LoadProof Implementation & Cost Savings for FMCG Cereal Manufacturer – Case Study
1. Introduction
LoadProof is a Centralized Enterprise Photo Documentation System for Supply Chain (patent pending). Recently a FMCG Food Manufacturer implemented LoadProof in their seven facilities. This document describes the benefits that were accrued and the associated dollar savings.
The Story of Cereal Manufacturer started in 1895, founded by the founder. In 2015, This Cereal Manufacturer bought multiple other cereal manufacturers and became as Cereal Manufacturer which is the third-largest cereal company in the United States with its headquarters in Lakeville, Minnesota. This Cereal Manufacturer is in the Fast-Moving Consumer Goods Packaged Food industry sells about 140 breakfast cereal varieties such as oats, pebbles, wheat etc… They have more than 2800 employees and produce $421 million in sales.
The company’s mission is to help make the world a better place, and they do this through their dedication to doing business the right way and engaging in efforts to create meaningful change for individuals and communities. Cereal Manufacturers are continually innovating and adapting for customers and clients to ensure that their products meet the needs of people for taste, value and preference.
2. Cereal Manufacturer Supply Chain – Macro Picture
This Cereal Manufacturer have a relatively very simple supply chain consisting of One Production plant (outbound), and 6 warehouse distribution centers (inbound and outbound) as mentioned below:
- Atlanta.
- Byhalia.
- Northfield.
- Tremonton.
- Utah.
- Wilmington.
- York
This supply chain helps the company to sell its products in Supermarkets across the United States. They ship their products to end retailers such as Costco, Walmart, Publix, Aldix, Dollar General, and Kroger. The company has a diverse portfolio of products distributed to a wide variety of retail outlets. So the number of loads they send per day is very high. In this situation it is very challenging for them to capture the picture of the loads they ship. If customers reject the loads they ship due to damages in shipping or due to spoilage of food it will be a big loss for this cereal manufacturer. It is the responsibility of Cereal Manufacturer to guarantee that the product is shipped without any damages and also at the same time maintaining the compliance standards of their retailers.
3. Cereal Manufacturer Supply Chain – Micro Picture
The objectives to accomplish as part of this project are listed below,
- They transfer their products from manufacturing units to Distribution centers and then distribution centers to big retail stores. In this process they were not able to identify the damaged loads during transfer. The problem is that they are currently taking photos and downloading those photos into a standard file folder structure in a local personal computer, but it consumes a lot of time to retrieve the pictures.
- They need to demonstrate that the loads they send to their customers are very well secured by their load securement process. They were not able to prove their load securement process before as they did not have any proof available with them to prove that they did their job right.
- They needed a tool to document the condition of the loads when the loads left their facility.
- Since they ship as many 150 loads in a day they were struggling to document the photos of the loads in a quick and easy manner. They were looking for a better way to organize, store, retrieve and share photos of the loads in a quick easy and efficient manner.
4. What is the Problem?
This Cereal Manufacturer has a very busy manufacturing plant in Tremonton. Since they are into breakfast cereal manufacturing, people buy their products regularly; hence their Supply Chain is very demanding. So it is necessary for Cereal Manufacturer to fill their stock to the retailers on a daily basis. Because of the large shipping volume, the company was experiencing difficulty in identifying the damaged loads during the shipping process. They are primarily focused on delivering the highest quality goods to their customers and to avoid retail chargebacks. In order to deliver that, This Cereal Manufacturer took many initiatives such as packing the items in an organized way and sealing it up with good quality packing materials.
