CPG

Customer Service is Critical in CPG

Consumer product group companies typically operate a large and complex supply chain. Take the example of a $4.6 billion producer of products with 15 North American plants and six distribution centers, this food conglomerate continues to develop and improve products to provide a healthy choice for consumers without compromising taste, convenience, and affordability.

Business Process and Problem

The company wanted to drive top-line sales growth by ensuring retailers’ shelves were stocked, including heavily promoted items that can cause 100% spikes in transportation capacity requirements. The transportation group needed to improve on-time delivery performance to meet customers’ requested arrival dates. The group was also being challenged to provide visibility of transportation activities to customers and internal departments, but its existing technology and processes did not support this.

Process Improvement – SaaS Solution

The transportation group realized that the best option was to improve its freight execution processes across both centralized and decentralized transportation planning environments. The company selected LeanLogistics and its LeanTMS® because of the breadth of system functionality, robust project management services, and real-world transportation expertise. The initial implementation stage, duplicating the company’s existing load building and tendering process, was completed in 10 weeks across three plants and six distribution centers.  Additional LeanTMS® capabilities, such as dock appointment scheduling, freight payment, carrier scorecards, capacity planning, and routing guide functionality, were also implemented.

To improve on-time delivery, the company knew it had to better synchronize plans and activities across internal operations and with carriers. To do so, it adopted:

  • Online Appointment Scheduling – The distribution centers were not connected to the Purchase Order system, so they had no knowledge of an inbound order until a carrier called them for an appointment. Appointments were scheduled from spreadsheets or from the third-party logistics provider’s warehouse management system. Now all dock appointments are made through LeanTMS® – all stakeholders can see both the inbound and outbound schedules. As a result, the group responsible for stock replenishment between plants and distribution centers can see whether the inbound transfer will make the outbound schedule or whether other action is needed to ensure on-time delivery to the customer. In addition, by having visibility to the actual shipment dates, planners need less “just-in-case” inventory.
  • Proactive Order Management and Recovery – Customer service specialists had to continually scan for potential service disruptions and call the local transportation departments to determine shipment status. Many problems went unnoticed until it was too late to resolve them. Now, with network-wide visibility and alerting, issues are proactively identified. The LeanTMS issue tracking and resolution capabilities enable collaborative resolution – externally with carriers and internally across departments. Moreover, problems and resolution trails are captured, giving the company the opportunity to identify systemic problems and share best practice resolution strategies.
  • Capacity Forecast Sharing with Carriers – A distribution center’s shipment volumes can spike 100% during promotional campaigns. In a capacity-constrained freight environment, this creates enormous risk that products will not make it to the shelves on time. The company decided to convert product forecasts into weekly shipment capacity forecasts so it could understand capacity variability and work with carriers to ensure complete coverage. The transportation group shares a rolling four to six week tactical capacity forecast with its carriers. They are now able to identify unusual promotional capacity needs and work with their carriers in advance to ensure capacity availability and high on-time delivery performance.
  • Carrier Allocation Management – Negotiating favorable rates based on freight volumes, the transportation group actively plans, monitors and adjusts carrier allocations and capacity commitments. The load optimization process uses the carrier allocation directions as a priority for carrier selection to ensure that the company fulfills its volume incentive agreements. Performance-toplan is reviewed regularly to ensure both parties are complying with their agreements. This, in turn, helps with rate negotiations, encourages higher tender acceptance rates, and informs transportation procurement where changes are needed.

Value Delivered

The cost justification for the project was simple – with the on-demand solution, the annual cash outlay is similar to the costs of staying on maintenance with the previous transportation management system and performing periodic upgrades. Moreover, the web-based architecture gives internal company departments and facilities easy access to transportation plans and status to synchronize activities better and keep customers informed. It also enables greater electronic communication with carriers in an affordable manner. The company has improved its on-time delivery performance by 2.2% – dramatic for the lowest-performing plants and slightly improved for other facilities. It is able to keep customers better informed about requested arrival date exceptions, improving customer satisfaction. Also, it is able to proactively plan for promotional activity, ensuring better on-shelf availability. Interactions with the carriers improved, increasing carrier data completeness from 70% to 90% and forecasting reduced the first-offer reject rate for tenders from 30% to 9%.

Download the “Major Grocer Optimizes Inbound Orders” case study.

Download the “Grocery Group Associates Gain Complete Visibility With LeanTMS®” case study.