Executive Briefings

Distribution Process at SC Johnson Hits the Mark

Beginning in 1996, the household products manufacturer decided to replace its centralized distribution pattern with an approach that relied on regional distribution centers across the country. Mark VII was named to help connect the links in the network through intermodal shipments.

Mark VII Transportation's ability to deliver consistent on-time intermodal service and its compatibility as a trading partner has earned the provider a critical role in the U.S. distribution strategy of SC Johnson of Racine, Wis.

A full-service transportation and logistics management company with 125 offices worldwide, Mark VII Inc. is headquartered in Memphis, Tenn. The company provides non-asset-based, multi-modal transportation services and integrated logistics solutions to companies in the U.S. and abroad.

Intermodal and highway carriers are held to the same standard; there's no "poor sister" performance standard for intermodal carriers.

SC Johnson started business in 1886 as a parquet flooring company. Through the design and marketing of Johnson Paste Wax - a formula specially prepared to care for their parquet floors - the company built its reputation as a consumer-driven company whose new growth hinged on product development. Over the years, other household products, including Pledge, Glade,Drano, Shout, Brite, Raid, Windex, and Off!, were added to the company's merchandise mix. SC Johnson presently employs more than 13,000 people in nearly 60 countries and reported 1998 revenue in excess of $5 bn. It remains a family-owned operation with several fourth-generation family members actively involved in company operations.

For years SC Johnson served most of its U.S. customers with direct shipments from the company's manufacturing plant in Racine. However, SC Johnson shifted gears in 1996, opting instead to pursue a regional distribution center strategy with a handful of well-positioned facilities.

"The restructuring was designed to improve customer service and position product closer to our customers," said Milton E. Morris, general transportation and export manager.
Mark VII had been providing intermodal service to SC Johnson since late 1994, shortly after Todd Thompson, vice president of sales, came over from APL. Mark VII began arranging and overseeing intermodal shipments from Racine to some SC Johnson warehouses as well as to the distribution centers of certain large customers, including Kmart, Wal-Mart and Sam's Club.

The network restructuring presented the opportunity for the intermodal company to play an even greater role in the SC Johnson service matrix. Bids were invited for transportation services, proposals were made, and Mark VII was selected to play an integral role in moving full product loads from the manufacturing site out to several SC Johnson centers.

From earlier experiences with intermodal, SC Johnson knew economic efficiencies could be gained without a service sacrifice by shifting certain traffic lanes to intermodal. SC Johnson now moves about 15 percent of its business outbound from Racine to the RDCs via intermodal service with Mark VII.

Shipments from the Racine plant represent the bulk of the business Mark VII handles for SC Johnson. Minor volumes come from SC Johnson overflow warehouses in the Racine area or from co-packers in the northern Illinois/southern Wisconsin area that do specialty packaging for some of SC Johnson's larger customers. The volume of household products manufactured in Racine is deemed proprietary information by SC Johnson.

Mark VII processes intermodal shipments from Racine to DCs in Ontario and Woodland Calif.; Fort Worth, Texas; and Forest Park, Ga.

Transit times "absolutely are critical" to SC Johnson, said Morris, and the company's on-time performance requirement is 99.5 percent. Intermodal and highway carriers are held to the same standard; there's no "poor sister" performance standard for intermodal carriers, Morris added.

No Excuses
"We deliver two days to Atlanta and two days to Texas, so if we pick up Monday, we're delivering Wednesday morning," said Thompson. The service commitment to the California DCs is three or four days. The only acceptable excuse for a service failure is severe weather, "and that's only when they're in a good mood," Thompson added.
For service to Atlanta, Mark VII predominantly uses Norfolk Southern and occasionally CSX. "Norfolk Southern has an early evening cut-off for Atlanta, but there's a later ride on CSX," said Thompson. "Everything we pick up in Racine is geared to meet specific railroad cut-off times in the Chicago area." Racine lies about 70 miles from the Chicago intermodal yards.

