Let’s Talk Cost Reduction Through Transportation Strategies

Randy Cooper

Director of Transportation at Del Monte Foods

Learning Objectives

Join us for an Executive Interview with Randy Cooper, the Director of Transportation at Del Monte Foods. In this interview, Randy will discuss how your company can leverage technology to reduce cost, as well as how small to mid-size companies may tackle transportation cost reduction. Randy will also include what kind of partners help in managing cost and how to better manage third parties. You won't want to miss this!


"It's very easy to get into a groove, where you've got the same team that you've had for a while and you think you're doing it the best. "

Randy Cooper

Director of Transportation at Del Monte Foods

Transcript

Britt Erler

Hello, and welcome to the SCOPE Supply Chain Virtual Summit hosted on Quartz Network. My name is Britt Erler, QN Executive Correspondent. Thank you so much for joining us. Please welcome our executive speaker here with us today, Randy Cooper, Director of Transportation for Del Monte Foods Incorporated, as he discusses how to reduce cost with transportation management strategies. Welcome, Randy.


Randy Cooper

Hi.


Britt Erler

It is a pleasure to have you here and really excited to dive into this topic today. Before we do so, if you wouldn’t mind giving the audience some context around your current role and your specialty.


Randy Cooper

Right now, I’m a Director of Transportation at Del Monte Foods. Been there about 6 years and prior to that and including that, I have about 20 years in the transportation management industry. Worked for a third party prior to Del Monte Foods and have a lot of different experiences with different supply chains.


Britt Erler

Absolutely. You’ve clearly seen, throughout your career, how the industry has developed, especially in the space when it comes to technology in the last year, all the new virtual platforms that we’re seeing. Let’s dive into this conversation about really reducing costs. How can you leverage technology to do that the best way?


Randy Cooper

I think there’s a couple of ways. In my experience, we tend to use technology to help fill gaps where there might be some that you can’t feel within the company that you’re with. We’ve been really successful with looking outside the company in terms of TMS or Transportation Management Systems. The providers we use typically have teams that are supporting us as well but it is a big technology play. Using bi, we use Tableau, but there are a lot of platforms out there that you can use to make sure that you have good insight into your data both looking forward and backward. I think we’ve done a good job embracing some of the new digital platforms that the carriers are using—the digital brokerages—that I think can really get out and engage with some of the smaller carriers that are out there that really—my team of three people, including me just don’t have time to go out and find that really solid carrier that might only have 10 trucks.


Britt Erler

Of course. I think that the big push as well, as we’ve seen technology evolve so quickly, especially in the last year. Was that a big push for you 5 years ago or did it really come to the forefront for your company just within all the changes we’re seeing recently?


Randy Cooper

Within our company, I’d say that within the last five years, there has been a quite a focus on technology. Transportation, I’d say we were a pretty early adopter of TMS and having dedicated systems for transportation. But the way that those have evolved over the last 5 years has just been incredible. Starting to leverage AI in determining whether an auto shipment is going to be early or late, and being able to make decisions based on some of that information that we didn’t have 5 years ago, to make sure that, in this environment where we’ve got so many vendors that have compliance programs now, to just be able to avoid some of those fines.


Britt Erler

Absolutely. I think the idea of cost reduction may be a little bit more daunting for smaller or midsize companies. We had a lot of those people attending our summit here today. Talk to me a little bit about that. How do you suggest the small and midsize companies best reduced costs?


Randy Cooper

I think outsourcing is a lot of my answer. I know that when you get down into some of the lower tier for a spin perspective companies, they might have one person that’s over three or four different functions. So if they don’t have the expertise, especially in transportation, where there’s a lot of costs tied up in transportation, if you can just outsource to some of these great companies, that is all they do. I think you can really mitigate a lot of the cost, especially in a market like what we’re seeing right now.


Britt Erler

I think a lot of cost reduction and the idea behind it is that you just have to be a good negotiator. Negotiate the cost, negotiate the price, but I think you and I both know that it takes a lot more than that. What would be your recommendations? What are some of your experiences in terms of reducing costs in the best way?


