The Value of Collaborative Transportation Management (CTM): Its Relationship to CPFR and Information Technology

By Terry L. Esper Doctoral Candidate in Logistics and Transportation And Lisa R. Williams, EM-AST&L,. Professor and Garrison Chair in Supply Chain Management Both from the University of Arkansas, Fayetteville

Published in the Transportation JournalTM Summer 2003 Vol. 42/NO. 4

Abstract Of current importance to the fields of transportation, logistics, and supply chain management is the concept of Supply Chain Collaboration. One of the primary processes associated with Supply Chain Collaboration is Collaborative Planning, Forecasting and Replenishment (CPFR). However, a relatively new extension of CPFR can be found in Collaborative Transportation Management (CTM). CTM involves converting order forecasts developed via CPFR into shipment forecasts, and collaboratively insuring their accurate fulfillment. This article explores the concept of CTM, and specifically discusses the role of Information Technology in CTM processes, as well as its subjective and quantifiable benefits. A descriptive case study of a third-party CTM systems provider is employed to investigate the processes and benefits of CTM. Additionally, opportunities for future research on CTM are suggested.

Interorganizational collaborative ventures exist to support and implement cooperation and strategic alliances between two or more organizations (Kumar and van Dissel 1996). There are a variety of economic reasons for the formation of these alliances (Culpin 1993). These collaborations can be formed for sharing the costs of large investments, pooling and spreading risk, and gaining access to complementary resources (Gulgar and Dunning 1993). Additionally, increasing the return on investment by geographically widening the marketplace for a firms products and services can be a motivator of collaborative relationships. Overall, literature on collaboration and interorganizational efforts has developed a myriad of theoretical arguments to explain the formation and structure of alliances between organizations. Adapting and extending existing theories of the organization from the intra to inter firm approach usually give rise to these arguments. Within the disciplines of logistics and supply chain management, the extant literature has recently begun to highlight the value of Collaborative Planning, Forecasting and Replenishment (CPFR). CPFR requires trading partners to extend collaboration to encompass operational planning to execution through the use of technology. The goal of CPFR is to automate and improve sales forecasting and replenishment between trading partners, enabling participants to share improvements in inventory costs and revenue, as well as customer service (Browning and White 2000). Even today, however, finding quantifiable measures of the inventory, revenue, and customer service benefits of CPFR is a challenge for researchers and managers alike. While value measures of CPFR have recently begun to appear in the trade literature, this collaborative approach to supply chain execution has continuously evolved, creating further challenges for capturing its true value. A relatively new extension of CPFR is Collaborative Transportation Management (CTM). CTM essentially involves converting order forecasts developed via CPFR into shipment forecasts, and insuring their accurate fulfillment (Browning and White 2000). Hence, in order to fully understand the value of supply chain collaboration, it is important to understand and quantify the benefits of both CPFR and CTM. However, just as in the early stages of CPFR, value measures for CTM have been difficult to find in the extant literature. This article is designed to portray the holistic value of supply chain collaboration by highlighting examples of benefits associated with collaborative supply chain execution and, more specifically, discussing CTM and the role that information technology plays therein, and its subjective and quantifiable benefits. The article is divided into three parts. Part I discusses the growth of CPFR and CTM, and their relevance to Supply Chain Collaboration. A literature review depicts the state of current research, and a theoretical model of interorganizational collaboration is employed to highlight the importance of information technology in Supply Chain Collaboration. Part II reviews a case study that describes how CTM value is obtained through interorganizational information technology. Part III presents some final remarks on additional research topics in this field of logistics. Part I: Supply Chain Collaboration Collaboration has been defined as an attempt to fully satisfy the concerns of the parties involved in exchange, in order to achieve an integrative settlement (Thomas 1992). Hence, parties attempt to find win-win solutions to goal conflicts that allow both parties goals to be

