When you’re trying to optimize logistics for one of the largest water, hygiene and energy technologies and services companies in the world, patience – and flexibility – are necessary virtues.
“The problems that you’re trying to fix change over time,” observed Ryan Hanson, vice president of North American logistics for Ecolab, a St. Paul, Minnesota-headquartered conglomerate with annual sales of $15 billion and operations in 170 countries.
A former logistics director for Amazon (NASDAQ:AMZN) and Target (NYSE: TGT), Hanson now oversees the warehousing and movement of Ecolab chemicals and equipment across North America.
The company started its journey seeking to improve freight payment processes and is now on a path to leverage data analytics to solve broader logistics challenges.
“In the beginning, it was all about freight payment accuracy, workload, eliminating frustration for my team and the carriers,” Hanson said.
Data quality drives analytics accuracy
To manage the transition, Ecolab needed a seasoned analytics provider as a partner. The team chose RateLinx, a supply chain and logistics solutions company Hanson had collaborated with while working for a previous employer.
Founded in 2002, RateLinx offers a complete supply chain and logistics shipping, visibility and payment platform that provides data-quality driven predictive analytics and prescriptive actions.
The company’s strength in data cleansing was a big part of the draw, Hanson said.
“When I first started in this business freight payment leakage and granular data quality wasn’t on my radar,” he said. “I focused on negotiating contracts to drive consistent service at the right cost.”
But if the master data is not perfect, errors occur. And accurate data translates into accurate freight payments and analytics.
Ecolab’s initial goal was simple – replace its manual payment system with an analytics-heavy approach so the company could pay carrier bills in a timely and accurate fashion.
When you’re shipping frequently via long-haul, a carrier charging a few miles extra adds up. The vast majority of carriers are not trying to do anything unethical, Hanson clarified. But mistakes do happen.
Hanson also wanted to know the amount of money Ecolab was spending on each delivery and lane.
Streamlining was yet another objective. When Hanson started at Ecolab, “a small army of people” worked for the freight payment team, he said. The group included contractors and temp associates because of the backlog. “It was a good team,” he said, “but we were powering through with a lot of muscle, too many manual hours, and were not confident in the accuracy.”
The RateLinx data solution addressed all of these issues. Its smart invoicing and payment tool does more than automate freight payments – it cleanses the tracking and invoicing data, adjusting status, billing or data corruption errors, ensuring compliance and eliminating rate tolerances.
Hanson said once the system was in place, Ecolab was able to reduce its rate tolerance from a $5 to $10 variance per shipment down to $0.01.
The system also accommodates Ecolab as the logistics team continues the transition away from manual labor. A few Ecolab buildings still operate outside of a transportation management system (TMS), Hanson said, relying solely on routing guides. RateLinx developed a workaround to audit those transactions.
“We’re able to give them a file of the tender, and they can track it the rest of the way, quickly report[ing] very accurate data on every delivery,” Hanson said.
Partnership key to success
Hanson said when he was working at Amazon the data was clean, reliable and trustworthy.
“But that’s Amazon,” he said. “Most companies don’t have that. At Target we didn’t have that. [Ecolab] didn’t have that. I’m guessing a lot of large companies don’t have that.”
For those businesses, tech partnerships are key to success.
“Most companies won’t be able to understand the bigger patterns driving freight spend if they don’t have a partner that produces really clean data and analytics,” Hanson said.
Software is just the beginning
Ratelinx provided the software solution, but it’s up to the shipper to create new practices and action items around the data that drive additional value.
For example, Ecolab had RateLinx create regional views tailored to the team that is responsible for a given carrier, mode, and geography. In this way, the person responsible for optimizing costs and miles in his/her region can see the data and take action.
Ecolab is just starting to calculate what it truly costs to deliver to a customer in a granular manner instead of using averages, said Hanson. “Because now we have accurate data to know what’s happening.”
The long-term goal is to move beyond payments and use analytics to make broader tactical and strategic decisions.
“Each person is solving a different problem,” Hanson said. “As long as the company that leverages [the data] doesn’t just consider it a freight payment tool, they will get a lot more value out of it.”