CSCMP Atlanta Roundtable:
Planning and Procurement of
Transportation–A Panel Discussion
December 18, 2015
© Transplace 2015. All Contents confidential.
1
Agenda
•
•
•
•
Introductions
Freight Market Conditions
Perspectives from Panelists
Q&A
© Transplace 2015. All Contents confidential.
2
Our Panelists
Moderator:
• Brent Hudspeth - Vice President, Transportation
Management, Transplace. Past President CSCMP DFW
Roundtable.
Panelists:
• Rob Haddock - Group Director, Thermal Logistics, CocaCola North America
• Steven Johnson - Director, Transportation Procurement,
Coca-Cola North America
• John Pinyerd - Director, Southeast Shorthaul, Dart Transit
© Transplace 2015. All Contents confidential.
3
Transplace Technology and Services
TECHNOLOGY SOLUTION
© Transplace 2015. All Contents confidential.
4
Transplace Footprint
TOTAL NUMBER OF
AVERAGE EMPLOYEE TENURE
5.4 YEARS
TRANSPLACE
COE LOCATIONS
Calgary, AB
Edison, NJ
Frisco, TX (Dallas, Headquarters)
Greensboro, NC
Greenville, SC
Kennett Square, PA (Philadelphia)
Lowell, AR (Northwest Arkansas)
Laredo, TX
Mexico City, MX
Monterrey, MX
Montreal, QC
Orange, CA (Los Angeles)
Richmond Hill, ON (Toronto)
St. Louis, MO
Stuttgart, AR
Tinley Park, IL (Chicago)
NUMBER OF TRANSPLACE
EMPLOYEES
1200+
© Transplace 2015. All Contents confidential.
5
16
Transportation Demand and Capacity Trends are
Local
October 2013
October 2014
October 2015
L/T Ratio
0.0
5.5+
© 2015 DAT Solutions
 October is usually busy, but October 2015 is relatively quiet
 October 2013: Typical fall freight season
 October 2014: Capacity constrained due to HOS, West Coast ports
 October 2015: More demand than 2013, but also a lot more trucks
Business-critical markets or lanes may still be challenging
Regulatory Update
Limited near-term impact but expectation remains that regulations are likely to
generally restrict capacity longer term
• ELD mandate late ‘17/early ‘18 pending
no further legal challenges
– Data shows mid single digit negative impact
to carrier utilization
• Suspension of HOS restart provision
minimally impactful (+ <1%)
– Suspension contingent on more robust study.
– Unlikely to see changes to maximum drive
time near term.
• Significant progress with existing
initiatives and the introduction of
additional initiatives unlikely with
Republican Congress and Interim
FMCSA Commissioner
© Transplace 2015. All Contents confidential.
7
Why Drivers
Leave Their Jobs (Pay & Respect)—It’s a Shipper
Why Did You Leave Your Last Trucking Job?
Problem, not Just a Carrier Problem
42.9%
Pay
38.0%
34.1%
29.8%
Lack Of Recognition & Respect
23.8%
18.3%
Didn't Get Home Enough
18.4%
Didn't Get The Right Loads, Or Enough Loads
22.3%
10.4%
13.8%
I Just Wanted To Make A Change
9.4%
7.3%
They Were Running Me Too Hard
Have Not Lef t A Trucking Job
15.9%
16.5%
Other
28.0%
28.8%
0%
10%
20%
30%
40%
Owner-Operator
50%
60%
70%
Company Driver
Source: BBTCM analysis and survey.
Source: BB&TCM (analysis and survey); comments on right from BB&TCM; cartoon from ATA
80%
90%
100%
 Does the shipper
value a driver’s time?
 Bathrooms, phones
 Wifi availability
 Helpful staff
 Parking availability
 Clear signs
 Paperwork handled
courteously and
simply
 Third Parties @ Gate:
Do they share your
view?
