Every year, while the rest of the country eagerly awaited the arrival of spring, golf-cart maker E-Z-GO braced for something decidedly less welcome: a seasonal spike in shipping costs.
At the heart of the problem was a simple imbalance in supply and demand. The Augusta, Ga.-based company uses special double-deck "golf car" trailers to ship its golf carts and utility vehicles. Those trailers, however, are in limited supply in North America—there are only about 1,000 of the units in the United States. For most of the year, the company is able to obtain all the capacity it needs from its dedicated contract carrier. But during April and May, its peak selling season, E-Z-GO has to hire additional for-hire carriers, and that's when things would get sticky.
To begin with, it was sometimes difficult for the golf-cart maker to find the extra double-deck trailer capacity it needed. More to the point, perhaps, it was often quite expensive. Although E-Z-GO's customers paid the shipping costs for their orders on a per-mile basis, that still left the problem of the return trip. If it didn't have a return load, E-Z-GO was often forced to pay for a round trip even though it was only moving products one way.
As a result, the company found itself losing money on shipping. "We could push out a thousand truckloads a month in peak season," says Cary G. Daniel, E-Z-GO's director of logistics and materials. "And we were bleeding red ink on transportation."
The logistics team's first thought was to invest in transportation management software. A transportation management system, or TMS, would help them identify opportunities to consolidate loads and locate backhauls. Trouble was, it wouldn't address some of the other problems E-Z-GO struggled with—like a lack of inventory visibility that created serious delays in truck loading. In the end, however, they found the answer they were seeking in a powerful integrated logistics management solution that combined a transportation management system (TMS) with a warehouse management system (WMS).
A subsidiary of Textron Global, E-Z-GO earned slightly more than a half billion dollars in revenue last year. Among other items, the company makes golf carts, utility vehicles, warehouse vehicles, and so-called "personal vehicles"—lightweight vehicles that are fast becoming a fixture in retirement communities, where residents use them in place of cars for local transportation.
E-Z-GO manufactures its vehicles at two 800,000-squarefoot plants on a campus in Augusta, Ga., building most of its electric-powered vehicles to order. Its customers, which include golf courses, resorts, and factories, typically place orders through a dealer or distributor for delivery in about six weeks' time. Customers can choose their vehicles' paint colors and accessories, selecting from an array of 225 options—bag covers, windshields, tow bars, logos, and the like. Orders tend to be small, usually ranging from one to four vehicles.
The company ships its products through 12 service centers located throughout the United States. Those service centers handle much of the customization work on the vehicles. Once the vehicles are finished, a carrier delivers the golf carts directly to the customers.
Building better loads
E-Z-GO's goals going into the software project were modest. At the time, it was losing significant money on shipping, says Daniel, and it just wanted to break even.
Step one was the installation of the transportation management system. In January 2007, E-Z-GO installed a TMS supplied by Waukesha, Wis.-based RedPrairie. Six months later, the company added the WMS, which was also supplied by RedPrairie.
Once the TMS was in place, E-Z-GO could finally abandon its manual load-planning procedures. "We used to use spreadsheets and calculators to try and configure loads," says Daniel. The TMS now automates the load-planning process and optimizes the use of trailer space.
Along with optimizing trailer space, the TMS has helped E-Z-GO optimize shipments. The TMS consolidates orders so that E-Z-GO can minimize the number of trailers it uses for deliveries. (E-Z-GO can fit anywhere from 24 to 30 carts on a golf car trailer, depending on the trailer's configuration.) By pre-planning the shipments, the application has enabled the company to move six or seven loads in a single trip.
Perhaps best of all, the TMS can feed information on potential outbound loads to E-Z-GO's carriers to help them locate backhauls (which typically come from companies that ship all-terrain vehicles). "We work through the carrier base to get backhauls," Daniel says. Because it has a gain-sharing contract with carriers, E-Z-GO gets a percentage when the trucker finds a backhaul.
As a side benefit, E-Z-GO has found that the TMS allows it to provide better service to customers ordering replacement parts. Customer service personnel can use the TMS to determine an order's shipping cost prior to confirming the order. Customers pay the shipping costs, and they appreciate knowing the exact charges in advance, the company says.
For all the efficiencies it has achieved with its TMS, E-Z-GO believes that the real gains have come through the combination of the TMS and the WMS. For starters, the WMS allows E-Z-GO to track the precise whereabouts of its products, which has significantly reduced loading times. After production, the company stores its vehicles in a 10-acre open-air warehouse in Augusta. In the past, it wasn't always easy to locate specific vehicles when it came time to load the truck. "We used to have guys riding around looking for product," says Daniel.
Nowadays, things are different. The WMS allows the golf cart maker to slot product dynamically in spaces throughout the open-air facility. The WMS keeps track of each product's location down to the exact spot in a specific row, and is able to direct workers right to the vehicles they need.
On top of that, the WMS can supply the TMS with detailed dimensional information for specific vehicles. That information proves invaluable when it comes time for the TMS to build load plans.
Ultimately, the integrated WMS and TMS system will enable E-Z-GO to change its distribution strategy and reduce its reliance on the specialized double-deck trailers. The company plans to convert three of its 12 service centers— one in California, one in Ohio, and one in New York—into regional distribution centers. Once that's done, it will use regular trailers whenever possible to linehaul product to the regional DCs, where final assembly and customization will take place. It will only need the specialized units to deliver finished vehicles from the regional DCs to customers.
Based on its positive experience with the integrated TMS and WMS solution, E-Z-GO plans to invest in another RedPrairie application. Daniel says the company expects to add RedPrairie's visibility application to the TMS, which will allow it to schedule inbound loads as well as outbound movements.
But whatever it does in the future, there's no arguing with the savings E-Z-GO has achieved to date. The company has seen its distribution costs drop by 20 percent. "The solution has allowed us to make smarter decisions," Daniel says. "Since fuel [prices] have gone through the roof, I shudder to think where we would be without the tools we have purchased."