completely achieved (Thomas 1992). Mentzer, Foggin and Golicic (2000) explored the concept of collaboration in a supply chain context by conducting interviews with 20 supply chain executives from leading companies. They found that the consensus view of defining supply chain collaboration was that it involved all companies in the supply chain actively working together as one toward common objectives. Furthermore, Morash and Clinton (1998) contend that supply chain collaboration includes integrations of behavioral, communicational and interactive flows. Hence, it can be deduced that supply chain collaboration refers to integration amongst supply chain entities that allows for win-win solutions to supply chain exchange processes. While traditional approaches to supply chain management collaborative processes (i.e. CPFR), have primarily involved the buyer-seller dyad, the entire supply chain involves more entities and stakeholders. In fact, Mentzer et al. (2001) offer that the supply chain consists of not only customers in downstream flows, but also third party organizations, such as logistics and transportation providers. Thus, in order to achieve holistic supply chain collaboration, relationships between all components of the supply chain must be collaborative in nature, including those with third party logistics and transportation providers. Supply chain collaboration can therefore be conceived as consisting of a number of collaborative business processes, including CPFR, which involves collaboration between all upstream trading partners, and CTM, which consists of collaborative exchange between buyers, suppliers and transportation service providers. Thus, in order to highlight the value of supply chain collaboration, the individual components of CPFR and CTM will be further discussed. Collaborative Planning Forecasting and Replenishment CPFR is becoming one of the most influential approaches to managing the supply chain. Recent moves to implement CPFR with various trading partners have been made by a diverse blend of companies, ranging from major retailers, such as Kmart, AutoZone, Ace Hardware, and Best Buy, to large manufacturers, such as Anheuser-Busch, Weyerhaeuser, Hewlett-Packard, and Kimberly-Clark (Andraski 2001). In fact, according to Moonwatch Media, some 120 companies are involved in some aspect of CPFR. AMR Research in Boston predicts that CPFR and the collaborative application market will be at critical mass in two years, reaching over $540 million by 2004 (Karolefsky 2001). CPFR offers companies several benefits. CPFR has the potential to deliver increased sales, administrative and operational efficiency, improved cash flow, and improved return-onassets (Sherman 1998). Further, through Collaborative Planning, Forecasting and Replenishment, inventory can be significantly reduced, and since total inventory across the value chain is estimated to be $1 trillion (Andraski 2001), inventory reductions have a significant impact on supply chain activities. Lower inventory levels increase operating revenues and reduce the need for costly facilities. Additionally, the CPFR process mapping and intercompany communication inherent in a CPFR project improves the overall understanding between the vendor and the customer, which leads to further streamlining and alignment opportunities (Sherman 1998). CPFR can also reduce the costs needed to handle exceptions. To find a lost order or to track an order that did not meet delivery expectations requires considerable resources to research, identify and resolve the issue. Such events result in lower fill rates, reduced order levels, and possibly lost customers. Better planning improves in-store/on-shelf presence and consequently