Randy Cooper

Even if you take the advice of outsourcing something, carrier relationships, that’s not something that I would suggest outsourcing. If it’s truly not a core competency with your company, then there are companies out there that can help you with that. We have found, in our experience, that if we can keep the relationships with the carriers, then we can weather some of these tough market storms that we find ourselves in at times.


Britt Erler

I completely agree with you. I think another thing as well is there’s a lot of companies that are either at the beginning stages of trying to do this, or they’re kind of in the middle and they’re thinking, “Where do we go from here?” For leaders that are looking to reduce costs for the organization as a whole, what are some obstacles that you faced up front that you think, “I wish I would have known that beforehand, so I could have prepared for it.”


Randy Cooper

I think one of the things that’s really important, especially from a transportation management strategy, is you are not going to win year in and year out. Transportation is cyclical. I think you build your strategy so that you can win more years than you lose. Like, we’re in post pandemic world where Manufacturing is taking off. If you bid 6, 8 months ago, you’re in trouble right now. I think what you have to do is make sure that your strategy—your core strategy—whether it be using a dedicated fleet because you have a lot of customers that you need to service at a high level, that’s going to look great in a year, like this year when over the road carriers are charging an arm and a leg in some cases. But when you have a real loose market, then it’s not gonna look as good. So it’s really incumbent on you, as a leader, to make sure that you educate those around you why you do what you do. In the long run, it’s a sound strategy.


Britt Erler

I agree. It is always a little daunting when people go to reduce costs. Employees in the organization always go, “How’s that gonna affect my job?” When I’m doing, “How’s that gonna affect my budget?” I completely agree. It starts with leadership down, really explaining how this is benefiting the company as a whole, so that people understand why their job is changing or why the process is changing. Now, I do have a question for you in terms of deciding what areas are best to reduce costs in. How do you narrow that down and decide where to start?


Randy Cooper

A couple of different things. Like you can hire excellent negotiators, like we talked about. Rate, that’s a great place to start. I find that being predictable with your carrier base really helps. If you haven’t done a bit in a while, and you can get into a cadence where you’re bidding out your network either once a year or once every two years, the carrier’s know that if the market isn’t favorable to them at a certain point in time, they won’t come to you so that you die that death of a thousand cuts by negotiating with with a bunch of different carriers. They know that the bid cycle ends at this point, we know we’re going to get a chance to adjust rates at that point. There are other things you can look at too. Making sure that payload utilization is something that you concentrate on. Making sure that you’re not shipping a lot of air. I think about, from a higher level analytic standpoint, making sure that your network really fits your customer profile, so that you’re not moving a bunch of unnecessary miles. Something that I think that we are really good about, but I’ve seen other companies struggle with, is truck is not the only available mode out there. If you’re able to use intermodal on some of your longer or some of your intercompany moves, you can save a lot of money. If your product rides well in a boxcar, you can save even more. Once you get stuck in that truckload as our only option, then pulling out of it might be difficult and require some change management within your own company. But boy, once you do, you can really save a lot of money.


Britt Erler

Really just being able to think outside of the box, not be kind of stuck in a rut, and constantly evolve the process that you have in place. I agree. I want to touch on something a little bit deeper as well. You had talked about the partners that you have in place earlier to help you manage reducing costs. Talk to me a little bit more about that. What types of partners you look for specifically?


Randy Cooper

We use several different companies when we outsource to help us. We use Transplace, which is a large third party logistics company for our TMS. We actually have a team there that handles the execution. We’ve outsourced our fuel program, so it’s Breakthrough Fuel, to make sure that we are paying what we should own fuel instead of kind of an antiquated fuel surcharge model that really came about in the 80s. That’s one that I really think can make an immediate impact. Then, looking at dedicated, we have a great partner in Rider Systems to manage our dedicated fleets and to a lesser degree with Swift. If service is something that you really need to concentrate on, and a lot of us do when you’re servicing customers like Walmart, Target, Costco, dedicated is almost guaranteed to give you a service.


Britt Erler

How do you manage third parties to make sure that you’re both leveraging both internal capabilities, and also making the best parts of your partner successful?


