BUSINESSWEEK ONLINE : NOVEMBER 20, 2000 ISSUE
BUSINESS WEEK E.BIZ -- SPECIAL REPORT

One Smart Cookie
Nabisco really delivers--by sharing space in the truck with its suppliers and rivals

Photo by DouglasLever.com
Whitehouse: Saving lots of dough
Bill Whitehouse runs up some hefty trucking bills. As vice-president for global procurement at Nabisco Inc. ( NGH), Whitehouse oversees deliveries to 80,000 buyers of 500 types of cookies--from Oreos to Chips Ahoy!--more than 10,000 candies, and hundreds of other food items. And he arranges incoming shipments of countless raw ingredients to Nabisco. Moving all those goods costs some serious dough: more than $200 million a year in transportation expenses.

What vexes Whitehouse is that he's paying for too many trucks that arrive at their destinations or depart half-empty. He reckons Nabisco could whack at least 10% off that bill by using the Web. That's why the 102-year-old company is leading the way in a revolutionary movement called collaborative logistics. Using the Web as a central coordination tool among producers, truckers, and retailers, companies can share trucks and warehouse space with other companies--even competitors--that are shipping to the same locations.

When it comes to using technology to collaborate, Nabisco has already shown itself to be one smart cookie. In a pilot last year, it used electronic links to share warehouses and trucks with 25 other manufacturers such as Dole and Lea & Perrins and coordinate orders with retailers.

In one test involving 8,000 orders from Lucky Stores Inc., the Southern California retailer was able to cut inventory costs by $4.8 million--because it found that it could more closely match orders and deliveries to consumers' needs. Moreover, Lucky, acquired last year by Albertson's Inc., got lower prices on several items because suppliers could fill their trucks instead of shipping them in part-empty trailers. Nabisco saved $78,000 in shipping costs, and all manufacturers combined saved nearly $900,000. Says Tom Speh, a professor of distribution at Miami University in Oxford, Ohio: ''Nabisco was a forerunner.''

Most of the communications in that pilot were still done on an old-fashioned, one-to-one basis, with both retailers and manufacturers sending data electronically to the warehouse. But now, Nabisco is looking to the Web to get many more partners involved in the hopes of saving even more money.

In September, Nabisco and 10 other companies, including General Mills Inc. ( GIS) and Pillsbury, started testing a collaborative logistics network from Nistevo Corp. in Eden Prairie, Minn. At Nistevo.com, companies post the space they need or have available and share trucks and expenses. Rules worked out in advance might spell out who pays for the miles that a truck must travel to pick up cargo after it has dropped off a load. But the goal is that everyone, from suppliers to truckers to retailers, share in the savings.

At the very least, Nabisco hopes the Web system will help it schedule routes better among its own divisions. ''The people bringing in the materials and shipping out finished goods didn't know they had the opportunity to use the same truck,'' says Whitehouse. ''They didn't communicate well enough.'' Using Nistevo, Whitehouse hopes to fix that and reap concrete savings within a year.

He will need to move fast. Last June, Nabisco was acquired by Philip Morris Cos. ( MO) That means it will have to integrate 70 more brands into its supply chain. More than ever, that's going to require the kind of collaboration only the Web can provide.

By FAITH KEENAN

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EBIZ Contents for issue dated Nov. 20, 2000


RELATED ITEMS
Logistics Gets a Little Respect

TABLE: The Evolution of Logistics

ONLINE EXTRA: Q&A with Nistevo CEO Kevin Lynch

One Smart Cookie

Warehouse Trouble

TABLE: How to Deliver?



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