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Schneider National is far-and-away the largest trucking firm in
the United States, with about 19,000 employees and a fleet of nearly 15,000
trucks (cabs) and 43,000 trailers. The company is so large that it is $1
billion larger than the next two largest trucking firms combined. Headquartered
in Green Bay, Wisconsin, Schneider National services two-thirds of the Fortune
500 corporations, including such major clients as General Motors, Wal-Mart,
Kimberly-Clark, Procter & Gamble, Chrysler, Sears Roebuck, and Staples. The
company is privately owned and had annual sales in 2000 of about $3.1 billion,
a growth of nearly 11 percent from the previous year.
Schneider
National was a major trucking firm with Don Schneider as its CEO when the
federal government deregulated the trucking industry in the 1980s,
revolutionizing the business environment of the industry overnight. Interstate
trucking firms no longer had to follow the rules of a regulatory bureaucracy
about what kinds of freight to carry and where to take it. These rules had made
it difficult for customers to change carriers because only certain trucking firms
could meet these regulations. Competition for customers heated up. Schneider
National responded to these demands with a multipronged strategy based on the
use of information technology, so that computer systems were now playing a
powerful role in Schneider National's operations. Moreover, the company also
began treating its employees differently, a major step toward democratizing the
company. The company made a paradigm shift. Several other competitors responded
to deregulation by merely lowering rates. They went bankrupt.
CEO Don
Schneider's business philosophy emphasizes IT. Basic to his philosophy is
Schneider National's communications with its customers. In its giant
headquarters building, the ground floor contains its call center, a full acre
in size, where 600 customer service representatives work. Using computers, they
have easy access to any customer's history, enabling each customer service
representative to answer customers' questions. The result is that the customer
is satisfied and the jobs of Schneider National reps are eased. New customer
service reps are given 4 to 6 weeks of training, much of it on the use of both
the company's computer systems and on the Web.
In 2000, 50
percent of Schneider National's customer orders were received either on the Web
or on its electronic data interchange (EDI) system. Through the use of these
electronic connections, the orders automatically arrive in Schneider National's
computer system, resulting in improved ordering accuracy and higher productivity,
thus lowering the cost of the whole ordering operation. Moreover, within 15 to
30 minutes of sending an order electronically, customers know what truck will
arrive and when. The system also includes electronic invoicing. The reason
electronic orders encompass only 50 percent of the total orders received is
because the Web system is new whereas EDI is an older technology, dating from
the 1960s, that is very expensive, so the small companies cannot afford it.
However, the Web is very inexpensive and easy to use, and Schneider is trying
to get all of its customers to use the Web ordering system. In fact the goal
for 2001 is to have 60 percent of Schneider orders arrive electronically, with
the gain being through the Web.
Schneider's
Web site was created by Schneider Logistics, a company spun off from Schneider
to provide information technology and supply chain management services to
Schneider and other companies. Its concept is for the transactions to be
completely paperless. Ultimately, it will enable customers to enter their
orders, check the status of their shipments---what truck or railroad car their
goods are on, where they are now, and when they are scheduled to arrive---as
well as check proof-of-delivery. All future services will be built to execute
within a Web browser.
To the
information that its customers require available and and to plan its pickups,
deliveries, and routes, Schneider National must gather a great deal of
information about the trucks, both cabs and trailers. "Trucking companies
are asset-intensive businesses," explained Donald Broughton, a senior
transportation analyst at A. G. Edwards & Sons. He emphasized how crucial
the use of the cabs and trailers are when he added, "The guy who has the
higher rate of asset utilization wins."
In 1998,
Schneider National became the first fleet trucking company to use OmniTracs.
OmniTracs is a satellite-based communications and positioning system produced
by QualComm, the San Diego-based wireless communications company. Schneider
National worked with QualComm in the development of the product. For it to
operate, each tractor has a radio frequency identification tag, a computer with
keyboard in the cab, and a satellite antenna with a GPS (global positioning
system) on the back of the trailer. Using this system, the company knows where
every truck is within 300 feet at all times. The driver and headquarters
communicate as often as required. The dispatchers can send information to the
driver on how to get to the delivery spot (if there is a problem), the location
of the next pickup (usually from someplace nearby), directions to the pickup
spot, the necessary papers (if any are required), and even traffic and road
problems. The driver can respond with approval and raise any questions about
the instructions, the truck, or the road. Schneider National sends and receives
about four million messages per month.
