Given the state of the economy and of gas prices, it's no surprise that companies want to find ways to rein in transportation costs. One company finding success in that endeavor is Welch's, a well-known purveyor of food and packaged consumer goods. The company is tapping the power of business intelligence for better insight into its supply-chain operations, which in turn can help keep transportation expenses lower.
Specifically, Welch's is using the BI services of a company called Oco. The company offers a SaaS (software as a service) approach to BI, a technology that draws data out from various sources, then presents it in useful, meaningful ways. Data can be sliced, diced, and sorted to provide insight into business operations.
[ Find out how the U.S. Postal Service reduced its transportation costs by $5 million. ]
Welch's initial deployment of the Oco solution integrated data from three different source systems, including the Oracle E-Business Suite, to provide visibility into details about invoices, shipments, orders, and associated costs. The company has extended the solution to provide the company with a detailed breakdown of fuel and other key transportation charges. Charges can be analyzed by carrier, customer, type of shipped product, shipping lane, geographic area, and mode of transportation.
One way Welch's is leveraging the Oco BI application is to ensure truckloads delivered by its carriers go out full. The idea is, customers are already paying for the full truck when it delivers goods, even if it's only halfway or three-quarters loaded. With the BI system, Welch's can tell if a buyer's shipment is coming up short of full capacity and help them figure out what else they can order to max it out, thus saving on future shipping costs. "Welch's can go to the customer and say, 'You're only ordering this much. Why not round out the load with other things you need? It will be a lot cheaper for you,'" says Bill Copacino, president and CEO of Oco
"If you're able to put 4,000 more pounds on the 36,000-pound shipment, you're getting a 10 percent discount [on transportation costs]," he adds.
Additionally, according to Copacino, the system helps Welch's balance its daily deliveries so that it uses approximately the same number of trucks, rather than hiring for seven trucks on a Monday, five on a Tuesday, eight on a Wednesday, and so forth. The company reaps transportation savings by using a stable number of trucks daily -- "as capacity is not jumping all over the place," Copacino says.
Moreover, the company can draw on historical data for a clearer comparison as to how much each carrier is charging for transportation costs, and those costs get broken down by the various types of fees, from fuel surcharges to the cost of unloading. Having the type of information makes it easier to negotiate rates with carriers, Copacino notes.
"We are gaining greater visibility into cost-savings opportunities, which is especially important in light of rising fuel and transportation costs," says Bill Coyne, director of purchasing and logistics at Welch's.
Beyond saving money on transportation costs, Welch's is using the BI app in other ways. Among them, the company is working collaboratively with carriers to report on actual delivery performance, such as whether shipment arrived on time. The company can now produce carrier scorecards and compliance reports, enabling it to quantify carrier performance and gain better understanding of customer-service metrics.