No wasted movement: Business analytics tool slashes Welch’s transportation costs

Jean Thilmany, contributing editor -- Manufacturing Business Technology, 3/16/2008 1:31:00 PM

Each day, hundreds of trucks filled with juices, jams, jellies, and more than 400 other products produced by Welch’s crisscross the United States. The food and beverage manufacturer averages around 50,000 customer orders each year, ringing up millions of dollars in transportation costs in the process.
Logistics managers knew they had some room to slash those costs, but until recently, they didn’t where to start looking for savings opportunities. The company had no way to get a clear view of its freight movement. Then it adopted a business intelligence (BI) solution.
The new system—from Oco, Inc.—is helping Welch’s analyze truck movements and freight bills while giving managers graphical insight into the findings, says Bill Coyne, Welch’s director of purchasing and logistics.
Welch’s went live with a new Oracle ERP system in September 2007. But that system didn’t allow for aggregating information from Welch’s various transportation and logistics applications. Coyne knew how useful this type of capability could be. With conveyance costs rising along with fuel prices, the time was ripe to add a transportation reporting solution into the technological mix.
The Oco BI system went live at Welch’s in February of this year. Each day logistics managers can view a map showing freight movements and the associated costs. By studying the map, managers can pinpoint cost-cutting opportunities, Coyne says.
Here’s how it works: Each night transportation numbers are automatically uploaded to the Oco server from several Welch’s software applications, including the ERP system and freight audit and payment systems. Information uploaded includes customer orders and bills of lading. The bill of lading, a document issued by carriers, gives detail of the shipment, including origin, destination, product weight, and product cost.
“Everything feeds into Oco at night to populate reports and key performance indicators,” says Anil Chitkara, senior VP of marketing and sales at Oco.
In the morning, Coyne and his team study the reports, which analyze freight movement during the past days and weeks. Carrier costs and routes are laid out before them in graphical form, which makes the information easy to conceptualize and keeps it at managers’ fingertips.
Soon after the system was turned on, Welch’s managers—given the ability to study freight movement up close—quickly spotted several transportation inefficiencies and set about righting them.
“We saw that we have days of the week when our shipping operation is heavily loaded and not enough hours or resources to get all the shipments out the door; and other days that are lightly loaded,” Coyne says.
On heavily booked days, transportation managers now have the ability to push back non-urgent shipments, without running the risk of having dissatisfied customers. 
The BI system also allows Welch’s to optimize its shipping schedules, in terms of costs, by examining the size and weights of individual shipments. 
“We can look to see if we can increase a customer’s order size,” Coyne says.  “If, for instance, they’re ordering nearly a truckload of product, we might be able to persuade them to take a full truckload.”
Coyne says the BI system paid for itself within the first month after adoption by isolating these types of transportation and logistics savings opportunities.
“If you think about it, you have total access to all your information, so you can search for inefficiencies and opportunities,” he says. “If you’re spending that much money on transportation and the investment for the tool is pretty moderate, paying for itself is easy.”
Oco’s Chitkara says the system is deployed in Software-as-a-Services (SaaS), which saves users on implementation and support costs.
 “The challenge for companies is they can get data from any one of several individual systems—ERP or PLM—but often the difficulty is pulling it together,” he says. “They’d traditionally use a systems integrator. But we’ve compiled all that software together—there’s a data warehousing and data integration and analytics piece—and we host it so you don’t need to bring it into your own place.”