Reducing Transportation Costs with Freight Market Intelligence

Transcription

1 TRN103 Reducing Transportation Costs with Freight Market Intelligence Rob Hair Sr. Director, Global Transportation Processes and Systems, PepsiCo Gary Girotti VP, Transportation Practice, Chainalytics

2 Agenda Introduction to Chainalytics Freight Market Intelligence Consortium (FMIC) Overview of PepsiCo s Transportation Procurement Model How Freight Market Intelligence Enhances PepsiCo s Procurement Process FMIC and JDA Integration Overview 2

3 Who is Chainalytics? Our Genesis Market Lacked Proven, Focused Supply Chain Analytics Competence Best Analytical Minds in Supply Chain 1 st Named to 100 Great Supply Chain Partners List by SupplyChainBrain; Recognized for 8 Years Running Launch of Freight Market Intelligence Consortium (FMIC) Mike Kilgore named a Pro to Know by Supply & Demand Chain Executive; Jeff Metersky (2006), Gary Girotti (2007), Steve Ellet (2011), Irv Grossman (2011), and Kevin Zweier (2012) also named Pros to Know Established Chainalytics India Private Limited in Bangalore FMIC named Top Supply Chain Innovation by Supply & Demand Chain Executive Named to ARC Advisory s 10 Coolest Supply Chain Boutiques TODAY More than 180 Clients 14 of AMR s Top 25 Supply Chains 5 of Top 10 Retailers 7 of Top 10 Food & Beverage Manufacturers 5 of Top 10 CPG Companies Transportation Practice Best Practice & System Assessment Mode Analysis vs. Procurement Launch of Sales & Operations Variability Consortium (S&OVC) Strategic Growth via Mergers & Acquisitions o Supply Chain Operations (Chainnovations) o Packaging Optimization (Adalis Packaging Solutions Group) Business Intelligence Freight Market Intelligence Consortium Membership-Based Consortium for All Major Modes of Transportation (TL, LTL, Ocean, and Air) $19B Annual Freight Spend from 100+ Customers in All Major Industry Sectors Robust Technology 3

4 Freight Market Intelligence Consortium Truckload Member Demographics of January 2012 Model $15B in Transportation Spend 12M Truck Loads 91 Model Participants with TL Spend from $10M to $500M+ Includes USA, Canada and In and Out of Mexico 7 Models (Dry Van, Temperature- Controlled, Intermodal, Flatbed, 3 Short Haul) Equivalent to Approximately 7% of Total North American For-Hire Truckload Market 4

5 Sample Market Insights Lane Specific Analysis and Market Trends Over Time 2011 YOY Average TL Rates per Mile increased by more than 6%. Actual Price per Equivalent Load only increased by about 3%. 5