the elimination of fire fighting that consumes countless hours. In addition, CPFR improves relationships with key trading partners. The ability to communicate more effectively with trading partners creates stronger relationships, thus paving the way for enhanced collaboration through aligned corporate priorities and performance goals. Benefits such as these drive companies such as Pharmavite Corporation to extend CPFR to its entire line of vitamins and nutritional supplements. TruServ, the national cooperative for the TrueValue supply network, plans to extend CPFR to its retail customers, following a successful experience with its vendors of hardware and home improvement products. A&P, the regional supermarket chain, has announced a test of CPFR as a key component of a systems and supply chain overhaul called Project Great Renewal. Paper manufacturer Herlitz has improved its customer service, generating more accurate forecasts and reducing stock outs. The companies that initiated CPFR reported enviable ROI results, including increased inventory turns on 10,000 SKUs up to 21 percent, reduced stock outs from 5 percent to 2 percent and decreased replenishment costs by 30 percent. In other pilot studies, CPFR has generated impressive numbers: sales growth of 2 percent to 25 percent, forecast accuracy improvements of 10 percent to 15 percent, service level improvements of 0.5 percent to 2 percent (www.cpfr.org 2001). Individually these success stories represent signposts of progress on the long journey toward Supply Chain Collaboration. Collectively, they represent the evolution of a business process that began as an intriguing concept and now is becoming a transformational force in the supply chain. This reality has been emphasized by Alex Gibbons, CIO, The Pillsbury Company, who states, I believe CPFR has more potential than almost any other e-commerce tool out there, (as cited in Karolefsky 2001). Considering the current success and future potential of collaborative supply chain initiatives such as CPFR, it seems almost inevitable that business leaders would parlay the collaboration paradigm into interfirm exchanges beyond those involving only upstream trading partners. One such area in which many firms have begun to utilize the collaborative approach is in the transportation management function. Collaborative Transportation Management One of the primary new extensions of the Supply Chain Collaboration conceptual framework is Collaborative Transportation Management (CTM) (Browning and White 2000). The goal of CTM is to develop collaborative relations between buyers, sellers, carriers, and third-party logistics providers (3PLs) to improve service, efficiencies, and costs associated with the transportation and delivery process (Karolefsky 2001). In order to implement this process, CPFR concepts are applied to transportation management and utilized between the CTM partners. Similar to Collaborative Planning, Forecasting and Replenishment, Collaborative Transportation Management involves information and process flows whereby suppliers and buyers jointly collaborate with carriers to provide effective and efficient shipment delivery (Browning and White 2000). Browning and White (2000) contend that CTM is an independent, yet concurrent, process with CPFR that builds on the same relationships between buyers and sellers, but incorporates carriers. Furthermore, the authors maintain that processes associated with CTM, such as order filling, will affect the CPFR process, yet represent a series of complimentary exchanges that are independent of CPFR. Hence, conceivably, firms can engage in Collaborative Transportation Management with or without employing Collaborative Planning, Forecasting and

Replenishment. Realizing the independent, yet connected nature of CPFR and CTM, it is necessary to explore Collaborative Transportation Management to further understand the phenomenon of Supply Chain Collaboration. The business processes most often associated with Supply Chain Collaboration are those involved in CPFR. However, Collaborative Transportation Management has been referred to as the missing link of collaborative supply chain execution (Karolefsky 2001). Without the ability to effectively develop shipment forecasts, the order forecasts that develop from CPFR could be inaccurately fulfilled. Thus, CTM provides the critical next step after order generation via Collaborative Planning, Forecasting and Replenishment. And, while CPFR is primarily buyer and seller-based, the concept of CTM adds a loop to the collaborative relationship to include transportation service providers, thereby adding value to the entire collaboration process. Essentially, Collaborative Transportation Management reengineers the process so the carrier becomes part of the buyer/seller relationship (Karolefsky 2001). Collaborative Transportation Management has become a critical means of addressing issues associated with shorter planning windows, inventory reduction, under-utilized carrier equipment, overuse of expedited services, and overall operation performance (Browning and White 2000). Additional advantages of CTM (Karolefsky 2001) are emphasized in Table 1.

Table 1: Advantages of Collaborative Transportation Management

Metric
Reduced transportation costs Increased Asset Utilization Improved Service Levels Increased Visibility Improved End-Customer Satisfaction Increased Revenues

Examples
Eliminate excessive empty backhauls and dwell time Reduced empty miles that are unpaid to the carrier Higher on-time performance Identifying location of freight in the supply chain Increased number of perfect orders
Improved fully loaded miles; better on-shelf performance; increased order quantity

Who Benefits
Buyer; Carrier Carrier Buyer; Supplier Buyer; Supplier; Carrier Buyer; Supplier Buyer; Supplier; Carrier

While the aforementioned benefits have recently begun to appear in existing literature (Karolefsky 2001), actual quantifiable measures associated with these benefits have been difficult to determine. This paper attempts to address this information deficit by highlighting several metrics of Collaborative Transportation Management, with associated cost savings, through descriptive case studies discussed below in Part II.

