New industry collaborations are resulting in fresh approaches to a chronic problem both in transportation and distribution: the need for higher productivity.

 The return on a technology investment doesn’t have to end. As long as there are opportunities to increase logistics productivity in a distribution center or on the road, customers will pursue them with networks of technology providers. These relationships are more partnership than purchasing.

PepsiCo (www.pepsico.com) is a prime example on the user side. When it implemented a transportation management system (TMS) a few years ago, it saw the project as more of a map in its business evolution than as the purchase of a tactical point solution to save transportation dollars.

Mark Whittaker, v.p. of PepsiCo Transportation, saw a threat to that evolution resulting from a possible 5-8% shrinkage in truckload capacity due to pending driver hours of service and safety regulations. Not only did he want visibility into the productivity of his own company’s private fleet, but he wanted a window into his other transportation providers as well.

What Whittaker learned about the business of transportation led him to establish Pepsi Logistics Co., Inc. (PLCI) as the internal logistics services division for the various PepsiCo business units. That strategic approach, which merited MH&L’s recognition as one of its innovators of the year (see pg. 15), also won the admiration of the TMS vendor PepsiCo ultimately selected.

“They created an internal 3PL before they created an external one,” says Fab Brasca, v.p. of global logistics at JDA Software (www.jda.com). “That’s the difference between looking at a TMS as just an execution level functional deployment that yields x% cost savings to really looking at it as a roadmap that points to each step that will evolve how the organization approaches things over time. That kind of approach will generate not only additional monetary and service value but strategic value as well.”

Indeed, it enabled PLCI to launch a strategic transportation provider network integration strategy to support a stronger alignment between its information system and its internal and external transportation providers. Whittaker expects this effort to address PepsiCo’s transportation capacity problem by driving captured capacity into the network, minimizing carrier cost and availability volatility.

Brasca says this is all part of an industry-wide move away from mere data reporting to analytics. Situational analysis is becoming the responsibility of people outside the boardroom and management offices, as well.

“Instead of treating analytics as a separate set of capabilities disassociated from your day to day execution, we see value in enabling some of those metrics as part of the operator’s user experience,” he says. “Instead of doing offline analytics which will get you longer term tactical and strategic value, there are some metrics where it makes sense to have that operationally available because it may have an impact on a user’s daily decisions—giving value to the planner on an hour-by-hour basis as opposed to monthly.”

Better Use of Labor

The strategic value of logistics software also comes into play when trying to maximize labor productivity. That’s more important than ever as companies struggle to draw skilled labor into their logistics ranks being vacated by retiring baby boomers.

Automation won’t solve that problem and logistics operations will continue to hire labor even as they automate. Making sure they’re productive requires a focus on three things: pace, utilization and process. Engineered standards are needed to help gauge those metrics. Labor management software puts those standards to work.