learning from experience michelin turns to automated ... · pdf filechartering process and to...

52 April 2011www.logisticsbusinessit.com

TransportManagement

Following the creation of a centralised planning,chartering and European flow-management platformin Clermont-Ferrand, Michelin has decided to add to

its in-house TOM software with modules from the Germantransport management software provider Transporeon.This project, which affects 30 production sites in Europe,was rolled out over a period of six months and has alreadysaved five full-time equivalent jobs (FTEs) and reducedadministrative costs by 15%.

In 2007 the Michelin group decided to establish acentralised planning and chartering platform for Europe.The idea involved bringing together between seven andeight teams that had previously been spread throughoutEurope, with the aim of optimising processes and makingit easier to adopt good practices in planning, charteringand flow management. Two years later, with thispreliminary project completed, the next stage was toautomate chartering by providing the central hub with ahigh-performance tool.

Four objectivesLaunched in 2009, this project was first and foremostdesigned to improve the productivity of planning teams.As it stands, the centralised platform arranges 95% of allchartering activities, while the remaining 5% are carriedout locally by certain sites; a benefit of around 8 FTEs isexpected by 2011.

Another objective is to improve the traceability of thechartering process and to create a reliable Europeandatabase, making it possible to audit work carried out,measure the responsiveness of chartering groups, bringperformance indicators into the data collected for thedatabase and create a database access system based onpre-established user profiles. A third issue is ensuring thatthe transport purchasing strategy is effectively carried out,partly by keeping constant track of the shipping capacitycommitments made by carriage companies, and partly bycalculating their levels of availability or the rate at whichthey turn down jobs. Michelin's final aim is to measure andimprove its own customer service by tracking deliveriesmade directly to factories.

“We wanted to take a more positive approach,

”said Gérald Bourlon, European Logistics ProcurementManager of the Michelin Group.

Transporeon for its responsivenessBefore the switchover, the chartering procedure had beendone manually, with multiple phone calls made and faxesexchanged. “With the volumes that we were managing,people were constantly busy talking on the phone, andlots of time was spent at fancy events; even the carriershad the same problem!” recalls Gérald Bourlon. Moreover,chartering forms varied from country to country. Thislaborious way of doing things manually made it difficult towork optimally with carriers' refusal rates (people were notalways fully informed, information was unavailable, etc.). Inthe same way, the number of late deliveries to clients wasnot measured systematically.

Because of this, Michelin contacted almost a dozensolution providers to ask for help. A shortlist was drawnup, and a final decision was made to choose the Germansoftware company Transporeon.

“We chose Transporeon because they met our criteriaand because of their ability to adapt to particularrequirements of ours with features such as quotamanagement, that do not appear in their software bydefault; Transporeon offered us relatively speedy updateson this. We were thoroughly impressed by theresponsiveness of the team and the way that they seemedto fully understand our requirements. Other meritsincluded the service information architecture, support for16 languages, a base of 19,000 carriers – meaning that30% of those that we worked with were already familiarwith Transporeon – support for carriers and swiftimplementation,” explained Gérald Bourlon.

A solution interfaced with the in-house softwareThe solution chosen includes two transport attributionmodels, one of which is No-Touch Order, whichautomatically charters shipments with carriers who have aBest Carrier framework contract and which extends itssearch to cover other carriers in order to carry out fasterchartering. “We have our own in-house software calledTOM (Transport Optimisé Michelin — Michelin OptimisedTransport), but it wasn't able to assign work dynamicallybased on quotas,” explained Gérald Bourlon.

“Transporeon's software was interfaced with Michelin's TOMin order to avoid having to re-enter all the data. Automaticassigning finds the best carrier at the first attempt half of thetime, and in 80% of the other cases, within the first fourcarriers suggested. However, if this doesn't work out, wecan turn to the second module, Best Carrier (previouslyTicap) in order to offer the work to a different group.” Morespecifically, Best Carrier is used in cases where it has beenimpossible to assign the work (for example because of timeclashes or because the maximum number of trips hasalready been reached), in cases where the journey hasspecific requirements (such as multiple loading points,additional restrictions because of dangerous products, etc.)or even in cases where a more rapid response is requiredbecause the client has an urgent request. Michelin has alsokept the journey tracking module which allows bothMichelin and the person receiving the delivery to followevery stage from dispatch to delivery through textmessages sent by the carriers. Lastly, the TransporeonReporting module tracks the performance of planners andcarriers through a selection of indicators calculated fromsystem data.