The Role of Information Technology One of the keys to effectively implementing and achieving the benefits of Supply Chain Collaboration lies in interorganizational information technology. In fact, Mentzer, Foggin and Golicic (2000) find that supply chain executives believe that advanced technology is essential to the success of collaborative supply chain relationships. Such systems provide the foundation upon which collaborative efforts can be developed and utilized to realize anticipated benefits. In a framework developed by Kumar and van Dissel (1996), information technology is viewed as both an enabler and supporter of collaborative efforts (See Figure 1). Figure 1: The Role of IT in Inter-organizational Collaboration (Adapted from Kumar & van Dissel, 1996)
Support Role of

Motives for Collaboration

Environmental Forces Intentions of Cooperating Parties

Reducing Transaction Costs & Risks

Collaboration
Enabling Role of
Making the collaboration feasible

In essence, the model postulates that environmental forces, such as globalization and environmental turbulence, coupled with the motives of individual firms, lead to the formation of collaborative efforts. Information Technology (IT), according to the model, has a significant impact on collaborative effort formation by playing two important roles. First of all, IT plays an enabling role in collaboration by providing the necessary tools that even make collaboration feasible. Functions of the enabling role of IT would include, for example, real-time data transfer and automated communication. Secondly, IT plays a support role in collaborative interorganizational relationships. This role of IT involves, for example, the reduction of transaction costs and transaction risks that result from the automated collaboration, thus supporting the perpetuation of the collaborative exchange. This model of collaboration formation is applicable to Collaborative Transportation Management as well. In line with the model, firms implement CTM because of two primary reasons: 1) external market-driven forces, such as competition and current trends; and, 2) the individual firms strategic intentions, such as the desire to share risks, pool resources, and increase resource utilization. This notion is supported by Browning and White (2000), who, citing a 1999 AMR Research report, suggest that business trends such as mass customization and e-commerce are forcing manufacturers and retailers to shorten planning cycles, re-plan and re-allocate on the fly, and expedite execution. They contend that transportation has become a

critical opportunity in these processes, which, if managed collaboratively, can eliminate cost and service inefficiencies and ultimately support the competitive effectiveness of firms in todays constant-evolving business market. While market forces and strategic initiatives are prevalent issues in driving the need for Collaborative Transportation Management, as the model suggests, IT plays both an enabling and supporting role in the actual implementation of CTM. In fact, Browning and White (2000) maintain that effective CTM requires new technologies that foster collaboration amongst shippers, carriers, suppliers, and 3PLs. Such systems ensure the feasibility of CTM initiatives and lead to the realization of the intended benefits of the collaboration reduced transaction costs and risks. It is important to note, however, that technology in and of itself is not enough to lead to successful collaboration (Mentzer, Foggin and Golicic 2000). It has been suggested that firms must know how to use information technology to reap the benefits of collaborative processes (OMarah 2001). In essence, human contribution, through data analysis and information utilization, is where the true benefits of information technology lie (Mentzer, Foggin and Golicic 2000). Therefore, the enabling and supporting role of information technology to CTM processes can only be realized if the technology is employed effectively. Several examples of the impact of effective Collaborative Transportation Management system utilization are highlighted in the case analysis of Part II. Part II: A Descriptive Case Study of Collaborative Transportation Management The value-added results of Collaborative Transportation Management can be obtained through two primary avenues: 1) direct communication between carriers and the trading partners, or 2) 3PL facilitation of the communication process. Existing literature highlights the mechanics of the direct communication method (e.g. Browning and White 2000), but little research has been conducted on how 3PLs add value to the Collaborative Transportation Management process. Therefore, in an effort to empirically investigate the value-added benefits of proper information technology utilization in CTM, we decided to sample within the third-party logistics industry as a means of attempting to fill the literature gap in this area. This section describes, via case study analysis, how a 3PL successfully adds logistics value through Collaborative Transportation Management by highlighting one such 3PL Transplace. Transplace was formed as an independent company in early 2000 by merging the existing non-asset logistics business units of the six largest publicly held truckload carriers. Transplace works with hundreds of major shippers and thousands of carriers to facilitate supply chain collaboration initiatives. Transplace is able to optimize, coordinate, and execute CTM to drive inefficiencies from the supply chain. By combining the three elements of their Dense Network EfficiencySM (DNE) platform, 1) critical mass of shipper freight and carrier asset networks, 2) web-based systems connectivity, and 3) their proprietary optimization algorithms to search for the best matching of freight with carrier assets, Transplace is able to increase load ratios and minimize empty miles and detention hours, which reduces cost and increases service within the transportation network. In particular, Transplace uses its algorithms to centrally process all shipper freight and carrier asset information in order to facilitate carrier selection and relationships, as well as supplier and consignee location analysis. Additionally, the company maintains relationships with a preferred carrier base, and also facilitates relationships with carriers that are preferred by its customers. Overall, Transplace manages all transportation

