Take one manufacturing facility, add four regional distribution centers (DCs) and 50-odd carriers, and then toss in tons and tons of pasta and hundreds of customer sites, and you get a recipe for a challenging transportation management environment. That's just the type of environment that Barilla America Inc. was facing a couple years ago when the company decided to deploy a new transportation management system to gain better visibility into, and control over, shipments of its pasta products to customers around the U.S. market.
Lots of Pasta, Limited Visibility
Barilla America, based in Bannockburn, Ill., is the U.S. division of Parma, Italy-based Barilla, the 128-year-old Italian foods and baked goods company that is that country's largest food-processing concern and top name in pasta. Barilla America operates one large production facility in the U.S. market, in Ames, Iowa, as well as four DCs around the country to handle distribution of product to Barilla's customers.
Eric Meister, director of Supply Chain Services with Barilla America, says the company's U.S. division had been doing a pretty good job of managing the movement of its goods around the country, but Barilla nevertheless saw room for improvement in its transportation processes. "The execution of transportation planning was decentralized," Meister explains. "We had limited visibility into financial planning opportunities across our network, and we had limited visibility into what was going on at all the locations."
Setting the Requirements
Mid-2003 found Barilla America's logistics organization looking for a solution that could give the -company better visibility into the movement of its products around the country. The overall strategy adopted by the logistics team focused on deploying a platform that would connect the company's transportation planning and customer service functions, Barilla's production and warehouse facilities, its third-party carriers, and, eventually, its customers — connecting all the dots, as it were, to allow the company to monitor the progress of shipments, check shipment status and otherwise gain a real-time picture of where its goods in motion were in the supply chain. In surveying the transportation management systems landscape, Barilla's logistics team had three primary business goals in mind for the project. First, they wanted to automate and standardize the company's transportation planning procedures. Second, they were looking to drive cost savings through better execution of carrier mode and shipment optimization. Third, Barilla wanted better visibility into its shipments after they left the warehouse.
On the technical side, the logistics team wanted to find a solution that would integrate easily into the company's enterprise resource planning (ERP) system, that could be implemented relatively quickly and easily, and that could generate a fast return on investment. Barilla also wanted a technology partner that could provide best-in-class support after the sale, Meister adds. "We weren't looking at this as a one-time buy. As our business changed and grew, we wanted a partner that could support that change and growth."
Centralizing the Planning Process
Barilla evaluated six different solution providers before settling on Holland, Mich.-based LeanLogistics, which offers a hosted transportation management system with planning, execution and settlement functionality.
The implementation of the transportation management system (TMS) essentially began about three months before Barilla selected a solution provider, as the logistics team invested the time and effort to map the company's "as is" and "to be" business processes, which helped them define the key requirements for the TMS. Once the request for proposal process concluded and Barilla had selected LeanLogistics, the company was able to get its first pilot location up and running on the Execution Management component of the provider's solution within six weeks, followed by the remaining locations within four months. Within six months of selecting LeanLogistics, Barilla had completed implementations of the provider's Settlement and Planning products as well. During that time, the logistics team also centralized traffic planning and freight payment at the company's headquarters, moving those processes out of the various shipping locations.
Becoming a Preferred Shipper
The aggressive timeline for the implementation presented something of a challenge, according to Meister, but he says that the buy-in on the part of the affected parties — with all the stakeholders viewing the new process as an improvement — helped ensure that the rollout went smoothly for the most part. Prior to the implementation, Barilla did have some concerns about whether its third-party service providers, including its 50 carriers, would view the new transportation management system as a value-add or simply as more work for them. The company did make clear to its service providers that the new system was going to be the sole platform for traffic planning at Barilla, with no exceptions, but Meister says that the service providers generally discovered that the new TMS actually made Barilla an easier company with which to do business and more attractive as a shipper.
In the financial justification for the project, the logistics team estimated in its return on investment (ROI) calculation that the implementation would save Barilla between 3 percent and 5 percent on its annual transportation spend, and that the project would pay for itself in the third full year of implementation. Beyond the hard dollar savings, the project has had several ancillary benefits for Barilla, such as more visibility to data and information, which has driven process improvements and benefited customer service, according to Meister.
Looking for New Opportunities
In addition, because Barilla's use of the solution has made it easier for carriers to do business with the company and, therefore, made the company more attractive as a shipper, Meister believes that with the current tight constraints on transportation capacity, Barilla may be better positioned than it otherwise would have been to gain access to additional capacity when needed. Barilla also was able to use the optimization tool in LeanLogistics solution to automate, in Meister's estimation, about 85 percent of the traffic planning decisions for its interplant transfers, such that the system is generating the mode and carrier selection for those shipments and then automatically tendering them. That allows the company's traffic planner to focus on dealing with exceptions and managing the process rather than processing transactions.
Finally, the company was able to achieve savings in freight payments by bringing that process in-house and gaining more control over the process. That has been particularly helpful over the past year with regard to time-based accessorials like detention, where the hours-of-service rules changes put pricing pressure on the accessorials.
At the time of the interview with Meister, Barilla's future plans for its work with LeanLogistics included incorporating inbound transportation and pairing that up with outbound transportation, then implementing the solution provider's appointment scheduling module. Elsewhere, Barilla was looking at evaluating a range of supply chain business processes, from demand forecasting and order processing to production planning, and possibly through transportation, with the idea of using the LeanLogistics project as a blueprint for potentially taking advantage of Web-based solutions to automate those processes. "We're using the success of this project and rolling it up the supply chain," Meister concludes.