6 Sep-10 Sep-10 Oct-10 Oct-10 Nov-10 Nov-10 Dec-10 Dec-10 Jan-11 Jan-11 Feb-11 Feb-11 Mar-11 Mar-11 Apr-11 Apr-11 May-11 May-11 Jun-11 Jun-11 Jul-11 Jul-11 Aug-11 Aug-11 Sep-10 Sep-10 Oct-10 Oct-10 Nov-10 Nov-10 Dec-10 Dec-10 Jan-11 Jan-11 Feb-11 Feb-11 Mar-11 Mar-11 Apr-11 Apr-11 May-11 May-11 Jun-11 Jun-11 Jul-11 Jul-11 Aug-11 Aug-11 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sample Network Insights Carrier Profile Shipper Size & Carrier Concentration Annual Truckload Model Annual Truckload Model 2 Carrier Report Annual Carrier Truckload Report Model 2 Carrier Report XYZ Inc. XYZ Inc. XYZ Inc. Carrier Shipment Statistics Estimated Costs and Market Position $3.80 DOE Price, Data requested from 10/1/2010 to 9/30/2011) $3.80 DOE Price, Data requested from 10/1/2010 to 9/30/2011) (FSC $3.80 DOE Price, Data requested from Shipment 10/1/2010 to 9/30/2011) Statistics Estimated Costs and Market Position Carrier Shipment Statistics Reported Annual Estimated Costs Annual and Annual Market Cost Position Difference Minimum Average Maximum Number of % Reported Reported Annual Estimated Annual Annual Cost Difference Status Minimum Average Maximum Number of % Reported Annual Cost Cost Difference Percent Co_Id SCAC Weekly Weekly Weekly weeks Weeks Status Annual Reported Cost Annual Estimated Cost Annual Difference Annual Cost Percent (Including Fuel Co_Id SCAC Weekly Difference Minimum Weekly Average Weekly Maximum Number weeks of % Weeks Reported Volume (Including Fuel (Including Fuel (Including Fuel (Including Fuel Volume Volume Volume w/volume w/volume (Including Status Volume Annual (Including Cost Fuel (Including Cost Fuel (Including Difference Fuel (Including Percent Fuel Surcharge) Fuel Co_Id SCAC Volume Weekly Volume Weekly Volume Weekly w/volume weeks w/volume Weeks Surcharge) Surcharge) Surcharge) Surcharge) (Including Surcharge) Fuel Volume (Including Surcharge) Fuel (Including Surcharge) Fuel (Including Surcharge) Fuel (Including Surcharge) Fuel Volume Volume Volume w/volume w/volume Surcharge) XYZ Inc % 3,860 $ Surcharge) 4,781,807 $ Surcharge) 4,853,526 Surcharge) $ (71,719) Surcharge) -1% AT XYZ Inc % 3,860 $ 4,781,807 $ 4,853,526 $ (71,719) -1% AT XYZ Inc % 100% 3, $ $ 4,781,807 1,255,699 $ $ 4,853,526 1,260,658 $ $ (71,719) (4,958) -1% AT 0% AT XYZ Inc % 462 $ 1,255,699 $ 1,260,658 $ (4,958) 0% AT XYZ Inc % 100% 462 4,946 $ $ 1,255,699 12,156,167 $ $ 1,260,658 11,397,639 $ $ (4,958) 758,528 0% AT 7% ABOVE XYZ Inc % 4,946 $ 12,156,167 $ 11,397,639 $ 758,528 7% ABOVE XYZ Inc % 100% 4,946 7,569 $ $ 12,156,167 7,125,551 $ $ 11,397,639 7,433,016 $ $ 758,528 (307,465) 7% -4% ABOVE BELOW XYZ Inc % 7,569 $ 7,125,551 $ 7,433,016 $ (307,465) -4% BELOW XYZ Inc % 100% 7,569 2,840 $ $ 7,125,551 3,272,128 $ $ 7,433,016 3,586,608 $ $ (307,465) (314,480) -4% -9% BELOW BELOW XYZ XYZ Inc. Inc % 100% 2,840 2,840 $ $ 3,272,128 3,272,128 $ $ 3,586,608 3,586,608 $ $ (314,480) (314,480) -9% -9% BELOW XYZ Inc % 23 $ 26,810 $ 26,224 $ 586 BELOW 2% AT XYZ XYZ Inc. Inc % 32% $ $ 26,810 $ $ 26,224 $ $ % 2% AT AT XYZ Inc % 720 $ 873,428 $ 904,858 $ (31,430) -3% BELOW XYZ Inc % 720 $ $ 873,428 $ $ 904,858 $ $ (31,430) -3% BELOW XYZ Inc % 8,892 $ 14,959,787 $ 14,989,016 $ (29,230) 0% AT