Solowave Design Inc, manufacturer of more than 20 varieties of ready-to-assemble children’s play centres, ran into a critical logistics challenge in the summer of 2004. As a startup, management saw potential problems in meeting delivery commitments to retailers across North America, including Canadian Tire, Rona, Home Hardware, Toys R Us, and Costco. Retailers’ strict delivery guidelines these days made it a problem Solowave had to solve, and fast.
Option one was to quickly hire an in-house logistics specialist, conduct on-the-job training, and minimize exposure to retailer penalties (or worse, loss of business). The other option was to find outside help from a logistics services company that could quickly solve the immediate need and, in the longer term, provide expert advice on managing Solowave’s inbound/outbound supply chain centered around its Mount Forest, Ont. manufacturing facility. Solowave’s inbound and outbound shipments are bulky, which added to logistics complexity, requiring oversized pallets.
“The fall of 2004 was a critically important time for our business,” recalls Richard Boyer, Solowave’s CEO. “As a first year supplier, meeting retailer delivery commitments with no service failures was absolutely expected.”
Solowave chose to seek outside help and went with North York, Ont.-based 3PL Links, a non-asset based logistics service provider that places a heavy emphasis on technology. The 3PL has more than 47 pre-qualified transportation companies in its service portfolio (representing more than $42 million in freight spend), which it re-qualifies each year via a tendering process.
The first step in the engagement was to identify weekly delivery commitments and tender freight to meet those commitments. Delivery points comprise mainly retailer distribution centers, but also included direct-to-store, and in some cases, direct-to-home deliveries (Costco.ca offers home delivery from orders placed on its Web site). Also to be considered was inbound materials to Solowave’s manufacturing facility, ensuring production schedules remained on plan. This required 3PL Links to manage inbound loads mainly from North America, but also from Asia. In all, up to 20 truckloads a day are received and shipped from Solowave’s manufacturing facility.
Key to meeting Solowave’s demands was 3PL Links’ transportation management system (TMS), which offers technology robust enough to run a challenging transportation operation. The system enables Solowave to:
a) identify least-cost routing from a network
of contract carriers
b) solicit tenders from carriers
c) pool shipments inbound and outbound to
improve load factors
d) measure carrier performance against
e) reduce overall freight costs.
3PL Links’ TMS system automated much of Solowave’s freight management functions, contributing greatly to meeting Solowave’s short-term objective of satisfying retail customers.
Solowave Design achieved a 15% savings in freight spend over the initial period. Delivery commitments were met and no service failures occurred. Building on this initial success, Solowave and 3PL links explored a deeper and ongoing relationship.
“3PL Links was instrumental in getting us through this critical time for our business,” says Boyer. “We thought it made sense to engage them more deeply in our supply chain and create a logistics model that gave us cost predictability and, in the end, overall logistics savings.”
After seeing the benefits of third-party logistics management in action, Solowave’s Boyer sensed a longer-term relationship would benefit all involved, especially retail customers.
Today, 3PL Links acts as Solowave’s freight management department, managing everything including inbound freight arrangement, outbound delivery appointment scheduling with retailers, and the inevitable logistics challenges that pop up.
“It seems that nothing goes as planned when dealing with logistics,” says Boyer. “The headaches involved in managing these unpredictable events are now handled by 3PL Links.”
For example, in the fall of 2004 shipments bottlenecked at the port of Vancouver due to rail delays and 3PL Links reacted quickly to find alternative modes of transport. This allowed raw material shipments to arrive as planned and production to run on schedule.
Another common practice for 3PL Links that’s benefiting Solowave is shipment pooling. Consolidating freight both inbound and outbound takes advantage of service opportunities and saves freight costs. For example, 3PL Links consolidates inbound freight in a facility near Toronto to save on transport costs all the way to Mount Forest, a rural community 170 kms (105 miles) northwest. Up to five loads are pooled before consolidating into a full truckload once or twice a week for delivery to Mount Forest. Estimated costs savings for this consolidation alone is close to 30%.
“Opportunities like shipment pooling are something that most companies like Solowave would likely not identify,” says Jason Read, a principal with 3PL Links. “But such logistics strategies are top-of-mind for us, and we can pass the savings to our customers.”