Michelin turns to automated charteringLearning from Experience

Gérald BourlonEuropean Logistics

Procurement Manager of the Michelin Group.

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53April 2011www.logisticsbusinessit.com

TransportManagement

The Michelin Group in 2009� €14.8 billion in net sales

� 109,193 employees

� 72 plants in 19 countries

� Commercial presence in over 170 countries.

Michelin's European logistics� 60 logistic bases in 20 countries

� 2 million square metres of warehouse space

� 2 million tons of goods transported

� More than 400 carriers and logistics companies

30 sites in six monthsThe tyre manufacturer and the software company workedon outlining Michelin's specific needs, and the green lightwas given the following month. Then Transporeon's testsystem was created and put into place. Cholet, the pilotsite, started using the system and the software wasimplemented across the rest of Europe – France, the UK,Spain, Italy, Germany and Eastern Europe.

“Three months for development and three months forrollout across Europe... And it worked!” enthused GéraldBourlon. The software, which manages transport offinished and semi-finished products, arranges around300,000 carriages per year for journeys between Michelin's30 European production sites and for deliveries madedirectly to clients. The journeys are made by tautliners,articulated lorries, refrigerated vehicles and vehiclescomplying with the European Agreement concerning theInternational Carriage of Dangerous Goods by Road.Michelin itself has 80 users of the Transporeon system and369 carriage companies are connected, with 269 of thesebeing active users.

Administrative costs down by 15%“After three months, we had already saved five FTEs andwe were ahead of schedule,” said Bourlon, adding, “threemore FTEs will be saved in 2011, and we have cutadministrative costs by 15%.”

From a qualitative standpoint, Michelin has harmonisedand automated its chartering process while remainingflexible, as chartering can be done at the central hub orlocally. “We've gained some credibility with our carriers aswe can now base our negotiations on facts,” explainedGérald Bourlon. Refusal rates, grouped either by countryor by carrier, are followed regularly, and keeping to thequotas set for the carriers ensures that Michelin sticks toits procurement strategy. Urgent jobs are dealt with betterthanks to a faster response time. “We are increasinglyfinding that we have to charter transport in less than 24hours: sometimes 12 hours, sometimes even 6 hours,”explained the Manager. Furthermore, time frames set byinternal clients for chartering are measured, giving

Michelin a better way to stay on the pulse ofthe market.

A win-win projectThe benefits are not solely reaped

by the contractor fromClermont-Ferrand. “It's a win-win project,” insists GéraldBourlon. The carriagecompanies will have thechance to reduce theirown administrative costs,

such as telephone, fax and data entry, because they willbe able to interface the Transporeon platform with theirown system. They will receive transport orders morequickly and more compactly, with all the necessaryinformation visible on just one screen. They will also beable to bank on receiving orders in line with the quotasagreed upon and being given the chance to quote onjourneys outside of their usual routes. Lastly, optimisedplanning means fewer kilometres travelled with no load.

“From our point of view, integrating the carriers has beensimple; 30% of them were already familiar withTransporeon. For the others, Transporeon walked themthrough the use of the platform by providing trainingcourses. I just had to send them a letter and theneverything else was taken care of! Everything went OK,”stated Mr Bourlon. Another point worth noting is that notonly did Michelin pay for the Transporeon software that ithad ordered to be put in place, it also went further bytaking responsibility for payment transactions, somethingwhich is usually handled by the carriage company. “Thismarks a turning point in how we work with our carriers.Our way of working is now more reliable, more productiveand more in line with our quality requirements,” decalredGérald Bourlon.

Next stop North America!Michelin has no plans to extend the usage of this platformto partial lots, which are managed by the distributioncentres. “ For individual sites, it is the service provider whoensures that the contract is complied with and not thetransport cell responsible for chartering,” explains MrBourlon. Equally, transport managed by Michelin isspecifically road transport, with multimodal transportaccounting for only a small share. Nonetheless, theMichelin Group plans to roll out its procurement strategyin North America. The fact that Transporeon recentlyestablished a presence in Atlanta is surely a plus...

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