 3% rate hike: ~1%
goes to driver
8
Truckload Bid Savings Gap Analysis
Savings % reduced, shippers accept lower savings to align with “core carriers”
TL Savings Gap Between Minimum Cost and Routing Guide
25.00%
Overall Average Savings
20.00%
15.00%
10.00%
5.00%
0.00%
2008
2009
Savings Gap
2010
2011
Average First Round Savings
2012
2013
Average Final Scenario Savings
Savings Gap increases as carrier capacity tightens
© Transplace 2015. All Contents confidential.
9
2014
2015
Coca-Cola North America
&
Coca-Cola Bottling System
Two Business Model RTM:
Production Center to Distribution Center to Red Truck
Production Center to Warehouse/Distributor
Transportation Planning
Classified - Internal use
--Restricted
Coca-Cola at a glance…
Coca-Cola
• The world’s largest beverage
company
–
More than 500 brands; over 200 countries;
1.9 billion servings each day
• North America Operating Model
–
Coca-Cola North America (CCNA); CocaCola Refreshments (CCR) and bottler
partners
–
•
•
•
More than 10,000 lanes
Average Length of Haul 250 miles
Freight Spend $1.4B
•
Full Truck Load
•
•
•
Highly Confidential – Not for Distribution
$16M
Ocean
•
Sparkling Beverages (Coca-Cola
Refreshments
• 70 Production Centers
Still Beverages (Coca-Cola North America)
• 8 Chilled Production Centers
• 6 Syrup Production Centers
• 15 Still Production Centers
1.1 million shipments
Less than Truck Load
•
•
• US Operations
–
• US Transportation
$120M
Rail
•
•
Intermodal < 1%
Tanker – Raw Materials
Transportation Procurement Strategy
Overview
2016
Long Term: Demand greater than Supply
So why
not
increase
trucks?
Highly Confidential – Not for Distribution
13
Our Transportation Strategy starts with Mode Allocation
Mode
Mode Optimization
Optimization
Supplier
Supplier Relationship
Relationship Mng.
Mng.
3PL
Over the Road
Asset
Key initiatives
complement one
another to create
a holistic
transportation
strategy
Intermodal
Dedicated
CORE
Captive
Captive Fleet
Fleet
Dedicated
Dedicated Fleets
Fleets
Private Fleet
CHALLENGER
CONTENDER
Intermodal
Intermodal
Private
Private Fleet
Fleet
Customer
Customer Direct
Direct
Carrier
Carrier Type
Type Allocation
Allocation
Plant
Plant to
to Plant
Plant
Highly Confidential – Not for Distribution
Asset
Asset Carriers
Carriers
3PL
3PL // Brokers
Brokers
Evolution of CCR Carrier Base
2011:
Total Carriers: 335
3PL / Brokers: 45
Carriers moving 80%: 72
2012:
Total Carriers: 265
3PL / Brokers: 15
Carriers moving 80%: 66
2013:
Total Carriers: ~110
3PL / Brokers: 8
Carriers moving 80%: 35
2014
Total Carriers: ~85
3PL / Brokers: 8
Carriers moving 80%: 30
Highly Confidential – Not for Distribution
2015
2016
Total Carriers: ~77
3PL / Brokers: 7
Carriers moving 80%: 22
Total Carriers: 60
3PL / Brokers: 6
Carriers moving 80%: 18
Great execution leads to long-term partnerships
Daily Execution
Long-term Relationships
C.A.M.
