Implement a global TMS with TMC

Good morning, everybody. Welcome to our session at Gartner. Thank you for attending our event today. My name is Jordan Kass and I have the very distinct honor of presenting today with Domenick Braico from Honeywell.

As you can see in the slide in front of you, Dom and I have prepared three very straight forward topics. I'm gonna get us kicked off and I'm gonna spend a little bit of time talking about TMC, a division of C. H. Robinson Worldwide and our capabilities. I'm gonna keep that really brief.

From there, I'm going to turn it over and I'm gonna hand it off to Dom. Dom is going to give us an overview of the Honeywell transformation, and that's gonna be the heart of our presentation here today.

Once we're done with that, our plan is to wrap the whole session up with a Q and A. So that sounds like a good plan. I'll jump in and get started. We'll begin with a very quick overview of TMC. TMC is a division of C. H. Robinson worldwide. Maybe some of you are familiar with it. Maybe your not. We were founded as a start up inside the framework of C. H. Robinson in 1999, and at that time we had really just one singular goal. We wanted to provide customers with a technology platform and services that directly connected them to their underlying carrier partners. That was in 1999 and today I am very proud to say that we are certainly no longer a start up. Today we manage over $4 billion in transportation. We do that in 185 different countries around the world. Our platform, it represents all modes, and all regions of transportation. And so while our business has grown tremendously our core focus of connecting, automating and optimizing the world's supply chain that has remained exactly the same. We execute that mission through our control tower network. You see that located behind me. We have our offices all over the world, and those offices are connected by our global tech platform known as Navisphere. Navisphere is providing analytics information and overall the answers our customers need to advance their supply chain. So that is my very quick overview of our capabilities. It sets the table for Dom and the Honeywell transformation. So if you guys don't mind if you could please join me and welcome Domenick to the stage.

Thanks, Jordan. So honored to be here with you all. A little bit about Honeywell, We're a Fortune 100, highly diversified software industrial company. We have four strategic business groups: Aerospace, building technologies, performance materials, safety and productivity solutions. Our transformation effort has been focus primarily in the Performance Materials Strategic Business Group and has spilled over slightly into the safety and productivity solutions. Performance materials and technologies from a supply chain diversity perspective; highly complex supply chain. The were managing from discreet manufacturing of electronic components to project manufacturing of modular oil refineries, to process manufacturing of chemicals and fibers and other specialty materials. So from a logistics perspective, a lot of complexity for our team to deal with this as logisticians. So small parcel heavyweight, air trucking, containerized ocean, you name it, was in scope for our logistics program.

In 2015, I think many of you can relate to this in your careers and roles, in 2015 at Honeywell we were on the tail end of a reorganization in our supply chain and logistics; and we were asking ourselves, You know, we were executing a global logistics program, a very significant global logistics program. But we weren't executing it with excellence. So we really we wanted to know the answers to a few fundamental questions that I think a lot of shippers I want to know the answers to. And that is you know, number one. Where is my shipment? What is the cost to move my shipment? How can I reduce the cost to move my shipment? And how are my carriers performing?

We didn't have good answers to those questions, so we knew that it was time to make a big change. In 2015 we also partnered with Gartner and Gartner helped us find our way in this global logistics transformation journey. One of the first things we did was that we executed a logistics maturity assessment and back in 2015 we scored ourselves as a 1.5. Clearly a lot of room for improvement. So to transform ourselves, we knew that a global TMS needed to be the foundation of our strategy.

This global TMS, another way that Gartner helped us is that they really provided some good strong counsel that if we wanted to achieve results faster that we needed to partner with a lead logistics provider or 4PL. So honestly, Honeywell was a big company with a lot of resources, but we really didn't have the desire to make it an IT investment and a human resources investment and what it would take to set up in man and operate a TMS.

So we set out to go in select elite logistics provider, or 4PL, and our requirements were pretty simple. Number one, this lead logistics provider they needed to have a global multimodal TMS. They needed to have established control towers in all the right regions. They needed to have proven experience with other shippers, other global shippers. Most importantly, and this is after a lot of vetting and and getting to know the finalists, they needed to be aligned with Honeywell culture, which is a very strong culture.

So standard selection process RFI/RFP. We visited all the finalists control towers really kicked the tires on their TMS systems. What's important to note here, folks, is that behind the scenes while we were vetting the lead logistics provider, we engaged in a huge internal marketing campaign. Upwards downwards, sideways on the idea was that when we selected our lead logistics provider, our partner, that the entire organization would largely be aligned and behind this effort, and we were been pretty successful with that. And honestly, the marketing effort continues to this day. I think not a week goes by that I'm speaking to a different Honeywell team about this program and trying to educate them about about what we're doing.

