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GKO FREIGHTSuccess Cases

Company: Ferramentas Gerais

Ferramentas Gerais uses the GKO Frete system in its transportation operations.

GKO Frete implementation allowed a reduction in costs, operational agility and negotiation power, with time optimization.

The scenario is more common than most shippers can imagine. Who, when passing by the transportation department room, particu-larly those responsible for freight analysis, never encountered the place filled with people focused on their work and surrounded by papers? The amount of shipping documents required varies from company to company, but it is invariably a great amount in most cases. Whoever thought that this scenario took place only in your company can now relax and know that others are facing the same reality.

There are several negative consequences for the operation as a result of this apparent disorder and lack of management. Delays in freight payments, which leads to a fine for the shipper, and conflicting numbers between what was negotiated with carriers and what was actually paid are some of the consequences resulting from the lack of management during freight analysis. According to data provided by GKO Informática, errors would account for 2% of the charged freight cost.

Some companies, however, are beginning to challenge that reality, adopting measures that allow better management of one of the aspects that profoundly impacts the company's performance. This is the case of Ferramentas Gerais, which has implemented the GKO Frete system, technology provided by GKO Informática, two years ago.

The Transportation Supervisor, Giulliano Marinsek, describes the department daily routine before the introduction of this technol-ogy. "Before, we could only count on shipping documents and on some information provided by the carriers via our ERP as an analytic resource", he says. According to him, this scenario hindered performance evaluation and data collection that would allow the production of management reports.

“One of the problems was having all the figures - for example, freight payment entries, number of payments and tables - compiled in one place for us to perform comparative analysis. Moreover, there were no data on number of freights per billing unit, city, destination and carrier, variables that would allow the company to identify where the blockages were" says Marinsek.

According to him, at that time, verifications were carried out through sampling by eight people on a monthly basis. "We would take the documents, check them against the freight table and confirm whether the carrier was working according to what had been negotiated", he sums up. According to the supervisor, as a consequence, the freight cost could only be seen on the company's general ledger. The result was not pleasing. "We could only see freight expenses that had been paid; we could not have managerial openness".

The introduction of the GKO Frete has already promoted an immediate change in Ferramentas Gerais’ routine. Among the possibili-ties, especial attention is given to data openness per unit. "Today we have 12 units. Before, freights were negotiated by each branch separately, which generated a large number of freight tables. Now, everything is centered at our headquarters in Porto Alegre", says the executive.

Getting to know the shipper

However, to start the operation with this new technology it was necessary a working partnership with the tool provider. GKO Informática’s Business Manager in Porto Alegre, Lardlei Agassis, says that this was a different project. That is because the program was introduced into Ferramentas Gerais at the time when the company was consolidating its ERP system implementation, EBS, provided by Oracle, a business management software that incorporates technical, accounting and administrative departments of organizations.

The first initiative for the implementation of the freight system was to conduct a planning stage to identify the information needed to set up the project, called "business model". GKO Informática Commercial Director, Ricardo Gorodovits, explains the work. "This, like every implementation project, began with an audit of the data that included all the freight tables held by the company, how many and who were the carriers and what was their IT infrastructure level, the accounting and taxation departments demands, what system features would be prioritized and what was the schedule to be followed" he says. Altogether, this process lasted a month.

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At that moment, says Agassis, it had already been possible to identify some problems. "Ferramentas Gerais had many carriers and different freight tables, more than four tables per transport provider" he stated. Moreover, the executive points out that there were some peculiarities regarding taxation. "Each company works on a different bookkeeping system and has particular ways of calculat-ing freight. We may have a freight account, for example, but in Ferramentas Gerais’ case there were several freight accounts", he says. Gorodovits emphasizes that this has not prevented the implementation of GKO Frete, but this was a good moment to reassess processes and partners.

Having had this scenario identified - number of freight accounts, carriers and tables - the next step was to convene with Ferramentas Gerais’ transportation providers to explain the project. "Most of them already knew the technology and knew that, from the moment of its introduction, there would be a tight freight control", he says. Agassis illustrated this by saying that if there were dubious information it would not be possible for the freight to be paid. "That information alone has already caused some reaction and increased attention regarding documentation submission", he says.

The main change would happen on documentation. The paper would be taken out of the scene to give place to digital data exchange. Immediate changes in carriers were seen, as many of them did not have a structured information technology (IT) depart-ment.

"They began to monitor themselves and assemble teams , as, if they did not have an organized IT department to meet Ferramentas Gerais needs and adapt to the market, they would lose the contract", he says. In Agassis opinion, this is one of the most important aspects of the project. For him, carrier’s IT cooperation is crucial. As for GKO’s commercial director, the technology infrastructure level from transport suppliers is the key to a rapid implementation. "Many of our users hire small or autonomous carriers which always requires a bigger effort to improve their processes", notes Gorodovits.

