|
OHL Leverages Transportation
Management for Increases in Profitability and Growth
Brentwood, Tennessee USA Site Visit
December 20, 2011
By
Evan Armstrong
Key Personnel:
Scott McWilliams, Executive Chairman
Gregory Sanders, President – North American Transportation
Derek Fain, Senior Vice President of Business Development – North American
Transportation
Robb
Porter, Vice President & General Manager – North American Transportation
Joe
Brunetti, Business Unit CFO – North American Transportation
Doug
Frank, Vice President of Logistics Shared Services – North American
Transportation
Jeff
McDermott, Vice President – North American Transportation
Kara
Brown, Communications Director
OHL Overview
Founded in 1951 as warehousing company Ozburn-Hessey Logistics, today’s
rebranded OHL has completed multiple strategic acquisitions and grown
organically to develop its current extensive global network and broad integrated
service offering. It has over 32 million square feet of warehouse space,
primarily in North America, and has greatly enhanced and expanded its domestic
and international transportation management capabilities. OHL has over 7,000
employees who generated sales of $1.2 billion in 2010 from operations in 18
countries. Value-Added Warehousing and Distribution (VAWD) contributed $432
million of revenues in 2010, North American Transportation management (NAT)
expanded to $316 million and Global Freight Management and Logistics (GFML)
added $423 million. OHL is on track to finish 2011 with gross revenues of $1.4
billion.
OHL – U.S. Campus and Dedicated
Warehousing Locations
OHL provides logistics solutions to several
large companies including Arch Chemicals, Coca-Cola,
Land O'Lakes,
Red Bull, Samsung, and Starbucks. It is majority owned by private equity
investment firm, Welsh, Carson, Anderson & Stowe, which has supported management
changes over the last few years to reflect OHL's push for globalization.
OHL’s global transportation management network
includes 50 OHL owned offices and more than 250 agent partners worldwide. It has
a significant Asia-Pacific, Europe, and North American footprint. OHL’s customs
brokerage operation has a staff of 57 licensed customs brokers and 57 customs
specialists who processed over 400,000 customs house brokerage entries in 2010.
OHL has been ranked by the U.S. Customs and Border Protection Agency as the 11th
largest (by entry volume) customs broker in the U.S. for the ranking period of
July 2011-September 2011.
OHL – Global Transportation
Management Systems
To support its operations, OHL has integrated
multiple best-in-class supply chain and warehouse management systems. Its core
systems “backbone” includes Cargowise for GFML,
Manhattan’s warehouse management system (WMS) for VAWD, and MercuryGate and
Oracle for NAT. The complete suite is detailed in the figure below.
OHL – Supply Chain Systems Suite
Focus on North American
Transportation Management
While the OHL brand is most often associated
with its warehousing operations, its NAT operations have been growing rapidly
and have helped OHL improve its overall operating margins. NAT revenues grew 27%
from 2009 to 2010 and are on pace to grow 33% from 2010 to 2011 expanding total
gross revenues to $420 million. On a transportation management by mode basis,
OHL is 44% truckload, 42% less-than-truckload (LTL), 5% parcel, 4% drayage, and
the rest is intermodal.
OHL operationally divides its North American
Transportation operations into three business units: 1. “TM” (transportation
management), 2. “Brokerage” (freight
brokerage/transactional freight management), and 3. “Distribution” (specialized,
asset-based, temperature-controlled, LTL
shipment management). TM is on track to grow 37% in 2011 to $235 million in
gross revenue. OHL’s Brokerage operation is on track to finish 2011 at $130
million and contributes solidly to OHL’s overall profitability. The niche
Distribution business will finish up 2011 with approximately $55 million in
revenues. OHL’s five-year goal is to expand its NAT operations to $1 billion in
gross revenue and double its combined NAT EBITDA (earnings before interest, tax,
depreciation and amortization) margins.
OHL has recruited some transportation
specialists to lead its North American Transportation business unit. Greg
Sanders, president, and Doug Frank, vice president of logistics shared services,
both spent time in senior roles at Schneider. Jeff McDermott, vice president of
technology, and Derek Fain, senior vice president of business development, come
from long transportation histories including YRC, Ryder and Penske. Joe
Brunetti, NAT's chief financial officer, spent time in a senior financial role
in a fast growing transportation and carrier company. Robb Porter rounds out the
management team with his experience in business development and operations at
Ryder and Menlo.
2010 saw new strategic growth and investment for
the Brokerage business unit with the opening of three new offices (Chicago, IL;
Dallas, TX, and Sparks, NV) and multimodal expansion into intermodal and flatbed
specialized services. It now has a staff of 140 in Gainesville, GA (previously
Turbo Logistics which OHL acquired in 2006) and staff in Sparks, Dallas, and
Chicago. The division is on target to open two additional offices in 2012.
Brokerage uses a modern split business model with separate operations staff
specializing in generating carrier capacity and inside sales personnel
developing business and generating loads.
To meet growing Brokerage and TM customer needs,
OHL has been actively developing and expanding its carrier base and
qualifying an average of 15 carriers a day for the last 17 months. It uses a
core carrier strategy which focuses on providing those carriers with the best
service and pricing with the most shipments. OHL primarily utilizes regional
carriers and spends a significant amount of resources managing its carrier
relationships through ongoing executive contacts, quarterly business reviews,
and service recognition programs.
OHL’s TM business unit supports customers with
an operations staff of 70 located in its Brentwood, TN headquarters and Sparks,
NV office. According to OHL, it can provide mid-tier customers with solutions
only previously offered to much larger 3PL customers. For its mid-tier and large
shippers, TM improves transportation management processes through enhanced
inbound and outbound carrier routing compliance, improved carrier management,
systematic shipment consolidation and mode selection, automated transportation
management execution, post shipment support, and better business intelligence
and reporting to support process improvements and transportation management.
