Profiles in Supply Chain Enablement: Retailer cuts transportation costs and increases on-time deliveries by joining collaborative logistics network
Company: Tractor Supply Company (Brentwood, TN)
Company Size: Large
Company Sector: Retail
Area(s) of Enablement: Fulfillment/Logistics
Enabler: Nistevo (Eden Prairie, MN)
Tractor Supply Company is the largest operator of retail farm and ranch stores in the United States, with almost 500 stores in 32 states. The company is focused on supplying products for the lifestyle needs of hobby and part-time farmers and ranchers. Tractor Supply was looking to implement systems to support inbound transportation management. The company wanted to increase visibility of inbound freight and identify opportunities to collaborate with vendors and carriers. In addition, the company aimed to reduce transportation lead time and increase transportation reliability in terms of on-time performance. Finally, Tractor Supply was looking to reduce its transportation costs. To address these challenges, Tractor Supply joined the Nistevo Network, a collaborative logistics network for transportation management, providing a hosted software service that enables manufacturers, retailers, distributors and logistics service providers to view, plan, execute, settle and analyze their inbound and outbound transportation. By joining the network, Tractor Supply sought capabilities to view, manage, optimize and settle its inbound shipments from suppliers through a single, Internet-based network. Specifically, Tractor Supply deployed the following capabilities:
- Rate Management: Nistevo provides a central location to store and maintain all of Tractor Supply Company's contract freight rates
- Vendor Interface: Each Day Tractor Supply Company loads any new purchase orders into Nistevo via EDI. When Vendors are ready to ship, they log in to Nistevo to update order dimensions and mark the orders ready to ship.
- Carrier Operations: Tractor Supply Company selects carriers and tenders orders to carriers. Carriers can accept loads, update load status, and submit invoices into Nistevo using EDI or a Web interface.
- Reporting: Tractor Supply Company can track load status real time and react to late loads by contacting carriers. Nistevo also serves as a central location for all inbound freight movement on truckload and LTL carriers. Nistevo provides the ability to query this data to analyze internal performance as well as external performance (carrier and vendor performance).
- Freight Audit: All contract freight moves are invoiced through Nistevo, and Tractor Supply uses Nistevo to match carrier invoices against contracted rates to ensure invoice accuracy. Audited invoices are then passed to Tractor Supply enterprise system for payment.
Over the time that Tractor Supply has used the Nistevo Network, the company has seen its transportation management costs cut by 20 percent, while on-time deliveries increased by 10 percent. In addition, the company introduced 100 percent tracking on inbound freight movements, resulting in a 90 percent reduction in inquiries regarding status of inbound orders. Since Nistevo is a subscription service, Tractor Supply had relatively small implementation costs and was able to realize a 100 percent payback in the first year of the project. As next steps, Tractor Supply was looking to implement Nistevo's Dock Scheduling Tool for scheduling inbound appointments at distribution centers (DCs). This will further streamline the process for managing inbound freight. Elsewhere, Tractor Supply is looking to use Nistevo to plan and execute DC outbound loads, to provide stores visibility of scheduled deliveries, and to track import freight movements. "Tractor Supply is currently experiencing significant growth," said Mike Buttarazzi, director of transportation at Tractor Supply. "To effectively support this, our company needed to automate its transportation operations and gain better visibility to inbound orders and shipments from suppliers. After a thorough evaluation of supply chain solutions, we concluded that only a hosted transportation management network would deliver the supplier connectivity we required. As the largest network in North America, Nistevo was the clear choice with its robust capabilities, proven business model and strong track record in the marketplace."
For more stories of successful supply chain implementations, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.