the supply chain digest letter

IN THIS ISSUE

CONTINUED ON PAGE 9

TransportationManagement Systems:Understanding Today'sSolutions and Trends . 1

Case Study: PPGAchieves Real Value . 1

TMS Thoughts LeadersDiscussion ................. 2

Vendor Profile:ManhattanAssociates ................. 4

Vendor Profile: ShippersCommonwealth .......... 7

What Today's ShippersWant .......................... 7

Vendor Profile: SAP ... 8

Where's the ROI inTMS? ......................... 8

The Future of TMS... 11

TMS Resources ....... 11

CONTINUED ON PAGE 3

Transportation Management Systems:Understanding Today's Solutions andTrends

It’s a great time to consider a transportation management system (TMS) - as itappears many companies are realizing.

Research by Supply Chain Digest suggests that the number of TMS “transactions”- meaning the number of companies purchasing a new TMS license or adoptinga new “hosted” TMS – has been about double in the past 12 months from what itwas two years ago.

The reasons are simple – a variety of cost pressure and service challenges, plusthe increasingly complex global nature of the supply chain and the increasinglystrategic role of transportation in the overall supply chain. While perhaps too often

Where'sthe ROIin TMS?We runthenumbersPage 8

SUPPLY CHAIN DIGEST LETTERThe

This month: Transportation Management SystemsISSUE 06-12 WWW.SCDIGEST.COM/LETTER DECEMBER 2006

PPG Combines Centralization and TMSto Achieve Transportation Excellence

PPG, a multi-billion dollar manufacturer of paints, glass, specialty coatings, andother products for both industrial and consumer markets, didn’t just jump on thetransportation centralization bandwagon – it helped define the concept.

“I believe we were either the second or the third organization in the country tocreate a central load control center, after 3M,” said Jim Carr, manager of PPG’sLogistics Center in Delaware, OH. “We’ve had a centralized model since 1990.”

The Logistics Center manages about 175,000 loads per year across a variety ofmodes, supporting 15 different business units and 42 unique ship sites. PPG’ssuccess in centralization is especially interesting because of the great diversity ofits freight moves and transportation requirements across its many products andbusiness units. They utilize bulk carriage, temperature controlled equipment,single and double drop flat bed trucks, a dedicated fleet, traditional dry van, somerail and intermodal, and even heavy air freight.

On top of that, with PPG products going into the automotive manufacturing marketand to many other manufacturing customers where the materials are critical, PPGoften must manage its transportation with very short order-to-delivery windows.

2 www.scdigest.com/letter DECEMBER 2006

THE SUPPLY CHAIN DIGEST LETTER

Editor: KRISTIE CLEMENT Publisher: DAN GILMORE

THE SUPPLY CHAIN DIGEST LETTER is published monthly by B2B Media Group, PO Box 714, Springboro, OH 45066.Copyright 2006. B2B Media group LLC. All rights reserved. A one-year subscription includes 11 monthly issues plus e-mailtransmissions of news and updates: Subscribers may make occasional photocopies of articles within THE SUPPLY CHAINDIGEST LETTER but may not reproduce the publication in its entirety. Routine or systematic photocopying or distribution of thenewsletter or articles from the newsletter is a copyright violation. To ensure compliance with all copyright regulations or to acquirea license for distribution or republishing, please contact B2B Media at 937-885-3253, or by email at [email protected]. editor’s e-mail address: [email protected]. Perodicals postage paid at MIAMISBURG, OH and additional mailing offices. postmaster:Send address changes to:

SUPPLY CHAIN DIGEST, Box 714, Springboro, 45066; 937-885-3253; e-mail: [email protected]

Gilmore: Adrian, I know you’ve been doing someresearch around the notion of a more “holistic”approach to TMS. What does that mean?

Gonzalez: Historically, the way companies havemanaged transportation operations has been veryfragmented. For example, one team focused on theprivate fleet, another on for-hire carriers, one focusedon international, and another on domestic. Samething with inbound versus outbound and even intra-company moves. There’s been similar fragmentationon the technology side, with the same kind ofdistinctions in area of focus from vendors.

We’re beginning to see progressive companiesbegin to organize and look at transportationoperations more holistically in the face of risingtransportation pressures. Similarly, leading TMSvendors are integrating what was a fragmentcollection of applications into a more unified platformthat can help companies manage transportationmore holistically across these areas.

