Quelle: Darwin, USA
Walking into the headquarters of Schneider National Inc.,the giant trucking company based in football-crazy GreenBay, Wis., is a lot like entering a sports arena: Heavyglass doors open into the lobby; a shop on the left offersSchneider tchotchkes and clothing for sale; plaques on anearby wall honour outstanding associates; people bustleback and forth, getting ready for the start of the day´saction. But what feels most arenalike is the loge-style viewfrom the second level. Spread out below is the company´sversion of the playing floor - in this case, one full acreof space where more than 600 customer servicerepresentatives ply their trade. They are the playmakers,the folks in constant communication with drivers andcustomers, ensuring that load A gets to destination B in themost efficient way possible. A 20-foot wide screen serves asthe Jumbotron, relaying messages ("We need more trucks inthe Southwest!") and keeping the reps updated throughoutthe day.
In short, this ain´t your granny´s trucking company.
Schneider National´s bright orange trucks are a fixture onthe nation´s highways. Legend has it that A.J. "Al"Schneider used the proceeds from the sale of his family carwhen he founded the company in 1935. Today, the company hasgrown to become North America´s largest truckload carrier,servicing two-thirds of the Fortune 500. The privately heldUS$3.1 billion company owns 13,000 tractors (the cabs) and42,100 trailers (the back part of the truck that carries thegoods), making its truckload fleet the largest in NorthAmerica. Its closest competitor is a distant second: WhenSwift Transportation merges with M.S. Carriers, the publiccompany´s combined revenues are expected to be about US$2billion.
And if the trucking industry conjures up images of CBradios, truck-stop pay phones and a bevy of gruffdispatchers barking orders to far-flung drivers, a closerlook at this transportation behemoth reveals an entirelydifferent reality. Schneider National might best be thoughtof as a high-tech company that happens to own a few thousandtrucks. CEO Don Schneider, Al´s son, recognized decades agothat information technology could help the company and itscustomers wring more cost-savings and productivity fromtheir supply chains. Today, Schneider is a leader in onboardtrucking technology, has invested heavily in its e-businessinfrastructure and announced plans last year to spin off itstechnology-intensive logistics subsidiary. In sum, IT is astightly intertwined with the company´s business strategy ascheeseheads are to the fortunes of the beloved hometownPackers.
Head Trucker
Don Schneider - who happens to serve on the Packers´executive committee - is a CEO unadorned by all the typicalCEO trappings. On the day of his interview with Darwin, he´soutfitted in blue jeans and a denim shirt with the orangeSchneider logo, which speaks volumes about thedown-to-earth, Midwestern character that permeates thecompany. All the executives´ offices, including Schneider´s,are the same size (not big); employees are known asassociates; and drivers are just as welcome in the CEO´soffice as are senior vice-presidents (he makes a point ofregularly chatting with drivers). He sits at his small tableand discusses technology´s role both at Schneider and in theeconomy as a whole. "How can you continue to get an economygrowing so close to full employment without driving upinflation?" asks Schneider, who as a former member of theFederal Reserve Board´s Midwest board of governors thinksoften about such issues. "[Alan] Greenspan and theeconomists [at the Fed] have surmised that it probably hasto do with the increased productivity from technology? A lotof it has to do with the fact that when you have information[as a result of IT], you take the risk out of decisionmaking that you used to have when you didn´t haveinformation."
Schneider´s embrace of IT manifests itself throughout hiscompany. However, the coolest technologies - the ones thatmake trucking feel as technologically sexy as its airline orautomobile brethren - can literally be found where therubber meets the road.
Location, Location, Location
Schneider drivers aren´t just behind the wheel of big,orange trucks - they´re driving 65-foot-long mobiletelecommunications units. Each cab is outfitted withOmniTracs, a satellite-based communications and positioningsystem from Qualcomm, a wireless communications providerbased in San Diego. Schneider was the first fleet to adoptthe technology, rolling it out in 1988. Don Schneider stuckhis neck out, convincing the board of directors to investUS$30 million in OmniTracs. "There was a lot of financialrisk involved. But the upside was so great that we couldn´tbypass the opportunity," Schneider says. The gamble paidoff. Customers were willing to pay for the real-timeinformation it brought them. Drivers, frustrated by years ofhaving to stop at phone booths every few hours to report toheadquarters, loved it. "We thought drivers wouldn´t knowhow to use it or want to use it. What we found was exactlythe opposite," he adds. Today more than 1,250 fleets in theUnited States use OmniTracs. "[Schneider] looked at thecapabilities it gave, and he had this fundamental beliefthat it would change the industry, his ability to servicecustomers and the life of the drivers," notes Chris Lofgren,CEO of Schneider Logistics, a separate business unitoffering supply chain management services.
A black box, which the drivers refer to as the satellite, ismounted inside all Schneider cabs. It has a keyboard andallows drivers to send and receive text messages - viasatellite, of course - to and from the customer serviceassociates back in Green Bay. "We send and receive about 4million messages per month," says Paul Mueller, president ofSchneider Technology Services, a unit of Schneider Logisticsthat provides tech support for all of Schneider National viaan outsourcing arrangement.
