Executive Briefings

Sunoco's Shipping Process Inside Its Plants Goes from Manual to Highly Optimized

A conversation with Gordon Heisler, director of transportation operations at Sunoco Inc., in Philadelphia.

Sunoco makes a wide range of petroleum-based products and is the largest producer of phenol in the United States and No. 2 globally. It is the third-largest producer of polypropylene in North America, a business that it has built through acquisition over the past five years. As director of transportation, Gordon Heisler recently co-sponsored the selection and implementation of a rail shipping and visibility solution for Sunoco's polypropylene plants.

Q: Can you describe Sunoco's polypropylene business for us?
Heisler: Sunoco is currently the third-largest producer of polypropylene in the U.S., but five years ago we were not in the polymers business at all. Polypropylene is basically plastic pellets that have a growing number of applications.

The primary end use channels of polypropylene are consumer products, automotive, fibers, film, and packaging.

Over the past five years, we acquired four plants from three different companies. These are all in the U.S., but they are geographically dispersed, so we were looking for a solution that would streamline the processes and standardize the plant shipping operations. The four plants operate under a single order-management system, but beyond that we were looking for ways to improve the supply chain and the utilization of our fleet of railroad hopper cars. Between the four plants, we ship in excess of 12,000 carloads of plastics a year. Virtually all of our polymer product is shipped by rail in hopper cars.

Q: The project was focused on the use of railcars once they were inside your plants?
Heisler: The focus was exclusively "inside the fence." Before we implemented the @Plant solution from Quality Transportation Services (QTS), all movements and activities inside our plants were performed manually. Our shipping process involves receiving, inspecting and validating before loading the cars, weighing them, doing lab sampling, generating the bill of lading and confirming the order in our order management system for each shipment and all the documentation associated with these functions. This was all handled with very manual and non-integrated methods. Since we had built this business through acquisition, each company had its own way of handling the shipping process and we were looking for a way to automate and standardize the shipping process.

To accomplish our goal, we first needed to have visibility at the location and current status of rail equipment inside our plant facilities. We already tracked the movement of cars outside the plants using the railroads' car-location messages, which we then made available to our customers through our online service. But inside the plant we needed more detail, in real time, about what cars had arrived and were available for loading. Before, this was done by a person walking along the tracks inside our plants and writing down car numbers.

Manual processes were used on both the inbound as well as the outbound. Weighing the cars, for example, involved having someone get the scale ticket, take it inside the plant and manually key it into a system. The same thing with the lab certificate.

Virtually all of the processes used in the shipping process were essentially manual and utilized non-integrated systems, with a lot of duplicate paperwork and repetitive entries. Obviously, this left a lot of room for error. Accuracy is paramount in today's environment, but it was impossible to be 100 percent accurate due to multiple manual entries into different systems.

Q: How did you decide on the rail car management system from QTS?
Heisler: We looked at three different solutions that would allow us to have inside-the-plant visibility of railroad equipment. We selected QTS because we liked the technology they offered and the flexibility. QTS has been a supplier to Sunoco for a number of years and had a successful track record on logistics software. When we got into the project we actually discovered many more capabilities in the system than we originally thought were there.

Initially, as I said, we were principally looking to track rail cars inside our facilities. But the QTS product offered us an opportunity to take these previously manual or disparate-system functions involved in the shipping process and integrate them together into a common rail shipping system.

Q: So how does it work?
Heisler: We have integrated all railcar activities and that includes inbound, outbound and intra-plant. We also have incorporated visibility of all railcars inside the facilities as well as at local storage yards in the vicinity. This was accomplished through the installation of fixed readers that scan the Automatic Electronic Identification (AEI) tags on each railcar. These readers are placed at the entrance to each facility. The tag itself, the transponder, is on the railcar and the stationary readers are at the gates, so it is just like what happens when you go through an EZ Pass tollbooth where the reader reads the transponder. It collects the location and direction and car number and this information is time stamped and transmitted to the QTS @Plant system.

We also have portable AEI readers that are used to scan each car number into a specific spot within the plant. As I described before, one of our loaders used to go out and do a car inventory by walking a string of cars and manually writing down each of the car numbers and its position. This is now performed using a portable AEI reader, which accurately captures the car number and its location. It is virtually fail-safe, which is a huge improvement over a manual process. We have taken a process that was completely manual before and replaced it with accurate, real-time data on exactly what cars are where and their status within our facilities.

