Ryder’s Transportation Management Center and

Rapid/Raytheon Distribution Center

Fort Worth, Texas

December 20, 2001

By

Richard Armstrong

Transportation Management Center

Ryder’s new Transportation Management Center is a showpiece. It’s a $13 million state-of-the-art building complete with a war room and an operations center. It will eventually house 300 customer service reps and logistics engineers. The operation is headed by Bill Jones, an LTL industry veteran and logistics consultant.

Jones’ TMC offers transportation network consulting; carrier procurement; shipment planning and execution; freight bill audit and payment; and freight management. It runs the Ryder “For Hire” program and will be the host to Ryder’s new Lead Logistics Manager (LLM) effort. The LLM is a key Ryder initiative which competes directly with Menlo’s LMS, Schneider’s MySumit, Transplace and Penske’s TMC approach. These companies not only have an i2 or similar TMS/optimization platform but are moving more and more to integrated supply chain management. Ryder is now at this new capability level.

The i2 transportation planning part of Ryder’s offering allows for consolidation (mode conversion), elimination of unnecessary premium transportation and end-to-end route optimization. The new LLP initiatives will also emphasize vendor/inventory control, visibility, e-commerce and carrier compliance.

Ryder’s currently manages over $2 billion in transportation. It breaks out like this for 2001.

$340 million of freight under management is included in Ryder Logistics’ $1.45 billion total revenue because Ryder takes liability for goods transported. In legal terms, Ryder is operating as a contract freight forwarder for the shipments handled.

The rest of Ryder’s purchased transportation involves a freight broker status. This managed transportation spend is about $1.8 billion. Much of it is processed through the freight payment center in Ann Arbor, MI. The Ann Arbor operation was originally LogiCorp. It was purchased in 1994 and has been the backbone of Ryder’s earlier TM efforts. Ann Arbor now has about 300 employees. Over 100 of these are logistics engineers, many of them working as consultants in the Detroit area automotive industry. The center processes 250 proposals per year. Ryder has become much more selective about the proposals which it aggressively pursues. It is looking for more collaborative partners. It is much less interested in non-integrated, single function offerings. As a result, Ryder signs business for one out of ten proposals received.

Ryder uses its ACE methodology on key proposals. ACE stands for Analyze, Chart and Execute. The approach allows for much better standardization for the total process and structure for implementation.

Ryder expects to win significant new business in 2002. The new Ryder team, headed by CEO Greg Swienton and Gene Tyndall, is committed to bringing Ryder back to profitability. We like the changes that Griffin, Jones and others are making under their leadership. Their efforts should make Ryder one of tomorrow’s primary lead logistics managers.

Rapid Facility Operations for Raytheon

This well run distribution center demonstrates Ryder’s aerospace logistics depth. The facility is 204,000 square feet and specializes in quick responses for aircraft on ground emergencies. The facility is managed by Ed Kelly, a very capable ex-military logistics officer.

Ryder should continue to expand in aerospace logistics. It has few competitors and Asian demand is particularly high. Ryder has hired veteran Skip Wakeman, an expert in aerospace logistics, to spearhead its efforts.