After overcoming the meetings with carriers step, it was time to parameterize the system, an action that takes about two weeks. The work consists of registering all transport providers data, such as address, taxpayer ID number (CNPJ), contacts and freight tables. It’s worth noting that, if the carrier has subsidiaries, information related to each branch will also be parameterized on GKO Frete.

Ferramentas Gerais data - head office, branches and items commercialized - in addition to the routes, are entered into the system. At this point, says Agassis, there is a particularity. "If the company launches a new product, this item does not need to be registered into the system. This is because, through an interface, as soon as the new invoice is received by the company, the new data is automatically registered on GKO Frete", he explains.

Application

The next step in the project was the implementation, followed by the testing stage. GKO Informática’s Business Analyst in Porto Alegre, Katie Becker, emphasizes that this phase was performed virtually, nothing yet being made at Ferramentas Gerais production environment. "We work in a parallel environment, with no connection to the actual operation", she assures.

Agassis reveals that there are usually three environments used - testing, production and type approval - for the integrated analysis, where the modules are evaluated in an integrated manner, from creating the data on ERP and at the carrier.

In Ferramentas Gerais’ case, two environments have been used: testing and production. "The first helps us to analyze the tool and its interfaces and confirm whether information provided by the carriers is being correctly received". During this period, it was already possible to pass on some data to Ferramentas Gerais, he guarantees. Without revealing numbers, the manager says that, even in the first shipping documents, the system already showed some differences and the possibility to reduce costs.

The executive points out that this testing phase depended not only on GKO’s work. "Because we had to implement the GKO Frete precisely at the moment when they were consolidating their ERP, some information - like the items code, quantity and weight of goods - did not match the data we had been given when the system parameters were set up”, he says. Nevertheless, there were not any other issues, and only a few adjustments were made necessary.

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Operation

AAfter the verification period, which took three months in Ferramentas Gerais’ case, it was time to put the technology into practice. "We transferred the data obtained during the testing period to the company’s headquarters corporate environment", he says.

Agassis points out that the initial analysis is performed only on the data sent by a single transport provider, to evaluate, once again, how the system is working. “We chose the carrier company that employed more technology and was already used to sending data via EDI (Electronic Data Interchange), for example", he informs.

The manager says that, after a week, a second transportation partner was added into the system. “It was quick, as calculating freight from one provider does not interfere with the other", he says. The executive also says that it took about a year to add all carriers, in accordance with the timeframe set up by Ferramentas Gerais.

Early on, some results could already be measured. Agassis says that, on his last visit to the company at the beginning of January, 70% of freights were being analyzed by using the GKO system, which, according to him, has already generated a reduction of at least 10% of the cost with transport. At that time, the remaining 30% that were not being checked were related to change in carriers, changes on freight tables and also related to adjustments on the IT department of some transport providers.

Results

The Transportation Supervisor at Ferramentas Gerais releases the latest figures, which showed the process development. According to him, today, 90% of the company’s freights are verified with the assistance of GKO Frete. The work is monitored by three employ-ees.

Marinsek says that to achieve this level the organization adopted severe measures, always based on the information obtained through GKO Frete analysis. He mentions that the first action taken was to reduce the number of carriers. "We had about 70 provid-ers, now we have 30", he says. The optimization did not take long. The supervisor estimates that in four months the number of carriers was reduced by 50%.

Decisions to be made are non-stop. "Our goal is to further reduce the number of carriers by July", he announces. Ferramentas Gerais transportation partners profile is composed of fractional load companies operating nationwide. Regionally, the services of smaller companies are used. "We have identified some blockages, such as the presence of more than one carrier carrying out the operation within the same region. The system allowed us to identify which carrier has provided the most appropriate freight rate and had the best service ", he says.

Reducing the number of providers has already had a positive impact on the company's accounts. "We have reduced freight costs over the net revenue", he says. The company does not disclose the rate obtained, but advises that the ideal for the business is 2.5%. The supervisor celebrates and reveals that the company has reduced about 0.50% of the total freight generated per month, a considerable percentage according to him, if taken into account the volume of transportation activities carried out by the company, although absolute company figures were not revealed. Without revealing numbers, the executive also ensures that there was an improvement in the accuracy of their deliveries.

The accounting department has also benefited from the introduction of the technology. "The delay in the verification process used to cause some delays in payments", acknowledges Marinsek. The delay was because the whole process was done manually, being necessary to type in the invoice data and then pass it onto the finance department so it could carry out the accounting procedures and make the payment. "With the GKO Frete this process is automatic. Using the EDI feature we have document flow with carriers, and they with us. We push a button and the freight is checked and the payment is cleared", he adds.

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