Several economic and regulatory changes have created a recent slew of evangelizers, each with their own convictions about the impending future of transportation. Amy Bare of Kimberly-Clark and Kevin Zweier of Chainalytics help to separate myth from reality to understand the current state of the market. Discussions on best practices for managing transportation capacity, including how procurement exercises and fleet modeling can mitigate your risk, will be reviewed.

1. Managing Transportation Capacity in
a Dynamic Market
&
DCS106

2. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Today’s Speakers
Kevin Zweier
VP, Transportation Practice
Chainalytics
Amy Bare
Director of Transportation –
Rates & Analysis
Kimberly-Clark Corporation

3. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
• Introduction
• Current State of
Transportation Market
• Best Practices in
Capacity Management
• Q&A
Agenda

4. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Who is Chainalytics?
MILESTONES
 Founded in 2001
 Established India office in 2005
 Acquired Chainnovations and Adalis’
Packaging Solutions Group in 2011
 Strategic Investment by GEF
 Acquired ROCE Partners in 2013
 Acquired Logiworx in 2014
BY THE NUMBERS
 150+ FTEs Worldwide
 Serve 300+ Unique Clients
–17 of Gartner’s Top 25 Supply
Chains
–80 Fortune 500 Companies
 Delivered 500+ Engagements
ATLANTA
MINNEAPOLIS MILAN
STOCKHOLM HELSINKI
BANGALORE
SYDNEY

5. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
• Largest TL and IM benchmark
consortium in North America,
providing apples-to-apples
comparison of costs by lane and
service
• Model Statistics (as of Jan 2014)
– $18 Billion in transportation spend
– 15 Million truck loads
– 118 Members with TL spend ranging
from $10MM to over $500MM
– Includes U.S., Canada, and Mexico
– 7 Models (Dry, Temp-Control,
Intermodal, Flatbed, 3 Short Haul)
– Equivalent to about 7% of the total
NA for-hire truckload market
Freight Market Intelligence
Consortium (FMIC)
Industries by Transportation Spend
Retail
$3.5B (21.2%)
Consumer Goods
$1.9B (11.3%)
Paper/Packaging
$1.4B (8.4%)
Industrial/Other
$1.1B (6.8%)
Food &
Beverage
$8.8B
(52.4%)
Members by Annual Spend
>$200MM
26
<$50MM
24
$100-200MM
24
$50-100MM
23

6. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Leading the world in essentials for a better life.
Kimberly-Clark Overview
• 58,000 employees worldwide
• $21.2 Billion in Net Sales in 2013
• Well-known global brands
HUGGIES® KLEENEX® SCOTT®
KOTEX® PULL-UPS® DEPEND®
• #1 or #2 position in more
than 80 countries
• Nearly one-quarter of the world’s
population use our products daily
• More than 140 years in business

7. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Consumer TissuePersonal Care
Health Care K-C Professional
Kimberly-Clark Business
Sectors

8. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
• Centrally located in Shared Service
Center
• North American Transportation
Management
– Domestic
– Import / Export
Kimberly-Clark Transportation
Overview
Freight
Procurement
Load Rates
and Manage
Systems
Optimize
and Plan
Schedule
Delivery
Appointments
Execute &
Track
Service
Approve
Payment
Truckload Intermodal Ocean LTL Parcel / Air
Parcel/Air 3%
LTL 6%
Ocean 12%
Intermodal
24%
Truckload
55%

9. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
• Introduction
• Current State of
Transportation Market
• Best Practices in
Capacity Management
• Q&A
Agenda

10. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Economic Recovery?
Sources: BEA; U.S. Department of Commerce © Statista 2014Additional Information: United States; BEA; 2009-2013
Quarterly Growth of the Real GDP in the United States
2009 to 2013

11. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
It’s All About the Drivers
“Practically every truck
manufacturer and nearly all
employers complain of the
great difficulty of securing
drivers who are competent
and who will work handling
freight aside from those who
drive . . .
Traffic World, Dec. 12, 1916
2011 CSCMP State of Logistics Report
horses.”

12. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Driver Turnover
Source: American Trucking Associations (ATA). Large carriers are those with annual revenues above $30 million.
Annualized Line-haul Driver Turnover
Q4’04-Q4’13

13. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Hours of Service
Source: Open Road Drivers Plan 2013 From ATRI survey

14. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Equipment & Shipment Trends
Source: ACT Research for tractors; ATA for shipments. Tractors in 000s;
shipments put in an index for comparative purposes vs. tractors.
Tractor Shrinkage vs. Dry Van Shipments
8 Years old or newer 15 Years old or newer Van Shipments
3,000
2,750
2,500
2,250
2,000
1,750
1,500
1,250
1,000
750
-18.9%
-11.7%
-18.1%
2006 2013

15. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
North American TL Market is
Huge and Efficient
This relationship is basically the same for all regions
we work in, but not necessarily all modes.
Annual TL
Freight Market
$300B Transport Topics Top 10 Carriers
$13B
“Large”
$200MM Shipper
Chainalytics
TL Consortium
$18B

16. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
NA Truckload Market Trends:
Dry Van & Temp Control
March 2013 to February 2014

17. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
• Introduction
• Current State of
Transportation Market
• Best Practices in
Capacity Management
• Q&A
Agenda

18. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Realities of Capacity
Management
Transportation is not a pure commodity.
It is a varying service that often directly touches your customer.
A transportation procurement event is as much a
relationship management process as a pricing event.
Nothing is contractually binding at the end of the procurement event.
Going to market, or market testing your rates, should be a
healthy part of the relationship management process.
Just because there is no contract commitment, does not mean there is not power.
There are many different approaches to carrier management.
You need to fit the strategy to what is important to your company.

19. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Factors that Drive
Transportation Strategies
Network
• Is the network one directional or more out and back?
• Are the volumes and lanes highly variable or more steady state?
Carrier/Shipper
Sophistication
• Can they communicate electronically at the transaction-level?
• Is there a good TMS in place to provide strong historical data?
• Are carrier relationships and communications centralized?
Market
Standardization
• Is there a high level of equipment variability for the same activity?
• Is there a unified standard for communication and legislation across
the market?
Unfortunately, there is not a “one-size fits all” strategy.
Service
Risk Tolerant
• If there is a carrier service failure, what is your business risk tolerance?
• Do you have the people, process and systems to manage service
failures?

20. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Capacity Management Strategy
Procurement Event
Post-Awarding
Scenario
Analysis
Rate Collection &
Communication
Getting Ready

21. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Procurement Event
Identified vs. Real Savings
Starting Point
(Not Real)
Easy to Correct,
but Tough to Find
Lapse in
Relationship
Management
Uncontrollable
Bid Rate Result
Assuming Perfect
Execution
Historical Average
Costs per Lane prior to
Procurement Event
Expedites and Outlier
Events Need to be
Removed from Savings
Potential
New Carrier Not
Working Out or
Carriers Not Accepting
Tenders
Incorrect Tendering
by Mode, Carrier, Lane
Definition, etc.
Savings “leakage” typically occurs as a result
of poor carrier relationship management
or errors in new rate implementation.
Where Leakage
Occurs
Base Costs
Theoretical
Savings Target
Operational
Reality
Carrier
Failure
Implementation
Failure

22. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Capacity Management Strategy
Transportation Mode Analysis
 Change modes
 Change size of fleet
 Cross-divisional consolidation
 Consolidation strategies
 Demand shifts
 Adjust delivery windows
 New service requirements
 Collaboration with shippers
What-if Analysis Considerations
• Network and cost trade-offs are too complex for
spreadsheet analysis
• Must be analyzed leveraging a transportation
optimization modeling tool that can calculate the
billions of potential assets routing possibilities vs.
one-way carrier costs
• Must look at both cost optimization and repeatability
of asset utilization to ensure value through the year
• Costing and analysis need to be objective and free
from bias of the outcome
Consolidation
(Co-shipping)Point-to-Point Rates Private/Dedicated Fleet
?

23. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Kimberly-Clark Transportation
Strategy
Optimal Supply
Chain Execution
Daily Optimization
Secure
Carrier
Capacity
to Drive
Revenue
Growth
Deliver
On-Time
Service
Procure
Below
Market
Transportation
Rates
Multi-Tiered Carrier Strategy
Integrated Processes through “Best of Breed” Transportation Management System
Talent with Transportation Expertise

24. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
• Leverage core carrier strategy to balance cost, service and capacity
– Majority of volume handled through core providers
• Not a traditional “bidder”
– Strategic approach to carrier relationship management
– Triggers for pricing action
• CHAINalytics benchmarking
• Market conditions
• Network changes
• Be a preferred shipper: consistent and driver-friendly freight
– Collaborate with customers to reduce / eliminate inefficient practices
• Leverage JDA Transportation Modeler for savings opportunities and to
understand impacts of pricing proposals
– Best value proposition
– Identifies optimal scenario based on available rates and capacity constraints
Kimberly-Clark Thoughts on
Capacity Management

25. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
JDA TMS
• Optimization Daily
• Constraints for Service and
Capacity
• Capacity Set by Origin
– No Lane Awards
– Do Not Take Rejects
• Review IM Opportunities Daily
• Track Optimization Conformance
• Modeling Tool Used For “What if”
Scenarios on Pricing & Capacity
Changes
• Process Capability
– Leverage Continuous Improvement
Clear Expectations of Carriers
• Weekly/Monthly Reporting and
Service Review Calls
– Tender Response / Acceptance
– Delivery Response
– Advance Notification
– On-Time Delivery
• Must meet Daily Load Targets
plus Surge Capacity
• Monthly Capacity Reviews
• Quarterly Assessments
• Bi-annual Carrier Strategy
Kimberly-Clark’s Tools & Processes
to Support Carrier Relationships

26. Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
• Introduction
• Current State of
Transportation Market
• Best Practices in
Capacity Management
• Q&A
Agenda

27. Questions?
abare@kcc.com
kzweier@chainalytics.com