XYZ Inc % 8,892 $ 14,959,787 $ 14,989,016 $ (29,230) 0% AT XYZ XYZ Inc. Inc % 98% $ $ 1,579,289 1,579,289 $ $ 1,551,672 1,551,672 $ $ 27,617 27,617 2% AT 2% AT XYZ XYZ Inc. Inc % 100% $ $ 599, ,163 $ $ 689, ,347 $ $ (90,185) (90,185) -13% -13% BELOW BELOW XYZ XYZ Inc. Inc Weekly Weekly Percent Percent to to to Market Market % 100% 3,585 3,585 $ $ $ 4,910,758 4,910,758 $ $ $ 5,062,026 5,062,026 $ $ $ (151,268) (151,268) -3% -3% BELOW -3% BELOW XYZ XYZ Inc. Inc at % 87% $ $ 1,311,745 $ $ 1,043,715 $ $ 268, ,030 26% 26% ABOVE ABOVE Average Average 14 Fuel Fuel Per Per 54 Mile Mile at at $3.80 $ DOE DOE 87% 627 $ 1,311,745 $ 1,043,715 $ 268,030 26% ABOVE % 730 $ 513,450 $ $120, ,610 $ (33,160) -6% BELOW XYZ XYZ Inc. 35% Inc. 35% % 100% $ $ 513, ,450 $ $ $120, ,610 $120, ,610 $ $ (33,160) (33,160) -6% BELOW -6% BELOW 30% % 26,059 $ TNTI_ Car3 30,249,440 $ 31,149,423 $ (899,983) -3% BELOW XYZ XYZ Inc. Inc. 30% % 100% 26,059 26,059 $ $ TNTI_ TNTI_ 30% Car3 WAL 30,249,440 Car3 30,249,440 $ $ 31,149,423 31,149,423 XYZ Inc % 6,661 $ 12,957,732 $ 13,458,719 $100,000 $ $ (899,983) (899,983) -3% BELOW -3% BELOW WAL WAL $ (500,988) -4% BELOW XYZ XYZ Inc. Inc. 25% % 100% 6,661 6,661 $ $ 12,957,732 12,957,732 $ $ 13,458,719 $100,000 13,458,719 $100,000 $ $ (500,988) (500,988) -4% BELOW -4% BELOW XYZ Inc. 25% 25% % 1,216 $ RTS_ 1,998,122 $ 2,163,900 $ (165,778) -8% BELOW XYZ XYZ Car12 XYZ Inc. Inc. Inc. 20% WAL $80, % 100% 100% 1,216 1,216 1,968 $ $ $ RTS_ 1,998,122 RTS_ 1,998,122 2,381,559 $ $ $ 2,163,900 2,163,900 2,380,354 $ $ $ (165,778) (165,778) 1,205-8% 0% BELOW -8% BELOW Car12 Car12 AT XYZ XYZ Inc. 20% WAL $80,000 XYZ Inc. 20% WAL $80,000 Inc % % 100% 100% 1,968 1,968 3,475 $ $ $ 2,381,559 2,381,559 4,763,127 $ $ $ 2,380,354 2,380,354 4,999,324 $ $ $ (236,197) 1,205 1,205 0% -5% AT 0% AT BELOW Car20 GRDN $60,000 XYZ XYZ Inc. Inc. 15% 15% % 100% 3,475 1,960 3,475 $ $ $ _WAL 4,763,127 3,085,733 4,763,127 $ $ $ 4,999,324 2,715,967 4,999,324 $ $ $ (236,197) 369,765 (236,197) -5% 14% BELOW -5% ABOVE BELOW 10% Car20 GRDN GRDN $60,000 $60,000 Car20 XYZ XYZ Inc. Inc % 100% 1,960 1,960 $ $ _WAL 3,085,733 _WAL 3,085,733 $ $ 2,715,967 $40,000 2,715,967 $ $ 369, ,765 14% ABOVE 14% ABOVE 10% 10% 5% EPES_ Car25 $40,000 $40,000 WAL 5% 5% EPES_ EPES_ $20,000 0% Car25 Car25 WAL WAL $20,000 $20,000 0% 0% $0 1, TNTI_W Car3 $0 $0 1, AL TNTI_W TNTI_W Car3 RTS_WA 800 Car12 Car AL AL 0.8 L RTS_WA Car12 GRDN_ 0.8 L WAL Car20 Car12 RTS_WA L GRDN_ EPES_W GRDN_ 100 Car20 WAL Car25 Car WAL EPES_W Car25 EPES_W 100 AL Car AL Weekly Volume Weekly Volume Absolute Absolute Weekly Weekly Market Market Position Position Cumulative Market Position Cumulative Cumulative Market Market Position Position Car3 Car3 Car3 TNTI_ TNTI_ TNTI_ WAL WAL WAL Car12 Car12 RTS_W RTS_W AL RTS_W Car12 AL AL GRDN_ Car20 GRDN_ WAL GRDN_ Car20 WAL WAL Car25 EPES_ WAL Car25 EPES_ EPES_ WAL WAL Car20 Car25 $5,000,000 $4,500,000 $5,000,000 $4,000,000 $5,000,000 $4,500,000 $3,500,000 $4,500,000 $4,000,000 $3,000,000 $4,000,000 $3,500,000 $2,500,000 $3,500,000 $3,000,000 $2,000,000 $3,000,000 $2,500,000 $1,500,000 $2,500,000 $2,000,000 $1,000,000 $2,000,000 $500,000 $1,500,000 $1,500,000 $- $1,000,000 $1,000,000 $500,000 $500,000 $- $- 6