activities for over 1.2 million truckload and intermodal shipments, and uses this density, coupled with technology, to facilitate Collaborative Transportation Management. Consequently, Transplace was considered an excellent candidate for a descriptive CTM case study analysis. Research Method To investigate our premise, we conducted this descriptive research in two phases. The first phase consisted of a series of in-depth interviews, conferences calls, and on-sight meetings and observations with several Transplace employees. This phase was conducted to learn more about their processes and CTM information technology, with a focus on the truckload portion of the Transplace operation. The interviews were transcribed by both authors, separately, and subsequently discussed to validate the content of the textual data. In addition to company information, technology, and processes, the investigators also obtained key contact information for several Transplace customers that were involved in a collaborative transportation management process. Phase two of the research involved depth telephone interviews with three key Transplace customers Weyerhaeuser, Anheuser-Busch, and Office Depot. The interviews were conducted primarily with the key Transplace customer contact within each company; however, there were instances where multiple informants were involved in the interview process. The informants were initially informed that research was being conducted on the impact of information technology on transportation management, and the role that Collaborative Transportation Management played in their processes. A pre-determined interview protocol was established by the researchers based on the conceptual model described in Figure 1. This series of questions was focused on collaborative transportation management and led the conducting of the interview. After each interview, the investigators cross-checked interview transcription for validation, and prepared a summary document for each interview informant to review for further textual data validation. Once all interviews were conducted, transcribed, and approved by the respective company contact, the investigators analyzed the text based on the collaboration model highlighted in Figure 1. Additionally, aggregated data was received from Transplace to allow for a series of quantifiable cost savings associated with the benefits of Collaborative Transportation Management highlighted in Table 1. The quantifiable measures were aggregated to protect the confidentiality of each Transplace customer that participated in this case study. These cost savings ranges, discussed in detail below, include the actual benefits of CTM realized by each of the case study participants. Research Findings The traditional relationship between shipper and carrier is "buyer and seller" in nature, oftentimes leading to value realization by only one organization in the relationship. However, by facilitating CTM, relationships can be fostered in which both shippers and carriers recognize measurable benefits. Firms conducting Collaborative Transportation Management have realized reduced transaction costs and risks, improved service performance and capability, as well as a more streamlined supply chain. These end results of the collaborative approach to managing transportation are primarily achieved because of effective information technology utilization and operational expertise. Based on the descriptive case analysis conducted, the present research