Texas shipments travel on the Burlington Northern Santa Fe. For loads to the Ontario DC, Mark VII often uses the dedicated high-speed Ice Cold Express (ICE) service it operates from Chicago to San Bernadino, Calif., with partner BNSF. A dedicated refrigerated RoadRailer service, ICE was launched June 7. The train is exclusive to Mark VII, which coordinates the sales, operations and services required in this new venture.
Mark VII now owns 132 53-foot RoadRailer reefers, as well as a fleet of standard intermodal reefer trailers. Insulated containers often are used to comply with SC Johnson's winter-season shipping requirement that merchandise be protected from freezing.
ICE departs Chicago each Friday afternoon, with trailers available for pickup at 4 a.m. Monday. Virtually anything bound to Ontario that moves out of Racine on Tuesday through Friday morning gets delivered Monday morning, which meets SC Johnson's general delivery requirements. RoadRailers bound for the Ice Cold Express are routed to BNSF's automotive yards at Naperville, Ill.

For service to Woodland and for shipments to Ontario, Mark VII uses different levels of service - including premium and guaranteed service trains - on BNSF, the Pacer Stacktrain (the former APL Stacktrain, now owned and operated by Pacer Co.), and, in some cases, the Union Pacific. The UP has been aggressive with its efforts to recapture lost accounts and generate new business, said Thompson. Service markedly has improved on the UP from where it was 18 months ago when service problems were widespread after the merger with Southern Pacific, he added.

"Everything we pick up in Racine is geared
to meet specific railroad cut-off times in the Chicago area."
- Todd Thompson of Mark VII

For the SC Johnson account, Mark VII uses multiple drayage carriers at the various points of service to ensure high levels of performance and price competitiveness as well as to help guarantee Mark VII's ability to meet surges in volume. Drayage firms for the SC Johnson account are selected from the ranks of existing service providers that already have established a level of understanding with the Mark VII way of doing things, said Thompson. "These carriers have to be competitive from a rate perspective, they have to commit to handle a certain volume each day for SC Johnson, and they must agree to service commitments that include absolute on-time performance, 24-hour pickup ability, and weekend notifications."

Because of the wide range of service requirements, Mark VII maintains a varied and sizeable pool of equipment, often more than 20 units, at the Racine plant. Mark VII moves 60 to 75 trailer/containers for SC Johnson per week.

The equipment mix adds to the complexity in Racine and at the Mark VII customer service center in Birmingham, Ala. "In some lanes we run rail trailers, other lanes we run containers. In certain lanes we are running Mark VII RoadRailers, reefers or containers ... we have different equipment going to different ramps to make different cut-off times, and our customer service people have to schedule carefully and communicate with Racine in order to meet the delivery schedule," said Thompson. The operations for this account are handled out of the Birmingham service center.

Here's how it works. Mark VII gives SC Johnson a daily drop sheet that shows equipment numbers of units waiting at the Racine plant and destinations to which each type of equipment can go. Shipping orders are transmitted via EDI from SC Johnson to Mark VII with pre-set delivery dates. It's up to Mark VII to determine the routing options based on the pre-determined delivery data. Generally that notice is received one day or less in advance of the necessary departure time from the Racine loading dock, which loads three shifts a day, five days a week. However, it will load around the clock seven days a week to meet commitments to customers. Product rolls off production lines and into the trailers and containers staged at dock doors.

Graveyard Shift
Mark VII drayage carriers routinely head to Racine in the morning, and Mark VII customer service instructs drivers which loads to bring to which rail ramps. According to Thompson, it's not uncommon for a dozen trailers or containers to be ready and waiting each morning, having been loaded during the SC Johnson graveyard shift. EDI messages flow to Mark VII as additional outbound loads move away from the loading docks, and carriers are dispatched for the newly-loaded pickups.

