US LBM is a privately held collection of 13 leading building materials distributors, serving in 11 States with more than 70 locations. The company has grown by acquiring regional distributors as well as through organic growth. The regional distributors have a great deal of autonomy and retain their own names. So, for example, in the Chicago area they are known by the name Hines Supply, while in Wisconsin they are called Wisconsin Building Supply. In fact, US LBM prides itself on the autonomy given to regional divisions and does not believe standard processes fit the distinctive needs of different regions.
This means that the job of the supply chain organization is to support the larger organization and not dictate processes or technology. I talked to Senthil Arumugam, Vice President of Logistics and Inventory Management at US LBM, about their implementation of a routing, GPS tracking, and customer service smart phone applet. The combination of those three solutions is what US LBM calls an “Electronic Delivery Management System.”
Senthil told me that this project had the very highest support, starting with the CEO. US LBM’s primary focus is on customers that require specialized services, such as custom homebuilders and professional remodelers, as well as multifamily and commercial contractors. Providing a higher level of service – such as providing customers more accurate delivery information – could help cement customer loyalty. Their existing paper based systems would not be able to provide the needed visibility. Further, they lacked delivery performance data, and continuous improvement is impossible without data. Researching their options and building a business case was six months of effort.
At the end of this process they selected Descartes Route Planner (routing), Descartes Mobile (a GPS-based mobile solution), and decided to build their own applet that customers could put on their smart phones for delivery details and statuses. They selected the Descartes solution because they believed that their industry had complex routing requirements and that Descartes’ was the most flexible solution they looked at.
But even after selecting Descartes, there were many options to consider: have Descartes host the solution? Host it themselves? Have a telematics device installed in trucks? Or give GPS smart phones to their drivers? The company ended up deciding to have Descartes host the solution and selected the GPS smart phone solution for tracking and supporting delivery details.
The complexity associated with delivering materials to a construction site is driven by the nature of the deliveries. For US LBM, typical lead times are less than 24 hours. Some orders need to go out the same day, others to a specific delivery window.
Further, efficient routing is impossible unless the routing system “understood” that the materials to be delivered require different loading and unloading times based upon the equipment used. This industry uses boom trucks (for “booming” shingles, for example, up to a roof), semi-trucks, vans, and dump trucks. US LBM had done engineered time studies and developed an internal system that allows them to understand the loading and unloading time based upon the type of truck and amount of material. This system, in turn, needed to be integrated with the routing solution. The Descartes solution’s ability to support this was one example of why Senthil considered this a flexible solution. Further, the architecture of the solution allows for one instance of the routing solution to support different regional divisions with different operating processes. In other words, the Descartes solution is not just flexible, it is also scalable.
Boom Truck at Construction Site
The initial regional implementation started in the second quarter of 2012, and was finished four to five months later. Because of their culture of operating divisions having great autonomy, the success of the initial implementations were key to getting the other divisions to decide to implement the electronic delivery management system. It was highly successful. Today there are 8 of the 13 divisions and 35 locations up on the system.
Driver’s access their schedule using a mobile device. Real time GPS information is received every few minutes used by Route Planner to calculate delivery times and keep customers up to date.
Customers are notified when schedule changes. With one click they can call their salesperson to order; the applet includes an itemized list of materials for delivery, and anticipated delivery times. Pictures are taken at the delivery site so that contractors, if they want, can verify that the right materials, in the right quantities, were delivered undamaged. Many locations have improved on-time delivery from 70% to 95%. Better visibility, means that customers also can now plan their work more efficiently. In fact, Descartes has produced a video where US LBM’s customers discuss the efficiencies they have gained because of the mobile delivery solution.
Internally, the US LBM salesforce job is easier. A sales person now has easy access to what yard is shipping an order, where that load is coming from, the estimated time of delivery, and even what material is on a load. Their mobile sales force does not need to make numerous calls or send out urgent emails to get the necessary information.
US LBM has also decreased delivery related costs by over 10 percent at some of the sites where it has been implemented. Savings come from more efficient warehouse operations in support of loading the trucks, lower fuel costs based on efficient schedules, and fewer expedited deliveries. Paperless proof of delivery, enhanced by picture and signature capture functionality, has also significantly reduced the number of customer calls and claims, and has helped US LBM to save tens of thousands of dollars with better delivery claim resolution.
In conclusion, this is what you might call a win-win-win. Customers are better served, the US LBM sales force and drivers jobs are easier, and US LBM reduces costs.