Barely a month later, Irvine disbanded his own small fleet and installed a similar system. But the system was slow and labor-intensive. As soon as the cost of information technology came within reach of the company's small budget, Irvine began investing. The heart of his system is a Compaq Proliant 2000 file server and a Novell network. Running off the system are some 20 PCs. Today, when Kimball Matkins, logistics manager at Prime since 1995, has to move 40,000 pounds of thermoplastics from Des Moines to Tulsa, he first turns to his PC to select from the company's more than 90 contracted carriers. Using proprietary software provided by a number of the carriers, Matkins can quickly get an estimate of how much each would charge for the haul. Then, to be sure that he's paying a fair price, he enters the shipping origin and destination into PC*MILER, a software application from ALK Associates (800-377-MILE; stand-alone, single-user, for Windows, $1,995) that calculates the best route to take, based on the lowest mileage. With that information in hand, Matkins calculates the dollar-per-mile shipping rate. "Some companies choose a carrier if it has trucks pointing in the right direction," says Irvine. "That's typically the wrong way to make the decision."
But price isn't Irvine's only consideration. Reliability is also important. Prime has preprogrammed its shipping standards--the carrier's on-time shipping rate, for example--into a module in Macola Progression Series, the company's accounting and distribution package ( Macola Software, 800-468-0834; accounting, $1,250 per module; distribution, $1,750 per module; all modules of accounting and distribution, $13,000). Every time a shipment is successfully delivered to a customer, Matkins enters three dates into Macola: when the shipment was requested, when the product was shipped, and when the product was delivered. With a few keystrokes, he can quickly find out whether the carrier is up to snuff. In addition, at the end of each quarter the Macola system automatically generates a quality report that's mailed to each carrier. Even if a carrier's prices are below the competition, Matkins may drop it if the computer reports, say, a low on-time shipping rate. "You're at the mercy of the shippers unless you track them very carefully," he says.
But Matkins soon learned that using a carrier's proprietary software to check the status of a shipment wasn't enough. When customers called Prime for shipment updates, they sometimes still had to wait while customer-service representatives called the shipping department and asked Matkins to download the status reports. Sometimes the reps wouldn't get back to the customers for hours. "The system just didn't work that efficiently," says Matkins.
So Robert Gray, Prime's information-systems director, created a program that can dial into a truck carrier's network every hour and automatically download an up-to-the-minute shipping update into a Microsoft Access database that resides on Prime's file server. Now all customer-service reps and salespeople also have access to the information. So far the program is being used with only one carrier--Barr Nunn Transportation, based in Granger, Iowa--but Matkins says Prime hopes to go on-line soon with all its carriers. "If a truck company wants our business, it's just going to have to provide strong electronic connections," says Matkins.
Irvine says that on a pure cost basis, Prime pays much less per mile than it did when the company managed its own fleet. In the old days, $1.25 a mile was commonplace. Today Prime ships for a little less than $1 a mile. In addition to reducing the cost of each haul, Prime has improved its customer service--using fewer people. The company used to have customer-service reps spread all around the country; now just four people answer customer calls--three based in Des Moines and one based in Detroit. "We never dreamed we could manage with only four customer-service reps when we first started," says Irvine. "But then we never knew how tightly connected we could be to the trucking companies."
Going It Alone
While outsourcing with computer connections is the preferred solution for distributors, small retailers--especially those that ship only within one region--are finding they can benefit most from ramping up the technology on the fleets they already own and manage. A good example is Winston Flowers, a $12-million florist with five retail outlets that uses 15 Ford vans for its deliveries throughout metropolitan Boston and the suburbs surrounding the city.
Like many small retailers, Winston's has changed dramatically since its start, in 1944, when Robert Winston first rolled a flower cart and umbrella out to a sunny corner in downtown Boston. In the hands of his grandsons Ted, David, Michael, and Alex, that cart blossomed into eight retail outlets, through which the company sold most of its flowers. By the early 1980s the grandsons had cut the number of outlets down to three, and deliveries had replaced 75% of in-store sales. As delivery demand increased, they found themselves investing more aggressively in technology to keep pace.
For a long time Winston's was decentralized: each store purchased its own flowers, had its own on-site staff of flower designers, and used its own van for deliveries. The autonomous shops had little trouble keeping track of deliveries, but they were often overloaded with orders. On a busy holiday weekend, for example, one big order could tie up a store's designers and space for an entire day, leaving other customers in the lurch. "We reached a point where we couldn't grow anymore," says Ted Winston. "We were turning down orders."