finds that, as highlighted in the collaboration model (Figure 1), Transplace, via information systems, both enables and supports CTM. Enabling Collaborative Transportation Management While shippers and carriers may desire to pursue more collaborative relationships with business partners, they may not always be feasible. In order to achieve the positive results of CTM, the processes between participating firms should be real-time, extendible, automated and cost-effective. Hence, the implementation of Collaborative Transportation Management requires systems that enable interorganizational collaboration in a cost effective and technologically compatible manner. Without such systems, firms attempting to apply CTM may find the endeavor ineffective and difficult to manage. Anheuser-Busch, the worlds largest brewer, continually challenged carriers with short lead times and demanding service requirements. They began to see more collaborative carrier relationships when communication with carriers was enhanced through the use of EDI and Internet technology. Historically, Anheuser-Busch received minimal shipment status information from carriers once shipments had left the loading dock. Anheuser-Busch did not require EDI-enabled carriers to submit electronic shipment status updates nor did they have the infrastructure and technology to support their smaller non-EDI carriers. Through Transplace, Anheuser-Busch was able to accept EDI shipment status updates from carriers utilizing EDI and deploy Internet support as a no-cost EDI alternative to small to mid-sized carriers where EDI was cost prohibitive. The Internet allowed carriers who would otherwise communicate via phone and fax to electronically receive load tenders, submit electronic shipment status updates, electronically post additional daily capacity, and view additional available shipments throughout the day. These real-time electronic communications strengthened carrier relationships by easing challenging demands and allowing for more collaborative exchange. Additionally, the enhanced carrier communications allowed for stronger relationships with customers, as more real-time information was available to support the collaboration with Anheuser-Buschs customer base. Office Depot, one of the largest office supplies retailers in North America, has also realized increased collaboration by automating inbound transportation. Automated processes were implemented that allow Transplace to receive an electronic duplicate of all purchase orders being sent to suppliers based on order forecasts. Parcel and LTL shipments are then consolidated across vendors on a daily basis and visibility of the consolidation and carrier optimization plan is provided to the vendors. Shipment visibility is provided to the suppliers using Internet technology as opposed to extensive phone calls and faxes. This technology allows suppliers to view loading details at the purchase order level, instructs the supplier on how to label the shipments and even provides printing of a master bill-of-lading. Office Depots receiving facilities are also provided visibility via the Internet of all shipments inbound to their facilities. Information that is provided includes volume of shipments and carton count information for each vendor / shipment combination. On the carrier side, carriers electronically submit documentation and provide shipment status updates using EDI and Internet technology, allowing carriers to collaborate in the transportation management process through continuous communication with shippers and Office Depot. Weyerhaeuser, one of the largest forest product firms in North America, also represents a case where Collaborative Transportation Management implementation was made possible via Transplaces systems. Prior to utilizing information technology, Weyerhaeuser primarily

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maintained manual and decentralized relationships with their carriers. These manual processes were time consuming and neglected shipment status updates from carriers after freight was shipped. Additionally, because of a lack of systems visibility and manual operations, there was limited ability to systematically match up random or consistent carrier freight opportunities between shipping facilities, or business units. Systems were provided that automated processes between the shipping facilities and the carriers. This enabled Weyerhaeuser to collaborate with carriers to match inbound and outbound freight, which has provided synergies for both Weyerhaeuser and carriers alike. Utilizing the DNE system, it was also possible to provide Weyerhaeuser with an overall network analysis. This study has given Weyerhaeuser the ability to now see how their businesses and carriers intertwine in the entire network. Furthermore, these systems will be employed to identify the synergies and opportunities of newly acquired Willamette Industries, Inc. The above examples highlight the enabling role of information technology in CTM execution. Before implementing CTM, each company utilized manual processes that impeded collaborative information exchange and visibility. However, by utilizing CTM systems, the firms involved in this study achieved more efficient and effective execution of the exchanges involved in transportation management. Although information technology makes CTM feasible, the realization of benefits associated with CTM requires proper execution and utilization of interorganizational systems. The ability to implement CTM is not, by itself, sufficient; firms must also exploit this capability in order to continuously foster and support supply chain collaboration. Supporting Collaborative Transportation Management As noted in the preceding discussion, Transplace offers implementation and execution solutions that lead to outcomes that support the collaborative relationships with carriers and suppliers. In the case of Anheuser-Busch, CTM systems provided shipment status visibility that facilitated the process of managing carrier service exceptions proactively as opposed to after they occurred. This proactive approach results in increased efficiencies and enhanced operations, which equate to cost avoidances. Furthermore, the carrier efficiencies gained by doing business electronically also allowed Anheuser-Busch to streamline costly carrier management processes associated with maintaining resources to collect and disseminate shipment status information back to internal customer service areas and receiving customers. In the case of Office Depot, inbound freight payment terms were converted from prepaid to collect for a majority of their suppliers who had been consistently paying higher rates for LTL shipments. Furthermore, combining the DNE system and engineering expertise, a process was implemented to determine where maximum opportunities existed for cross supplier load consolidation. These opportunities were then converted to collect freight terms allowing Office Depot to control inbound transportation while allowing their suppliers to place more focus on having the product available at the right time. This conversion in freight terms, in many cases, resulted in a change in FOB terms from FOB destination to FOB origin. In the process of taking control of inbound shipments, Office Depot continued to maintain strong relationships with suppliers and carriers that have become more collaborative in nature. Hence, through CTM, not only was technology utilized to enable collaborative efforts,