The cost of
OmniTracs system was $30 million. Schneider thought the drivers' response to
the system might be negative, but he was wrong. "We thought drivers
wouldn't know how to use it or want to use it," he said. "What we
found was exactly the opposite," because they were frustrated at having to
stop along the road and call headquarters at telephone booths every few hours.
In fact, the system has been such a success that by 2001 more than 1,250 fleet
trucking companies have started using it.
Schneider
National worked with QualComm again to develop SensorTracs in order to collect
engine data, such as speed, RPMs, and oil pressure, via satellite. The data not
only contribute to better maintenance of the engines but also help drivers to
drive more safely and to take better care of the vehicles. It can even increase
the drivers' incomes. One element of a driver's monthly bonus is based on
staying within certain key factor ranges when operating the vehicle.
Currently,
Schneider National is working with QualComm to develop a trailer-tracking
system. It too is wireless. Each trailer has a radio frequency identification
tag, which is read by devices that are placed at various points along the rail
lines and in the rail yards. The data are directly linked to Schneider
National's fleet management and logistics systems. They tell the dispatchers
and the customer reps if the trailers are empty or full and if they are hooked
onto a cab, sitting in a yard, or, rolling on a train. "Ultimately revenue
is the measurement of how well we load and move these trailers, " said
Paul Mueller, president of Schneider Technology Services, a unit of Schneider
Logistics. "It is not uncommon to have to send drivers off-route to get
[empty] trailers." When they arrive, the trailer isn't there or it might
be loaded." Schneider National sees the new trailer-tracking system as a
way to improve customer service through more on-time deliveries and better
in-transit knowledge. It should increase drivers' satisfaction by increasing
their billable miles and so their earnings. Ultimately it will increase trailer
utilization and efficiency. The company does not intend to use it to reduce the
number of trailers it owns because its orders are increasing. However, it does
want to reduce the number of new trailers it needs to purchase so that it can
use the saved funds elsewhere.
Schneider's
Global Scheduling System (GSS) helps to optimize the use of both the company
drivers and the loads throughout the country. The system processes about 7,000
load assignments daily, looking at all the possible combinations of drivers and
loads on any one day. It accesses more than 7,000 possible combinations of
drivers and loads per second, and of course the loads and trucks are at
different locations each day. Its primary value is servicing customers by
satisfying their requests to move freight. However, the GSS can also save the
company money because fuel is expensive, and the system makes it more likely
that when the trucker delivers his or her load, the next load to be picked up
is close by.
Information
technology is also being used to help Schneider retain drivers. There is an
industry shortage of 80,000 to 100,000 drivers a year. The company's Touch Home
program uses the existing in-cab computer technology to give the drivers e-mail
access via satellite. The system thus enables drivers to stay in contact with
their families.
The company
is forging ahead. For example, currently it is working with Network
Computing magazine on a Web site in which the entire logistics transaction
will be accomplished electronically, including the order, its acceptance,
pickup, delivery, billing, payment, and reporting. "Then order management
will be a no-touch process from front to back," declared Steve Matheys,
Schneider's vice president for application development. "That's a huge
cost-saver and customer satisfaction play."
Sources:
Charles Haddad, "Transportation: Sharing the Load," BusinessWeek
on-line" January 13, 2003; David Drickhamer, "Rolling On," industryweek.com,
December 1, 2002; Jack McCarthy "The Wireless Road Taken," InfoWorld,
November 22, 2002; Eileen Colkin, "Getting Tough on ROI," InformationWeek,
October 21, 2002; "Don Schneider," CIO Magazine, October 1,
2002; Chris Murphy and Marianne Kolbasuk McGee, "Running the
Numbers,"InformationWeek, September 30, 2002; "Schneider
National, Inc.: Keeping a Growing Supply Chain on Track," www.sun.com,
2002; Todd Datz, "In It for the Long Haul," Darwin Magazine,
September 2001; Paul Musson, "Schneider National Partners with Sun for
Service and Support," Serverworld Magazine, January 2001;
"Schneider National Selects QualComm Trailer Tracking Solutions,"
www.qualcomm.com/pressroom, April 9, 2001; "Schneider National,
Inc.," The Industry Standard, August 29, 2001; Bill Roberts,
"Keep on Trackin'," CIO Magazine, June 15, 2000; Joel Conover,
"Network Computing and Schneider National: Building an Enterprise Proving
Grounds," Network Computing, July 20, 2000; Kelly Jackson Higgins,
"Schneider National Rolls into the Web Age," Network Computing,
February 7, 2000; Douglas Hubbard, "Try Simulation," CIO Magazine,
June 15, 2000; and Esther Shein, "Smooth Operators," CIO Magazine,
August 15, 2000.