It involved implementing many measures right from packaging to loading items into the trailers for delivery to the customers. They made sure that everything is sealed properly so that customers can get their products in good condition and at the right time, so that they do not get costly retail chargebacks. They did not have a well organized and centralized system to document the condition of their loads through photos to prove that their loads were shipped after thorough packing and without any damages. They were not able to showcase the quality of packaging they do to their customers, as they did not have any tool to provide visibility to their shipping processes. They lost a lot of dollars in reshipping items as some of their customers reported that they did not deliver the item in correct quantity and in good condition and would reject their loads. To overcome these hefty retail chargebacks, they had to prove that the loads left their facilities in very good quality, excellent condition and in quantities ordered by the retail customer and also they should provide visibility to their shipping processes as they are shipping FMCG food products.
5. What is the Solution?
In order to overcome these critical issues, Cereal Manufacturer looked their options available to them and chose LoadProof as it is the complete centralized solution to store their enterprise data securely. So, they reached out to us as we had similar experience with food manufacturing customers such as
- Hain Celestial.
- Royal Cup Coffee
- Brent Redmond
- Pharmaceutical Products – Kenco Pharmaceuticals
- Daily Milk Runs – KTI Ltd
- Kane is Able – Shipping Liquor products LoadProof is a centralized enterprise photo documentation system, using which the company can take pictures and upload it to a secure cloud.
6. What are the capabilities that Cereal Manufacturer obtained with LoadProof?
LoadProof is a Centralized Enterprise Photo Documentation System for the entire Cereal Manufacturer Supply Chain. It also improves the supply chain visibility and creates trust with their customers.
6.1 Super-fast Photo Capture
After downloading the LoadProof app from the app store, Cereal Manufacturer users are able to take pictures using their mobile devices in a few seconds and then upload those pictures to the cloud tagging the pictures with appropriate contextual data elements. While uploading pictures Cereal Manufacturer personnel are able to add notes, are also able to tag the pictures with the following
- User that captured the photos.
- Date when the photos are captured.
- Time when the photos are captured.
- GPS coordinates of the location where the photos are captured.
- Device that was used to capture the photos.
- Android OS version that was running in the device that was used to capture photos.
The pictures are captured in multiple resolutions based on the plan; the different resolutions that are available are Low Resolution, Medium Resolution and High Resolution. Cereal Manufacturer uses high resolution pictures for to capture pictures of documents such as Packing Slip, Bill of Lading & Trailer Inspection Form.
6.2 Super-Fast Photo Retrieval
So now the photos are uploaded to the LoadProof cloud, users can easily log on to the LoadProof cloud through the browser and look up photos from wherever they need to. Users logon to the cloud the browser by providing their credentials, which includes a user id and password. Then users are able to input one or more of the contextual data that had tagged the pictures with and then perform a super-fast search. Now users can retrieve the pictures they need, drill down further and look at the pictures individually, zoom in, zoom out, save them locally if they need to (not recommended often) and also examine any notes that was entered and also look at the date stamp, time stamp, GPS coordinates etc. if there is a need to validate any of these data set for each picture.
6.3 Super-Fast Photo Sharing
After retrieving pictures users can share the pictures with anybody else, usually customers, vendors, partners, carriers, cross dock facilities, insurance companies, claims processors, Retailers, consolidation facilities etc. in multiple ways as listed below,
- By generating one PDF document for the entire load.
- By sending the entire load to a customer by inputting an email address.
- By setting up a customer as a user within LoadProof.
- By generating a LoadProof URL for each picture and then sharing that URL in an email.
- By generating multiple LoadProof URLs for all pictures and then sharing those URLs in an email.
6.3 Share Pictures with anybody in a couple of clicks
1.Cereal Manufacturer has corporate level users set up that have visibility to look at pictures across all the sites
a. These users could be picture taker users or picture viewer users or both.
b. These users could also be Admin users or Non admin users
2.Cereal Manufacturer also has Network level users that have visibility to look at the pictures at the Supply Chain Network level
a. These users could be picture taker users or picture viewer users or both
b. These users could also be Admin users or Non admin users
3.Cereal Manufacturer has site level users that have visibility to look at the pictures at the site level
a. These users could be picture taker users or picture viewer users or both
b. These users could also be Admin users or Non admin users
6.4 Integrations with other Systems
- LoadProof supports integration with other systems.
