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When Procter & Gamble divested Sunny Delight Beverages Co. in 2004, selling it to a private equity firm, the producer of popular SunnyD juice-based drinks had sales of $550m but no systems or distribution network of its own. P&G had agreed to provide service and support for up to a year after the divestiture, but the company had to move quickly to establish enterprise services and an infrastructure to get its products to market.
"One of the first questions we asked ourselves was whether we wanted to do transportation on our own," says Jim Glendon, supply chain director of Sunny Delight. "We pretty quickly decided the answer was 'no.' This was not an area that we wanted to become experts in because of the scale - we were shipping around 30,000 refrigerated loads annually -- the technology and knowledge of the industry that were required. We decided it made a lot more sense to look for a third-party logistics provider that could bring these things to the party and allow us to focus on growing our business."
At the time Sunny Delight had four plants across the U.S., in South Brunswick, N.J.; Atlanta; Sherman, Texas; and Anaheim, Calif. The company had no outside warehousing as it shipped ready-to-drink product from its plants direct to customers.
All transportation was via refrigerated trucks, which presented a challenge at the time because the market was experiencing a capacity shortage. "Even within P&G we were the only refrigerated brand, so we definitely needed a partner that knew the refrigerated side of the business," says Glendon.
After going through a selection process that included visits to the offices of the two final candidates, Sunny Delight decided to partner with Transplace. "When we got down to the final selection, it was actually a fairly easy decision," says Glendon. "Transplace had done some work for P&G so they were familiar with our operations. And their costs, meaning the total cost of their fees plus the transportation piece, was pretty much in line with what he had been paying as a part of P&G. They had the scale, they were getting good rates from our carriers, their people there were very impressive and their technology was very thorough in terms of their project management and how they planned to bid our business and bring us on board."
Though Sunny Delight was officially sold in August 2004, it had started work on the selection process the prior May. Transplace was selected in September 2004. "By February 1, 2005, we had the Transplace system up and running and carriers under bid, so we were separated from P&G at that point from a transportation standpoint," says Glendon. This was six months ahead of required separation date. Two months later, SunnyD was able to cut all logistical ties with P&G when it moved to a new ERP system.
The transition to Transplace "was very fast and very efficient. The start-up basically was a non-event," Glendon says.
In 2007, Sunny Delight acquired two additional brands from Kraft, Fruit20 and Veryfine, which added dry van transportation and another production facility to the mix. Again there was a short time frame for action. "That whole transition for us was 120 days, from when we closed the deal to when we were cut over from Kraft," says Glendon. "From day one, Transplace was on our integration team so they had a thorough understanding of the project. They put together our carrier package out of the new plant in Littleton, Mass., and we ended up with a very good carrier base, both from a cost and service standpoint."
Today Transplace handles all of Sunny Delight's outbound transportation and the majority of its inbound. "The only inbound they don't handle are those cases where the suppliers include transportation with their total price and don't separate it out," says Glendon. Transplace negotiates rates with carriers and does the day-to-day carrier management, which includes tendering the loads, scheduling them into plants, and handling freight payment. It also sends each carrier a monthly performance scorecard. "We have a semi-annual carrier review, where I go to Transplace's offices and we sit down with our top ten carriers and talk through cost and performance issues and any other areas that either one of us needs to address," says Glendon. "I want our carriers to see SunnyD and Transplace as partners so they know that when Transplace talks to them, it really is SunnyD. If a carrier calls me directly, I will send them right back to Transplace."
The tightness of this relationship shows up in other ways as well. The Transplace team that manages SunnyD's business "has a real sense of ownership, a sense of urgency about the business," says Glendon. "They are very results oriented. Their crew is talking with our plants several times a day, working through issues. There really is a partnership here."
And there have been bottom-line benefits. "From 2006 until today, we have seen a 25 percent reduction in linehaul rates," Glendon says. This was the result of several initiatives, including use of a dedicated fleet in some areas, better consolidation of LTL shipments and use of Transplace's cooperative bidding module, he explains. "Of course, cost doesn't really matter unless we are getting the service, and the service has been right at our target," he says. "The technology Transplace has, in terms of their business intelligence reporting and exception reporting and their whole transportation management solution, helps maintain that high service level."
Glendon also commends Transplace for its use of carriers that participate in EPA's SmartWay program. "As a company, SunnyD has just issued its first sustainability report and it was great that we could report that we are now SmartWay certified because of the carriers that Transplace is using on our accounts. This is important to us because we know those carriers are not only doing what is good for the environment, they are doing what is smart from a business standpoint and that saves us money."
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