Anheuser-Busch takes steps to more streamlined operations by strategically leveraging data
For global brewer Anheuser-Busch (AB), diving into data helped to identify areas of its supply chain operations it viewed as wasteful and under performing and subsequently make inroads for things like pricing and forecasting. But getting there required time and patience, as well as collaboration with a key partner to help get them on the right path.
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The importance, and emergence, of data management and analytics within supply chain management continues to be on an upswing, and for good reason. One being it helps shippers streamline key operational processes, like asset tracking and inventory management, among others.
For global brewer , diving into data helped to identify areas of its supply chain operations it viewed as wasteful and underperforming and subsequently make inroads for things like pricing and forecasting. But getting there required time and patience, as well as collaboration with a key partner to help get them on the right path.
Prior to getting on this path, , AB director of transportation procurement, explained that data reliability was an issue for the company. While it used some traditional KPI (key performance indicators) and did some data measuring and analytics, it was not meeting the company’s needs, in terms of peeling the onion for what was needed in order to truly leverage data to learn where its weaknesses were for things like warehouse throughput and carrier efficiencies.
“We were looking to speed up our processes and also access more in terms of driving freight value through them,” he said.
This led AB to turn to Transfix, a New York-based logistics technology services provider that streamlines shipment data to better help shippers make informed decisions to optimize time and revenues.
Young said that this collaboration helped AB better drive transparency between shipper and carrier collaboration.
“What this has done is allowed us to leverage the insights Transfix has provided us with and drive some transparency between shipper and carrier collaboration to help each other out,” he explained. “It has helped us to identify inefficiencies on our side and take action with this insight, which translates into better service, in our eyes, and better overall cost of service.”
Since it began leveraging data through Transfix, AB’s Young said the gains have been evident.
One clear example was that in 2018, the growth of AB loads serviced by Transfix saw a 145% annual gain, highlighting the volume of freight Transfix took on for AB while also upholding very strong service levels, in the form of AB upholding its 98% on-time delivery rates.
When asked what the key advantages of leveraging data into efficiencies, as opposed to more traditional methods, Young did not hesitate to make his case.
“It is all about the transparency, the insights, and the efficiencies you can drive, and eliminating waste for things like turnaround time, load tendering, and internally improving operations,” he said.
CEO and Co-Founder said these improvements are the byproduct of getting beyond the qualitative to the quantitative and getting things to where they need to, or at least closer to, where they need to be operationally, as opposed to focusing on data fluidity.
As an example, he pointed to how on a rolling basis Transfix shares with AB its average pick up times on a facility-by-facility basis
“A classic asset-based carrier or 3PL would say ‘I need more money to haul freight to this facility because it is taking too long,’ which is not really an actionable insight,” he said. “So we can come to [AB] and say ‘here is the deal, you have an average of up to 2.5 hours to work with and out of, say, 17 breweries, these 14 are working fine and these three dealt with detention.’ Our goal is not to dehumanize anything…there is peak and other stuff, which requires a lot of freight. Our goal is to provide customers on the shipper side with the information needed.
Taking that one step further, McElroy said if you look at one door at one facility that costs $250,000 annually in detention, that leads to the question of how much would it cost a shipper to put on an extra unloading crew for an extra two hours a day? That would presumably be less than $250,000, he quipped, but he added that comes with the caveat that the shipper may not view it as a major concern and they have bigger things to deal with.
“But now that we are starting to quantify it and we are starting to allow people to ascribe a cost changes how a shipper can make decisions,” he observed. “To me that is how you make decisions because you are saying ‘OK, what will it cost to do this or that?’ We know where every single shipment is every 60 seconds and we show you what is actually happening. It is very hard to argue with that as it is GPS-verified; it is not anecdotal or opinion-based.”
As a large shipper, being able to get type of detailed insight into company facilities, allows for fact-checking internal KPI, said Young. And if there is misalignment, he noted that is where AB can begin to identify where the gaps may be.
Equally, if not more, important, though is what he described as the “additive” piece, or what the total cost is, which he said it’s the most important thing in getting away from being price-driven to being cost-driven.
“It is getting away from just a bid where you take the lowest price to understanding the total costs of operation,” said Young. “And when you take these other things into account, you are going to pay for that…if you don’t pay detention, then the rate is going to go up and you might have someone new on the lane and that could lead to problems with liability. It is all about the transparency, the actual costs of the operation and then figuring out what that is costing you.”
That is something that plays out when getting past the qualitative of “this place is a bad location to the quantitative of “this location is so slow that X% of the time the driver that takes the load will not take it again,” explained Young. He also noted that factoring rates in allows AB to quickly compute what its costs are and to decide whether to address it or not, tying it back, again, to total costs and adhering to that philosophy as a key step in the process.
With total costs always top of mind, Young said that, as it relates to the carrier side much of that is related to compliance, in the form of on-time pickup and delivery.
“There are other things that go into it that have value when we do our bid, but we are starting to quantify it for the bid transformation and instead of having a price or a dollar or rate per mile what you now have is a backwards look at historical performance,” he said. “It is not just what happened last year but, instead, is through a peak and a valley to look at performance and how that relationship is quantified and what is that value. Also, when capacity is tight and we need to take a load to the spot market, we can take a rate-per-mile bid and turn it into a total cost.”
That can be done by making data more relevant in a bid, or, as TransFix’s McElroy put it, bringing the bid to life.
“It is one thing for a shipper to say ‘we move 1,000 shipments in this lane out of this facility,’ but that provides a very narrow perspective, but that can change and become more vital with data on things like the average load and unload times on certain days of the week,” he said. “Something we are working on with AB is looking at the relationship between appointment time and cost, because it is a blind spot often not recognized. If you have a good pick-up time, as opposed to a bad one, you can be talking about as much as 50% of a rate difference and that good pick up-tie is determined, in many ways by length of haul. You don’t want a 750-mile load picking up on a Thursday but a lot of times getting to that level of planning and sophistication is really hard.
Young concluded by saying that digging deeper into data has allowed AB to shift away from being under the microscope of internal drivers like load assignment changes, load cancellations or pickup changes or needed production changes to things like understanding what the impact is from a carrier standpoint and on clients, coupled with looking at intelligence and analytics around things like making delivery and pickup times.
“We have a lot of volume coming out of our breweries but, for our wholesalers, it is more critical to have labor at the right time operationally so finding ways to make it work on both sides is extremely important,” he said.
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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