As chief information officer, John Hazenfield works closely with DistTech’s vendors to develop new technologies.
Starting in 2000, Chief Executive Officer Richard Manfredi and other executives at Manfredi Motor Transit Co. began to rethink the company’s market position. Established in 1932, the Newbury, Ohio-based company had a reputation as a reliable dedicated contract and common carrier for bulk liquid commodities. But today, customers view on-time, damage-free service as a given, Manfredi says. Quality transportation service simply is no longer a competitive edge.
As a result of this self-examination, Manfredi Motor Transit management determined that an opportunity existed not in delivering freight but in delivering information on a timely basis. One of the reasons many shippers were using third-party logistics companies was their competency in data analysis relative to traditional asset-based carriers.
“If you don’t deliver metrics along with an on-time load, it is not considered a good load,” says Craig Cullinan, vice president of sales and marketing.
So Manfredi Motor Transit built information management as a core competency, and to crystallize the transformation, the company in 2004 was renamed Distribution Technologies, Inc. – later shortened to DistTech. The name reflected the merging of reliable transportation service with real-time information technology, Cullinan says.
The name DistTech, Cullinan says, is a “great contraction of the fact that we are in the distribution business, but we have the underlying enabling technology that customers don’t have access to.”
Cullinan says that many customers came up short in technology for reporting and managing key metrics for transportation, despite investing millions in sophisticated planning systems such as SAP and PeopleSoft.
“They were sold on the promise of ‘supply chain tools,’ but the reality is they didn’t get anything.”
As part of the transition to the DistTech name and philosophy, John Hazenfield became the company’s chief information officer, having previously been chief operations officer. In his new role, Hazenfield worked closely with DistTech’s chosen technology vendors to develop new capabilities to meet its customers’ information requirements.
“The great thing about John is he understands the technology, but more importantly, he understands what it means to customers,” Cullinan says.
One service DistTech provides is visibility to its own internal customer account managers and its customers of key performance metrics. DistTech tailors these metrics to help customers reduce the total cost of transportation in their supply chain, Cullinan says. These metrics are designed to monitor what DistTech said it would do, how it actually performed, and how it will improve. DistTech offers a menu of typical metrics but can develop new reports and metrics to match the needs of customers and prospects.
As a liquid bulk carrier, one key metric is the delivery cost per gallon. Using this metric, customers can judge DistTech against other actual or would-be providers. “It forms a pretty good foundation for partnership,” Cullinan says. “We are now having many more fact-based discussions.”
Another useful report is an “outbound frequency distribution report” that shows a customer how orders were distributed during a week. For example, DistTech may have hauled 50 loads for the customer in one week, but the loads may have been scheduled unevenly, such as 15 on Monday, 15 on Tuesday, and 20 Wednesday, with none on Thursday and Friday. If the customer changed to 10 loads a day in a five-day workweek, it could improve efficiency and decrease costs.
One of DistTech’s tools for offering customers visibility to its metrics is a secure online portal, called eStat, from TMW Systems. Using the portal, customers can tender loads and access real-time information such as shipment tracking and reporting of key metrics. “We open up our database,” Cullinan says.
In addition to the website, Hazenfield says DistTech shares custom reports and other data back and forth with customers using file transfer protocol (FTP) and electronic data interchange (EDI). Overall, the company exchanges information electronically with about 95 percent of its customers, he says.
Another strategy for DistTech is tailoring its technology to help its customers’ customers. For example, one shipper uses DistTech’s website to manage all of its own orders from customers (consignees) from order entry through billing, Cullinan says. The shipper’s customers use DistTech’s website to place orders for a specific product and number of gallons. The online order template features drop-down menus and pre-populated information. In effect, DistTech’s website frees the shipper from having to re-enter customer orders or arrange its own transportation.
“For example, we know that this customer signed on and ordered this product for the Albuquerque plant, where it was sourced from, and the actual product they want,” Cullinan says. “We do all the transportation around it, send the information off to our customer, and create the billing for it.”
Another value-added service DistTech can provide is vendor managed inventory (VMI). With a VMI arrangement, a convenience store, for example, would no longer issue a purchase order each time it orders gasoline. Its supplier would automatically track inventory usage at the retailer electronically with floating tank sensors (also known as telemetry).
By tracking actual demand data in this fashion, a supplier – a DistTech customer – could arrange for the data to go directly to DistTech, which would arrange transportation for the specified product reorder points and quantities. DistTech also captures and reports all necessary billing information for the supplier for the actual number of gallons delivered each month, for example.
“[Shippers’] CFOs love that,” Cullinan says. “I’ve spent more time collaborating with CFOs than in the past.”
One of DistTech’s largest customers is Degussa Admixtures Inc., part of Degussa AG, which is a multinational provider of specialty chemistry products. DistTech manages about 100 pieces of equipment for Degussa and staffs employees on site who handle all of the company’s information needs, says Mike Maloney, program manager for the Degussa account.
DistTech has reduced Degussa’s billing cycle time from one week to less than two days, Maloney says, by working with its vendors to develop the wireless technology necessary for drivers to input delivery information – customer order number, product code and quantity delivered – at each delivery point in multi-stop loads. DistTech uploads all delivery information to Degussa for billing within 24 hours of delivery, Maloney says.
As another example of real-time information, DistTech is implementing Coriolis mass flow meters in its tank trailers, which eventually will automate the reporting of gallons delivered to Degussa’s customers. The actual gallons dispensed from its trailers will be sent automatically and wirelessly to the back office, Maloney says, to improve billing accuracy.
“In today’s world, the only guaranteed capacity is dedication,” says John Casto, distribution manager for Degussa Admixtures. “That is extremely important to us in the service building industry, which is very famous for last-minute requests and deadlines. Because of our relationship with DistTech, we have the mechanism and infrastructure in place with all the communications to get real-time information to make real-time decisions.”
Since changing its name, DistTech has shifted the majority of its business to dedicated contract carriage (DCC) work, as in the Degussa example. In 2004, about 65 percent of its revenue was from common carrier work with 35 percent from DCC, Cullinan says. Today, these numbers have reversed to 65 percent DCC and 35 percent common carrier work. Total revenue during the same period has grown by more than 20 percent, he says.
“This change was the result of deeper integration requests from customers,” Cullinan says. “Basically our customers wanted us to assume more functions besides just basic transportation.”
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