The return on a technology investment doesn't have to end. As long as there are opportunities to increase logistics productivity in a distribution center or on the road, customers will pursue them with networks of technology providers. These relationships are more partnership than purchasing.
PepsiCo Inc. is a prime example on the user side. When it implemented a transportation management system (TMS) a few years ago, it saw the project as more of a map in its business evolution than as the purchase of a tactical point solution to save transportation dollars.
Mark Whittaker, vice president of PepsiCo Transportation, saw a threat to that evolution resulting from a possible 5% to 8% shrinkage in truckload capacity due to pending driver hours of service and safety regulations. Not only did he want visibility into the productivity of his own company's private fleet, but he wanted a window into his other transportation providers as well.
What Whittaker learned about the business of transportation led him to establish Pepsi Logistics Co. Inc., or PLCI, as the internal logistics services division for the various PepsiCo business units. Indeed, it enabled PepsiCo Transportation to launch a strategic transportation provider network integration strategy to support a stronger alignment between its distribution network and its internal and external transportation providers. Whittaker expects this effort to address PepsiCo's transportation capacity problem by driving captured capacity into the network, minimizing carrier cost and availability volatility. He also sees it as a way to cut the number of miles needed to deliver Pepsi products -- and minimize the company's carbon footprint.
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| A warehouse worker uses a voice-directed device to pick items as directed by warehouse control software. The pallet truck, manufactured by Crown, is equipped with Dematic AGVS controls. |
"We're committed to minimizing PepsiCo's environmental impact by doing what's right to reduce the overall need for transportation," he says. "We're consolidating loads, driving the least amount of miles and using competent carriers that are EPA SmartWay certified. These practices are contributing to PepsiCo's overall environmental goals and, specifically, PepsiCo's transportation sustainability strategy."
The SmartWay Transport Partnership is a public/private collaboration between the U.S. Environmental Protection Agency and the freight industry to improve fuel efficiency, increase environmental performance, and encourage supply chain sustainability. Fab Brasca, vice president of Global Logistics at JDA Software, which provided PLCI's transportation management system, says his client's approach puts software in a new light.
"It's the difference between looking at a TMS as just an execution-level functional deployment that yields x% cost savings to really looking at it as a roadmap that points to each step that will evolve how the organization approaches things over time," he adds.
It's also part of a trend where companies are using supply chain-spanning informational tools and involving people outside their boardroom and management offices -- including people on the plant floor.
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