A Cereal Maker Hitches Its Wagons To The WebAdam Aston
General Mills Inc. has come up with a whole new way to use the Web to save millions--and it has little to do with its famed breakfast cereals. Think carpooling. Just as sharing a ride can help commuters ease traffic and save fuel, the Minneapolis-based food giant piggybacks gobs of freight onto trucks being shared by a dozen different companies.
It's collaborative logistics--an innovative way to reduce the gnarly problem of getting products to customers across North America fast, without breaking any bank accounts. General Mills, its partners, and their carriers can now view a master list updated by the second that shows when and where all their shipments are going--anytime, from any Web browser. And soon, the system will offer advice on how best to route and combine them to use the fewest possible trucks.
Such mathematical acrobatics can deliver a wallop. Before General Mills unveiled this first-of-its-kind Web project in March, each time a truck went out half-loaded, the company was wasting thousands of dollars' worth of shipping capacity. Now, on one route where General Mills is sharing a truck with Fort James Corp., a Deerfield (Ill.)-based paper company, the cereal maker is on track to save upwards of $800,000 in its first year. Over a number of trial runs with the new Web system, General Mills already has shaved more than 7% in transportation costs. If that keeps up as it rolls out the system, the cereal maker could save tens of millions of dollars. "The only way now to boost productivity is to go outside our walls--collaborate with other companies," says Kevin J. Schoen, the company's director of strategic alliances.
Unlike a lot of first-generation B2B Web sites, which were built to give buyers leverage over sellers, this Internet project benefits both sides of the equation. Shippers get to save money and guarantee delivery. And carriers get to keep their trucks chock full. At least for General Mills, good old-fashioned cooperation is the fastest lane to the New Economy.