Payload payoff

by Array

When Unilever partnered with Schenker and Nulogy to improve its shipping processes, it knew the savings would not be immediate. Now, with the second phase of the program in full swing, the economic and environmental rewards are rolling in. Deborah Aarts gives an update.

Sometimes it pays to be patient.

In November 2007, MM&D profiled phase one of a distribution improvement project being conducted jointly by shipper Unilever Canada Inc, third-party logistics provider Schenker of Canada Limited and software vendor Nulogy.

Phase one of the project involved an overhaul of the back-end processes used to plan outbound loads from two distribution centres in the greater Toronto area. By replacing a deluge of phone calls, emails and spreadsheets with new software (Nulogy’s LiveLoader program), the three parties created a new system that better prepared Unilever’s complex shipments within the DC.

As helpful as phase one was, it was never expected to generate much of a return. Rather, it was meant to lay the groundwork for a second phase—optimizing the load-building process—that promised to create significant cost savings and environmental benefits.

Starting phase two

In the past, Unilever shipped outbound deliveries from its DCs in frequent intervals using less-than-truckload (LTL) services. The goal of phase two was to come up with ways to put the same number of shipments into full truckloads.

Shortly after phase one wrapped up in early 2008, Nulogy set to work preparing LiveLoader to handle the next step. The team configured the software to give Schenker warehouse staff direction on which loading configurations could fit the most pounds in the fewest trailers.

Once a trailer was completely full, the driver could proceed directly to the destination hub city, where pallets could be deconsolidated for local deliveries. No need to cross-dock and consolidate LTL shipments at the carrier’s Toronto depot.

Initially, some carriers resisted the idea. But once the Unilever team was able to convey the potential advantages, most got on board.

“While Nulogy was looking at the algorithms, we were negotiating with carriers. We were looking to change the way we paid our freight dollars,” recalls Unilever’s manager of transportation services, Ginnie Venslovaitis, who recently left the company.

“We told our carriers ‘we’re going to load your trailers to the max. You’re going to get the same shipments, but you’re going to load them differently…It’s going to be on my head to fill the trailer completely, because I don’t want to pay for empty space. And since you’re not going to have to cross-dock it at the front end, you won’t have to touch it twice, so you’re going to have savings.’” Phase two went live in November 2008 with shipments from its Toronto food DC to Vancouver—Unilever’s most expensive lane. Shipments to Calgary followed in January 2009.

So how does the new load-building process actually work? Linked to Unilever’s demand information and Schenker’s WMS, the LiveLoader system flags enough pallets to fill a full truckload and factors in weight, cube size, stackability and other factors to map out the best configurations. Since all pallets in a trailer are labelled and destined for the same place, there are few restrictions about which pallets go where.

As Kevin Wong, Nulogy’s chief operating officer, explains, LiveLoader creates a plan of what is possible and then hands it off to the loading-dock staff. “We achieve consolidation in the plan, but then we let people use their 10 or 15 years of experience to make it work in the trailer…The LiveLoader says they can do it, so it becomes a challenge to make it fit,” he says.

To accommodate the consolidated loads, Unilever’s carriers had to make some equipment modifications. Since many of the company’s pallets are mixed, they can’t always be stacked atop one another, so many of the carriers installed load bars to handle the second layer. This in turn forced Schenker to switch its dock equipment, as the forklifts in use were too tall to use with the load bars.

The payoff

Despite all the work involved in making it happen, Venslovaitis says all partners—including carriers—have embraced the second phase of the project as a means to boost efficiency.

But it is Unilever that is seeing the biggest improvement. In 2009, with just the Vancouver and Calgary lanes on board, Unilever shaved $120,000 off its transportation spend. The figure will be smaller this year; the company sold its laundry division, so overall shipment volumes will be down. Even still, Venslovaitis pegs the savings at between $80,000 and $100,000.

Aside from cutting costs, the change is also improving Unilever’s environmental footprint. If the savings weren’t there, Venslovaitis says, it’s unlikely the company would have embraced the consolidated approach.

“To be honest, it would have been a struggle if I had to spend $120,000 more to ship 10 fewer trucks,” she says. “But because I’m saving $120,000 while pulling trucks off the road, it’s awesome.”

In Wong’s view, much of the success came from taking a phased approach to implementation. “We learned a lot by rolling out phase one, reflecting a bit and then starting with phase two,” he says. “Phase one was a teaser. Now, we’re getting things out of it. The benefits are happening.”