Harding: We’re seeing the same thing. Ourcustomers are driving us towards a more holisticview. They are demanding a set of capabilities thatextend beyond just truckload freight and managingcarriers and rates and looking to optimize the wholenetwork. We’re seeing a huge interest in extendingTMS capabilities across all assets and functionalsilos. The challenge is they may have differenteconomies and different service strategies. Solving

that problem is a key part of Manhattan Associates’product strategy.

Gilmore: In looking at this issue, I think somecompanies find that after adopting TMS, they findsome “hidden” ROI that goes beyond the originalcost justification, in part by managing the processmore holistically.

Harding: Absolutely. In the frequent case wherenetworks have been operating in a decentralizedfashion, what you find is that after a TMSimplementation solves certain problems, otheropportunities start coming up. There are manydifferent areas, but the key is visibility to identifywhere those opportunities exist. If the freight ismoving enough to keep customers mostly satisfied,there isn’t a systemic way to really identify additionalareas for savings and operational improvementwithout a strong TMS. Some times thoseopportunities are hard to see upfront, but they arethere.

Gonzalez: Even many well-known companies haveissues with just effective blocking and tackling intransportation. So that drives the initial TMSimplementation. But once you start looking at thedata and the improved visibility, often usingperformance management tools and analytics, thenyou start to identify whole new areas for continuousimprovement.

The SCDigest’s Dan Gilmore recently spoke with Adrian Gonzalez of ARC Research Group, and Matt

Harding of Manhattan Associates, about key TMS issues. Below is an excerpt of this discussion. The entire

video interview can be viewed at www.scdigest.com/letter/tms.

TMS Thought Leaders Discussion:Holistic Transportation Management

www.scdigest.com/letter 3DECEMBER 2006


TMS: Understanding Today'sSolutions and TrendsCONTINUED FROM PAGE 1

referred to as the “perfect storm,” as transportationconsultant Stephen Craig of CP Consulting recentlytold SCDigest, “The ‘silver lining’ in this so-calledperfect storm is that this is perhaps the best timeever to get corporate approval for new transportationmanagement technology.”

The time has simply never been more favorable forgetting an approval for a TMS investment.

“TMS” HAS MANY DEFINITIONSWhile there is unquestionably a strong interest inTMS solutions, the definition of TMS is one areawhere there is some confusion as to terms. This isbecause a variety of somewhat distinct categoriescan fall under the TMS umbrella.

• Traditional TMS: A system that is involved in theplanning and execution of shipments, typicallyacross multiple modes. This is the area of primaryfocus in this issue ofThe Supply ChainDigest Letter. You’llsee as we describe inmore detail below thatthe scope of these coreTMS solutionscontinues to expand.

• Network Planning and Optimization: Of latethere has been strong market interest in softwarethat helps companies design and optimize theirsupply chain networks. Because transportationcosts and service requirements play suchimportant roles in this network optimization,sometimes companies describe what they arelooking for as a “TMS” when the industry generallyuses the “Network Planning” term. (We will belooking at Network Planning solutions andstrategies in the January issue of The SupplyChain Digest Letter. Go to www.scdigest.com/letter to arrange your free subscription and ensureyou receive this issue.)

• Global Trade Management and InternationalLogistics Systems (ILS): These solutions aretypically involved in several of the international-specific elements of global trade and goodsmovements, including import and exportcompliance and screening, documentation, trackand trace visibility, sourcing, total delivered costcalculation and financial flows (letters of credit,etc.). Many have some transportation planningand execution capabilities. To make things moreconfusing, many traditional TMS vendors haveadded capabilities in this area, either throughdevelopment or partnership (see below).

• Parcel Manifesting Systems: Traditionally usedto select the best carrier and rate amongst multiplesmall parcel vendors (UPS, FedEx, DHL, etc.),and ensure technical and labeling/documentationcompliance with those carriers. Recently, someof these more parcel oriented vendors havebranched out into other modes, especially LTLand some truckload.

• Routing and Scheduling: Software that providesdetailed, optimized street-level routing and

Gilmore: Many companies first bought TMS in the1990s, or last looked at solutions then and arefinally evaluating them again. What are someimportant recent changes in TMS technology?

