Legacy companies in the industrial supply chain with decentralized distribution models are deploying advanced technology to make their operations more efficient.
General Insulation Company (GIC) fabricates and distributes wholesale insulation for the construction industry. GIC has historical roots in the Northeast: when Jack Doherty sold the business to Frank Granara in 1982, the company was operating out of a single location, an old church, in Somerville, Massachusetts. General Insulation grew slowly at first, and then more rapidly.
Now GIC has 41 distribution centers and six fabrication locations across the United States and a supply chain that stretches around the world and imports and exports shipments to and from Europe and the Middle East.
The growth of GIC’s distribution center network was to some degree a process of accretion, where each new branch of the company was treated as its own profit center and operated relatively autonomously. That meant that procurement, sales, transportation, and customer relationships are handled locally. That worked well for some parts of the business, but not so great for others: local customer service can be more responsive, but running dozens of different transportation processes autonomously is fairly inefficient.
Over the years as its logistics needs grew more complex, GIC upgraded from a small freight brokerage to larger 3PLs with more extensive service offerings and better execution. Still, the company struggled to manage daily transportation spend across more than 40 locations, where the branch managers were accustomed to using the same carriers over and over again.
“Our branches are decentralized and making their own decisions,” said Ian Allison, transportation and supply chain manager at GIC. “We decided we wanted to take a look outside of our main logistics provider’s walls to find something more efficient that could help us with our truckload business specifically.”
Allison explained that while most of the truckloads inbound to GIC’s network were handled on a contract basis by asset-based carriers, outbound freight was more complex. Because GIC’s distribution centers service construction projects, their networks are constantly evolving and shifting as new destinations pop up and disappear. GIC executes more than 7,500 less-than-truckload shipments per year between its distribution centers and to customer locations, and is onboarding a parcel visibility solution to help manage that part of its business.
General Insulation’s private fleet of trucks makes deliveries to customers, handling the most stable part of the company’s network. To ensure that inventory is always positioned where it needs to be, GIC procures spot trucking capacity to move freight between its distribution centers and branches on an ad hoc basis.
As GIC grew, it became important that transportation buying decisions were still made on a local level, in close contact with end customers, but the procurement of spot trucking capacity needed to be more efficient. It was far too easy to overpay, and too hard to manage GIC’s outbound network intelligently.
“We don’t make every decision for the branches, whether it’s purchasing or truck carriers, so each location would get into a habit of always calling the same carrier,” said Rick Campbell, director of operations at General Insulation “As we continue to grow, we can’t keep doing the things we were doing in the past.”
Allison, a logistics veteran who cut his teeth at one of the largest 3PLs in the world, decided to use Convoy to help General Insulation manage its spot truckload business. With Convoy’s free transportation management system (TMS), each of GIC’s locations could still book truckload shipments autonomously, but now visibility and reporting on their performance was automated.
“It’s been life-changing for us,” Allison said, “to have the ability to communicate to all providers and monitor performance at all of our branches.”
Allison emphasized that Convoy’s cloud-based technology eliminated the need for GIC to purchase a complex, expensive on-premise TMS with a lengthy—and often risky—integration process.
“Convoy’s platform is ideal for us,” Allison said. “All 47 of our branches can utilize it and do spot quotes with five strategic providers, pick the best rate, and tender it to them instantaneously. Before, we didn’t know what the branches were doing, didn’t have a really good way to measure their success, and couldn’t measure their spend overall. Now it’s all right there for us, to the minute when a carrier responds to a rate request. Who’s our primary carrier? Who’s winning the most freight and who’s doing the best job? Before, we’d have to piece that together ourselves.”
Carriers are smarter today, Allison said. They’re pre-booking their routes and using more sophisticated software to manage yield.
“We know that lead time equals dollars and that it’s important to be as flexible as we can with our truckload shipments, but even in last-minute scenarios, Convoy’s platform has made us much more efficient,” Allison said. “In the Convoy platform carriers have two hours to respond to a tender. Most carriers respond in 45 minutes or under, and our best carriers respond in 10 minutes or under.”
General Insulation and Convoy are working on deepening their partnership—beyond procuring spot capacity, GIC wants to redesign its network, take more ownership of inbound truckload freight, and continue leveraging its supply chain as a competitive advantage.
At the moment, inbound freight to General Insulation’s network is handled by its vendors and transportation costs are prepaid. GIC is analyzing its inbound freight and identifying opportunities to in-source it. Allison said that if those opportunities make sense, Convoy’s ability to create user-friendly route guides would help establish it as a core carrier on those lanes.
While Convoy thinks it can source reliable capacity less expensively than what it costs General Insulation today, it’s not just about cost savings. Increased visibility into its inbound freight could enable GIC to improve its facility operations, rationalize the timing of shipments, and work more closely with its carriers.
“For our vendors, transportation is often a liability rather than an asset,” Campbell said. “In some cases we have more than 1,000 shipments from the same vendor. In an ideal situation, we take that over, and now we have the capability to create a routing guide and tender directly to our carriers.”
This article is published jointly with our partners at Convoy. To view more Future of Freight content, click here.