dock scheduling will begin later this year.
“At first, the initial reaction among our carriers was one of trepidation,” says Hartlaub. “Some of them were not computer savvy, but now they have to monitor e-mail and the Web. For a lot of carriers that was new stuff, but they’ve grown and evolved.”
Throughout the process, Hartlaub says he is proud that none of his 30 or so trucking partners has changed. But what has changed is the efficiency of his carrier network. “Things have gotten better and better…now it’s seamless,” he says of his carrier relations. “They like the way we interact with them.”
Nusekabel says the future is bright from the TMS provider side as well. He says fully automated TMS systems are only in use in 30 percent to 40 percent of logistics operations. “That indicates to us there is still a huge opportunity out there,” he says. Larger companies seem more willing to make the commitment of automating their systems, but the payback can be just as large on a percentage basis for smaller companies, he adds.
Hartlaub’s advice for shippers considering making the jump to an automated TMS system is simple: Do your homework; do the necessary advance planning; get support of upper management; and understand what you want it to accomplish.
“Shippers need to have a clear understanding of how their operation functions as well as the attributes of the systems they’re considering,” adds Hartlaub. “There are systems with more robust options, but you may not need them. We’re not a $200 billion transportation company, but we got what we needed.”
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!