Gonzalez: There are huge differences in today’sTMS applications. From a pure technologyperspective, most are moving from a client-serveroriented architecture to a more services orientedplatform. This helps ensure the systems are moreopen, flexible, and configurable. The other bigdifference is that in the past, a TMS was mostly astand-alone application that had just a handful ofusers. Today, when you look at the functionality andinformation in a TMS, you can have hundreds oreven thousands of users. The ability to configurethe application for different user roles becomesvery important.

Harding: What we’re also seeing now is a greaterfocus on integrating other applications, like WMS,inventory planning, and dock door scheduling into atotal supply chain approach. For example, what arethe transportation impacts on certain inventorystocking scenarios? It also turns out that bettertransportation visibility by itself really helps to breakdown some of the functional silos that can existwithin the supply chain.

For the complete video of this discussion with ourexperts, visit www.scdigest.com/letter/tms !!!!!

... this is perhaps thebest time ever to getcorporate approval fornew transportationmanagementtechnology.”

CONTINUED ON PAGE 4




dispatch for multi-stop fleets, especially for companies withdirect store delivery and home delivery operations. Sometraditional TMS vendors provide routing and schedulingcapabilities either directly or through partnership.

• Fleet Management: Focused on companies that operateprivate fleets, generally emphasizing the management of thephysical assets, especially with regard to maintenance, partswarranties and related capabilities.

EXPANDING DEFINITION OF COREIn the past 18-24 months, TMS vendors have made significantstrides in delivering more advanced solutions that continue toexpand what can be considered “core” functionality. Anotherimportant development is that the latest generations of solutionsare clearly easier to configure, integrate, deploy and use thanever before.

In the recent past, we’ve seen continued vendor improvementsin the depth and breadth of functionality, and in the ease of useand deployment. Some of the key new trends we’re seeinginclude the following:

• Improved integration and flexibility: Nearly all TMS vendorsare somewhere along the path of introducing solutions basedon Service Oriented Architectures (SOA) that offer the promiseof much easier integration with other enterprise applicationsand more flexible tailoring of the solutions to meet specificcustomer needs.

• Dock door scheduling: With more focus on supply chainsynchronization and faster turn of trailer and dock doors,integration of traditional TMS with dock door scheduling moduleshas been an increasing trend. These dock door modulesthemselves are evolving from basic scheduling applications toones which truly optimize dock and door processes.

• International focus: Though it’s unlikely that no single vendorhas a truly complete solution, the majority of vendors areadding more global transportation capabilities. However, theyare adding these capabilities in different ways, with some morefocused on being able to deploy their TMS in other countries,some more focused on optimization of the full inboundinternational through domestic moves, and others more focusedon trade compliance and documentation.

• On-demand or “hosted” solutions: We’ll discuss this growingtrend below.

THE GROWTH OF ON-DEMAND

TMS Solution Profile

Manhattan Associates

Solution Description:

Manhattan Associates’ TransportationManagement solutions provide everything youneed to automate your transportation network.Transportation Management solutions will enableyou to develop an optimal transportation plan foryour day-to-day operations. Our solutionsintegrate transportation procurement, planningand execution so you can run a more efficienttransportation network—and increase overallprofitability. You’ll be well-equipped to make thebest resource-to-shipment assignments, adaptquickly to changes and events in real time andstrengthen communication with your tradingpartners and carriers.

Key Customers:

PPG Industries, Coles Myer Ltd., Elektra delMilenio S.A. de C.V., Dick’s Sporting Goods,MeadWestvaco

Web site & Contact Info:

www.manh.comPhone: [email protected]

Featured White Paper/Collateral:

• Case Study: “PPG Paints a Picture of Successwith Manhattan Associates" TransportationManagement Solutions

• Corporate Brochure

Available at the corporate web site,through the included response cards,or www.scdigest.com/letter



In-house management ofbusiness function

Software is paid for on asubscription; transactionbasis, but installed in atraditional manner at theusing company

Traditional model:software license ispurchased upfront,installed at the usingcompany

Outsourcing management ofbusiness function

Pure "on-demand" model:software is paid for onsubscription/transaction basis,hosted by provider or thirdparty

Software licensed ispurchased upfront, butsoftware solution is "hosted"by the provider or a thirdparty

Operations ModelOn-Demand/Softwareas a ServiceFramework

PricingModel

Traditional Hosted

In-House Outsourced

Subscription/Transaction

UpfrontLicense

CONTINUED ON PAGE 6

In the past two years,there has been stronggrowth in both interestand adopion of “on-demand” solutions,alternatively referred toas “hosted” or “softwareas a service.” Whilethere has beenconsiderable hypeabout on-demandsolutions generally(e.g., Saleforce.com forCRM), TMS is an areawhere there has beenas much user interestas any. In fact, SCDigesthas heard of a couple ofstories of companiesadopting on-demandTMS solutions almost outside the formal corporate ITprocess, to get access to capabilities even if not muchintegrated with other enterprise systems.

