Rapid growth at Land O'Lakes convinced the dairy products food company that it was time to bring the majority of its logistics operations in-house, despite a successful relationship with a third-party logistics provider. According to Patrick Johnson, logistics manager for Land O'Lakes, the objective was to implement a system that would allow transportation managers and customer service reps to directly manage the daily execution and visibility of freight operations in order to improve control.
The company selected Nistevo's Collaborative Logistics Network as its transportation management solution. Johnson said Nistevo's hosted internet-based infrastructure was an important selection criterion, since it enabled the company and its other supply-chain partners in the Nistevo community to quickly execute, plan and measure inbound and outbound transportation.
"Nistevo technology has enabled the company to execute its core carrier strategy, transfer direct management of its transportation operations back in-house and save millions of dollars in freight expenditures," says Johnson, who nominated Nistevo. "Nistevo's web-based solution has also helped the company provide previously unavailable metrics to customer service on on-time delivery and to transportation management on carrier tenders declined."
Phase one of the implementation began in mid-August 2001 and took only 60 days. Since the solution is a web-hosted service, no additional internal software or hardware purchases were required. This first phase included connecting all Land O'Lakes core carriers and three of the company's largest distribution centers in Illinois, New Jersey and Ohio to the Nistevo Network. Within a short period of time, all three DCs were tendering their freight to their core carriers for both plant and customer deliveries. Land O'Lakes had real-time visibility to 30 percent of its freight and the company was managing more than 4,300 shipments. Employee training took only one day.
In Spring 2002, Land O'Lakes expanded its use of the Nistevo network and transferred control of its largest plant, with more than 6,000 shipments annually, from a 3PL to its internal staff using the Nistevo network. This second phase of the implementation took just 30 days and was completed by the end of March 2002. The final phase was completed in early April 2003 and Land O'Lakes now manages all of its 30,000 freight loads through the Nistevo network.
Since rolling out the first of five phased implementations, in September 2001, the Nistevo/Land O'Lakes partnership has contributed significantly to a 16 percent reduction in freight dollars and a return on investment of 400 percent in just the first six months. That produced the lowest logistics costs per unit for the company since 1998.
The Nistevo Network also enables systematic freight consolidation among community members by identifying complimentary freight lanes and helping set up inter-company "tours" and dedicated lanes of freight. These tours offer shippers new capacity and cost efficiencies, while carriers benefit by more effectively utilizing assets.
The visibility that Nistevo affords transportation planners has also opened up the potential for major improvements in truck utilization. When a truck brings in raw materials to a Land O'Lakes plant for further processing, it can be reloaded with finished product destined for a forward DC. From that DC, it can be dispatched with product to a customer location.
"This very efficient use of truck resources reduces costs for shippers and carriers and minimizes dock congestion," says Johnson. "There is one truck in and one truck out, so facility capacity is increased. This continuous routing also increases truck utilization, especially in places where there is a surplus of empty trailers."
The Nistevo Network gives Land O'Lakes information that was not available before, such as on-time delivery, carrier departures, arrivals and delays and alerts about whether or not a delivery is going to be late.
"This alerting information empowers our customer service representatives to be more proactive in communicating with the customer if a truck is going to be late," says Johnson.
The system also allows planners to use their time more efficiently. Instead of sending faxes, e-mails or making phone calls, planners can tender a load online to a specific carrier on a specific lane. In addition, Land O'Lakes can use the Network to measure the performance of its carriers with metrics such as on-time delivery, fill rates, how many loads were tendered and how many were accepted or rejected.