For 2012, TM is simplifying its IT platform and
will have all of its customers on one of two transportation management systems
(TMS); Oracle’s OTM software and MercuryGate’s TMS. In our opinion, both systems
are tier-one TMS with very good transportation planning and execution
capabilities. For network modeling and TM solutions development, OHL’s
six-person engineering team is using JDA/i2’s Transportation Modeler and
MercuryGate’s Mojo applications. It also uses
IBM’s LogicNet software for network supply chain modeling.
To detail potential savings for its TM
customers, OHL uses a targeted “Value Grid” approach. OHL works with its
customers in defining the specific business process improvement areas.
The following case studies provide
specific examples of how OHL works with its transportation management customers
to make process improvements and reduce costs.
Seventh Generation TM Customer
Case Study
Established in 1988,
privately-held Burlington, Vermont based Seventh Generation is committed to
selling household and personal care products which protect human health and the
environment. Its business has been expanding with increased order volumes to its
large retail customer base. Its growth caused Seventh Generation to look at
options to support increased supply chain demands.
Seventh Generation’s previous
transportation management solution did not provide the requisite technology
needed for optimal transportation planning capabilities, visibility, and
reporting to manage its business. In 2009, OHL was selected to perform a supply
chain network modeling study for Seventh Generation to identify potential areas
for warehousing and transportation improvements. After identifying significant
benefits through improved transportation management, OHL was tapped to make
improvements in Seventh Generation’s order planning process and reduce
transportation costs via systematic transportation optimization.
OHL implemented a TMS for daily
shipment planning and transportation optimization. The TMS was also leveraged to
ensure retailer purchase order delivery windows were made in order to prevent
fines and chargebacks. After a successful first phase, in the second phase of
the project, OHL implemented an inbound vendor management program using a TMS to
drive carrier compliance and proper mode selection.
To date, OHL’s TM division is
annually managing approximately 3,000 inbound and outbound shipments for Seventh
Generation. The percent of shipments by direction and mode are as follows:
|
• |
Outbound LTL |
71.4% |
|
• |
Outbound TL |
28.6% |
|
• |
Inbound TL |
82.9% |
|
• |
Inbound Intermodal |
15.7% |
|
• |
Inbound LTL |
1.3% |
Reports and data provided by OHL
drove improved supply chain management and visibility for Seventh Generation.
These included:
|
• |
Improved
inbound shipment visibility and advance shipment notifications enabled
better dock planning and operational efficiencies at Seventh Generation’s
warehousing operations. |
|
• |
Outbound
orders are better planned based upon inbound receipts. |
|
• |
Monthly
financial reporting from OHL’s TMS resulted in better accrual reporting to
track and manage transportation expenses. |
|
• |
Data and
modeling tools monitor Seventh Generation’s total carbon footprint. |
As Seventh Generation’s business has grown, OHL
has utilized the TMS data and its network modeling tools to ensure that the
current distribution network is still achieving optimal results. OHL currently
has multiple continuous improvement projects underway to achieve additional
savings by leveraging its TMS functionality in reviewing potential pool points
and building continuous truckload moves.
Nissan Forklift TM Customer Case
Study
Nissan Forklift is a wholly owned
subsidiary of Nissan Motor Co. Ltd. It manufactures forklifts and pallet jacks
at its plant in Marengo, IL.
Nissan Forklift has outbound
shipments to approximately 200 dealers and engine users. It was suffering from a
lack of outbound transportation planning, had no TMS, and was using a manual
carrier routing guide. Additionally, Nissan lacked shipment visibility for both
inbound and outbound shipments.
In 2009, OHL’s TM group was
selected to manage Nissan’s outbound transportation and provide a TMS solution
to improve shipment visibility and support key performance indication (KPI)
service metric reporting. OHL leveraged relationships with its truckload
carriers who were capable of supporting multi-stop truckload moves and deployed
its Oracle TMS for daily transportation management. The TMS is utilized by OHL
TM’s onsite operation of two dedicated transportation professionals to manage
all transportation operations. The team is also using OHL’s WMS to manage
Nissan’s warehouse labor. Approximately 12,000 outbound shipments are planned
and optimized by the two person team annually.
In terms of results, OHL developed
a monthly savings report used to “re-baseline” Nissan’s transportation business
and negotiate with carriers. Through its work with OHL, Nissan Forklift
initially saved 7% overall on LTL and truckload transportation and continues to
drive savings and efficiencies year-over-year. Nissan Forklift also has
on-demand access to data and OHL engineering expertise. Working with Nissan, OHL
helped develop a “Dealer Cost Matrix” which was used to support a cost increase
to Nissan’s customers and facilitated needed increases in labor charges per
unit.
OHL Operations Summary
OHL
is no longer just a warehousing company. It has grown strategically and is now
an integrated 3PL with expanding domestic and international transportation
management capabilities. Its capabilities and increasing global scope have made
it a go-to provider for large companies such as Starbucks. With rapidly
expanding domestic transportation management operations, we anticipate OHL will
be successful in continuing to land more integrated supply chain management
business and work with transportation management customers, such as Seventh
Generation and Nissan Forklift, who need solid solutions.
...3PL, third-party logistics
providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn hessey
logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics, 3PL, third-party
logistics providers, OHL, ohl, Ozburn-Hessey, Ozburn-Hessey Logistics, ozburn
hessey logistics, North American transportation management, NAT, global freight
management, Arch Chemical, Coca-Cola, Land O'Lakes, Red Bull, Samsung,
Starbucks, customs brokers, customs brokerage, Cargowise, Manhattan,
MercuryGate, Oracle, freight brokerage, Turbo Logistics...
|
