Kraft  Foods has eliminated more than 50 million truck miles since 2005 through a focus on transportation sustainability efforts.  The company made these sustainability improvements by shifting wheat shipments from truck to barge and by using technology to reduce costs and emissions in transportation.  

Kraft's initiative is called Project MOST (Management of Optimized Sustainable Transportation) and utilizes Oracle's Cooperative Routing which is an integrated option for Oracle's Transportation Management application.  By looking at your entire logistics network over time, Cooperative Routing has allowed Kraft to strategically examine the use of carrier and fleet resources in their supply chain.  It does this by identifying historical shipping patterns and determining optimal asset utilization, while bringing visibility to potential continuous move opportunities.

Kraft has achieved a strategic approach to transporation by mostly eliminating one-way freight with the establishment of permanent lane assignments that have improved service, reduced costs and lowered their carbon footprint.

Despite the lower spending levels at most companies and tough ecomomic climate, companies realize the benefit of investing in a transportation solution can reduce costs.  According to a recent Aberdeen survey, nearly 70 percent of companies for the firm’s second quarter 2009 AXIS report on TMS say that they currently have a mandate from management to make technology recommendations for transportation-related solutions with 54 percent of respondents planning to adopt a related solution in the next 18 to 24 months.

AMR Research also has a new report that discusses the robust TMS savings that firms that invest in a transportation solution are receiving.  According to AMR, TMS solutions offer considerable savings potential including "freight budget cost reduction, route and mode optimization, more competitive delivery options, and reduced network inventory levels".

I wrote in June about how there is tremendous interest in transportation procurement tools since companies are looking for the opportunity to reduce costs given the tough ecomomic conditions.  I recently read a report that cites that Transportation Procurement remains hot and shippers are putting more of their freight spend out to bid with the savings averaging 12%. 

Transportation procurement does not require a large software investment and can be ideally managed with a software-as-a-service (SaaS) solution that automates and standardizes the procurement process. Companies generally utilize a transportation procurement tool at a tactical level where the focus is on a select number of lanes instead the entire network.  There are a number of SaaS vendors in the marketplace including i2, JDA, LeanLogistics, Manhattan Associates and MercuryGate. 

Given the poor economic conditions, companies are looking for the opportunity to reduce costs and one hot area that is ripe with potential savings is to conduct transportation procurement bids. The process involves sending bid packages (aggregated forecast of shipments) to carriers, they submit their bids (often involving multiple rounds) and then you evaluate the bids and award the business.

There are a number of software solutions in the Transportation Procurement space that will automate and optimize the whole process.  These procurement solutions do not just consider carrier rates but optimize the results considering carrier performance, capacity, seasonal variability, equipment requirements, service level and business rules.  The benefits realized from these solutions include more reliable capacity with fewer rejected shipments, higher on-time delivery performance, drastically reduced procurement time with a substantial cost savings.

This link has an interesting article from Adrian Gonzalez of ARC Advisory that discusses this topic in further detail: http://logisticsviewpoints.com/2009/05/21/transportation-procurement-is-hot-right-now/

In this Supply Chain Digest interview with Hal Feuchtwanger, Managing Director, Global Logistics at i2, he discusses some of the key business drivers in the transportation industry as well as the growth in adoption of on-demand solutions in the supply chain technology space. A key point discussed is that flexibility and agility are critical for survival in today's rapidly changing and challenging business environment.

http://www.scdigest.com/assets/newsViews/09-04-30-2.php

Transportation Management Systems (TMS) enable the collaborative sharing of data throughout organizations and often lead to more informed decision making.  In this video of Beth Enslow, senior vice president for supply chain risk at Marsh Inc.discusses the collaboration within organizations and why eight out of nine TMS users are now outside the transportation department.  Here is the link to the complete video (supplychainbrain.com registration required):

http://newsletters.supplychainbrain.com//lt.php?id=KUoLBgQLUwECAUVfDFdOUAdTAVA%3D