Program
Value-Add
Scores
Forecast
Scorecards
Performance
Communication
Highly Confidential – Not for Distribution
Logistics Planning Interdependencies
2004 - Tactical Planning
Demand Planning
2009 - Operational Execution
Supply Planning
Field Planning Operations Execution
Plan
Materials
Demand
Planning
Supply Network
Planning
Plan
Production
Plan
Transportation
Unconstrained
Demand
Forecasting
Procurement
0 – 28 days
Production
0 -7 days
Logistics
0 – 28 days
Plan
Warehousing
Rolling Time Horizon (Days)
30 - 120
14 - 90
0 - 14
Order
Fulfillment
Process
Ship
to customer
Objective
Lane volume
forecasts tied to
customer specific
promotional
activity
Warehouse
0 -28 days
0 - 28
Inventory Management – Inventory Policy
Measures: Schedule Adherence, WOS, Age of Stock, Forecast
Accuracy, Order Fill/Case Fill, Master Data, Dependent Demand Signals
Primary Tender, On-Time Delivery
CCNA - CONFIDENTIAL
17
TRANSPORTATION
SIPOC
Logistics
SIPOC: Customer
Freight Planning
Lane Forecasting
Suppliers
Inputs
Promotional Volume
Demand Planning
Projected T/L by Customer
Lane
Evaluator Tool
BW Historical Volume
Historical T/L Customer
Current Procured Volume
LOL Historical Volume
Transportation Planners
Transportation
Procurement
Contracted Carriers
Extract
Evaluator data
Evaluator Vs
Historical
Analysis
Outputs
New Volume Projections
by lane
I
Customers
Contract Carriers
National Retails sales
Customer Freight
Planning Lane
Forecasting
National Retail Sales
Process
D M A
Strategic
Customer
Promo Vs
procured review
Volume by lane
measurements
Evaluator Tool Accuracy
Transportation
Procurement
Transportation Planners
Evaluator Tool
Management
Procure &
monitor
shipments vs
plan
Measure
accuracy of
Evaluator data
provide
feedback
C
The Dart Network of Companies
800 Lone Oak Road · Eagan, MN 55121 800.366.9000
www.dart.net
About Us
Eagan, MN Operating Center
Dallas, TX Operating Center
Dart Transit Company
providing quality transportation services since 1934
Our family-owned and operated business is one of the largest
dry-van, truckload carriers in the United States.
•
•
•
•
The Dart Network of Companies
Over 2000 power units
Over 6,000 53’ trailers
Satellite equipped
First class customer service
800 Lone Oak Road · Eagan, MN 55121 800.366.9000
www.dart.net
2016 Critical Issues for Transportation
• Driver recruiting/retention
• Driver and tractor
utilization
• Driver training costs
• History of class 8 tractor
orders
• Used tractor values
• ELD mandate
• Cost containment
The Dart Network of Companies
800 Lone Oak Road · Eagan, MN 55121 800.366.9000
www.dart.net
The Truth About Bids
• Carriers can be replaced during a
bid
• Shippers can be replaced during a
bid
• No one knows if their pricing or
awards will be accepted
• Bids shake up the business in good
times and bad times
• We are all negatively impacted by
a sluggish economy
The Dart Network of Companies
800 Lone Oak Road · Eagan, MN 55121 800.366.9000
www.dart.net
Bids Are Risky
Stability
of
Carrier
Cost
of
Service
Quality
of
Service
The Dart Network of Companies
800 Lone Oak Road · Eagan, MN 55121 800.366.9000
www.dart.net
The Greatest Bid Obstacle
TIME
–Unrealistic turn
around time
–Multiple rounds
–Elapsed time
until award
The Dart Network of Companies
800 Lone Oak Road · Eagan, MN 55121 800.366.9000
www.dart.net
Carrier Needs
• Business partners
• Consistency in freight
volumes
• Fair return on
investment
• Communication
The Dart Network of Companies
800 Lone Oak Road · Eagan, MN 55121 800.366.9000
www.dart.net
Our Panelists
Moderator:
• Brent Hudspeth - Vice President, Transportation
Management, Transplace. Past President CSCMP DFW
Roundtable.
Panelists:
• Rob Haddock - Group Director, Thermal Logistics, CocaCola North America
• Steven Johnson - Director, Transportation Procurement,
Coca-Cola North America
• John Pinyerd - Director, Southeast Shorthaul, Dart Transit
© Transplace 2015. All Contents confidential.