Q: Explain how this changes your operations.
Heisler: Knowing the exact location and status of railcars has streamlined our loading process. In the past, for example, a person would write down the car information and take it into the office for data entry. If a digit were transposed, we might very well miss a shipment that day because the car number that began with an eight had been written down as a three, and never got onto the loading rack. Instead of loading 10 cars that day, we may have only loaded nine. The system also validates our private car number IDs that reside in the data base against all arriving cars; so a foreign car is identified immediately. Another benefit is automation and integration of the weighing function. The car is indexed at the scale using one of the handheld readers, so the car identification is synchronized with scale weight of the car loaded. The lab system is similarly integrated. After the car is loaded and weighed, the lab runs various tests on the product. When these tests are completed, the data is transferred right into the shipping office screens as opposed to loaders and lab personnel hand delivering pieces of paper that would previously have to be re-keyed.

Q: Are the various plants connected?
Heisler: Yes. If you look at how we conduct the business now, our supply-chain managers are located in Pittsburgh and the plants are hundreds of miles away. Pittsburgh now has visibility inside the fence at every facility as to the real-time status of every shipment and every car. The data available includes the weight of the car, the product loaded and whether it has passed lab certification and is ready for shipment. This access to data has huge benefits for us. Product inventories are in our system immediately allowing for immediate decisions by supply-chain management. We have consolidated the shipping functions at two plants into one as a result of the project.

Q: Have you quantified the results?
Heisler: The project has exceeded our original estimates of defined benefits in several areas. One would be data accuracy as we are no longer subject to the handwriter of the day. The time it takes to complete our whole shipping administration process has been reduced by more than 50 percent per shipment. We have the benefits from improved visibility locally and from supply-chain management. We have exceeded our original estimates on benefits in terms of personnel savings, data accuracy and real-time, shared data. In addition, we have seen a significant productivity gain in terms of our shipping clerks and other folks inside the plants. It was very time consuming to legibly write down car numbers and to re-key all that data. Now it all just flows onto the screen. Creating our switch list is now a simple drag-and-drop operation. We also generate our bills of lading electronically. We have also automated previous manual processes for railcar demurrage and detention management. Since our in-plant efficiency has improved, we are also seeing railcar asset utilization improvements that we feel are in excess of one day per car. Overall, the project has been viewed as a very successful one.

Sunoco makes a wide range of petroleum-based products and is the largest producer of phenol in the United States and No. 2 globally. It is the third-largest producer of polypropylene in North America, a business that it has built through acquisition over the past five years. As director of transportation, Gordon Heisler recently co-sponsored the selection and implementation of a rail shipping and visibility solution for Sunoco's polypropylene plants.

Q: Can you describe Sunoco's polypropylene business for us?
Heisler: Sunoco is currently the third-largest producer of polypropylene in the U.S., but five years ago we were not in the polymers business at all. Polypropylene is basically plastic pellets that have a growing number of applications.

The primary end use channels of polypropylene are consumer products, automotive, fibers, film, and packaging.

Over the past five years, we acquired four plants from three different companies. These are all in the U.S., but they are geographically dispersed, so we were looking for a solution that would streamline the processes and standardize the plant shipping operations. The four plants operate under a single order-management system, but beyond that we were looking for ways to improve the supply chain and the utilization of our fleet of railroad hopper cars. Between the four plants, we ship in excess of 12,000 carloads of plastics a year. Virtually all of our polymer product is shipped by rail in hopper cars.

Q: The project was focused on the use of railcars once they were inside your plants?
Heisler: The focus was exclusively "inside the fence." Before we implemented the @Plant solution from Quality Transportation Services (QTS), all movements and activities inside our plants were performed manually. Our shipping process involves receiving, inspecting and validating before loading the cars, weighing them, doing lab sampling, generating the bill of lading and confirming the order in our order management system for each shipment and all the documentation associated with these functions. This was all handled with very manual and non-integrated methods. Since we had built this business through acquisition, each company had its own way of handling the shipping process and we were looking for a way to automate and standardize the shipping process.

To accomplish our goal, we first needed to have visibility at the location and current status of rail equipment inside our plant facilities. We already tracked the movement of cars outside the plants using the railroads' car-location messages, which we then made available to our customers through our online service. But inside the plant we needed more detail, in real time, about what cars had arrived and were available for loading. Before, this was done by a person walking along the tracks inside our plants and writing down car numbers.