Many companies are showing interest in on-demandTMS. What they mean by that term, and what is drivingthe interest, covers a range of possibilities. In fact, thereare two key dimensions to the on-demand model versusthe traditional way of purchasing and installing a TMSsolution, with a third that often also comes into play withregards to TMS:

• Pricing model: Will the software be paid for upfront,by buying a license for the software, or will it be paidfor incrementally as used based on transaction orsubscription pricing?

• Deployment model: Will the software be deployedwithin the four-walls of the enterprise, on your hardware,or will the software be accessed though the Internet orother broadband approach (e.g., Citrix) and physicallyreside in someone else’s data center?

In a “pure” on-demand model, the software is deployedremotely on the on-demand company’s servers, and ispaid for on a transaction or subscription basis.

But other combinations are possible, and while there area few “on-demand” only vendors, most TMS vendorscan adapt to customer-specific interests. For example,a company, based on capital budgeting concerns maydecide it wants to pay for the TMS on a transaction basis,but wants the software deployed within its enterprise.

Conversely, a company may want to buy a softwarelicense upfront, but want hosting and management ofthe application to be performed by someone else.

• Outsource functional management: Many TMSbuying cycles these days have a 3PL proposing toboth provide the technology (often using one of thestraight software vendor’s products) and also runningsome or all of the transportation functional processes.

There is no right answer. The key is to be very clearabout what is driving your potential interest in on-demandTMS, and be sure to do the analysis of the optionseffectively. (See the Resources section at the back ofthis issue for more information available about on-demand TMS solutions).

We’ve even seen a few cases where companiesimplemented TMS “on-demand” initially either to speedtime-to-implement or because capital appropriationswere tight, only to later either buy a software license ormove the deployment in-house.

CLARIFYING YOUR NEEDSMore so in the area of TMS than perhaps any othersupply chain application area, SCDigest has seencompanies that have not well crystallized what is reallydriving their interest. This leads to a variety of problemslater, including difficulty deciding on a vendor, and a lackof clear and achievable project goals.

Below is a list of key questions The SCDigest Letterbelieves are key to clarifying your TMS needs. Answering




these questions will in turn help you to much better focuson a shorter list of potential vendors:

? Are you looking for a “big”, enterprise scale solution ora lighter-weight, more execution oriented system?

? Similarly, are you thinking of deploying the TMS moreat a facility-level, or in an enterprise/network orientedapproach?

? Are you more heavily considering a traditionaldeployment/purchase or an on-demand approach?

? How big in your mix is parcel? If it is a heavy orpredominant mode, it will likely change your potentialvendor base.

? How important is WMS integration? If high, it may leadto some bias towards vendors offering both WMS andTMS. Be sure to way that against the benefits ofintegration with other planning systems or integrationwith your ERP system.

? Does the collaboration model have value? Some TMSvendors offer opportunities to consider moves in thecontext of others in their “networks,” offering theopportunities for in-network continuous moves orbackhauls.

By answering these questions upfront, you will be in amuch better position to clarify your functional needs andfilter the list of potential vendors.

FUNCTIONAL DIFFERENTIATORSWhile we've seen significant improvement in TMSsolutions in recent years, and to some extent increasedparity among the market leaders, there are still importantdifferences among alternatives that need to be fullyexplored in relation to your specific needs. We summarizekey areas of these functional differences below. See theResources section at the back of The SCDigest Letteron-demand Videocast How to Select a TMS 2006 for anopportunity to see an in-depth presentation on this andother related TMS topics

• Footprint: Not every vendor still has all the pieces.Make sure you understand what pieces the vendorhas, and what is real versus what is just part of the“roadmap.”

