Reducing Transportation Costs with Freight Market Intelligence · 2018. 3. 14. · PepsiCo Network Overview 60% of Pepsi Volume 1,000 Drivers 500 Tractors 2,500 Trailers 55 Plants

Reducing Transportation Costs with Freight Market Intelligence

Rob Hair Sr. Director, Global Transportation Processes and

Systems, PepsiCo

Gary Girotti VP, Transportation Practice, Chainalytics

TRN103

CHAINalytics

Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL CHAINalytics

• 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

Agenda

2

Copyright 2012 JDA Software Group, Inc. - CONFIDENTIAL CHAINalytics 3

2011

Who is Chainalytics?

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

TODAY

• 1st Named to “100 Great Supply Chain Partners” List by SupplyChainBrain; Recognized for 8 Years Running

• Launch of Freight Market Intelligence Consortium (FMIC)

Our Genesis

• Market Lacked Proven, Focused Supply Chain Analytics Competence

• “Best Analytical Minds in Supply Chain”

• Launch of Sales & Operations Variability Consortium (S&OVC)

• 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

• Strategic Growth via Mergers & Acquisitions

o Supply Chain Operations (Chainnovations)

o Packaging Optimization (Adalis Packaging Solutions Group)

• FMIC named “Top Supply Chain Innovation” by Supply & Demand Chain Executive

• Named to ARC Advisory’s “10 Coolest Supply Chain Boutiques”

2001

2002

2003

2004

2005

2006

2007

2009

2010

2008

Procurement Mode Analysis

vs.

Best Practice & System Assessment

Business Intelligence • 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

Freight Market Intelligence Consortium

2012


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

Freight Market Intelligence Consortium


Lane Specific Analysis and Market Trends Over Time

Sample Market Insights

5

2011 YOY Average TL Rates per Mile increased by more than 6%. Actual Price per Equivalent Load only increased by about 3%.


Carrier Profile

Sample Network Insights

6

XYZ Inc.

(FSC @ $3.80 DOE Price, Data requested from 10/1/2010 to 9/30/2011)

Co_Id SCAC

Minimum

Weekly

Volume

Average

Weekly

Volume

Maximum

Weekly

Volume

Number of

weeks

w/volume

% Reported

Weeks

w/Volume

Annual

Volume

Reported Annual

Cost

(Including Fuel

Surcharge)

Estimated Annual

Cost

(Including Fuel

Surcharge)

Annual Cost

Difference

(Including Fuel

Surcharge)

Difference

Percent

(Including Fuel

Surcharge)

Status

(Including Fuel

Surcharge)