The Mark VII customer service team monitors shipment progress and provides SC Johnson with EDI messages confirming delivery. Though most operational communications between SC Johnson and Mark VII occur via EDI, they fall back on telephone calls when hot loads come out during the day or if the plant is running behind on its loading schedule.
SC Johnson uses a freight payment company to audit bills and process payments back to Mark VII.

Customer-service team members know the efforts they expend on the SC Johnson account don't go unnoticed - or unrewarded. SC Johnson has a highly detailed annual carrier evaluation program, and Mark VII's performance in 1998 cornered SC Johnson's intermodal carrier of the year award.

"We rate all our carriers on virtually every aspect of the service they perform for us," explained Morris. The carrier evaluation program at SC Johnson began 12 years ago and now measures carrier performance in each of six categories: on-time performance, both pickup and delivery; EDI capabilities; operations, including the availability and quality of equipment provided for SC Johnson shipments; pricing; administrative factors, such as invoice accuracy and freight claims activity; and customer service issues, including the ease of doing business with the provider.

The evaluations are detailed. For example, Mark VII's on-time performance in the most recent evaluation year was 99.86 percent against the SC Johnson requirement of 99.5 percent; their EDI delivery confirmation messages were 99.66 percent accurate and complete. Mark VII scored a total of 299 out of 315 maximum points according to the Johnson Wax scoring methodology.

"Their service performance is excellent, but what really makes Mark VII a top service partner is the ease of doing business with them," explained Morris. "They give us clean equipment in excellent shape, they clearly articulate which equipment can go where, and they have highly dedicated customer service people in Birmingham who go to extraordinary lengths to keep us on time."

"They do tell us we're one of the easiest carriers to work with," admitted Thompson. "We try to give them the equipment they need, we've never turned down a load, and we had one invoicing error in more than 3,000 shipments."

SC Johnson and Mark VII currently are testing intermodal service from a SC Johnson manufacturing facility in Toluca, Mexico, just outside Mexico City. "This lane traditionally has been served over the road, but service has improved with privatization of the rail service in Mexico enough for us to provide a much better standard of delivery," said Morris. "There's a good chance we can achieve some additional efficiencies with intermodal service." All shipments from Toluca head northbound to Racine, where product is dispatched to the DCs. Service trials began in August.

Mark VII Transportation's ability to deliver consistent on-time intermodal service and its compatibility as a trading partner has earned the provider a critical role in the U.S. distribution strategy of SC Johnson of Racine, Wis.

A full-service transportation and logistics management company with 125 offices worldwide, Mark VII Inc. is headquartered in Memphis, Tenn. The company provides non-asset-based, multi-modal transportation services and integrated logistics solutions to companies in the U.S. and abroad.

Intermodal and highway carriers are held to the same standard; there's no "poor sister" performance standard for intermodal carriers.

SC Johnson started business in 1886 as a parquet flooring company. Through the design and marketing of Johnson Paste Wax - a formula specially prepared to care for their parquet floors - the company built its reputation as a consumer-driven company whose new growth hinged on product development. Over the years, other household products, including Pledge, Glade,Drano, Shout, Brite, Raid, Windex, and Off!, were added to the company's merchandise mix. SC Johnson presently employs more than 13,000 people in nearly 60 countries and reported 1998 revenue in excess of $5 bn. It remains a family-owned operation with several fourth-generation family members actively involved in company operations.

For years SC Johnson served most of its U.S. customers with direct shipments from the company's manufacturing plant in Racine. However, SC Johnson shifted gears in 1996, opting instead to pursue a regional distribution center strategy with a handful of well-positioned facilities.

"The restructuring was designed to improve customer service and position product closer to our customers," said Milton E. Morris, general transportation and export manager.
Mark VII had been providing intermodal service to SC Johnson since late 1994, shortly after Todd Thompson, vice president of sales, came over from APL. Mark VII began arranging and overseeing intermodal shipments from Racine to some SC Johnson warehouses as well as to the distribution centers of certain large customers, including Kmart, Wal-Mart and Sam's Club.