26
Back-up
Classified - Internal use
--Restricted
27
Short Term: Available Capacity
Highly Confidential – Not for Distribution
Long Term Pessimism
Highly Confidential – Not for Distribution
29
Performance Requirements Reminder
 Primary Tender Acceptance
• Core – 97%
• Challenger & Contender – 95%
 Surge
• Core – 20%
• Challenger – 10%
• Contender – 0%
 On-Time Pick Up & Delivery to Final Appointment – 97%
 On-Time to Original Appointment – 82%*
 System Status Message Reporting – 96%
 Shipment Delay Messages
• Core – 100%
• Challenger & Contender – In process of rolling out
* While 82% is a starting point, most customers require 95% and carriers will be held to that
Highly Confidential – Not for Distribution
30
Regulations, More than Demand, Will Drive the
Next Crunch—But It’s Coming
Tons of New Regulations
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Safety information and carrier ratings
Special state regulations on trucking (ex: CARB)
Opening the border to trucking
Elimination or allowing of illegal aliens
Various health regs (apnea, medical certs, etc.)
Require ELDs or electronic logging devices
Hours of service changes
Increase broker bond & require prompt payment to carriers
More stringent temperature & cleanliness requirements
Encourage union membership and require benefits for ICs
Examination of fleets for patterns of violations
Prevent shipper coercion regarding HOS, CSA, etc.
National drug clearinghouse
Requiring standard training procedures
Test new carriers for proficiency
Increase minimum insurance coverage for carriers
Tightened OSHA requirements
Hold shippers & brokers responsible for hired carriers' safety
Limit max governed speed (64 MPH)
New vehicle stability controls
Source: FTR Associates and BB&TCM analysis
Implied Driver Hires Per Quarter Required By Regulation
180,000
Electronic Stability controls
160,000
Speed limiters
140,000
120,000
100,000
Safe Harbor
OSHA Worker Protection
80,000
Minimum Insurance
60,000
Entry Proficiency
40,000
Training Provisions
20,000
Drug & Alcohol Data Base
-
Prohibition Of Coercion
Bios
Rob Haddock
•
Group Director, Thermal Logistics, Coca-Cola North America
•
CSCMP National Programs Process Team Chair
•
34 year career with the Coca-Cola system
–
Field experience
• United Steel Worker hourly associate
• Warehouse management
• Transportation management
• Production management
• Production scheduling
• Customer service management
–
Corporate Experience
• Marketing & Sales Business liaison, strategic planning
• Mid & Short term production, distribution & procurement planning
• SAP SME APO SNP, PPDS & ECC
• S&OP/S&OE process management
• Transportation Management
•
Over 3 decades of supply and operations management experience with The Coca-Cola Company ranging from plant management, customer service,
transportation, business Liaison, Vendor Managed Inventories, Operational Excellence, Transportation Management, Production & deployment
planning, etc….
•
SME for SAP planning systems and planning organizational design
Steven Johnson
•
20 year supply chain career including 13 years with Coca-Cola
•
Led various functions including: Accounting; Plant Operations; Production Planning; Transportation; Project Management; Customer Service; and
Procurement
•
“Constantly pursuing the perfect supply chain”
•
Resident of Atlanta with wife, Arden and 3 children
© Transplace 2015. All Contents confidential.
32
Bios
Brent Hudspeth
Two kids born in ATL.
Mr. Hudspeth has 25 years of supply chain and transportation industry experience in executive and consulting roles. During his
seven-year tenure with Transplace, Hudspeth has held both Supply Chain Consulting and Transportation Management roles.