XYZ Inc. 1 48 73 123 53 100% 3,860 4,781,807$ 4,853,526$ (71,719)$ -1% AT

XYZ Inc. 2 3 9 18 53 100% 462 1,255,699$ 1,260,658$ (4,958)$ 0% AT

XYZ Inc. 3 6 93 194 53 100% 4,946 12,156,167$ 11,397,639$ 758,528$ 7% ABOVE

XYZ Inc. 4 42 143 176 53 100% 7,569 7,125,551$ 7,433,016$ (307,465)$ -4% BELOW

XYZ Inc. 5 12 54 77 53 100% 2,840 3,272,128$ 3,586,608$ (314,480)$ -9% BELOW

XYZ Inc. 6 - 1 2 17 32% 23 26,810$ 26,224$ 586$ 2% AT

XYZ Inc. 7 2 14 27 53 100% 720 873,428$ 904,858$ (31,430)$ -3% BELOW

XYZ Inc. 8 58 168 294 53 100% 8,892 14,959,787$ 14,989,016$ (29,230)$ 0% AT

XYZ Inc. 9 - 17 54 52 98% 865 1,579,289$ 1,551,672$ 27,617$ 2% AT

XYZ Inc. 10 1 12 20 53 100% 635 599,163$ 689,347$ (90,185)$ -13% BELOW

XYZ Inc. 11 28 68 97 53 100% 3,585 4,910,758$ 5,062,026$ (151,268)$ -3% BELOW

XYZ Inc. 12 - 14 54 46 87% 627 1,311,745$ 1,043,715$ 268,030$ 26% ABOVE

XYZ Inc. 13 1 14 26 53 100% 730 513,450$ 546,610$ (33,160)$ -6% BELOW

XYZ Inc. 14 143 492 665 53 100% 26,059 30,249,440$ 31,149,423$ (899,983)$ -3% BELOW

XYZ Inc. 15 41 126 186 53 100% 6,661 12,957,732$ 13,458,719$ (500,988)$ -4% BELOW

XYZ Inc. 16 4 23 47 53 100% 1,216 1,998,122$ 2,163,900$ (165,778)$ -8% BELOW

XYZ Inc. 17 10 37 66 53 100% 1,968 2,381,559$ 2,380,354$ 1,205$ 0% AT

XYZ Inc. 18 9 66 146 53 100% 3,475 4,763,127$ 4,999,324$ (236,197)$ -5% BELOW

XYZ Inc. 19 11 37 53 53 100% 1,960 3,085,733$ 2,715,967$ 369,765$ 14% ABOVE

Carrier Shipment Statistics Estimated Costs and Market Position

2011- Annual Truckload Model 2

Carrier Report

0%

5%

10%

15%

20%

25%

30%

35%

Weekly Percent to MarketAverage Fuel Per Mile at $3.80 DOE

TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WAL

Car3

Car12

Car20

Car25

-

100

200

300

400

500

600

700

800

900

1,000

Sep-

10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Weekly Volume

TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WALCar25

Car3

Car12

Car20

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Absolute Weekly Market Position

TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WALCar25

Car3

Car12

Car20

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

0

0.2

0.4

0.6

0.8

1

1.2

Sep-

10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

Mar

-11

Apr

-11

May

-11

Jun-

11

Jul-1

1

Aug

-11

Cumulative Market Position

XYZ Inc.


Co_Id SCAC

Minimum

Weekly

Volume

Average

Weekly

Volume

Maximum

Weekly

Volume

Number of

weeks

w/volume

% Reported

Weeks

w/Volume

Annual

Volume

Reported Annual

Cost

(Including Fuel

Surcharge)

Estimated Annual

Cost

(Including Fuel

Surcharge)

Annual Cost

Difference

(Including Fuel

Surcharge)

Difference

Percent

(Including Fuel

Surcharge)

Status

(Including Fuel

Surcharge)

