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A Quantum Leap Forward in Minimizing Distribution Costs Leading Chemical Manufacturer Enjoys Fast Payback, Superior Load Control Management From TRACS* Logistics Software Founded in 1906, Quantum Chemical Corporation, Cincinnati, Ohio, is a subsidiary of Millennium Chemicals Inc. Quantum is the largest U.S. supplier of polyethylene and manufacturer of a wide spectrum of chemicals with production plants in Texas, Iowa, Illinois, Ohio, New Jersey and California. The company reports that in 1994 it installed TRACS* software from Shelton, CT-based Weseley Software in its Load Planning Center and has since saved hundreds of thousands of dollars in annual freight costs. According to Quantum sources , "TRACS* paid for itself twice over a two year period." Background Quantum's legacy system, an IBM IMS DB/DC application with Order Entry. Inventory Control, Routing and Ratings applications, is still in use. However, the mainframe environment did not provide the ease of use, the quick access or the transportation planning capabilities required by such a diverse enterprise. Quantum's original mainframe-based shipping software primarily calculated rates and assigned a carrier. However, the process of updating carrier and rating information was very difficult. As a result, carrier selections were not always based on the most current information and rate calculations including surcharges were not always accurate. Many times, when the shipping locations received orders with carriers assigned to them, carrier coverage was unavailable and the staff had to choose another carrier. This resulted in less than optimal shipping decisions and added difficulty in tracking freight costs. In early 1993, Quantum hired Andersen Consulting to analyze the company's business procedures and develop a strategic plan to optimize them. The study recommended that Quantum revisit its carrier contracts in the areas of rail and motor freight procurement, network re-engineering and transportation load planning. As a result, Quantum introduced a "Core Carrier" program in which it consolidated the number of motor carriers with which the company negotiates. System Recommendations In the Spring of 1994, Quantum asked Andersen Consulting for recommendations on fulfilling the broader demands of distribution management while effecting significant economies. After consultations, Andersen recommended that Quantum transition its systems to a PC-based distribution environment. Quantum issued an RFP. Quantum representatives Jim Fee, Sr. Information Technology Analyst; Tom Moranz, Manager, Distribution Logistics and Bob Risberg, Manager, Transportation Load Planning, recalled that Quantum was looking for a "next generation" solution. Quantum interviewed and saw demonstrations at a well known ratings and payment service company; a distribution software company, and Weseley Software Development Corp., a Pinnacle Automation Company. Quantum selected Weseley's TRACS*system because of its advanced technology, competitive pricing and because it was a good technological fit with Quantum's vision of its IS (Information Systems) future. Implementation "Weseley was approved in the Spring of 1994, and the first phase was implemented in a matter of a few months," Risberg reported. He added, "TRACS* was first piloted at Quantum's Clinton, Iowa site in October 1994. This facility conducted a three-month pilot, after which TRACS was successfully implemented for the remaining sites over a two year period. New sites are now implemented in a day or two." Centralized Load Planning TRACS was installed at the Load Planning Center to manage shipment planning activities for multiple ship locations in the Quantum distribution network. Three Load Planners and three Logistics Analysts at the Load Planning Center manage transportation planning for all ship sites. The process of implementing TRACS* at the multiple sites was a three-step program: first, a one day meeting in which a team from the Load Planning Center visited the location; next, the team would review the new system and demonstrate TRACS* to the staff. Although the staff at these remote facilities did not need to use TRACS* to do their daily work, they could view TRACS* modeling results from the Load Planning Center to see how the system determined load plans, compared carriers, etc. Third, Fee would shut down the transportation software on the mainframe and go live with TRACS* that same day. Quantum' transportation planning process now includes the following steps: 1) Orders are entered into Quantum's Order Entry System. 2) A "shipset"of orders is printed at the designated ship location to provide advance notice for product planning and inventory allocation. 3) The orders are also downloaded into TRACS* at the Load Planning Center, where they reside until their delivery date falls within the three day planning window used by the planners. 4) The Load Planners use TRACS* to determine the optimal shipping method for outbound shipments and interplant transfers. They also assign the carrier who can meet the delivery requirements at the lowest cost. 5) The planners schedule load tenders, which are EDI-tendered to most carriers.(Pickup appointment times are coordinated at the local level.) 6) A carrier assignment sheet is electronically transmitted to the ship location with a carrier assigned to each shipment and/or load. The staff then uses this TRACS* generated report to manage the day's work load. Two TRACS* modules are used by Quantum: TRACS*LoadBuilder and TRACS*Routing Manager. They run on a Novell 4.1 Local Area Network server with six concurrent users. TRACS*LoadBuilder analyzes orders to determine the optimal way to deliver them, considering all constraints and available carriers and modes - LTL (less Than Truck Load), TL (Truck Load), multi-stop TL, dynamic pool distribution, piggyback (TOFC), small packages including zone skipping, air and rail. In addition to its sophisticated mathematical model, TRACS* also includes hundreds of user-definable parameters that can be used to further tailor the modeling. TRACS* Routing Manager provides a flexible interface to a wide range of systems including order processing, warehouse, financial and customer service systems. One-feature, for example, is TRACS* Order Filter, a download interface that can be set up with user-definable parameters so that a wide range of order entry screens can be handled. Order/shipment/load data is stored in a multi-layered file structure that allows load planners to continuously create optimal plans from a dynamic order pool. Results Moranz, Fee and Risberg stated that the benefits of the TRACS* system are significant. They report saving thousands per month on freight costs alone. They list improvement of the optimization process for carrier selection; ensured use of the best carrier/mode for a delivery; increased order visibility, and improved carrier ability to handle same day shipments. The distribution team attributes the solid cost and productivity savings to improved freight consolidations, LTL conversions to truckloads, and an improved ability to maintain rating information and surcharges. Future Plans The trio said that they're looking at rail shipment management, a feature included in the release TRACS*3.2. This version provides a new client/server solution for Load Planning Centers and additional modules besides TRACS*LoadBuilder and Routing Manager. These modules include TRACS*Assign, which provides flexible "auto-assign" capability by analyzing a group of loads and assigning carriers/equipment according to user-defined preferences; TRACS*Offer, which provides electronic load tendering according to user-defined preferences, and TRACS*Status, an intelligent messaging center that captures EDI status messages, monitors delivery events and alerts transportation planners to potential hot spots in the distribution network. A Quantum representative noted that "Weseley support has been excellent." making its vendor selection an all around, win-win situation. Weseley Software Development Corp., founded in 1983, is a leader in the logistics software industry. The company develops end-to-end transportation planning and execution software for multi-modal shippers. TRACS* is installed at many Fortune 500 companies. Clients include manufacturers and distributors in the chemical, consumer goods, grocery, retail, third party logistics and other industry sectors. |