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FREIGHT TRANSPORTATION PURCHASING PHILOSOPHY Co-authored by Toyota-NAPO (1st in the series)
Introduction TransportGistics’ white papers were designed to provide useful, informative and timely logistics information and to provide a forum through which our fellow logistics and transportation and distribution professionals could exchange ideas and information. This objective has been achieved, as evidenced by many of our readers suggesting white paper subjects along with their content questions. Recently, an overwhelming number of our readers asked that we present white papers addressing: Freight Transportation Purchasing Philosophies; Purchasing Freight Transportation Effectively; The Role of The Logistics Leader in Purchasing Freight Transportation Services and Contract Carriage Agreements. In order to exchange ideas and information, we asked about 400 of our readers, representing organizations of a variety of sizes and types across the entire industrial spectrum, to collaborate or participate in a white paper. More than 300 readers from around the world responded; some suggested topics that they wanted to learn more about and others indicated that they would like to participate. Most wanted to learn more about how other companies purchase freight transportation services. In order to treat this subject properly, we asked our readers at Toyota-NAPO, Welch Foods, Frito Lay and Applica to collaborate with TransportGistics on a series of four white papers? We are pleased to announce the following four white papers in this series and the readers and companies that collaborated with TransportGistics:
1.
Freight Transportation
Purchasing Philosophies - Tony Minyon, TOYOTA, National Manager-North American
Parts Operation (NAPO)
2.
Purchasing Freight
Transportation Effectively - Bruce True, WELCH FOODS, Logistics Manager
3.
The Role of the Leader
In Purchasing Freight Transportation Services - Keith Thurgood,
FRITO LAY, Group Manager-Logistics
4.
Contract Carriage Agreements
- Thomas Pidgeon,
APPLICA, Manager of Logistics About the Authors Toyota-NAPO Tony Minyon holds a B.A. Degree in Economics
from California State University Fullerton. Shortly
after graduation, he took his first position with
Toyota Motor Sales,
USA and during the next 14 years he progressed from
entry level to his current position where he has global responsibility
for the purchasing of
transportation for the NAPO division. His prior experience
in several Toyota
business units, including service parts & finished
vehicles has refined
his expertise in JIT transportation. In March,
2002 he was promoted to National Logistics Manager at Toyota-NAPO.
Tony's commitment to
education is demonstrated in, at least, two (2) ways: his
continuing studies within both
the Toyota education system and at external specialized logistics and transportation courses;
and through his writings and
lectures. He is an active member in many logistics
forums, and has been a guest speaker at several universities
and transportation summits.
TransportGistics is a
global, multi-product and services company that provides market
leading, simple, incremental solutions for transportation
management and logistics functions within the supply
chain.
TransportGistics commitment
to education is portrayed through its advancement of professional
logistics and transportation programs.
Its white paper site presents important and timely subjects
each month, and is visited by more than 22,000 companies,
universities and governments, worldwide.
Through its question
and answer section TransportGistics readers are actively
engaged in asking and answering questions.
This activity has created a forum through which logistics
and transportation professionals exchange ideas and information.
********* Executive Summary
Freight transportation in the Virtually all companies, regardless of size, recognize the importance of getting their products to their customers. Some companies address this mission critical business component from the cost perspective only, while others consider both cost and service. These two high level considerations recognize that there must be a basis upon which the determination can be made. The Purpose of this Paper is to present Toyota-NAPO’s freight transportation purchasing philosophy and to examine how this organization looks at their carriers, how they want their carriers to see them and why that is important. A Description of TOYOTA-NAPO NAPO-North American Parts Operation is responsible for receiving and shipping $2 billion worth of service parts and accessories globally. As part of the
Developing a Philosophy Developing a unique philosophy, such as one for purchasing freight or manufacturing or how to run the Logistics Department would be functionally unsuccessful. Specific philosophies must have their roots in the culture and “mind-set” of the corporation to be successful. Each department or operating segment may have some unique features and attributes in their espoused philosophy, but unless they are grounded in the “essence” of the company they will not effectively allow you to deal with vendors and customers and in all probability the inconsistency will drive a wedge within and between the necessary inter and intradepartmental relationships. Developing a Transportation Purchasing Philosophy In order to develop
an effective Transportation Purchasing Philosophy it is imperative
that you first begin to develop an understanding and appreciation
of the corporate philosophy. In some cases, the corporate
philosophy is documented and circulated throughout an organization.
More often, the corporate culture is unwritten, and passes
from one generation of employees to the next by means of conversation,
observation and instruction. In the case of With the corporate philosophy established, incorporation of those unique aspects that relate to a Transportation Purchasing Philosophy is appropriate. When it is fully understood, its principles can be incorporated into a Transportation Purchasing Philosophy. In turn, that philosophy must be effectively articulated to all appropriate areas so as to allow them to understand the fundamental manner in which business is conducted. What Makes TOYOTA – NAPO’s Purchasing Philosophy Tony Minyon, National
Manager understands, respects and appreciates The
NAPO’s Mission Statement
Having developed the following mission statement,
“To provide our customers with the right parts at the right time in the
right place at the lowest cost”, “At Carrier Relationships with Relationships are based on three (3) principals:
Having established
their carrier relationships,
When replacements,
new traffic lanes need to be satisfied or additional carriers
are required, the How Does By incorporating
all of the principals addressed above,
What does it mean to be a Having recognized the importance of establishing a well defined and articulated
transportation purchasing philosophy, it should also be obvious
that it is equally important to incorporate the business rules
and operating relationships.
Can we move this part better?
Faster?
Cheaper? Most importantly: All three constraints are balanced
equally. We will not give up quality to save a buck Do not carry more inventory
if it does not make financial sense
Who better to tell how we can improve than those
actually doing the work! Ask your partners, what can we do to be a better
shipper? And listen!
We look for “partners” to achieve Respect,
not “vendors & carriers” Mr. Minyon states that, “Genchi Genbutsu and Teamwork go hand-n-hand.
By meeting the “players face to face,”
you can develop the bonds to work together.
The term “win/win” has been touted for the past decade,
but teamwork has endured for centuries. Now there is nothing wrong with “win/win” solutions,
but they sometimes look
at the pure cost solutions,
not the people that developed them.
All of the other foundation pieces build into the fact
that when we make a partner selection, we do it with
respect for the people, the process, and the capabilities.
Yes, price plays into this process, but as mentioned
before, so does lead-time & quality equally.” Conclusion An organization’s freight transportation purchasing philosophy must be established with care in order to effectively select carrier partners who will understand your business methods, how you buy such services, and how your partners are expected to perform. It must be articulated in an effective and efficient manner so as to ensure that a mutuality of understanding is achieved. It is clear that Toyota-NAPO has established and maintains a process that defines the organization and its philosophy in ways that foster the development of strong logistics partnerships. Continuation Please consider this white paper as a continuum in this subject area.
Succeeding white
papers will address common issues and address them with common
solutions. We encourage our readers to direct any specific
questions or comments to papers@transportgistics.com Disclaimer The information presented herein represents the opinion of the author(s) but not necessarily the opinion of TransportGistics, Inc., and is not presented as a legal position or opinion. All content copyright by TransportGistics, Inc. All rights are reserved. The authors of the articles retain the copyright to their articles. No material may be reproduced electronically or in print without the express written permission from the individual authors and/or TransportGistics, Inc. (papers@transportgistics.com) |
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