XYZ Inc. 1 48 73 123 53 100% 3,860 4,781,807$ 4,853,526$ (71,719)$ -1% AT

XYZ Inc. 2 3 9 18 53 100% 462 1,255,699$ 1,260,658$ (4,958)$ 0% AT

XYZ Inc. 3 6 93 194 53 100% 4,946 12,156,167$ 11,397,639$ 758,528$ 7% ABOVE

XYZ Inc. 4 42 143 176 53 100% 7,569 7,125,551$ 7,433,016$ (307,465)$ -4% BELOW

XYZ Inc. 5 12 54 77 53 100% 2,840 3,272,128$ 3,586,608$ (314,480)$ -9% BELOW

XYZ Inc. 6 - 1 2 17 32% 23 26,810$ 26,224$ 586$ 2% AT

XYZ Inc. 7 2 14 27 53 100% 720 873,428$ 904,858$ (31,430)$ -3% BELOW

XYZ Inc. 8 58 168 294 53 100% 8,892 14,959,787$ 14,989,016$ (29,230)$ 0% AT

XYZ Inc. 9 - 17 54 52 98% 865 1,579,289$ 1,551,672$ 27,617$ 2% AT

XYZ Inc. 10 1 12 20 53 100% 635 599,163$ 689,347$ (90,185)$ -13% BELOW

XYZ Inc. 11 28 68 97 53 100% 3,585 4,910,758$ 5,062,026$ (151,268)$ -3% BELOW

XYZ Inc. 12 - 14 54 46 87% 627 1,311,745$ 1,043,715$ 268,030$ 26% ABOVE

XYZ Inc. 13 1 14 26 53 100% 730 513,450$ 546,610$ (33,160)$ -6% BELOW

XYZ Inc. 14 143 492 665 53 100% 26,059 30,249,440$ 31,149,423$ (899,983)$ -3% BELOW

XYZ Inc. 15 41 126 186 53 100% 6,661 12,957,732$ 13,458,719$ (500,988)$ -4% BELOW

XYZ Inc. 16 4 23 47 53 100% 1,216 1,998,122$ 2,163,900$ (165,778)$ -8% BELOW

XYZ Inc. 17 10 37 66 53 100% 1,968 2,381,559$ 2,380,354$ 1,205$ 0% AT

XYZ Inc. 18 9 66 146 53 100% 3,475 4,763,127$ 4,999,324$ (236,197)$ -5% BELOW

XYZ Inc. 19 11 37 53 53 100% 1,960 3,085,733$ 2,715,967$ 369,765$ 14% ABOVE



Carrier Report

0%

5%

10%

15%

20%

25%

30%

35%


TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WAL

Car3

Car12

Car20

Car25

-

100

200

300

400

500

600

700

800

900

1,000

Sep

-10

Oct

-10

No

v-10

Dec

-10

Jan-

11

Feb

-11

Mar

-11

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-11

Weekly Volume

TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WALCar25

Car3

Car12

Car20

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000


TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WALCar25

Car3

Car12

Car20

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

0

0.2

0.4

0.6

0.8

1

1.2

Sep

-10

Oct

-10

No

v-10

Dec

-10

Jan-

11

Feb

-11

Mar

-11

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-11


XYZ Inc.


Co_Id SCAC

Minimum

Weekly

Volume

Average

Weekly

Volume

Maximum

Weekly

Volume

Number of

weeks

w/volume

% Reported

Weeks

w/Volume

Annual

Volume

Reported Annual

Cost

(Including Fuel

Surcharge)

Estimated Annual

Cost

(Including Fuel

Surcharge)

Annual Cost

Difference

(Including Fuel

Surcharge)

Difference

Percent

(Including Fuel

Surcharge)

Status

(Including Fuel

Surcharge)

