Innovators: ADS Logistics

Gordon Gustafson, chief commercial officer and vice president of integrated solutions for ADS Logistics, led the development of a metals supply chain software system called LoMaS.

Using electronic data interchange (EDI), an auto manufacturer orders a steel coil from a steel mill. The mill receives the purchase order and sends a release order to a warehouse. The warehouse sends a load tender to a carrier. The carrier picks the coil up from the warehouse and is en route to the manufacturer.

In the midst of all these transactions, one step is missing. When the carrier arrives, the manufacturer turns away the load. The steel mill hasn’t sent the manufacturer an advance arrival notice. As a result, the driver returns to his terminal, having lost precious time and money.

Several years ago, this problem occurred far too often for Homewood, Ill.-based truckload metals hauler Area Transportation. Solving the problem would require more than a simple fix. The problem stemmed from how information was moved and managed in the metals supply chain.

Fast forward to 2007. Today, a material manager for an auto manufacturer goes online to a “virtual” warehouse of metals products to check his inventory of steel coils. The manager clicks on the pieces he needs and selects a ship-to destination. Immediately, his receiving department is notified the shipment is on its way, and when it will arrive.

The Web-based system generates a work order and documentation for the mill’s warehouse – the pieces to be picked up and the truck to ship them on. Meanwhile, a manager at Area Transportation uses the same software to finalize the building and routing of the load.

Once the shipment is delivered, proof-of-delivery documentation from the carrier is attached automatically to the online shipping records for the mill and manufacturer. Area Transportation then finalizes its billing and driver settlements.

An outgrowth of Y2K
The software that streamlines this transaction for Area Transportation is part of a supply chain and transportation management software (TMS) system called LoMaS – developed by Area Transportation’s parent company, ADS Logistics. Area Transportation is ADS Logistics’ trucking division and largest revenue center with its operation of 200 company trucks and 300 owner-operator trucks. ADS Logistics’ overall business is the supply chain management of metal products.

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The idea for LoMaS originated in the mid-1990s when ADS management began searching for a Y2K-compliant system to operate its multimodal division, which specializes in managing metals transportation via trucks, railroads and warehouses to provide customers with more economic service than direct trucking alone, says Gordon Gustafson, chief commercial officer and vice president of integrated solutions for ADS Logistics.

Buying a commercial software package meant extensive modifications to outfit the software to the unique procedures and information needs of the metals industry, Gustafson says. So management decided to build a system internally. With an IT staff of about a dozen people, the project began by evaluating a software system they already had built for ADS Logistics’ warehousing division.

“Within that system, it was pretty obvious the company could manage a product once it comes through its doors,” Gustafson says. The warehouse could track when a product entered the building, how long it was there, and the characteristics of when it left – such as what customer ordered it, and what truck it was put on.

Instead of focusing on transactions just within a warehouse, Gustafson says ADS executives decided to try and extend the walls of its warehouses to the points of pickup and delivery of metals in the supply chain. In other words, the company added the necessary steps to the software to control and execute the movement of metals from mill to manufacturer.

New revenue stream
When initially completed, the LoMaS supply chain management system allowed ADS Logistics’ warehousing and multimodal division to manage the movement of information and product among ships, trucks, train and warehouses as seamless as possible. As time progressed, a number of railroads and other customers observed how ADS Logistics was helping solve their information challenges, such as documenting the arrival and delivery times of products, Gustafson says.

A number of railroads and key customers began to ask ADS Logistics to build interfaces directly from LoMaS to their own TMS software. The next stage in the software’s evolution was when ADS Logistics began selling LoMaS directly to customers in the metals industry as a Web-based TMS. To date, the company has about 100 customers that use all or part of the LoMaS system, Gustafson says.

After early success in using LoMaS for its multimodal and warehousing divisions, three years ago ADS Logistics modified LoMaS to fit the operational and financial information requirements of Area Transportation.

“The thing we tried to do is to make it as automated as we possibly could,” Gustafson says. “It was designed to create efficiency in processes, and to become an exception-based system.”

ADS Logistics sees LoMaS as the perfect compliment to its specialized metals hauling equipment and warehousing facilities. In the ADS environment, LoMaS automates reporting of receiving and shipping information via a variety of EDI protocols; creates online visibility of in-house and in-transit inventory through Blackberry communication with drivers; automates load tender and truck scheduling; enables real-time reporting of inventory transactions; and transmits real-time work instructions to employees’ mobile barcode scanners/data terminals.

Through ADS Logistics, Area Transportation now offers its customers more services than a common carrier alone can provide, Gustafson says. Just as important, Gustafson says, is that Area Transportation is a highly entrepreneurial company that seeks to tailor its trucking services to solve customers’ challenges. Its services include just-in-time transit, dedicated fleets, specialized metals hauling and onsite transportation management.

Recently, for example, a manufacturing customer selected Area Transportation to replace its own private fleet with dedicated carriage. Area Transportation staffed managers on site, and by linking the LoMaS system with the customer’s IT systems, the carrier receives loads ready to ship into LoMaS. When loads don’t occur as planned, such as not being ready to ship on time, they become an exception in the system that a manager is forced to deal with. Having the systems linked in real time makes it easy for managers to make quick adjustments and enable more time to pre-plan loads to improve driver satisfaction, Gustafson says.

“The more services we can offer that differentiate us, the better we can be,” Gustafson says. “It is better for the customer as well. When systems start to work, customers see the benefit. A ‘stickiness’ develops as to why we need to keep working together.”

Innovators profiles carriers and fleets that have found innovative ways to overcome trucking’s challenges.

If you know a carrier that has displayed innovation, contact Avery Vise at [email protected] or (800) 633-5953.