Delivering Rapid Results with a 3PL When Transportation is not a Core Competency

Close collaboration is key to achieve success.

Many companies realize transportation is not their forte and instead, take the approach of outsourcing their transportation management activities. Most need to integrate and deploy a transportation optimization solution quickly that will deliver valuable and tangible cost savings to the bottom line.

Partnering with a leading provider of third party logistics (3PL) services and transportation management systems is one solution, and the key word here is partnering. Close collaboration with a 3PL is critical for achieving success. Knowing this first hand my company chose to work with a 3PL that had an innovative technical platform as well as a forward-thinking approach.

We wanted a partner that could handle my business, while at the same time be strategic by providing a series of non-traditional concepts and ideas to manage the company's network. With transportation not being a core competency for IPG, we decided to shift gears in late June 2006 and selected Transplace with the hopes of bringing in a much needed fresh perspective to their transportation management strategy and execution.

Close collaboration began with tight integration of systems -- Intertape's Enterprise Resource Planning/Systems of Record and Transplace's Transportation Management System. After analyzing historical customer order and shipment data, changes were made to our network design, which included the numerous considerations and associated impacts as well as modifications that were needed for our business rules and logic sets. We found the creative solution we were looking for that would be beneficial to both Intertape and most importantly -- our customers.

With the dynamics of the North American freight market changing from a transportation capacity provider market into more of a shippers' market where available capacity exceeds demand for transportation services, Transplace is assisting IPG to better understand the rhythm of its logistics operations. IPG has had a complete turnaround from before when 95% of its shipments were less-than truckload (LTL) and 5% were truckload (TL). We have seen a dramatic shift in these numbers. He's also increased order consolidation to fully leverage the highly cost effective/service-centric mode of multi-stop truckloads.

IPG has been able to reduce direct freight costs and realize improved utilization from the serving carrier base. The company has seen service levels improve as IPG reviews much more closely which carriers to use that are performing to their service standards, which has meant a reduction in freight damages. More multi-stop truckload shipments enables goods to receive less touches, which equals less damaged shipments delivered to customers and IPG knows that's a good thing to improve upon when it comes down to providing high quality service. Another area IPG is focused on is improving its LTL freight processes. Transplace conducted a competitive transportation sourcing event focused on IPG's LTL freight, which has been rolled out for us to gain cost efficiencies as well as much improved service from our serving carriers.

Reviewing shipment data, analyzing lanes and existing truckload rates and identifying the amount of freight moving within IPG's network helped the company consolidate shipments across its network and uncover more areas of opportunities. Working closely with Transplace our company was able to find out where to save on costs and improve the efficiencies of certain routes such as rebidding particular lanes and renegotiating contracts with carriers that provide increased consistency of service and improved rate discounts.

What does the future hold? The next step is to model our network, and explore how to implement many of the already identified opportunities, such as immediately seeing the impact of carrying a specific item in a distribution center, or shipping directly to the customer from one of IPG's suppliers. The rest of 2008 will be focused on partnering with shared customers.

When transportation management is not a core competency, a company must look outside to a partner that offers best in class technical solutions and true value that close collaboration between a customer and a 3PL can deliver, which has been significant cost savings and improved service efficiencies across the entire transportation network for IPG.

Joseph Tocci, Senior Vice President of Supply Chain, Intertape Polymer Group. Intertape Polymer Group Inc develops and manufactures specialized polyolefin plastic and paper- based packaging products and complementary packaging systems for industrial and retail use. http://www.intertapepolymer.com/Home/


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