The network restructuring presented the opportunity for the intermodal company to play an even greater role in the SC Johnson service matrix. Bids were invited for transportation services, proposals were made, and Mark VII was selected to play an integral role in moving full product loads from the manufacturing site out to several SC Johnson centers.

From earlier experiences with intermodal, SC Johnson knew economic efficiencies could be gained without a service sacrifice by shifting certain traffic lanes to intermodal. SC Johnson now moves about 15 percent of its business outbound from Racine to the RDCs via intermodal service with Mark VII.

Shipments from the Racine plant represent the bulk of the business Mark VII handles for SC Johnson. Minor volumes come from SC Johnson overflow warehouses in the Racine area or from co-packers in the northern Illinois/southern Wisconsin area that do specialty packaging for some of SC Johnson's larger customers. The volume of household products manufactured in Racine is deemed proprietary information by SC Johnson.

Mark VII processes intermodal shipments from Racine to DCs in Ontario and Woodland Calif.; Fort Worth, Texas; and Forest Park, Ga.

Transit times "absolutely are critical" to SC Johnson, said Morris, and the company's on-time performance requirement is 99.5 percent. Intermodal and highway carriers are held to the same standard; there's no "poor sister" performance standard for intermodal carriers, Morris added.

No Excuses
"We deliver two days to Atlanta and two days to Texas, so if we pick up Monday, we're delivering Wednesday morning," said Thompson. The service commitment to the California DCs is three or four days. The only acceptable excuse for a service failure is severe weather, "and that's only when they're in a good mood," Thompson added.
For service to Atlanta, Mark VII predominantly uses Norfolk Southern and occasionally CSX. "Norfolk Southern has an early evening cut-off for Atlanta, but there's a later ride on CSX," said Thompson. "Everything we pick up in Racine is geared to meet specific railroad cut-off times in the Chicago area." Racine lies about 70 miles from the Chicago intermodal yards.

Texas shipments travel on the Burlington Northern Santa Fe. For loads to the Ontario DC, Mark VII often uses the dedicated high-speed Ice Cold Express (ICE) service it operates from Chicago to San Bernadino, Calif., with partner BNSF. A dedicated refrigerated RoadRailer service, ICE was launched June 7. The train is exclusive to Mark VII, which coordinates the sales, operations and services required in this new venture.
Mark VII now owns 132 53-foot RoadRailer reefers, as well as a fleet of standard intermodal reefer trailers. Insulated containers often are used to comply with SC Johnson's winter-season shipping requirement that merchandise be protected from freezing.
ICE departs Chicago each Friday afternoon, with trailers available for pickup at 4 a.m. Monday. Virtually anything bound to Ontario that moves out of Racine on Tuesday through Friday morning gets delivered Monday morning, which meets SC Johnson's general delivery requirements. RoadRailers bound for the Ice Cold Express are routed to BNSF's automotive yards at Naperville, Ill.

For service to Woodland and for shipments to Ontario, Mark VII uses different levels of service - including premium and guaranteed service trains - on BNSF, the Pacer Stacktrain (the former APL Stacktrain, now owned and operated by Pacer Co.), and, in some cases, the Union Pacific. The UP has been aggressive with its efforts to recapture lost accounts and generate new business, said Thompson. Service markedly has improved on the UP from where it was 18 months ago when service problems were widespread after the merger with Southern Pacific, he added.

"Everything we pick up in Racine is geared
to meet specific railroad cut-off times in the Chicago area."
- Todd Thompson of Mark VII

For the SC Johnson account, Mark VII uses multiple drayage carriers at the various points of service to ensure high levels of performance and price competitiveness as well as to help guarantee Mark VII's ability to meet surges in volume. Drayage firms for the SC Johnson account are selected from the ranks of existing service providers that already have established a level of understanding with the Mark VII way of doing things, said Thompson. "These carriers have to be competitive from a rate perspective, they have to commit to handle a certain volume each day for SC Johnson, and they must agree to service commitments that include absolute on-time performance, 24-hour pickup ability, and weekend notifications."