- LoadProof is already integrated with Mercury Gate, MyEzClaims System. MyEzClaims is a Freight Claims Processing system that helps shippers process their Freight claims with multiple carriers faster and easier.
- Loadproof can be integrated by setting up a field to look up from any other system using a hyperlink so that LoadProof data can be pulled into a browser directly by clicking a link in the external system.
6.5 Integration with Other Systems
- LoadProof supports integration with other systems.
- LoadProof is already integrated with Mercury Gate, MyEzClaims System. MyEzClaims is a Freight Claims Processing system that helps shippers process their Freight claims with multiple carriers faster and easier.
- LoadProof can be integrated by setting up a field to look up from any other system using a hyperlink so that LoadProof data can be pulled into a browser directly by clicking a link in the external system.
7. What are the Benefits?
The results were fantastic, and Paulette mentions in her testimonial, that she is super happy. Not only the system was super easy to turn on, now they are not spending a lot of time just looking for pictures. Now they are saving anywhere from 20 to 30 hours per week per facility on the time that is spent on organizing the pictures and retrieving the pictures that are needed for his customers. Life is so much better.
7.1 Measurable Hard Benefits
- Now there is one centralized place to get the pictures from, retrieval of pictures is super easy, Cereal Manufacturer’s personnel retrieve the pictures in seconds instead of spending hours and hours looking for those pictures. All the time related to this activity is saved now.
- With the centralized sharing of pictures is super easy, all Cereal Manufacturer’s personnel have to do is put in the email address and push a button, the person on the other end gets the picture within minutes and there are no more back and forth conversations wasting time. All the time related to this activity is saved now.
- Their operators started doing a much better job, when everyone knows the quality of the work we are doing is documented. They were able to better serve their customers.
- They were setting up their both internal DCs as users within LoadProof, basically it is a self-service model, which helps tremendously because now, instead of calling their other DC personnel they can look and download the pictures whenever they need, life is so much better, everything related to the pictures is super easy. All the time related to this activity is saved now.
- Before their customers will call them and say that an item is missing when they received. Their DC units wouldn’t have anything to show that they did their job right. So all they can tell is hey you know what, we will send the missing product in the next load. But now with LoadProof, they can show the pictures and say, hey we did send this item along with the picture of the PO and trailer inspection form. By this way they were able to prove that it is not their fault. All the free quantities they have been doing have reduced now.
- With LoadProof now they are able to capture the Trailer Inspection Form which is critical in food transportation. The form has some critical factors to inspect such as if the ceiling of the trailer has any holes/ leakage, and if the floor of the trailer has any holes or water which could cause harm to the product. Additionally it also has inspection field for refrigerated trucks and for auditing the cleanliness of the trailer.
- Now with picture documentation they were able to capture their shipping conditions such as addition of load bar, air bags between the pallets and also the condition of the seals they fix in the outside door of the trailer. With these additions they were able to prove that they did their job right. It also made them much easier to have that conversation in a rejected load scenario and as they can push back on the customer as we they have proof.
7.2 Intangible Soft Benefits
- Everybody in the distribution center feels good about the centralized picture documentation system. There is no more uneasy feeling in the stomach when a retail customer reports damage and submits a damage claim. Nobody is losing sleep over damage claims and rejected loads.
- The visibility to the steps they do to ensure the product is shipped in excellent condition to all parties, customers, carriers, internal stake holders such as the Salespeople, Customer Support people, Support Technicians, etc. makes them feel much better, if there is any complaint, and they can immediately pull the pictures and show them. The visibility has enhanced transparency, so the trust with their partners have improved significantly, their reputation in the food industry has improved as well.
- Inbound Quality Process – They have also started to take pictures in their Inbound loads for Quality Audits, with pictures now we are able to push back on the vendors, also they understand the issues faster and better as pictures are worth thousand words, this results in getting the quality issues addressed faster and better.
