OTM Sourcing Module Lessons Learned
August 13, 2012 Gary Bolen
Transportation Analyst
Family Dollar Sourcing Module Usage
Used for all Inbound Truckload and Intermodal Bid Projects 8 Bid Projects completed using Sourcing Module since
2006 Not currently used for Ocean Freight or LTL Bid
Projects
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Family Dollar Network Characteristics
Over 55,000 Truckload & Intermodal Shipments Over 900 Truckload & Intermodal Lanes 10 Distribution Centers 2 Import Distribution Centers Core Carrier Base of 46 partner carriers Over 1,000 Collect Vendors
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Family Dollar Network Map
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Bid Phases
1. Pre-Bid Phase
2. Bid Phase
3. Bid Optimization Phase
4. Post-Bid Phase
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Pre-Bid Phase Activities Determine scope of Bid Project
Create Bid Project Timeline
Query and scrub historical data
Build Shipment Set & Lane Summary
Fine tune Lane Summary through Action Utilities
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Mini Bid – Lanes from specific origin markets Address new vendor openings, add capacity to existing
lanes, replace carriers not meeting expectations
DC Bid – focuses on new DC openings All vendor to DC lanes for specific destination DC
Network Bid – includes the entire inbound vendor
to DC lane network All vendor to DC lanes for the entire transportation
network
Determine Scope of Bid Project
Network Bid Timeline
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Network Bid Timeline Continued
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Bid Project Team Members
Required Project Team Members 1. Transportation Manager 2. Transportation Analysts (2)
Supplemental Project Team Members
1. IT Support / OTM Super Users 2. Transportation Planners / Routers 3. DC Transportation Site Managers 4. Freight Payment Provider
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Preparing Historical Lane Data
Historical data using previous calendar year or fiscal year can be queried from the OTM database
Data for new DCs can be mocked up using geographically close existing DCs
Populating P_SHIPMENT table using CSV upload template allows an easy way to exclude lanes that have shipment volume too low to go out to bid and to preserve existing lane naming conventions
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Shipment Set
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Houses all OTM historical shipments within given date parameters
Lane Summary
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Uses Shipment Set data to build lane ID’s that can later be put out to bid.
Lane Summary Statistics Helpful To Carriers
Percent of Stop-offs Average Distance Total Annual Shipments Max Weekly Shipments Primary Vendor Source Postal Code Lane Attributes No refrigerated trailers Drop trailers required Seasonal summer lane
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Zone Lanes & Autocombine Utility
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Niles, IL – 50 Shipments
Chicago, IL – 75 Shipments
Aurora, IL – 100 Shipments
Chicago Zone Lane – 225 Shipments
Carrollton, TX – 50 Shipments
Garland, TX – 25 Shipments
Dallas, TX 75 Shipments
Arlington, TX – 50 Shipments
Dallas Zone Lane – 200 Shipments
Seasonality of lanes
Try to group a seasonal vendor with a year round vendor to create lanes with annual volume.
Consider removing lanes that only ship for 1-2 months out of the year from the bid.
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Bid Phase Activities
Create Bid Project / Bid Round.
Invite carriers to Bid, provide bid documentation, and specify constraint sets.
Allow carriers to submit bids.
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Clearly Communicate Nature of Bid Project
Number of Bid Rounds Planned Implementation
Date For New Rates Rates Contract Term Factors considered to
make bid awards Service Level Price Incumbency Financial Stability
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Supplemental Bid Documents For Carriers
Generated In OTM Carrier Response
Template Generated Outside OTM Bid Introduction
Document SWAT Lane Analysis
Spreadsheet Bid Package SOP Bid Upload and Validation
SOP 19
SWAT Analysis
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Look For These Challenges From Carrier Partners
Submitting under-competitive bids in multi-round bids and holding best rates until later bid rounds
Submitting incorrect bid information Wrong RPM / Wrong requested award percent / bids
on lanes carrier does not intend to service Submitting rates without adequate reloading
options at destination or pickup capacity at origin Submitting bids based on non-asset capacity
without communicating that bids are based on non-asset capacity
Trying to increase a bid rate in later bid rounds
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Network Bid Record Growth
0
5,000
10,000
15,000
20,000
25,000
30,000
2009 2010 2011 2012
Bids
Bids
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Ensuring Bid Stays On Track
Use Sourcing Module Tools to determine how many carriers have bid.
Send reminders to carriers that have not bid mid way through the bid round.
Place phone calls to carriers that have not the day prior to the bid closing to determine if they need more time or clarification.
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Bid Optimization Phase
• Create Sourcing Rule Set ID required parameters
• Include and Commit bids to be considered by the Solver
• Solve Scenario (Scenarios)
• Analyze solver output
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Making sense of multiple bid records
Weigh criteria other than cost that are most important to your business unit.
Build Sourcing Rule Set IDs that consider other important factors in awarding lanes
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Tailoring the Solution
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Sourcing Rule Set ID Parameters
Solve Scenario
Multiple Bid Rounds Low Cost Solution Blended Solution One on one carrier
negotiations
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Solution Table Rank Order By % Of Total Spend
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Post-Bid Phase
• Finalize awards on each lane
• Set the awarded bid status
• Use Build Rates Action to make new rates available in OTM core product
• Communicate lane awards to Carriers through new rate sheets
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Building Rate Records Select template rate offering considering naming
convention.
Example: SCNN_TOP_0212_31407_9990
Select contract term effective and expiration date for new
rates. Test that new rates are performing as expected and have
them available in OTM at least a week prior to new rates’ effective date.
Send rates to Freight Payment Provider.
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Rate Offering Lane ID
Rate Record
Post Bid Functions
Communicate lane awards and rate sheets to carriers
Load Commitment Allocations via CSV template to manage split lane awards
Add accessorials to all new rate offerings Keep rate offerings for new service providers
inactive if they are not finished with the contract process
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OTM 6.1.2 Issues
Carriers unable to upload single carrier response with over 900 bid records
Unable to use carrier response analysis to check bid round status
Unable to Build Rates from scenarios with over 900 solution ID records into new rate records
Unable to delete a lane ID through the OTM user interface
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OTM 6.1.2 Sourcing Module Work-Arounds Used
Split Carrier Response Template into 2 separate upload files.
Use SQL to check bid round status
Build rate CSV upload templates for scenarios with over 900 solution records
Use Delete Statement to Delete Lane ID’s from Lane Summary
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Sourcing Module Benefits To Your Organization
Leverage Lane Volumes Interface to receive carrier bid data Analyze Bids More Quickly Using Discounts &
Penalties Awarded Rates Immediately Available In Core
Product
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Celebrate the Completion of your Bid Project
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Question and Answer
Thank You