OmniTracs also allows Schneider to know where its tractorsare at all times. The OmniTracs antenna, which sits on theback of the tractor, maintains constant communication with asatellite and automatically reports its location back toGreen Bay. Besides being critical to the company´s customerservice reps, the location technology happens to be quiteuseful when somebody decides to take a joyride in one of thetrucks. "We can determine pretty effectively a tractorlocation within 300 feet," Mueller says.
Schneider and Qualcomm also jointly developed a monitoringtechnology called SensorTracs, which uses electronic enginesensors to record information such as speed, rpms and idletime. In 1990, Schneider became the first fleet to implementthe technology, allowing the company to receive engine datavia automatic satellite downloads. SensorTracs helpsSchneider manage wear and tear on its engines and also keepsdrivers on their toes (and off the gas). "As a matter offact," Mueller notes, "one element of a driver´s monthlybonus is predicated on staying within certain key factorranges when operating the vehicle." Jeff Gordon wannabesbeware.
Unlike tractor-tracking technology, which has been aroundsince 1988, trailer-tracking technology is just starting tobe rolled out to the nation´s fleets. Trailers need to betracked for the same reasons tractors are - they areexpensive units, and knowing in real-time whether they´rerolling on a train car through Raleigh, N.C., or sitting ina yard in Sioux Falls is critical. "Those arerevenue-generating assets, so understanding where they areand the status of those assets is pretty important," Muellersays.
Schneider began beta-testing a satellite trailer-trackingsystem from a company called Orbcomm in 1999, but thatcompany filed Chapter 11 last year. Enter Qualcomm, whichhad been partnering with Orbcomm to offer thetrailer-tracking system. Schneider decided to go with theQualcomm technology which uses cellular, not satellite,technology like OmniTracs earlier this year and eventuallyplans to install it on all its trailers. Not only canSchneider monitor the whereabouts of its trailers, a sensorunit inside the trailer can tell whether the trailer isempty or full. Another sensor mounted in the bottom of thetrailer can tell whether it´s hooked to a tractor or not.
If all that tracking technology feels Big Brotherish, well,it is. However, to Schneider and its competitors, staying ontop - even staying alive - in the industry means knowingwhere your assets are at all times and moving them to wherethey need to be as efficiently as possible. "Truckingcompanies are asset-intensive businesses," says DonaldBroughton, senior transportation analyst at A.G. Edwards &Sons in St. Louis, Mo. "The guy who has the higher rate ofasset utilization wins."
The E-business of Trucking
Schneider´s aggressive use of technology isn´t limited tothe highway; it´s integrated throughout the wholebusiness. According to COO Scott Arves, the company spendsin excess of 1.5 per cent of its revenues on technology, afigure that Don Schneider says is "higher than any of ourcompetitors´."
"We´re moving 10,000 loads every single day," says CraigDickman, vice-president of IT. "With the low-margin natureof this business, every decision that you´re making has animpact on profit and loss, so technology becomes importantto allow people to make more effective decisions."
The company has developed optimization software known as theGlobal Scheduling System (GSS). This tool gives customerassociates the ability to optimize all of the company´sdrivers and loads across North America. It processes 7,000load assignments a day and optimizes at a rate of more than7,000 driver-load combinations per second. For a truckingcompany, where every empty trailer or misdirected drivermeans a hit on the bottom line, that kind of decision-makingtool is critical. "Every morning you wake up, your means ofproduction or your capacity is in different locations,"Dickman says. "You really need to be able to look at ways tomake customer commitments and say, ´Yes, we have the abilityto move this freight.´"
Half of Schneider´s customer orders are receivedelectronically, either via the Web or electronic datainterchange. (EDI, which has been in use since the 1960s,allows businesses to transmit documents electronically,generally over private networks.) "Anytime we can create anelectronic transaction, we do so," says Dickman, adding thatin the trucking industry, that´s not always possible - MaBell and Pa Fax still hold their own, especially withsmaller shippers. To encourage more Web transactions, thecompany continually elicits customer feedback to make sureits Web site, www.schneider.com, is easy to use. Customerscan use the site to place orders, track shipments and printthe documents necessary to complete theirtransactions. Another company site,www.schneidercarriers.com, serves as a portal that matchesavailable freight to capacity for Schneider´s more than6,000 carrier partners.
Linda Beth, vice-president of e-business solutions, saysthat the company´s goal this year is to receive 60 per centof its orders electronically. For Schneider, increasingelectronic orders means better order accuracy and higherproductivity. So it will continue to nudge customers in thatdirection.
Industry Challenges
One of the major challenges facing Schneider is all toofamiliar to carriers: recruiting new drivers. According tothe American Trucking Association, there´s a need for 80,000to 100,000 additional drivers. COO Arves says, "It´s been anongoing problem for us and really everybody intransportation." He explains that the problem has existedfor the last decade, and he anticipates that it willcontinue, because demographics point to a smaller labourpool in the coming years.