• Fundamental Data Model: Will it support your order/shipment needs? You need to make sure the vendor

can model your environment and processes - thistakes getting under the covers.

• Optimization: Levels of optimization capability vary,and SCDigest recommends that most companies doa “bake-off” with vendors on the final short list bytaking actual company order data and having thevendor run it through their optimizers.

• Support for Global Logistics: If global inbound andoutbound is a strong part of your projected needs, youwill likely find significant differences between vendorsin their support for global logistics generally, and theirability to link full cycle global through domestic moves.

• Support for Workflow: With transportationincreasingly complex, the need to potentially supportmultiple businesses and transport models within yourcompany, and the increased need for integrated TMSwith other areas of the supply chain is key.

• Support for Parcel: Varies significantly from vendorto vendor.

• Freight Payment: Ability to easily match uptransportation data to the company G/L is key anddifferent between vendors. This is an area where theERP solutions can definitely have some advantages.Another differentiator in this area is the ability tomanage claims, both against carriers and suppliers.

• Rating Engines: Level of flexibility and support formultiple attributes.

• Vendor and Carrier Collaboration: Richness anddepth of the web portals for integrating and collaboratingwith both carriers and suppliers. While most vendorsoffer something these days, there are differences inthe level of functional richness.

• Analytics: Solutions range from basic reporting tovery rich analytic applications that allow for detailedand “root cause” analysis.

To get at these differences, The SCDigest Letterrecommends the use of detailed “scripted demos” thatrequire vendors to demonstrate full process support foreach area of your needs. It is not uncommon forcompanies to create two dozen or more of thesescenarios. While this requires a lot of preparation workfor not only the vendors but your own team, the resultsin terms of a much more clearly differentiated view of thesolutions and a much better identification of the onesolution that likely best meets your needs is well worththis upfront effort. !!!!!




Shippers Commonwealth

What Today’s Shippers Want

As pioneers in the development and wide-scale deploymentof advanced Transportation Management Systems (TMS),we at Shippers Commonwealth see today’s progressiveshipper seeking dynamic optimization with interactiveexecution, now seamlessly combined with businessintelligence for management. We also see increasingdemand for complete Tier 1 TMS suites of the highest qualityat an affordable price which can be rapidly deployed and“self-funded”.

On-Demand TMS solutions on a “pay as you go basis” withrapid deployment and outsourced hosting have now madeintegrated Tier 1 TMS solutions available to shippers of anyand all sizes. Companies that are realizing measurableimmediate and hard cost savings within 35 – 45 days includeBon-Ton Stores, Sonoco, Alcoa, Johns Manville, Jeld-Wen,and North American Salt.

There is greater readiness and sophistication to take onExtended TMS Solutions (XMS) for expanding to inbound,dynamic pool distribution, multi-modal, and multi-shippercollaboration as part of “communities” or a “commonwealth”of shippers (an XMS can integrate to any ERP system, notjust the ERP that your company may be running today.)Significantly, we see today’s customer base demanding themost complete TMS solution as delivered and supported byreal TMS focused experts, not enterprise solutions whereTMS is a partial “after-thought” with numerous gaps. Part ofthis is embodied in our motto: “Big Enough To Serve, YetSmall Enough To Care…for our “Customers For Life”.

The sophisticated shipper marketplace now demands thedeepest commitment to continuously improving solutions forcomplex transportation needs in a capacity constrained, highdemand business environment. It is all about the four P’s:products, people, productivity, and performance. The bestproducts need to be delivered by the most qualified people forlife cycle expansion and support.

All shippers and receivers should benchmark what theirpeers are doing in this space, and also look into XMSprograms to advance into collaborative transportation forexpansion or On Demand TMS programs to get started. It isalways valuable to benchmark what the right process (andsupporting TMS delivery program) can do for fulfilling yourorganization’s logistics mission: delivering on-time, defect-free, at the lowest landed cost. Leading TMS providers canhelp you in this quest. !!!!!

by Robert Shagawat, CEO, Shippers Commonwealth


Most comprehensive suite of TMS solutionsfor shippers or receivers of any and all sizes,providing guaranteed benefits with highestcapabilities, quality, and speed, at lowestlanded cost with life cycle support for ourcustomers. We at Shippers Commonwealthpride ourselves on “customer for life” andself-funded TMS programs that pay forthemselves in months. Visit our clients andsee the proof for yourselves. Let us help you.We are “big enough to serve, yet smallenough to care”.