If I had one slide to tell people about this program and it would be this one. You know what we've done in Honeywell is we've taken three instances of SAP connected them to the Navisphere Transportation Management system, loaded it with Honeywell procured rates, for Honeywell approved carriers, and the outputs pretty simple. Optimize shipments, improve visibility and cost savings.

The implementation work started in early 2016. We partnered with TMC to develop a deployment plan that was based on mode, region, business unit. I won't kid you. There were some bumps along the way on both sides on Honeywell side on TMC side, but the strong partnership that we forged and developed help this work through all the issues along the way. We're very pleased with the results that we've secured so far with our global logistics transformation program. So far with this program, we've been able to reduce costs by 10% on freight that's been managed through the transportation management system. With regards to data visibility hugely successful with establishing one single version of the truth with a robust BI tool in the Navisphere TMS. We're starting to leverage Navisphere Vision, which is an Internet of things (IoT) real time tracking tool to give us better visibility to the freight and transit. Another interesting thing that we're doing is we've actually taken shipment tracking information and we're feeding it into our ERP systems so that users and purchasing and customer service don't need to leave their native systems to see shipment tracking information. [It's] been really powerful.

Not directly related to the TMS, but where TMC helped we partnered with TMC to develop a program called Active Order Management, and this active order management program has been able to help us reduce inventory and certainly improve working capital huge metric and focus at a company like Honeywell, the whole act of water management process. And we're looking to expand that globally moving forward.

Agility. A great example is recently when when we had all the trouble at the Mexican border, the TMS provided, a lot of ability for us to add more capacity to the border crossings and have visibility to our wait times, etc. So the agility has been a huge intrinsic benefit to the global TMS program. Recently, we've executed the Gartner logistics maturity assessment, and we got better. So we went from a 1.5 to a 2.5. Still a long way to go. But I'm confident now that we have the people, process, and tools in place to get us to the next level. And we'll continue to test and grade ourselves, maybe every other year, to see how we continue to mature. We did a lot of things right, and we did a few things wrong along the way.

So on the right things we secured executive sponsorship upfront, and I have to thank my leadership, David Grim, and Jason James, who are here— for all their support on this journey along the way. They've been very supportive and we're very appreciative of that. Identify a project leader to own the effort. I see a lot of other shippers, a lot of their companies. They try and do an effort like this really, with part time leadership. If you want to get good results, you need a full time leader for your transformation effort. Money well invested. Still licking my wounds on this one— set realistic timelines. A very aggressive company at Honeywell. We want to get things done fast. But an old director of mine said "nobody will remember that you did it on time, They'll remember if you did it wrong". So set a realistic timeline. Do it right. Work with the most willing divisions, modes and regions. First, I can't stress this enough, Honeywell is a big company. And while we did a lot of internal marketing of the program, some divisions were more ready for this transformation and others. So work on your willing participants first and then take care of the unwilling in the end. Build a flexible solution. Wish we thought of this one sooner. If you look at you know how EDI processes work between ERPs and TMS systems. Think about like your ocean process, is really your most complex electronic process. So something we wish we had done is maybe built that ocean process up front. Then you could use that process for multiple modes of transportation. I think it would have eliminated a lot of implementation cycle time. And don't ever lose momentum in your implementation. We had some times in our implementation where we lost IT Resource is for good reasons, but try not to do that, and try to use agile methodology where possible to keep momentum going.

Next steps for us. So number one: we're looking to expand this program and a lot of it's just been leading by example from the performance materials division. Other divisions on Honeywell are are naturally looking to join this program from the success we've had. Additional waste reduction. What I mean by that is: using the TMS better. So I've got a trucking manager who's really embraced the TMS concept, and I see him at his desk and he's got Navisphere up. He's working directly with our control tower team in Chicago, and he's gleaning insight from the data to reduce costs, and it really brings a tear to my eye to see him do that. And we want to continue to do that. And also the next step, is use this data to feed that network optimization engine for us. Continue to improve the processes, so what I mean by that is: on the outbound side how do we take that tracking data and put it in the hands of our customers. Be more customer facing. On the inbound side, how do we improve that vendor portal to do more things than just manage transportation? We talked earlier about Navisphere Vision and we implemented this with TMC. It's their multi-modal (IoT) internet of things logistics, tracking, tool. Frankly, a great tool. We're just beginning just to scratch the surface of how to use that tool, both in the control tower and on the Honeywell side. But great set of tools to have.

Longer term. We all have long term aspirations. Longer term you know, we want to look at supply chain execution convergence. You need the foundational technology like a TMS— to crawl before you you run into a convergence of technology. And certainly down the road, we want to look at, You know, autonomous lights out supply chains. again need this foundational technology to get there.