7 Smaller Shippers Showing Cost Advantages Weekly Market Position By Shipper Spend Category Shippers by Spend 26% 29% 20% 25% $0-$50M $50-$100M $100M-$250M $250M+ Source: Chainalytics FMIC Long Haul Dry Van January

8 Carrier Spend Categories Carrier Spend Categories Annual Volume Annual Volume Annual Shipper Spend vs. Annual Carrier Revenue Market Position: Shipper Size vs. Carrier Size 4.2MM Loads Across 58 Shippers Volume Per Year - Shipper Spend Categories Volume Per Year - Shipper Spend Categories 50.0% 35.6% 50.0% 22.4% 35.6% 27.6% 12.3% 22.4% 27.6% 2.1% 12.3% 0.0% 2.1% 0% 20% 0.0% <25MM 25-75MM MM MM >250MM 0% 20% <25MM 25-75MM MM MM >250MM <100K -3% -1% -3% -4% -2% 1.7% <100K <100K -3% -1% -3% -4% -2% 1.7% % -3% -1% -3% -2% 3.1% <100K % -3% -1% -3% -2% 3.1% % -1% -2% -4% -3% 5.2% % -1% -2% -4% -3% 5.2% % 0% 2% -3% -2% 5.0% % 0% 2% -3% -2% 5.0% % 0% -1% -2% -2% 4.6% % 0% -1% -2% -2% 4.6% % -1% -1% -2% 2% 17.2% % -1% -1% -2% 2% 17.2% % -2% 0% -1% 1% 15.7% % -2% 0% -1% 1% 15.7% % 1% 1% 3% 15.1% % 1% 1% 3% 15.1% % -5% 2% 5% 2% 17.0% % -5% 2% 5% 2% 17.0% % 4% 5% 10.8% % 4% 5% 10.8% > % 4.5% >50000 > % 4.5% >50000 Market Position - Shippers Size and Carrier Size Market Position - Shippers Size and Carrier Size Sweet Spot - Between 1M and 5M per Carrier 8

9 Overview of PepsiCo s Transportation Procurement Model

10 PepsiCo Network Overview We are a shipper $1.5B+ Annual Transportation Spend Across All Modes $900MM+ in Truckload Spend 500+ Carriers 80,000+ Lanes 1,000,000+ Loads We are a carrier PBC Fleet Dedicated Fleets Frito-Lay Fleet 60% of Pepsi Volume 1,000 Drivers 500 Tractors 2,500 Trailers 55 Plants 80 MM Miles / Year 14 Fleets 350+ Drivers 275 Tractors 900 Trailers 20 MM Miles / Year 85% of Frito-Lay Volume 1,400 Drivers 1,050 Tractors 4,100 Trailers 140 MM Miles / Year 10

11 Global Transportation Procurement Model Overview Our Transportation Procurement Model is a comprehensive strategy of five interlocking capabilities to own "all that moves" within our supply chain. 11

12 12 Each step of procurement model has distinct purpose... Get What You Pay For

