Transplace Delivers Dramatic Improvements with Lean Six Sigma
Transplace, with Dallas area headquarters in Frisco, Texas is a proven leader in applying advanced third party logistics solutions. The company has offices across North America and a large Operations Center in Northwest Arkansas. Transplace offers award-winning technologies to their customers leading to executable solutions that optimize supply chains, customer service and total costs. They provide non-asset based logistics services for manufacturers, retailers, and distributors of all types and sizes. Transportation services include truckload, intermodal, railcar, parcel, flatbed, fleet management, regional short haul, temperature control, expedited and much more and they don’t own a single truck!
Transplace wanted to reduce costs and to stand out from the competition because there are many providers of 3PL services. A 3PL firm is an outsourced provider that manages all or a significant part of an organization’s logistics requirements. They manage transportation of goods, including shipment status and sometimes product consolidation activities. Company President & CEO Tom Sanderson decided in 2006 to use Lean Six Sigma (LSS) to drive their continuous improvement initiative.
Transplace also wanted to offer LSS as an additional service to their customers. Their intent was to use LSS to solve customer problems as opposed to solving internal issues only. When a customer problem arises, the management team may pull in a LSS Black Belt to perform process improvements as needed. In addition, each Transplace manager is challenged to be Green Belt certified which contributes to the company’s LSS culture.
LSS enables Transplace to lower their customers’ transportation costs and increases customer satisfaction. Deploying LSS techniques internally also lends credibility when contracting with prospective customers that already have established process improvement methods.
Sanderson read Lean Six Sigma for Service by pioneer Mike George, Sr. The book led him to TMAC at the University of Texas at Arlington where several levels of LSS training, deployment and coaching services are readily available. Transplace sought direction from TMAC on how to get the ball rolling.
In response, TMAC delivered a 3-day Champion and Sponsor workshop in 2006 for the Transplace management team. Each year since, Transplace has sent one to four employees to TMAC’s four-week open enrollment Lean Six Sigma Black Belt course.
TMAC also provided an on-site LSS Green Belt course in 2006 for 25 Transplace staff members. In 2009 Transplace asked TMAC to train a new group of managers on the LSS Sponsor and Champion workshop.
Transplace Black Belts and Green Belts applied their knowledge of LSS to solve a variety of problems. In addition, Black Belts assumed the responsibility for training and coaching Green Belts internally. Black Belts serve for a period of 18-24 months before rotating back into a management position.
Transplace firmly believes the dedicated Sponsor and Champion training improved the success rate and results of their LSS projects. Another key to their success was assigning the Black Belts to work full time on process improvements. From 2006 to 2010 a total of 13 Black Belts and125 Green Belts were trained. During the same period a total of 25 Black Belt projects were completed, along with 130 Green Belt projects. The average LSS Black Belt project financial impact was $227K. The average LSS Green Belt project was $80K.
The total savings over a 5 year period (2006-2010) totaled $11.4M. Examples of some specific projects include:
- Invoice process error rate reduced from 5.5% to 1.7%.
- New carrier certification process reduced from 39.6 days to only 3.1 days (92% reduction)
- 1,800 hours saved across 3 areas including Operations, Finance & Accounting, and Sales & Pricing
- Rate Adjustment Management Process (RAMP) reduced from 43 days to 3 days (93% improvement)
- On-the-Spot carrier confirmation process reduced from 1.1 days to 3.5 minutes (99+% improvement)
Working with TMAC to integrate the LSS methodology throughout our company has led to significant cost reductions, increased employee involvement and increased customer satisfaction. Our next challenge is how to deploy LSS in daily operations and not just special projects. The low hanging fruit is gone and we need to learn to reach higher to continue our journey.