Key Customers:

Alcoa; Sonoco; Johns Manville, Bon-TonStores; UPS; Stage Stores; Jeld-Wen,Boscov’s Stores, 4 Seasons Automotive,North American Salt, among many others

Web site & Contact Info:

www.shipperscommonwealth.comPhone: 843-557-1615 or 804-474-7700 [email protected]


“Case Study: Johns Manville TransportationImprovement Initiative” from Supply ChainDigest August 2006

“Case Study: Stage Stores Keeps OnTruckin” from Chain Store Age/RetailTechnology Quarterly July 2004

Available at the corporate web site, throughthe included response cards, orwww.scdigest.com/letter



Where’s the ROI in TMS?

This may be the most favorable business environmentwe’ve ever seen to secure corporate approval for TMSsolutions, but in the end the numbers still have to work.

After discussing TMS deployments with manycompanies, The SCDigest Letter has come to thefollowing conclusions:

! In today’s environment TMS systems almost alwayshave an ROI that meets corporate hurdle rates orpayback period requirements. These are high ROIapplications.

! Many companies sometimes struggle to find that fullROI in quantifying project benefits due to lack ofexperience with TMS systems.

! The ROI calculations provided by vendors arebeneficial in identifying likely areas of savings;however, the calculations typically overstate what theTMS will actually achieve. This is partly from a naturalbias towards identification of a greater level of savings,and partly basing calculations on assumptions thateverything will be executed perfectly and not takinginto account things that can go wrong.

! ROI sometimes shows up post-implementation inways that weren’t initially envisioned.

SAVINGS BUCKETSIn general, the level of savings opportunities from TMSis driven by three main factors:

! The current level of transportation technology/automation.

! The level of shipment consolidation opportunities,generally represented by the amount of LTL movesinbound and outbound.

! The current level of centralization, and plans forcentralizing currently decentralized transportationfunctions. Many TMS initiatives are driven by a moveto centralization (often termed the “load controlcenter”), and often savings in manpower and carrierspend can be generated from centralization programs.

On the next page we list some of the key areas ofsavings fromTMS implementations, along with sometypical percentages of savings. When reviewing thesenumbers, please keep in mind that there are someredundancies, meaning you won’t realize savings from


SAP


SAP is the world’s leading provider of businesssoftware. Today, more than 34,600 customersin more than 120 countries run SAP®applications—from distinct solutionsaddressing the needs of small and midsizeenterprises to suite offerings for globalorganizations. Powered by the SAPNetWeaver® platform to drive innovation andenable business change, SAP software helpsenterprises of all sizes around the worldimprove customer relationships, enhancepartner collaboration and create efficienciesacross their supply chains and businessoperations. SAP solution portfolios supportthe unique business processes of more than25 industries, including high tech, retail,financial services, healthcare and the publicsector.

SAP for Logistics Service Providers deliverscomprehensive capabilities for lead logisticsproviders, third-party logistics providers,forwarding companies, and ocean andtrucking carriers. It provides an integrated,flexible set of solutions that enables you tohandle complex business processes whilemanaging operational activities.

Web Site and Contact Info:www.SAP.comPhone: 800-872-1727


Transportation Management and theAdaptive Supply Chain Network -Available at the corporate web site, throughthe included response cards, orwww.scdigest.com/letter



all the areas:

Netting it all out, we typically see companies reducingtransportation overhead between 10-30%,

depending on factors related to centralization. Wealso see a reduction in freight spend of between 5to 15%. For most companies, this provides savingsthat generate a substantial ROI and rapid payback.It is possible for companies to generate total savingshigher than these levels (these are exceptions) ifthere is very little current automation, high levels ofLTL shipping that can be consolidated, and/or amove from a much decentralized operation to acentralized one.

UNDERSTAND THE TIMING OF ROIThe numbers referenced above generally refer tothe total savings available from the TMS initiative.Vendors and consultants will sometimes discussthese savings as if they will come all at once. Ofcourse, the savings emerge over time, both asusers take time to fully embrace new technologyand processes, and different levels of functionalityand capabilities are phased in.