13 ...and Drives Ability to Deliver All Other Capabilities Example: Market Knowledge elevates other components of model How have our forecast volumes been affected by transportation market conditions? What rate increases can we expect? Are our carriers equipped to handle new regulations? Are we at, below, or above market rates? 13

14 14 Market Knowledge Goal Procurement Activities Understand your transportation market Data gathered and analyzed Carrier rates Fuel prices Carrier input prices Capacity Driver availability & wages Regulatory trends Developed point of view on transportation market 1 Leverage Expansive Network to Understand or Benchmark Similar Lane Rates 2 Use Strategic Carrier Network to Benchmark Market Rates in Any Given Lane or Region PepsiCo Network

15 Output Inputs Market Knowledge: Sample Tools & Resources Industry Lane Rate Benchmarks 3 Leverage Chainalytics Freight Market Intelligence Resources 15

16 28-Sep 28-Oct 28-Nov 28-Dec 28-Jan 28-Feb 1-Mar 30-Apr 31- May 30-Jun 31-Jul 31-Aug 28-Sep 28-Oct 28-Nov 28-Dec 28-Jan 28-Feb 31-Mar 30-Apr 31- May 30-Jun 31-Jul Weekly Loads Weekly Loads Internal Business Intelligence Goal Procurement Activities Know your capacity needs Key Data Elements Volume trends and seasonality Know geographic areas historically challenged by capacity Accurate historical price, service, and bid cycle data Understand geographic capacity concerns Information Management Manage inputs into worksheet or model to gather monthly volume information Leverage Chainalytics models and tools to define internal business intelligence for each business unit 1,200 1, ,200 1, Total Reported Loads Per Week Total Reported Loads Per Week

17 Procurement Event Success Depends on Pre-Work and Data Accuracy Goal Procurement Activities Obtain best cost and service agreements Process Definition Define scope, timeline, stages, and milestones of process Identify key roles and responsibilities (internal teams and any external support) Data Gathering Develop list of lanes, volumes, historic prices for bid Determine what freight you would prefer to renew and not open for bidding. Field Coordination Solicit input on carrier participants based on market knowledge. Maintain continuous communication with field throughout process Carrier Coordination Discuss rules of engagement with the carriers before, during and after the bid. Formalize in writing (Examples: Bid timing, insurance requirements, accessorial policies) Develop and refine bids with carriers to ensure "right" service/cost mix Formalize agreements per applicable business customs/legal framework Information Management Determine tool or method for bid, and maintain/monitor bids Formalized framework to define bid requirements and "host" bid 17

18 Carrier Relationships Goal Develop carriers who provide strategic value Procurement Activities Carrier Capability who will build their operation around the network Strong growth potential Can they grow with your business, and operations Proper operational authorities, insurance requirements Operations feedback on carrier performance and service Continued Carrier Relationship-building Continually meet with existing / potential carriers to understand capabilities and strategy. Establish working relationship with the carrier base. The carrier must be as familiar with our business as we are with theirs 18

19 Execution and Tracking Goal Get what you pay for Procurement Activities Continual performance feedback on execution performance Carrier performance KPI s Capacity plan performance KPI s Route Guide compliance Spot Bid results Problematic lane analysis 19

20 FMIC and JDA Integration Overview

21 Integration Overview New in JDA Transportation Manager / Transportation Planner April 2012 Rating and Routing and TM Opt Request Server Provides benchmark rates automatically on initial optimized result commit to TM and subsequent execution-based rating Storage and Display of FMIC Rate Output Results JDA s analytics solution and default reporting capabilities alongside customer-driven ad-hoc reporting will have access to the backend data through enhanced load APIs and standard practice to access the benchmark rate data in the backend data store 21

22 JDA Transportation Manager Load Rating Details

23 Process JDA customers must join the Freight Market Intelligence Consortium and provide data to access the benchmark rates Other membership benefits apply Semi-annual or quarterly reports, batch estimator access, benchmark surveys, and annual summit Access to LTL, Ocean, and Heavy-Weight Air benchmarks as well 23

24 Thank you. Please remember to submit your survey. TRN103