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but also systems were employed that lead to lower transaction costs by providing a level of accessibility that is not capable with manual processes. According to Weyerhaeuser, Collaborative Transportation Management systems allowed for significant cost savings and enhanced efficiencies. Through matching of inbound and outbound freight as well as automated load consolidation, Weyerhaeuser was able to realize freight rate savings, reductions in human resources costs, and improved service for its customers. Moreover, Weyerhaeuser was able to more effectively manage their volume surges and specialized delivery programs, which results in additional cost avoidances. Overall, the support role of CTM technology leads to results that cultivate collaborative efforts. Such results are mutual, providing all entities involved with key metrics to measure and evaluate the collaboration. These metrics ensure that results are quantifiable and easily compared against past performance. These key performance indicators, including transportation and administrative costs, on-time performance, and asset utilization, have been extended to include the value received from CTM by Transplace customers. Transportation Cost. An important indicator of CTM value is the ability to reduce transportation costs through advance planning, optimization, and continual updates of shipment status. Typical metrics, such as cost per ton, cost per cubic foot, and cost per hundredweight allow the shipper to compare CTM processes against historical benchmarks. LTL consolidation, optimal carrier relationships, optimal mode selection, and Collaborative Continuous Moves (CCM) are primary opportunities to improve these metrics. Transplace has increased LTL consolidation opportunities through the use of optimization technology, thereby providing mode conversion savings between 8.5% and 20%.1 Additionally, LTL consolidation may reduce the probability of freight damage, which reduces financial risk. Optimal carrier relationships and CCM are other avenues for CTM savings. Transplace facilitates carrier relationship activities to ensure the right carrier is utilized for the right shipment to deliver at the right time, while maintaining collaborative exchange. These processes provide cost savings for both the shipper and the carrier: the shipper realizes lower transportation costs through better carrier utilization, and the carrier is assured of transporting freight in lanes where they will optimize their equipment. CCMs take the carrier relationship process one step further by utilizing the inbound carrier capacity for outbound shipment matching. Using Transplace DNE technology parameters such as 1) the lead time provided to the carrier about the next shipment, 2) the empty miles between the destination of the inbound shipment and the origin of the outbound shipment, 3) the dwell time or waiting period between the inbound shipment delivery appointment and the outbound shipment pick-up appointment and 4) the discount off the one-way linehaul costs are taken into consideration to come up with the overall most cost effective transportation management solution. Companies have seen CCM execution grow from non-existent prior to utilization of the technology to as high as 72% of their network executed in the CCM channel.1 Due to global visibility of all shipment activity across multiple companies, empty miles and dwell time can be reduced for the carrier, while the shipper receives preferred rates and consistent capacity. Thus, the win-win-win goal of CTM can be achieved. On-time Performance. Another important factor for CTM success is pickup and delivery on-time performance. If product is delivered through a less expensive mode, but the product arrives late (or not at all), the opportunity cost of a lost sale and customer dissatisfaction may far outweigh the transportation cost savings. In many just-in-time environments a 15-