- Ability to set up multiple facilities and multiple personnel at the facility level and at the corporate level is very helpful also. It has eliminated unnecessary calls quite a bit, nobody has to wait for the other person to inspect the loads.
- It made everyone in their supply chain to be accountable for whatever actions they do. This resulted in better discipline and work culture in their supply chain as a whole.
8. What is the Cost Savings?
The savings are summarized below under different sections as appropriate.
8.1 Savings due to implementing a Centralized Enterprise Documentation System for Pictures & Videos
# of Hours saved per facility per week | 25 |
# of Facilities | 7 |
Hourly rate of employees that manage these pictures | $40 |
Total Savings in a year per facility | 25 X $40 X 54 = $54,000 |
Total Savings across 7 facilities per Year | $54,000 X 7 = $378,000 |
Total Savings per Year within the entire Supply Chain Network | $378,000 |
8.2 Savings due to Reduced Retail Chargebacks submitted by customers
Average # of Shipments in a month | 550 |
# of Facilities in supply chain network | 7 |
Average value of a shipment | $6500 |
Average value of all shipments in one facility in one year | $6500 x 550 x 12 = $42,900,000 |
Average $ lost (0.5% damages) due to retail chargebacks | $214,500 |
Average value of all shipments in one year within the Supply Chain Network across 7 sites | $42,900,000 x 7 = $300,300,000 |
Average $ lost due to retail chargebacks (0.5% of Total) | $1,501,500 |
With LoadProof that dollars lost is reduced to 20%, hence the savings are 80% | $1,201,200 |
The dollars lost due to retail chargebacks claims submitted by customer’s results in $1,501,500.
With LoadProof, that is reduced by 80%. Hence the savings are 80%.
Industry Numbers: The damage claims vary around 2% as per Industry standards. Cereal Manufacturer is of 0.5% which results in savings of $1,201,200
8.3 Savings due to Faster Processing of Freight Claims
Average # of shipments in one facility in one year => 600 shipments per month x 12 months | 6600 |
# of Facilities | 7 |
Average # of shipments within the supply chain network in one year across 7 sites | 46,200 |
Hourly rate of employees that manage these pictures | $40 |
Estimated # of shipments (1% of total shipments) that results in Freight claims within the supply chain network | 462 |
Hours saved with faster processing of freight claims within supply chain network (12 hours saved per freight claim) | 462 x 12 = 5,544 |
Total dollars saved = 5,544 X $ 40/hour | $221,760 |
Total Savings/Year within entire Supply Chain Network due to faster Freight Claims Process | $221,160 |
The total savings with faster processing of Freight claims results in $221,760
Industry Numbers: Average number of Freight claims issued for outbound shipments is approximately 1% of the number of shipments. Cereal Manufacturer is around 1% which results in a savings of $221,760 with faster processing of Freight claims.
8.4 Quality Audit after Inbound Receipts – Direct Hard Savings
Average # of Shipments in a month | 550 |
# of Facilities in supply chain network | 7 |
Total # of shipments in one month across the 7 sites | 550 X 7 = 3850 |
Total # of shipments in 1 year across 7 sites | 3850 X 12 = 46,200 |
Average # of issues identified in Quality Audits = 2% of total shipments | 0.02 X 46,200 = 924 |
Total hours spent in resolving those issues identified in quality audits – 10 hours per unit | 924 X 10 = 9240 hours |
Total $ spent in the labor in resolving the issues identified in quality audits @ $40 / hour | 9240 X $40 = $369,600 |
As the Quality issues are documented using pictures vendors understand the problems better and resolve them quickly resulting in reduced time spent on clarifying quality issues. This time of spending 10 hours per unit is reduced to 2 hours per unit, so the 8 hours are saved per unit. | |
Total Hours spent in resolving the issues identified in Quality audits using LoadProof | 924 X 2 = 1848 |
Total $ spent for in the labor in resolving the issues identified in quality audits @ $40/hour | 1848 X $40 = $73,920 |
