Prezentare - Cost Saving Through Technology

Seeking the Silver Bullet:Cost Savings Through Technology

Logistics Technology ForumEye for TransportApril 21, 2009

Economic pressures on companies are greater than in decades. The demand for cost savings, both internally and externally is driving logistics decisions. Can technology provide a silver bullet for driving costs out of the supply chain?

•Penske Logistics Overview

•Freight Data Analysis – Case Study

•Network Convergence – Case Study

Agenda

Copyright © 2009 Penske. All rights Reserved.

Page 1

•Network Convergence – Case Study

•Dynamic Routing – Case Study

•Summary

Penske Logistics

2008 Revenue - $2.9B

9,583 Associates

9,400 Vehicles

16.2 MM ft² Warehousing

8 Transportation Management Centers• Dearborn, MI

• Green Hills, PAAward-Winning Service

• Four time GM Supplier of the Year


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• Beachwood, OH

• Roosendaal, The Netherlands

• São Paulo, Brazil

• Shanghai, PRC

• Saltillo, MX

• Hyderabad, India

• Four time GM Supplier of the Year

• Ford World Excellence Award

• Two time Ford NA, Q1 Award Winner

• Ford Brazil Logistics Supplier of the Year

• Eaton Premier Supplier & Supplier Excellence Awards

• Merck Supplier of the Year

• P&G/IAMS QAKE Award

• Eastman Supplier Excellence Award

• Emerson Marquee Supplier Award

Global Operations

North America: $2.6B

• 56 major contract customers

• 7,732 associates

• 13.8MM ft² warehousing

• 8,991 vehicles

South America: $80MM


• 1,164 associates

• 1.4MM ft² warehousing

LLP R / ITM DCM DCC


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Europe: $166MM


• 585 associates

• 906K ft² warehousing

• 409 vehicles

Asia: $10MM


• 102 associates

• 223K ft² warehousing

Freight Data Analysis

Case Study

Freight Data Analysis – Case Study

Client Profile:

• Global diversified manufacturer

• Penske engaged at division level

• Division operated on a site-centric basis

• Task – 10% freight spend reduction

• Modes:


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• Modes:

–TL

–LTL

–Small Package

–Air

Freight Data Analysis – Case Study

Penske Approach

• Analysis of past year’s freight data allowed us to identify a number of possible projects –

• Improved transportation efficiency and coordination

• Tighter integration with supplier and customers

• Coordinated decision-making across sites

• Site visits, discussions with stakeholders, and conference calls enabled


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• Site visits, discussions with stakeholders, and conference calls enabled validation of savings potential, prioritization of projects, and coordination between various sites

Tools Used

• Data analysis, contract analysis, rate shop, change management, process mapping

Results

• 12 – 16% identified annual savings, net, transportation spend

Network Convergence

Case Study

Network Convergence – Case Study

Client Profile

• North American-based automotive manufacturer

• Penske engaged at Corporate level

• Four divisions:

–Powertrain

–Stamping


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–Stamping

–Production

–Service & Replacement Parts (S&RP)

• Record-setting cost-reduction task


Production:

–Crossdocks: 4

–Production Suppliers: 1,883

Network Statistics

• 2 different 3PLs working cooperatively to create Network Synergies

• Primary focus cost reduction & inventory reduction


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–Production Suppliers in crossdock network: 1,442

S & RP:

–Packagers / PDCs: 40

–S&RP Suppliers: 1,454

–Network Convergence Suppliers: 586

–Network Convergence OD Pairs: 1,197

Crossdock

Packager / PDC

Production Unique

Integrated Common S&RP

Common S&RP Not Integrated

S&RP Unique

SDS Common

SDS Non Common


Penske Approach

• Analysis of the two independent networks allowed us to identify multiple synergies for leverage –

– Common suppliers

– Crossdocks and other infrastructure

– Backhaul opportunities

• Some process changes were requires, as well as a high degree of


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• Some process changes were requires, as well as a high degree of collaboration between the two 3PLs

Tools Used

• Data analysis, contract analysis, rate shop, change management, process mapping, route design, trailer cube mapping

Results

• Over $3M annual savings, net, in transportation spend

Dynamic Routing

Case Study

Dynamic Routing – Case Study

Client Profile

• North America based manufacturer of refrigerated food products

• Explosive expansion across North America, U.S. in particular

• Retail outlets –

–Supermarkets

–Distributors


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–Distributors

–Big Box retailers

• Dedicated truck fleet, and dedicated routing system proving costly

STATIC

• Supply Chain functional areas work

independently

DYNAMIC

• All function areas work together to

define an approach and define action

plans

Static vs. Dynamic Supply Chain Organizations

• Customer demand drives decisions • Customer demand is anticipated and

controlled within boundaries



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Dynamic does not equate to more flexible, in fact it may be the opposite.

controlled within boundaries

• Cost is a function of the demand • Costs are planned and drive decisions

• Change in demand drives reactionary

actions

• Variability in one area impacts all

functions and customers

• Change in demand is anticipated

• Variability is an accepted part of the

norm

Limitations:

• A routing tool can only route given its defined constraints

• The routing is a snapshot for the period of time being routed - it does not consider driver availability across a time period, conduct driver scheduling, etc

• The tool routes only the data given, human errors in entering order demand cannot be caught by the system (GIGO)



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• The routing tool will plan pickup and delivery at the earliest time available, and does not balance the volume being picked up or received

• The tool does not plan the labor schedule at the supplier or delivery point


Points to be routed in vRA How the routes appear after routing


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How the routes look with actual roadways

MISSION FOODS

Jefferson Time M

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Penske Approach

• Analysis of the order patterns and demand profiles confirmed the opportunity for a more efficient routing solution

• This included a better selection process for dedicated vs. common carrier

• The joint project team worked together to create a new order process flow, from order input through production processes, to enable dynamic routing

• Rollout was implemented on a site by site basis


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• Rollout was implemented on a site by site basis

• Implementation timelines have shrunk as the team becomes more efficient

Tools Used

• Data analysis, mode selection, rate shop, change management, process mapping, route design, trailer cube mapping, visual route assist

Results

• 3-8% savings in transportation spend, net, by location

SummarySummary

Cost Savings Through Technology

•3 different clients, 3 different problems, 3 different sets of tools deployed, 3 different solutions: no silver bullet

•Technology alone is not the answer


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answer

•Satisfactory results require good tools, good processes, and good people to use them

•Your company is as good as your people, and your chosen partners

Prezentare - Cost Saving Through Technology

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