It is important to model these savings phasesaccurately. We’ve seen a few companies with strongtotal ROIs suffer internal issues because theprojected savings were expected to be realized inthe first year, not positioned to be achieved inseveral phases It is quite typical, for example, fora company to put in basic TMS functionality first toautomate transportation processes and perhaps

Optimal Mode/Carrier freight spend savingsDecisions 2-6%

Optimized LTL to Multi-stop Truckload or freight spend savingsPool Carrier Consolidation 5-20%

reduced overheadImproved Efficiency in Operations 10-30%

Core Carrier Program/Using Data freight spend savingsto Improve Negotiations 3-10%

Continuous freight spend savingsMoves 2-5%

Basic Order freight spend savingsConsolidation 1-2%

freight spend savingsImproved Freight Settlement/Audit 2-5%

optimal mode and carrier selection, then move tooptimized shipment consolidation in phase 2.

KEYS TO ROITo generate anachievable ROIcalculation, it is critical tobuild a true “bottoms up”business case that isbased on analyzing eacharea in detail to estimatethe hard savings that areachievable over time.Some companiesstruggle with doing thisinternally, and may findthat using an experiencedconsultant can help gainclarity and consensus.

The real key, of course, isto tie the savings tospecific operational

programs. The question to ask is what, specifically,will be different after TMS implementation, and inwhat timeframes? It is important that everyoneunderstands where the project justification is comingfrom, and how process must change to achievethese numbers. !!!!!

Since the inception of the Logistics Center, PPG hasrelied on strong transportation technology. They beganwith a home grown system that ran on a mainframecomputer. In 2002, however, Carr and his team decidedthat the burden of maintaining the system in-house,coupled with the newer, more advanced capabilitiesthat were available in the commercial TMS(Transportation Management System) market, meant itwas time to revamp the system and look to the outside.

After a substantial selection process (more on thatbelow), PPG eventually chose a hosted TMS solutionfrom logistics.com, now a part of Manhattan Associates.

THE ON-DEMAND CHOICE WAS EASYWhile PPG considered a traditional deployment, in theend Carr said going the on-demand route was an easydecision because of the lack of investment required inIT personnel and infrastructure.

PPG Case StudyCONTINUED FROM PAGE 1

CONTINUED ON PAGE 10



CONTINUED FROM PAGE 9

PPG Combines Centralization and TMSto Achieve Transportation ExcellencePPG, like a growing number of companies, purchasedor built TMS systems in the 1990s but then went back tothe market for a second time. SCDigest thinks thelessons of these “second timers” holds some value forthose investigating TMS solutions for the first time.

In PPG’s case, the companystarted by soliciting Requestsfor Information (RFI’s) fromsix potential vendors. Fromthose six, four were invited todo presentations andunscripted demos.

From those presentations, twofinalists were selected torespond to detailed “scriptedscenarios” – a process thatcan be quite an effort forshippers to create and vendorsto respond, but is definitelyworthwhile because theygenerally provide a clear viewof what capabilities the vendortruly has.

“We told the vendors ‘Here’sour business, these are thescenarios. Now, show us, nottell us, how it will work with yoursystem,’” Carr said.

Going through this the secondtime, PPG also had theadvantage of having theinterface points between theTMS and other corporatesystems already defined. Carrsaid that for new TMS adopters,getting these interfaces well mapped is key.

“You have to decide where and when you are going topull order information from, what information you aregoing to pull, when you are going to update thesesystems with transportation information, and how youare going to handle the freight pay and accounting sideof the data,” Carr said.

SUCCESS WITH THE NEWS TMSSince PPG already had a history with building a TMS,

they were a demanding customer. Carr said that inaddition to reducing the maintenance burden from it’sinternally developed TMS, PPG was interested in realizingmore advanced optimization and consolidationcapabilities, using a system that was able to run thatoptimization program more quickly, and provide moreadvanced rating and routing functionality.

The TMS from ManhattanAssociates has deliveredthose additional capabilities.Some of the bottom line andoperational benefits PPGhas realized from the TMSare shown near by.

PPG is very focused on theefficiency of its LogisticsCenter. The 175,000 loadsper year are executed withonly 15 staffers, which Carrbelieves is a high level ofproductivity. A key metric hewatches is loads per planner,and says the new TMS iscritical to keeping that levelof effectiveness high.