One way Schneider is combating that trend is by making moreof an effort to recruit women and minorities. "You´ll see usand others trying to do a better job in the future ofrecruiting people from the Hispanic population," he says,adding that Schneider has already made great strides in thisarea. The company also uses technology as a recruitment andretention tool; its Touch Home program includes in-cabe-mail via satellite and discounted 800 numbers to helpdrivers stay in touch with their families while they´re onthe road.
Then there´s that little issue of the economy.
Like many industries, trucking has been slammed by thedownturn. Higher fuel prices hit where it hurts most - atthe pump, the lifeblood of a transportation company. Theslowdown in manufacturing has led to fewer shipments,another blow to truckers. Insurance costs have risen. Andused truck values have recently declined in theneighbourhood of 30 per cent.
Schneider doesn´t have it nearly as bad as others in theindustry, especially smaller companies, which suffer more ina sour climate. "This is a marketplace where size matters,"says A.G. Edwards´ Broughton. "You buy trucks cheaper andfuel cheaper." He also notes Schneider´s high level of lanedensity, which means that once a trucker delivers a load,there´s a greater chance the trucker´s next load isnearby. As he explains, "100 trucks chasing 100 loadsnationwide are worse off than 1,000 trucks chasing 1,000loads."
Higher levels of lane density lead to higher levels of assetutilization, which gives large players like Schneider a legup in the 400,000 company-strong (or weak, as the case maybe) trucking industry. "Last year more trucking companiesfiled for bankruptcy than in any other year in the last 10or 11," Arves says, adding that this year looks nobetter. There is a silver lining in those dark numbers forSchneider, however. "It takes a lot of excess capacity, ifyou will, out of the industry," Arves notes.
But even well-positioned companies such as Schneider can´tafford to sit back and wait for the upturn. It´s pursuing anaggressive cost-cutting strategy, looking to save US$50million this year. It´s also cutting its purchases in halfand being more conservative in its growth plans. Technologyspending is also staying flat compared with last year´sspending. But has Schneider changed its view on the benefitstechnology brings to the table? Absolutely not.
"We believe technology drives productivity, and we continueto push aggressively to drive productivity gains within ourcorporation," Arves says.
That type of thinking is warmly embraced by DonSchneider. "We hire competent people," he says. "What wewant to do is give them as much information and as manytools as we possibly can so they can be as effective as theycan." He insists the company doesn´t do technology fortechnology´s sake. "It´s for the customers and ultimatelythey have to pay for it," he says. "So there has to be valuein it."
Led by Schneider, who is entering his fourth decade at thehelm of his father´s venerable company, the colossal orangefleet rolls on, a thundering herd of old economy trucksmasking a decidedly information age modus operandi.
Schneider Snapshot
Schneider National is North America´s largest full-truckloadcarrier. (Full-truckload carriers transport freight fromsingle customers; less-than-truckload carriers handlesmaller loads from multiple customers.) It is privatelyheld.
Headquarters: Green Bay, Wis.
Year founded: 1935
Revenues: US$3.1 billion (2000)
Employees: 19,000
Lines of business: Schneider National offers van,dedicated, truck-rail, specialized and bulkservices. Schneider Logistics provides supply chainmanagement services.
Major full-truckload competitors: J.B. HuntTransport Services, Swift Transportation, WernerEnterprises
It´s Not My Way Or The Highway
In most companies, information technology projects beginlike this: CEO reads in magazine at health club aboutCompetitor X using Technology Y; CEO says to CIO, "Why can´twe do that?" CIO makes feeble attempt to explain why butunderstands that the unspoken message is "Do it." In otherwords, the request is thrown over the wall to IT sans anybusiness-IT collaboration. Chris Lofgren, CEO of SchneiderLogistics, says that view of IT as a service organizationwas prevalent at Schneider, too, until the company launcheda technology steering committee a few years back. Sincethen, any wall between business and IT has disappeared -business executives understand technology because, frankly,their jobs depend on it.
Craig Dickman, vice-president of IT, and a team of five workfor Schneider National. Dickman´s role is to look foropportunities where technology can make the company moreproductive and efficient. He and his team work closely withbusiness leaders on all aspects of strategy. "We go out ofour way to manage the [business-IT] alignment, at a deeperlevel than is typical," he says.
The nine-member technology steering committee overseesIT-driven projects. That committee takes a hard look atthese projects to make sure they are really deliveringvalue. Lofgren says that when it was formed, the committeecancelled most of the 500 or so projects that were underway. They were cut because they weren´t strategicinvestments, nor did the business side have anyaccountability, he notes.
Members of Dickman´s team and a business team bringproposals to the committee. "That drives alignment betweenthe business and tech teams as they come together in frontof the committee and allows the committee to take anenterprise view of all the tech initiatives we have,"Dickman says.