November 1, 2008
When logistics and distribution managers need software to solve a business problem, the first thing most of them do is look into buying an off-the-shelf package. But what happens if they can't find something that meets their precise needs?
When logistics and distribution managers need software to solve a business problem, the first thing most of them do is look into buying an off-the-shelf package. But what happens if they can't find something that meets their precise needs? Some give up. Others buy a commercial package and then pay somebody to make the necessary modifications. What they often overlook is the do-it-yourself option—building their own application or, if they lack the necessary expertise, hiring a programmer to do the job.
That's exactly what Just Born Inc. did. When it needed software to optimize its distribution network, the Bethlehem, Pa.- based confectioner, whose brands include Peeps, Mike and Ike, Hot Tamales, and Peanut Chews, hired programmers at nearby Lehigh University to develop a custom application. Just Born connected with Lehigh professor Larry Snyder through the university's Center for Value Chain Research, through which companies can sponsor research projects.
Just Born ships large orders of its candy directly to customers and smaller orders through regional "pool points," locations where it breaks down truckload shipments into less-than-truckload shipments for its many smaller customers. The company suspected that there were ways to make its existing network more cost effective. But in order to figure out how, the candy maker first needed to analyze a year's worth of shipping data, says Alan Sargent, Just Born's supply chain manager.
Unfortunately, there was no readily available software package that could address the questions Just Born sought to answer. "I don't know of any software out there to determine which customer should be shipped direct and which should be LTL," says Snyder, who worked for a supply chain software maker before going into academia. "There may be software out there, but I don't know of any."
Unable to find a turnkey product, Sargent put the software development project out to bid, soliciting proposals from several respected consulting firms. But the bids—which ranged from $125,000 to $250,000 —were more than a company of Just Born's size could justify. It was at that point that he turned to Lehigh University to develop a software solution.
With the help of a Ph.D. student, Snyder devised algorithms, or a sequence of computer-coded instructions, to tackle the problem. Their objective was to answer three key questions: How many cross-dock pool points should Just Born have? Which customers should be served direct and which through the pool points? How should the truckload carriers moving direct shipments across the country be routed?
The model they came up with showed that there was indeed room for improvement: By reducing its pool points to 23 from 28, Just Born could cut its costs while still satisfying its customers' delivery- time requirements. Although the software didn't have "bells and whistles" or fancy interfaces, it got the job done. Granted, since Snyder is a full-time professor at Lehigh University, the work took a bit longer than it would have with a dedicated consultant. But Sargent says the project was done for a third of the typical cost.
As Just Born's experience shows, companies don't have to settle for an off-the-shelf supply chain software package that may not meet their exact needs. Even if they don't have the internal resources to develop a custom package, they can always hire someone to create one for them.