Presently, he steers Transplace’s programs across an array of manufacturing, retail and distribution companies which utilize the
Transplace TMS, managed transportation, logistics engineering, brokerage and related services. Prior to Transplace, Mr. Hudspeth
held executive roles in both logistics services and consulting organizations, with a continued focus on achieving greater productivity
in transportation and supply chain. He has overseen the business development and marketing teams in two entrepreneurial logistics
organizations, NextJet and Aviation Services Group. Additionally, he has worked in management and operations consulting
capacities within AT Kearney, Arthur Andersen and Precision. Moreover, Hudspeth gained valuable consumer products experience
through headquarter level sales and marketing positions at The Coca-Cola Company. Hudspeth has contributed articles and been
quoted in a numerous publications including the Wall Street Journal, the Journal of Commerce, and Supply and Demand Chain
Executive. Brent is a two-time president of the Dallas-Ft. Worth CSCMP Roundtable, and board member of the Stanford Business
School Alumni Association. Mr. Hudspeth holds a MBA from Stanford University and BA from Washington & Lee University.
John Pinyerd
•
John Pinyerd is a graduate of Auburn University where he majored in Transportation and Logistics (War Eagle!).
•
His career has been fairly equally divided between being on the shipper, 3PL and on the carrier sides of the industry, and along
the way he achieved the “Lifetime Certified Purchasing Manager” achievement from ISM.
•
At Menlo Logistics, he served as Senior Project Director over their national freight bid and directed their largest freight
accounts: Electrolux, IBM, and Homelife, He also served as Menlo’s lead consultant to William Sonoma. Prior to joining Dart,
John was the Senior Strategic Sourcing Manager at Cendian Corporation and was responsible for $250 million in transportation
procurement.
•
John joined Dart Transit in 2002 as the Southeast Regional Sales Manager. In his current role of Director of Southeast
Shorthaul, John is responsible for directing both the sales and operations for Dart in the southeast. At Dart, he helped create
and grow a Southeast Regional Fleet.
© Transplace 2015. All Contents confidential.
33
Questions
•
•
•
•
•
•
•
How are companies planning transportation? Looking historically, thinking future will be like the past? Or is there someone
out there who is inline with future volumes?
Recent thoughts on Freight Forecasting—more customers talking about it
What do we see from other companies in the market? How do you deal with reality when averages are not the same? You bid
lanes and volume from plant x, move part or all to another plant; Volumes change – bid 20 per week and becomes 40 or 5
Seasonal adjustments/surges, contingency planning, tapping additional capacity; how does a carrier plan for that?
Impact of plant openings/shifting production volumes
Implications of Polar Vortex—how has that made you behave differently relative to freight procurement and planning
What technology is out there that can tie between ERP/Demand Planning applications and TMS/Execution systems? ERP only
gets you so far.
•
•
•
•
•
•
What is your bid process? How are other companies handling their bid process?
When do you hold your bids? Do you keep to a strict schedule or adjust based on internal or external factors?
What timelines do shippers think are reasonable? Carriers?
What type of data format do you want to work with in a bid? How do you all want to manipulate the data?
Do you want to have a dedicated and IM component in your bids?
How do you measure the successful outcomes of your bid process?
•
•
What is the right number of suppliers you should have—trucking companies? How many too few or too much?
How do you consider scorecarding your providers?
•
•
What do you all see as the capacity environment? Into 2016?
What do you see as the impact of latest regulations?
© Transplace 2015. All Contents confidential.
34
Flow
•
Brent open panel
–
–
–
•
Coke panelists provide
–
–
–
–
•
Brief overview of Coke
Talk about how they coordinate planning and sourcing at Coke
Intro the challenges faced
Any thoughts on current market
Dart provide
–
–
–
–
•
Introduce the topic and all the panelists
Quick overview of TP, just to show scale and relevance
Provide brief market update (1 to 2 slides), some good info we have on bid results over last 5 years
Brief overview of Dart
Carriers view on current market, all the bids
Challenges
How they see disconnect of what was bid and what they actually see, other challenges
Brent lead discussion around – bids, market, challenges
© Transplace 2015. All Contents confidential.
35