Randy Cooper

I think it’s important to make sure that you have enough touch points with your third parties. I know that, in our case, we stay really integrated with all third parties that we use with very rich QBR, Quarterly Business Review meetings that we have that really connect the companies at a higher level, like get the C level executives and involved. You also have to have those weekly touch points, those daily touch points with your third parties.


Britt Erler

Was there a magic number of how many partners you think is really just golden where you’re not spreading yourself too thin?


Randy Cooper

To have the best type of partnership with these companies, they have to become extensions of your company. I think that if I look back through my career at the customers when I was on the other side that had the best results with third parties in outsourcing. Now when I’m with Del Monte, it’s the ones that really incorporate them into the daily doings of their company. With a good partner, if they have a customer service question, they’re not coming to me or to my team. We’re not bottlenecking that information. They should feel like they can go to whoever they need within your company to get the answers and the help that they need. I think, on a transportation side, I don’t understand why you might want to get involved with one or more TMS at a time. It makes more sense to me to make sure that you have one system of record, one source of the truth. Sometimes, you want to have some accountability there. It’s easier when you have the one provider, I think that you shouldn’t limit yourself to one if you have different pieces that need to be addressed. Like I said, we have sedicated. Not every partner is going to be strong and dedicated. A fuel program is a pretty specific thing. I don’t know that there’s a number I can give you, it’s just I wouldn’t over commit, because then you would find yourself spread a little thin.


Britt Erler

I think, at the end of the day, it’s taking a look internally at your own business and seeing what makes sense as a whole. As you said, you have one partner, you always know who to go to, but also spreading yourself thin, you’re not utilizing or streamlining your services in the best way possible. Completely agree with you there. To kind of wrap up our conversation here today. You’ve obviously been in the business a very long time, and you’ve seen the changes, you’ve seen the obstacles, and also the benefits of doing this. What are some of your biggest lessons learned for leaders that you think they can really take away?


Randy Cooper

Don’t be afraid of change is one thing. It’s very easy to get into a groove, where you’ve got the same team that you’ve had for a while and you think you’re doing it the best. But even if you’re a little hesitant to engage with partners, you really need to see what’s out there. It’s really been eye opening to me coming from a vendor background to a shipper. There are a lot of great companies that are out there that can help you. If you’re willing to embrace the change, if you’re willing to help sell through at your company, there’s a lot of help out there that can help you lower your costs.


Britt Erler

I think that’s one of the things we realized, with COVID, is how many companies were still in the stone age, so to speak, in terms of their processes. What I hear time and time, again from leaders is the idea of allow yourself to adapt, allow yourself to evolve, because if you don’t, you’re really going to miss out on a lot of opportunities. As you and I both know, this industry is changing daily. That’s kind of what leads into my final next question for you is, what do you expect to see in the industry within the next five years? I don’t believe we have a perfect roadmap, which is based on the changes you’ve seen so far.


Randy Cooper

I think that, especially when you consider the shortage of Supply Chain folks that are out there and some of them that are getting to be retirement age, outsourcing is a thing that’s definitely not going away. I think it’s something that’s probably going to expand even more. I’m a big believer in the digital platforms. I just think that they unlock capacity that you may not be able to get to. I think it’s really important for you to consider how you implement solutions like that. Typically, someone who’s newer on the block that you might have some interpretation about engaging with, they’re more than happy to tell you what they think they do well. Don’t feel like you have to fit a square peg in a round hole. They’ll tell you what they do well, allow them to do what they do well for you, and then as they grow, you will just benefit more. I think that’s important.


Britt Erler

fantastic advice. I think this is really great, as I mentioned, for companies that are not only beginning stages of trying to put these management strategies together, but are also in the middle or at the end and thinking, “Where do I go from here? How do I move forward and making sure it’s the right direction” Randy, incredible advice, much appreciated. Thank you for joining us today. Thank you to everyone in the audience as well. I’m sure you have further questions for Randy—not to worry—we will have a discussion forum underneath this presentation. Please be safe, be healthy, and enjoy the rest of the SCOPE Supply Chain Virtual Summit. Thank you.


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