FINDINGTRANSPORTATIONLEVERAGE“Centralization enables youto leverage your freightspend, your dedicated fleet,your processes and yourtechnology,” Carr told us.“When the model is based oneach plant or area doing itsown thing, you just can’t getthat leverage.”

He said in addition to theeconomic benefits, centralization enables a company toimplement standardized best practices across all thebusinesses.

“We can create consistency in how we do things to bothcarriers and customers,” he said.Technology then plays a key role in that transformation.

“But you just can’t run a centralized load control centerwithout this kind of TMS technology,” Carr emphasized.!!!!!

! Enhanced ability to create continuous movesor pick-ups from multiple PPG ship sites in acommon geographic area such as Cleveland.

! Improved visibility to transportation movesacross the network, improving efficiency andservice both to the PPG business units andtheir end customers.

! Enhanced efficiency and lower overhead costs.More than 85% of all loads receive automaticoptimal carrier selection, and next bestrecommendations are automatically made forrejected loads.

! Reduced transportation spend throughimproved optimal selection of modes, carriersand consolidation opportunities.

! The ability to react more quickly to changingbusiness needs through configuration changesin the TMS.

! Management of inbound moves, and “reverselogistics” for the many reusable containersPPG uses for customer shipments.

! Broad use of the web to connect to carriers.About 25 of PPG top carriers use EDI, but thecompany now uses the web-based capabilitiesof the TMS to connect to another 100 or somedium and smaller carriers, streamliningmanual processes and reducing cycle times.



The Future of TMS

BY JP WIGGINSINDUSTRY SOLUTIONS, TRANSPORTATION SAP

In the 1980s our transportation management systems(TMS) were rudimentary with simple features mostlydesigned to help outbound domestic shippers choosemode and manage transportation orders. In the 1990s,we saw the evolution of tools designed to optimizeshipments across the modes and help reducetransportation costs, with initial features for third-partylogistics (3PL) and logistics service providers (LSP). Bythe early 2000s, the industry saw TMS better suited notonly for global shippers but also for the 3PL/LSP market.

What we are starting to see is that just like before we arereaching the limits of the current generation of products.The reason is the same: industry is starting to ask thetechnology to do more than the current products cansupport.

In today’s world, software packages no longer fit intoboxes for transportation management, customerrelationship management, human resources, financials,and so on. The industry is starting to want solutions thatgo beyond these classic definitions.

The IT industry is responding to this demand bydeveloping tools that are designed to not only solve TMSproblems but business problems that clearly cross the

classic product boundaries; for example, solvingproblems across multiple tiers and not just within thefour walls of one company. Inter-enterprise optimizationis one of the new challenges we are now starting to face.

To solve these advanced problems, your TMS must beone with your other systems and not an integrated pointproduct. In fact, integration is now a limiting factor forTMS (and overall IT) growth. Look at how much of yourIT budget is spent on TMS integration and maintenance.Enterprise Application Integration (EIA) toolkits havehelped the integration challenge but they are just astopgap measure. A better way is emerging.

The next generation TMS is being built on thetechnologies of enterprise service-oriented architecture(enterprise SOA) on an open platform. When yourbusiness logic is built on the same platform, then theintegration challenge is eliminated and all your softwarecan share their unique functions without boundaries.

While it is not an exact analogy, I think of TMS like thespell checkers we used in the 1980s, which we wouldhave to buy as an add-on tool. Today the functions of aspell checker are completely embedded in our desktopapplications. Our desktop shares critical functions acrossall desktop applications. On a much larger scale that’show your TMS needs to be; it needs to share its businesslogic across all functions. This will stop us from wastingbudget on integration and allow problem solving thatcrosses departments and enterprises.!!!!!

TMS Resources

Partial list of resources available:

On-Demand Videos and Videocasts

!!!!! How to Select a TMS – The No Spin Zone

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!!!!! Cutting Costs with On-Demand TMS

!!!!! Holistic Transportation Management

More Transportation Videos and Videocasts comingsoon.

Tools

!!!!! On-demand TMS Cost Calculator

!!!!! Graphic: TMS Functionality Breakdown

!!!!! Graphic: Actual TMS cost justification analysis froma high tech manufacturer

Case Studies, Articles, and White Papers

Large selection of material, including the featuredmaterial from Manhattan Associates, SAP and ShippersCommonwealth.

Find the TMS-related information and tools you need. Available for download at www.scdigest.com/letter


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