Manual processes were used on both the inbound as well as the outbound. Weighing the cars, for example, involved having someone get the scale ticket, take it inside the plant and manually key it into a system. The same thing with the lab certificate.

Virtually all of the processes used in the shipping process were essentially manual and utilized non-integrated systems, with a lot of duplicate paperwork and repetitive entries. Obviously, this left a lot of room for error. Accuracy is paramount in today's environment, but it was impossible to be 100 percent accurate due to multiple manual entries into different systems.

Q: How did you decide on the rail car management system from QTS?
Heisler: We looked at three different solutions that would allow us to have inside-the-plant visibility of railroad equipment. We selected QTS because we liked the technology they offered and the flexibility. QTS has been a supplier to Sunoco for a number of years and had a successful track record on logistics software. When we got into the project we actually discovered many more capabilities in the system than we originally thought were there.

Initially, as I said, we were principally looking to track rail cars inside our facilities. But the QTS product offered us an opportunity to take these previously manual or disparate-system functions involved in the shipping process and integrate them together into a common rail shipping system.

Q: So how does it work?
Heisler: We have integrated all railcar activities and that includes inbound, outbound and intra-plant. We also have incorporated visibility of all railcars inside the facilities as well as at local storage yards in the vicinity. This was accomplished through the installation of fixed readers that scan the Automatic Electronic Identification (AEI) tags on each railcar. These readers are placed at the entrance to each facility. The tag itself, the transponder, is on the railcar and the stationary readers are at the gates, so it is just like what happens when you go through an EZ Pass tollbooth where the reader reads the transponder. It collects the location and direction and car number and this information is time stamped and transmitted to the QTS @Plant system.

We also have portable AEI readers that are used to scan each car number into a specific spot within the plant. As I described before, one of our loaders used to go out and do a car inventory by walking a string of cars and manually writing down each of the car numbers and its position. This is now performed using a portable AEI reader, which accurately captures the car number and its location. It is virtually fail-safe, which is a huge improvement over a manual process. We have taken a process that was completely manual before and replaced it with accurate, real-time data on exactly what cars are where and their status within our facilities.

Q: Explain how this changes your operations.
Heisler: Knowing the exact location and status of railcars has streamlined our loading process. In the past, for example, a person would write down the car information and take it into the office for data entry. If a digit were transposed, we might very well miss a shipment that day because the car number that began with an eight had been written down as a three, and never got onto the loading rack. Instead of loading 10 cars that day, we may have only loaded nine. The system also validates our private car number IDs that reside in the data base against all arriving cars; so a foreign car is identified immediately. Another benefit is automation and integration of the weighing function. The car is indexed at the scale using one of the handheld readers, so the car identification is synchronized with scale weight of the car loaded. The lab system is similarly integrated. After the car is loaded and weighed, the lab runs various tests on the product. When these tests are completed, the data is transferred right into the shipping office screens as opposed to loaders and lab personnel hand delivering pieces of paper that would previously have to be re-keyed.

Q: Are the various plants connected?
Heisler: Yes. If you look at how we conduct the business now, our supply-chain managers are located in Pittsburgh and the plants are hundreds of miles away. Pittsburgh now has visibility inside the fence at every facility as to the real-time status of every shipment and every car. The data available includes the weight of the car, the product loaded and whether it has passed lab certification and is ready for shipment. This access to data has huge benefits for us. Product inventories are in our system immediately allowing for immediate decisions by supply-chain management. We have consolidated the shipping functions at two plants into one as a result of the project.

Q: Have you quantified the results?
Heisler: The project has exceeded our original estimates of defined benefits in several areas. One would be data accuracy as we are no longer subject to the handwriter of the day. The time it takes to complete our whole shipping administration process has been reduced by more than 50 percent per shipment. We have the benefits from improved visibility locally and from supply-chain management. We have exceeded our original estimates on benefits in terms of personnel savings, data accuracy and real-time, shared data. In addition, we have seen a significant productivity gain in terms of our shipping clerks and other folks inside the plants. It was very time consuming to legibly write down car numbers and to re-key all that data. Now it all just flows onto the screen. Creating our switch list is now a simple drag-and-drop operation. We also generate our bills of lading electronically. We have also automated previous manual processes for railcar demurrage and detention management. Since our in-plant efficiency has improved, we are also seeing railcar asset utilization improvements that we feel are in excess of one day per car. Overall, the project has been viewed as a very successful one.