One of the repeated suggestions we get from SCDigest readers is to carry more case studies/success stories – how others are making important supply chain improvements and avoiding costly mistakes.

Goodyear Tire’s recent journey from transportation mediocrity to excellence is one such example. I recently moderated a panel discussion at Manugistics’ interesting transportation summit in Chicago, where I had the chance to hear Goodyear’s success story, and speak with Paul Scott, Manager of Supply Chain Technology at Goodyear’s Akron headquarters.

Like many companies, until recently, Goodyear ran a very decentralized transportation operation. Rates were negotiated centrally, and paper routing guidelines were sent to the 60-plus ship sites – where transportation managers used them more as inputs rather than hard rules, believing (often correctly) they understood customer requirements and local conditions better than the routing group did. But that also meant least cost or preferred carriers often were not selected. Processes varied significantly from ship site to ship site – carriers and customers were frequently handled differently depending on the plant or warehouse. Ship sites even a few miles from each other operated with no coordination.

The catalyst for the improvement program was the need to replace an aging freight payment system – but a number of logistics mangers, including Paul Scott, had a broader vision. That included building a centralized Load Planning Center (LCP) based on broad adoption of best practice, comprehensive transportation management system (TMS) technology, and outsourcing of the actual management of the LCP to Exel Logistics. Exel runs the LCP as a service directly inside Goodyear headquarters – operating truly as if they were direct Goodyear employees, shoulder-to-shoulder with customer service.

Despite a high projected ROI, getting the project approved actually took a couple of years – but accelerated with the arrival of a new VP of supply chain who understood the transportation opportunity and the impact of transportation excellence on supply chain performance. After that, things moved fairly rapidly.

The project was constructed in four tracks:

	Outbound shipments from distribution centers
	Outbound shipment from plants
	Automated freight payment
	Vendor inbounds to the plants

Go live for phase 1 (first DC shipments) occurred in only eight months from project approval in Q3 2002. The last of the 15 DCs went live in Oct. 2004 – but this was in parallel with progress on other tracks, such as plant shipments and freight pay. Vendor inbound pilots will start the beginning of next year.

You’ll find a complete case study of Goodyear’s transportation success by clicking here, but the key benefits and takeaways for me were as follows:

	Projected transportation savings of about 3% are being realized – worth millions, of course, for a company of Goodyear’s size.
	The LCP manages about 4000 shipments per day in the LCP with a little over 30 staffers; the headcount will increase a little as vendor shipments are included.
	To gather support for the project, the transportation team did a good job of translating the LCP and technology project into wins for functions at each level of the company, from ship sites to the exec suite.
	The LCP brings not only best practice and process standardization, but an upgrade in professionalism – in many of the ship sites, transportation management was a part-time job.
	Goodyear, like many/most companies, was missing opportunities for internal collaboration/leverage – which it is now gaining by combining shipments from nearby ship sites, and finding continuous move opportunities.

To me, it’s a great study of the benefits of centralization, the bottom line and customer service benefits improved transportation performance can deliver, and how to manage outsourcing well – the Exel team’s performance metrics are really very similar to what they would be if they were direct Goodyear employees.

Does anything strike you about Goodyear’s transportation transformation? What do you think about having a third party run your transportation management? Is centralization of transportation management clearly a best practice? Let us know your thoughts.