The other thing I want to add folks is before I hand off to Jordan is that as you embark on a journey like we did, a lot of shippers keep their logistics providers at a very arm's length. And if you want to get extraordinary results like we did at Honeywell, you really need this to develop a partnership with your lead logistics provider. I know partnerships a very overused term, but truly develop that partnership. You need to consider them as an extension of your team, treat them fairly. And if you do that, you're going to get very extraordinary results in your transformation effort. Thank you, everybody. I want to hand off back to Jordan for Q and A and recap.

Thank you, everybody. Just just a quick recap. As you know, we gave a quick overview of TMC. I hope you found that to be helpful. Dom obviously went into a deep case study on the Honeywell transformation. Before we open up for Q and A, if any of you would like to ask questions one on one, we will both be at the booth later on this afternoon. Of course, you can visit the website, which is behind you (, and then I'll make myself personally available to anyone via email. ([email protected])

We've got a case study that I can send to you. So with that, thank you guys for being a great audience thus far, and we will open it up for questions and the Q and A if you guys could do us a favor. If you could tell us your name and the organization that you're with too, that would be super helpful.

Question: Was headcount reduction part of the initiative's business case in terms of outsourcing the load planning?

Answer: Great question. It was a small part of the business case, and if I had a do over on that wouldn't have been part of the business case at all, because really, this program, this project totally stood on the merits of all the logistics, optimization and the cost saving. So I would challenge you all to, you know, Honeywell, we're a very lean organization, and a lot of that head count could have been put to use in other parts of the organization. So I wouldn't counsel anybody to bank on any head count reduction with a TMS implementation.

Question: As part of the solution, does TMC help you with procurement events? Is that a streamline event through contract negotiation with your approved carriers and then uploaded into the Navisphere TMS?

Answer: Yes, So later on, after go-live, we did use the Navisphere tools. And I think you guys directly used a Jager tool, which is very robust. And, like, a great story is recently, we literally in January and February had carriers coming to us saying, 'Hey, we want to reduce our rates.' And we quickly turned around a two week full truckload refresh bid for nearly four million savings this year. So having that procurement capability directly integrated with the TMS has been a big game changer for us.

Yeah, I could just add a little bit. Most of the customers that we that we work with use our procurement tools on they use them in in two ways. We have customers that elect to retain control of carrier selection care management. They own the rates A-Z using the TMS are just they're just executing. And then other customers want our transportation expertise to actually go ahead and negotiate on their behalf. So whatever your goals are.

Question: Did the inital implementation cover a wide breadth of freight types, such as inbound, outbound, interplant, finished goods etc?

Answer: Yes, all of it, really. The only thing we excluded from this TMS implementation was what I'll call are US class-one rail. Why we excluded yhat was that we had a boutique 3PL who I won't name, who's really doing a good job in the space. And we had recently had a spin off in 2016 where we lost a lot of rail volume and honestly didn't make sense to do that. But otherwise it was, you know, every mode in every region and why we went out of our way to do that is what the TMS is starting to help us to do, is do a lot of mode shifting.

Question: Are you using TMC for freight audit and pay? If not, how do you address the redundancies between those two sources of record to understand spend?

Answer: Another great question. Thank you for that. We work with TMC to develop a hybrid freight payment process that I'm very proud of. And what we've done is we have all the carriers whose freight is managed to the TMS; We have them sending electronic invoices to TMC, and basically what TMC is doing is they're working it out with the carrier they're, reconciling the invoice. And then in the end of that process, they're sending to Honeywell a very clean electronic invoice that were then paying the carrier directly through our internal accounts payable program. Why I like this process so much is, you know, in an era what afraid audit, pay companies going bankrupt and frankly, it's a pain in the you- know-what to have to send money every week or a month to a freight, audit and pay. It really leaned up the process way reduced our headache of having the check the invoice. And frankly, the TMS process reduces a lot of noise with freight costs. Then again, our AP team think this invoice from from TMC, pay it no questions, and then we're also been able to take that information. We used to number one too to automate, a freight cost accrual process which was huge for us and number two, we also used it be able to pass the freight costs on to our customers by embedding that information into our SAP deliveries and shipments.

Just add, I'm guessing your most of your payments, probably in North America. And so absolutely that keep that capabilities available. It's an auto pay program. For those of you in the audience who are a global shipper and are paying around the world today, we can't pay in every single region of the world. We have, however, recently launched a global audit so that you can at least do that. We did that in partnership by permission to say this we presented together last year. But we did that in partnership, actually with Microsoft who also uses our platform globally and are the first to be on the global audit program as well, we'll be rolling that out here very shortly.

Well, thank you guys very much. We'll be available.

Implementing and leveraging a global TMS: lessons from Honeywell

Increasing supply chain complexity and talent shortages make connecting, automating, and optimizing global supply chains no easy task. View our 2019 Gartner* Supply Chain Executive Conference session with Honeywell to gain insights, benefits, and learnings in deploying a single, global TMS platform combined with supply chain talent.

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