Information technology is revolutionizing the supply chain. From improving safety to decreasing costs, new technologies have many benefits. This, in turn, is changing the way logistics are managed. Kloeckner Metals Corporation utilizes these technologies in both their fleet and common carrier management.
The Kloeckner fleet of trucks has seen many changes over the years. It is actually made up of many legacy companies. Transforming the Kloeckner fleet and getting the processes standardized has been a detailed process.
“Bringing our fleet into 100% Department of Transportation compliance has been a journey, and we’ve become a much safer and very compliant fleet,” says Don Troy Corporate Director, Fleet and Logistics for Kloeckner Metals Corporation.
Getting to this point required a lot of work. Policies and procedures had to be combined and developed. Kloeckner’s national branches received extensive training with the D.O.T. on these policies and procedures. The branches were then audited to ensure compliance and continued improvement. A monthly metrics report was created which shows areas of success and improvement, as well as shortfalls and areas that need focus.
“As a transportation management team we have dramatically improved our fleet safety scores to be some of the lowest in the U.S.,” Troy says. “We believe that Compliance, Safety, and Accountability program from the Federal Motor Carrier Safety Administration has helped us get much better at managing our fleet.”
In 2016, Kloeckner reduced its unsafe driving score to 3%, crash indicator to 5%, controlled substance and alcohol score to 0%, and driver fitness score to 1%. All of these scores are significantly lower than just a few years ago.
“That has made us a safer fleet, and that in turn has reduced our accident costs, workers compensation injuries, and all the claims and liabilities that come with owning your own trucking fleet,” Troy says.
Contracting with common carriers is another important piece of Kloeckner’s logistics strategy. Most inbound deliveries for Kloeckner are delivered by common carriers, as well as half of the outbound traffic. The process of selecting common carriers is decentralized and mostly determined by the Kloeckner branches. When a common carrier wants to do business with Kloeckner, there are a few steps they go through. The carrier will typically give a quote on lanes of freight, and those quotes will be evaluated for competitiveness. Preference is generally given to a carrier over a broker, because of cost savings.
“Carrier partnerships are critical,” Troy says, “because brokers don’t own trucks. They can quote us, but then they have got to go find somebody in the area who’s willing to accept it for that. If they can’t, they have to change the price, delay the delivery, or turn the load back to us.”
Building long-term relationships with carriers is very critical. As the number of loads a carrier is responsible for increases, quality of service typically improves. Carriers benefit from predictable jobs, and offering this predictability improves their relationship with Kloeckner.
“As we grow in our relationships with carriers, our distribution network and supply chain becomes stronger,” Troy says. “That being said, brokers offer us a connection to a lot of smaller carriers that we depend on daily.”
The process of onboarding new carriers has been greatly improved by technology. Much of the process has been accelerated, simplified, and standardized. Where the contracts once were all paper, they have now been switched to e-contracts with e-signatures. This accelerates onboarding of carriers into the Kloeckner carrier network.
“If a carrier has a significant risk according to the D.O.T., we decline to work with them until they can become a safe carrier,” Troy says.
Additionally, an electronic insurance verification process has been implemented. An insurance verification company checks every policy from top to bottom. They make sure that the insurance is rated high enough, and that the insurance provider has the financial resources to pay a claim should one arise. The policies are continuously checked to make sure they are in force and up to date.
“If a carrier’s insurance policy expires, they will be closed for use until their insurance requalifies,” Troy says. “Having a good contract between all these carriers and then having such a tight grip on those insurance requirements has really prevented us from being exposed to a lot of litigation and cost.”
New technologies have drastically changed the way which safety metrics can be monitored. Electronics have been put into Kloeckner trucks which can track an amazing amount of data. They can tell if the driver is changing lanes without a turn signal. They track what the following distance is. They can tell if the driver is speeding. They can even tell if the drivers are wearing their seatbelts.
“Traditionally in the trucking industry, people tend to react after an accident,” Troy says. “Now we can proactively look at driver patterns and address those issues prior to an event with drivers.”
Safety incidents are recorded, and then compared with historic data. It could be that a particular driver had one speeding incident, but generally drives the speed limit. If a driver has a following distance incident, the data can tell if they were cut off. When a driver starts to develop a pattern of unsafe behavior, Kloeckner meets with the driver proactively.
“We have made our fleet much safer, and we have also seen substantial savings because of all this technology,” Troy says.
Other technologies are also being implemented to improve logistics. In 2014, Kloeckner introduced automated manual transmissions on their trucks. Instead of drivers having to clutch and shift, the transmission and the truck are connected by a computer chip that tells the transmission which gear to be in based on speed, rpms, and torque loads. This has resulted in miles per gallon improvements in fuel efficiency.
Other changes in the industry have allowed trucks to carry more weight. Standard limits are 80,000 pounds, but in some areas they have been legally increased to 86k-87k. One truck in Cincinnati set a company record by carrying over one million pounds in a week. This has required upgrading the equipment to carry more weight.
Kloeckner has also begun replacing some of the older style flat beds with Conestoga trucks with rolling sides. “In flat beds you have to cover it with a tarp, and that’s a very physical, dirty, hard job to do,” Troy says. “The Conestogas are faster, safer, and easier, and actually the material is better protected.”
The Future of Logistics
Another item that will greatly improve Kloeckner logistics efficiency is a Transportation Management System (T.M.S.). This is a future budget item that Kloeckner is looking into. The T.M.S. will increase visibility with inbound traffic, and coordinate it with outbound traffic. It looks at all the routes and will prompt logistics managers when there is an opportunity to integrate inbound and outbound trucks. This will reduce the amount of trucks that are returning empty after delivering a shipment. If there are loads that are near one of the normal delivery lanes, the T.M.S. can notify the logistics managers.
The T.M.S. can also view historical data to determine the best price for routes. Not only can it track historical data from Kloeckner shipments, it connects into a bigger system that can display national pricing trends. A T.M.S. system can allow Kloeckner to see what new shipping lanes might cost. When Kloeckner builds a load, it can then send the data to T.M.S. to find the best transit for the load, at the best price.
“It knows that XYZ Trucking did this for $142 dollars last time. It knows that we did X number of these loads last year, and it knows that it could potentially connect to another lane,” Troy says. “It will integrate with the purchasing side so they will know how many days it takes from market to branch. That will continue to push down our inventories and make us leaner and more efficient company.”
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