Because of the wide range of service requirements, Mark VII maintains a varied and sizeable pool of equipment, often more than 20 units, at the Racine plant. Mark VII moves 60 to 75 trailer/containers for SC Johnson per week.

The equipment mix adds to the complexity in Racine and at the Mark VII customer service center in Birmingham, Ala. "In some lanes we run rail trailers, other lanes we run containers. In certain lanes we are running Mark VII RoadRailers, reefers or containers ... we have different equipment going to different ramps to make different cut-off times, and our customer service people have to schedule carefully and communicate with Racine in order to meet the delivery schedule," said Thompson. The operations for this account are handled out of the Birmingham service center.

Here's how it works. Mark VII gives SC Johnson a daily drop sheet that shows equipment numbers of units waiting at the Racine plant and destinations to which each type of equipment can go. Shipping orders are transmitted via EDI from SC Johnson to Mark VII with pre-set delivery dates. It's up to Mark VII to determine the routing options based on the pre-determined delivery data. Generally that notice is received one day or less in advance of the necessary departure time from the Racine loading dock, which loads three shifts a day, five days a week. However, it will load around the clock seven days a week to meet commitments to customers. Product rolls off production lines and into the trailers and containers staged at dock doors.

Graveyard Shift
Mark VII drayage carriers routinely head to Racine in the morning, and Mark VII customer service instructs drivers which loads to bring to which rail ramps. According to Thompson, it's not uncommon for a dozen trailers or containers to be ready and waiting each morning, having been loaded during the SC Johnson graveyard shift. EDI messages flow to Mark VII as additional outbound loads move away from the loading docks, and carriers are dispatched for the newly-loaded pickups.

The Mark VII customer service team monitors shipment progress and provides SC Johnson with EDI messages confirming delivery. Though most operational communications between SC Johnson and Mark VII occur via EDI, they fall back on telephone calls when hot loads come out during the day or if the plant is running behind on its loading schedule.
SC Johnson uses a freight payment company to audit bills and process payments back to Mark VII.

Customer-service team members know the efforts they expend on the SC Johnson account don't go unnoticed - or unrewarded. SC Johnson has a highly detailed annual carrier evaluation program, and Mark VII's performance in 1998 cornered SC Johnson's intermodal carrier of the year award.

"We rate all our carriers on virtually every aspect of the service they perform for us," explained Morris. The carrier evaluation program at SC Johnson began 12 years ago and now measures carrier performance in each of six categories: on-time performance, both pickup and delivery; EDI capabilities; operations, including the availability and quality of equipment provided for SC Johnson shipments; pricing; administrative factors, such as invoice accuracy and freight claims activity; and customer service issues, including the ease of doing business with the provider.

The evaluations are detailed. For example, Mark VII's on-time performance in the most recent evaluation year was 99.86 percent against the SC Johnson requirement of 99.5 percent; their EDI delivery confirmation messages were 99.66 percent accurate and complete. Mark VII scored a total of 299 out of 315 maximum points according to the Johnson Wax scoring methodology.

"Their service performance is excellent, but what really makes Mark VII a top service partner is the ease of doing business with them," explained Morris. "They give us clean equipment in excellent shape, they clearly articulate which equipment can go where, and they have highly dedicated customer service people in Birmingham who go to extraordinary lengths to keep us on time."

"They do tell us we're one of the easiest carriers to work with," admitted Thompson. "We try to give them the equipment they need, we've never turned down a load, and we had one invoicing error in more than 3,000 shipments."

SC Johnson and Mark VII currently are testing intermodal service from a SC Johnson manufacturing facility in Toluca, Mexico, just outside Mexico City. "This lane traditionally has been served over the road, but service has improved with privatization of the rail service in Mexico enough for us to provide a much better standard of delivery," said Morris. "There's a good chance we can achieve some additional efficiencies with intermodal service." All shipments from Toluca head northbound to Racine, where product is dispatched to the DCs. Service trials began in August.