XYZ Inc. 1 48 73 123 53 100% 3,860 4,781,807$ 4,853,526$ (71,719)$ -1% AT

XYZ Inc. 2 3 9 18 53 100% 462 1,255,699$ 1,260,658$ (4,958)$ 0% AT

XYZ Inc. 3 6 93 194 53 100% 4,946 12,156,167$ 11,397,639$ 758,528$ 7% ABOVE

XYZ Inc. 4 42 143 176 53 100% 7,569 7,125,551$ 7,433,016$ (307,465)$ -4% BELOW

XYZ Inc. 5 12 54 77 53 100% 2,840 3,272,128$ 3,586,608$ (314,480)$ -9% BELOW

XYZ Inc. 6 - 1 2 17 32% 23 26,810$ 26,224$ 586$ 2% AT

XYZ Inc. 7 2 14 27 53 100% 720 873,428$ 904,858$ (31,430)$ -3% BELOW

XYZ Inc. 8 58 168 294 53 100% 8,892 14,959,787$ 14,989,016$ (29,230)$ 0% AT

XYZ Inc. 9 - 17 54 52 98% 865 1,579,289$ 1,551,672$ 27,617$ 2% AT

XYZ Inc. 10 1 12 20 53 100% 635 599,163$ 689,347$ (90,185)$ -13% BELOW

XYZ Inc. 11 28 68 97 53 100% 3,585 4,910,758$ 5,062,026$ (151,268)$ -3% BELOW

XYZ Inc. 12 - 14 54 46 87% 627 1,311,745$ 1,043,715$ 268,030$ 26% ABOVE

XYZ Inc. 13 1 14 26 53 100% 730 513,450$ 546,610$ (33,160)$ -6% BELOW

XYZ Inc. 14 143 492 665 53 100% 26,059 30,249,440$ 31,149,423$ (899,983)$ -3% BELOW

XYZ Inc. 15 41 126 186 53 100% 6,661 12,957,732$ 13,458,719$ (500,988)$ -4% BELOW

XYZ Inc. 16 4 23 47 53 100% 1,216 1,998,122$ 2,163,900$ (165,778)$ -8% BELOW

XYZ Inc. 17 10 37 66 53 100% 1,968 2,381,559$ 2,380,354$ 1,205$ 0% AT

XYZ Inc. 18 9 66 146 53 100% 3,475 4,763,127$ 4,999,324$ (236,197)$ -5% BELOW

XYZ Inc. 19 11 37 53 53 100% 1,960 3,085,733$ 2,715,967$ 369,765$ 14% ABOVE



Carrier Report

0%

5%

10%

15%

20%

25%

30%

35%


TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WAL

Car3

Car12

Car20

Car25

-

100

200

300

400

500

600

700

800

900

1,000

Sep

-10

Oct

-10

No

v-10

Dec

-10

Jan-

11

Feb

-11

Mar

-11

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-11

Weekly Volume

TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WALCar25

Car3

Car12

Car20

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000


TNTI_WAL

RTS_WAL

GRDN_WAL

EPES_WALCar25

Car3

Car12

Car20

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

0

0.2

0.4

0.6

0.8

1

1.2

Sep

-10

Oct

-10

No

v-10

Dec

-10

Jan-

11

Feb

-11

Mar

-11

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-11


Shipper Size & Carrier Concentration


Smaller Shippers Showing Cost Advantages

25%

20%

26%

29%

Shippers by Spend

$0-$50M

$50-$100M

$100M-$250M

$250M+

Weekly Market Position By Shipper Spend Category

Source: Chainalytics FMIC – Long Haul Dry Van – January 2012


Annual Shipper Spend vs. Annual Carrier Revenue

8

“Sweet Spot” - Between 1M and 5M per Carrier

<25MM 25-75MM 75-125MM 125-250MM >250MM

<100K -3% -1% -3% -4% -2% <100K

100-250 -1% -3% -1% -3% -2% 100-250

250-500 -2% -1% -2% -4% -3% 250-500

500-750 -8% 0% 2% -3% -2% 500-750

750-1000 -1% 0% -1% -2% -2% 750-1000

1000-2500 0% -1% -1% -2% 2% 1000-2500

2500-5000 4% -2% 0% -1% 1% 2500-5000

5000-10000 3% 1% 1% 3% 5000-10000

10000-25000 -10% -5% 2% 5% 2% 10000-25000

25000-50000 2% 4% 5% 25000-50000

>50000 1% >50000

Market Position - Shippers Size and Carrier Size

Car

rier

Sp

end

Cat

ego

ries

An

nu

al V

olu

me

Volume Per Year - Shipper Spend Categories

2.1%12.3%

22.4%35.6% 27.6%

0.0%

50.0%

1.7%

3.1%

5.2%

5.0%

4.6%

17.2%

15.7%

15.1%

17.0%

10.8%

4.5%

0% 20%

Market Position: Shipper Size vs. Carrier Size 4.2MM Loads Across 58 Shippers

<25MM 25-75MM 75-125MM 125-250MM >250MM

<100K -3% -1% -3% -4% -2% <100K

100-250 -1% -3% -1% -3% -2% 100-250

250-500 -2% -1% -2% -4% -3% 250-500

500-750 -8% 0% 2% -3% -2% 500-750

750-1000 -1% 0% -1% -2% -2% 750-1000

1000-2500 0% -1% -1% -2% 2% 1000-2500

2500-5000 4% -2% 0% -1% 1% 2500-5000

5000-10000 3% 1% 1% 3% 5000-10000

10000-25000 -10% -5% 2% 5% 2% 10000-25000