Savings = $369,600 - $73,920 | $295,680 |
8.5 Total Savings per Year
Savings due to Centralized Picture Documentation System | $378,000 |
Savings due to reduced retail chargebacks from customers | $1,201,200 |
Savings per Year due to faster processing of freight claims | $221,760 |
Savings due to reduced labor spent in quality audit | 295,680 |
Total Savings | $2,096,640 |
9. How much did it cost to implement LoadProof?
Total Recurring Cost per year = $ 15,600
Total savings is $2,096,640 for a spend of $15,600, which means, this customer made their money back in less than 1.5 weeks.
Even if the savings due to providing an organized system for photos alone is measured, that is still $369,600, and the customer would make that investment in less than 2.5 months.
10. User Testimonial
Quote by Paulette Johnson – Compliance Manager – Cereal Manufacturer
LoadProof helps us with the following:
#1 – Capture damage from incoming loads to DC’s from Manufacturing plants or DC to DC transfers, provide feedback as needed.
#2 – Capture load securement.
#3 – Capture as many loads as we can stage or while being loaded to validate load condition to customer. With these capabilities we are able to better serve our customers.
Puga Sankara
Puga Sankara is the co-founder of Smart Gladiator LLC. Smart Gladiator designs, builds, and delivers market-leading mobile technology for retailers, distributors, and 3PL service providers. SG LoadProof is a patent pending Centralized Enterprise Photo/Video Document System on Cloud for Supply Chain. SG LP is built on the fact that photos & videos are vital docs as important as POs/SOs/Legal Contracts/Fulfillment Orders that reside in ERP/WMS/TMS systems, that serve as compelling, conclusive, unequivocal proof of crucial, critical, vital operations executed in Supply Chain within/across orgs when fulfilling customer orders as well as meeting contractual obligations between orgs as merchandise is transferred between different parties that partake in Supply Chain functions & operations. And these photos/videos data should not be stored in someone’s Smartphone or Email Inbox or in their personal/work Computer, but should be stored in a Centralized Enterprise system, where such data can be pushed into super-fast, stored securely, accessible to all stake holders (CFO/Sales Reps/Customer Support/AR/AP) in an org, as well as facilitates super-fast retrieval/sharing. LP is an Enterprise System of record for Photo/Video docs & is as important as an ERP which is an enterprise system of record for POs, SOs, Legal Contracts between parties etc. that have huge legal ramifications, also as important as a WMS (Warehouse Management System) that hold indispensable shipment & fulfillment data on orders. Like how Instagram, Facebook, Snapchat etc. have evolved into social media platforms/systems that enable individuals to showcase their beauty/pretty clothes/lovely cosmetics/hep coolness etc., LoadProof is an Enterprise system that holds similar photos/videos, but for a different reason, not for show off, but to serve as compelling, conclusive, unequivocal & indisputable system of record and proof that can be presented even in the court of law, when there is a dispute between parties while they execute many facets of the Supply Chain functions & operations. Puga is a supply chain technology professional with more than 25 years of experience in deploying capabilities in the logistics and supply chain domain. His prior roles involved managing complicated mission-critical programs driving revenue numbers, rolling out a multitude of capabilities involving more than a dozen systems, and managing a team of 30 to 50 personnel across multiple disciplines and departments in large corporations such as Hewlett Packard. He has deployed WMS for more than 30 distribution centers in his role as a senior manager with Manhattan Associates. He has also performed process analysis walk-throughs for more than 50 distribution centers for WMS process design and performance analysis review, optimizing processes for better productivity and visibility through the supply chain. Size of these DCs varied from 150,000 to 1.2 million SQFT. Puga Sankara has an MBA from Georgia Tech. He can be reached at [email protected] or visit the company at www.smartgladiator.com. Also follow him at www.pugasankara.com.
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