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minute delay may shut down a production plant, so executing the transportation process flawlessly is vital to supply chain efficiency. Through CTM, companies have realized on-time performance improvements ranging from 5% - 30%.1 This service level improvement allows other activities within the supply chain, such as more efficient cross-docking and direct trailer loading (i.e., avoiding the freight staging process), to become more effective. Furthermore, while difficult to quantify in financial terms, improved appointment scheduling, carrier status updates, and load planning also provide value in CTM. Asset Utilization. Carriers benefit from CTM primarily through better asset utilization. By reducing empty miles, controlling excessive dwell time, gaining advanced notification of the next shipment to move, and identifying the appropriate equipment to deploy, carriers retain better drivers and maximize their asset utilization. The CTM concepts are especially applicable to carriers or private fleets that service a particular geographic area. Transplaces experience has shown that regional fleet utilization increases 10% - 42% because of complementary backhaul opportunities in an extended planning horizon to the carriers.1 Instead of returning to a distribution center empty, the equipment can pick up an inbound vendor shipment, eliminating the need to tender to another carrier, while better utilizing the existing equipment in the area. Increased utilization ensures improved fixed cost (driver, tractor, etc.) and variable cost (fuel, tires, etc.) management for each piece of equipment. Administrative Cost. When quantified, the CTM methodology can be shown to greatly reduce administrative time to execute transportation activities. In many cases the average order lead-time is reduced by 0.5 days to 2 days.1 Besides the direct inventory carrying cost savings, the value of needing less time (and therefore less follow up) to order product and be assured of its delivery improves customer satisfaction, order fill rates, and overall exception management. Additionally, through LTL consolidation, the number of shipments that must be managed is reduced (by up to 64%) because more freight is moved via truckload carriers.1 Finally, the potential for late delivery is minimized compared to LTL modes, since truckload shipments bypass the complex LTL breakbulk network. Overall, CTM through information systems improves the operations and efficiency of all entities involved. Internet visibility provides all stakeholders (dock personnel, merchandising agents, and carriers) with the ability to manage the supply chain more effectively. Dock managers use the Internet to review inbound shipments that aid in scheduling cross-dock labor; merchandising agents use the internet to check the status of a purchase order for improved customer service; and carriers use the internet to provide load tender acceptance, status updates, and delivery appointments. All of these activities work in concert to ensure the CPFR process and CTM process are synchronized, leading to holistic Supply Chain Collaboration. Part III: Conclusions The advent of the Internet and electronic communications has enabled companies to be more responsive to their customers. Companies can now receive their customer orders in a matter of seconds, enabling faster order processing, shorter order cycle times, and collateral improvements in customer service. These technological advancements are also changing the marketplace and providing an impetus for changes in organizational structures. To survive against global competition and other environmental pressures, companies are forming strategic supply chain partnerships and alliances. Such relationships are designed to

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realize increased efficiencies, streamline processes, provide a broader range of integrated services and enhance customer service through long-term collaborative efforts, as in the case of CPFR and CTM The conceptual framework and value measures for CTM presented above can serve as a foundation for organizations considering implementation of CTM. A limitation of this research, however, is that it is descriptive in nature, and offers evidence of benefits of CTM based on aggregate data. Future research may build on the current research by employing more rigorous methods to develop models that will measure and quantify a larger array of benefits of CTM, such as head-count reduction, improved asset utilization, relationship quality enhancements, and workforce realignment. Additionally, while the current research focused on the role of information technology in CTM processes, future research could also explore other key enablers of collaborative exchange between shippers and carriers, such as trust, leadership, and benefit sharing (Mentzer, Foggin and Golicic 2000). Also, future research is warranted that further explores the interface between CTM and CPFR. While this research highlights the relationship between these two concepts from a definitional perspective, future research could empirically explore linkages between CPFR and CTM.

Endnote
All cost saving data was received from Transplace as a part of this case study analysis. The measures were aggregated to protect the confidentiality of each Transplace customer that participated in this case study. These cost savings ranges and averages include the actual benefits of CTM realized by each of the case study participants, where applicable.
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