DALLAS (Aug. 15, 2002) — Cooper Tire & Rubber Co., looking to enhance its competitive stance through more efficient tire distribution activities, has selected a Dallas-based provider of “value chain management solutions” to help it optimize its transportation and logistics systems.
After a six-month review of available service providers, Cooper chose i2 Technologies Inc., a 14-year-old Dallas company whose credo is “eliminating inefficiencies to generate value.”
While Cooper's move is a step short of complete outsourcing, the move does make i2 Technologies a partner in Cooper's logistics network, which comprises nine distribution centers and four tire plants across the country.
In explaining his company's choice of i2 Technologies, George McAfee, Cooper Tire's project manager, operations research—supply chain, said, “We believe transportation is a competitive differentiator, because it really closes the loop on customer service. It's all about making better decisions to deliver more value to our customers.
“Smaller, more frequent shipments add to the complexity—and complexity comes with added costs,” Mr. McAfee said. “All of this added complexity couldn't be managed with legacy technologies and methods, so we had to do something. It was a business necessity.”
Cooper, in a statement on i2´s Web site, pointed out that customers, seeking to reduce their inventories in order to free up working capital, tend to order more frequently and in smaller quantities, as opposed to ordering large quantities and holding the inventory. With that natural migration toward smaller shipments, manufacturers are faced with rising transportation and freight costs.
As Cooper Tire experienced this shift in demand, company executives realized they needed to optimize their transportation processes to control spending and maintain high levels of customer service. The company's existing transportation management systems were stressed to meet the complexities of the evolving marketplace.
Adding to the complexity was Cooper's growth in brands in recent years.
“With seven proprietary brands plus an almost equally large private brand offering, our sales were growing rapidly,” Mr. McAfee said. “And, as the complexity of our shipments grew, we identified that we were not well-positioned to service new customers or the additional demand. So that started us looking at the design of the network and where the gaps were.
“What we have purchased is software,” Mr. McAfee said, “but what we are implementing is a totally re-engineered business process.” Cooper declined to quantify the financial impact of the change, but Mr. McAfee, in a statement on the i2 Technologies Web site, called it “huge.”
Cooper is using a two-pronged package of tools from i2 Technologies. The “Supply Chain Strategist” helps Cooper rationalize the distribution network and make demand-sourcing decisions within its distribution centers. Then i2's transportation solution system helps manage the movement of goods from the plants to distribution centers and from the distribution centers to customers.
“Obviously transportation was an area of opportunity for improvement, from a sheer spend perspective,” Mr. McAfee said, “as well as from an operational planning and execution standpoint.”
Overall, i2 Technologies said its systems are designed to help a company plan shipping routes optimally in order to reduce mileage, save fuel and reduce pollution.