25000-50000 2% 4% 5% 25000-50000

>50000 1% >50000

Market Position - Shippers Size and Carrier Size

Car

rier

Sp

end

Cat

ego

ries

An

nu

al V

olu

me

Volume Per Year - Shipper Spend Categories

2.1%12.3%

22.4%35.6% 27.6%

0.0%

50.0%

1.7%

3.1%

5.2%

5.0%

4.6%

17.2%

15.7%

15.1%

17.0%

10.8%

4.5%

0% 20%


Overview of PepsiCo’s Transportation

Procurement Model


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…

10

PepsiCo Network Overview

60% of Pepsi Volume

1,000 Drivers

500 Tractors

2,500 Trailers

55 Plants

80 MM Miles / Year

PBC Fleet

14 Fleets

350+ Drivers

275 Tractors

900 Trailers

20 MM Miles / Year

Dedicated Fleets

85% of Frito-Lay Volume

1,400 Drivers

1,050 Tractors

4,100 Trailers

140 MM Miles / Year

Frito-Lay Fleet


Our Transportation Procurement Model is a comprehensive strategy

of five interlocking capabilities to own "all that moves" within our supply

chain.

11

Global Transportation Procurement Model Overview


Each step of procurement model has distinct purpose...

Get What

You Pay

For


Example: Market Knowledge elevates other components of model

13

...and Drives Ability to Deliver All Other Capabilities

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?


Market Knowledge

Understand your transportation market Goal

Procurement

Activities

Data gathered and analyzed

Carrier rates

Fuel prices

Carrier input prices

Capacity

Driver availability & wages

Regulatory trends

Developed point of view on transportation market

Leverage Expansive Network

to Understand or Benchmark

Similar Lane Rates

Use Strategic Carrier Network

to Benchmark Market Rates in

Any Given Lane or Region

1

2

PepsiCo Network


Market Knowledge:

15

Leverage Chainalytics’ Freight

Market Intelligence Resources

3

Inp

uts

O

utp

ut

Industry Lane Rate Benchmarks

Sample Tools & Resources


Internal Business Intelligence

Procurement

Activities

Leverage Chainalytics’ models and tools to define internal business

intelligence for each business unit

Goal Know your capacity needs

0

200

400

600

800

1,000

1,200

28

-Sep

28

-Oct

28

-No

v

28

-Dec

28

-Jan

28

-Feb

31

-Mar

30

-Ap

r

31

-M

ay

30

-Ju

n

31

-Ju

l

31

-Au

g

Wee

kly

Load

s

Total Reported Loads Per Week

0

200

400

600

800

1,000

1,200

28

-Sep

28

-Oct

28

-No

v

28

-Dec

28

-Jan

28

-Feb

31

-Mar

30

-Ap

r

31

-M

ay

30

-Ju

n

31

-Ju

l

31

-Au

g

Wee

kly

Load

s

Total Reported Loads Per Week

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


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

Procurement Event

17

Obtain best cost and service agreements Goal

Procurement

Activities

Formalized framework to define bid

requirements and "host" bid

Success Depends on Pre-Work and Data Accuracy


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

Carrier Relationships

Develop carriers who provide strategic value Goal

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

Execution and Tracking

Get what you pay for Goal

Procurement

Activities


FMIC and JDA Integration Overview


New in JDA Transportation Manager /

Transportation Planner 6.3.5.1 - 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

Integration Overview


JDA Transportation Manager Load Rating Details – 6.3.5.1


• 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

Process


Thank you. Please remember to submit your survey.

TRN103

Reducing Transportation Costs with Freight Market Intelligence · 2018. 3. 14. · PepsiCo Network Overview 60% of Pepsi Volume 1,000 Drivers 500 Tractors 2,500 Trailers 55 Plants

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