Things weren't working well for the shipping part of this manufacturing company's ERP system, said a technician working there.
"The whole process for calculating and paying the carriers for freight was not good," he said. "Our company makes motor oils and other fluids used in cars and trucks. Since the products weigh a lot, shipping cost is a very visible item the business is always trying to reduce and the ERP system should help keep those costs under control. But no such luck.
"We had an army of accountants trying to reconcile actual freight invoices to what we had calculated," said the technician. "To make a long story short, this was not working."
After several years of this, the company finally upgraded to a new freight payment system. "This system would calculate the lowest-cost carrier for each shipment," the tech explained. "It would know all starting and ending points and the rates of all our carriers, and automatically pay the carrier as soon as the load left our plants. This made the carriers happy, and they give us a better rate."
For the first month after the new system rolled out, there were no serious problems. In fact, the system worked very well at figuring out which shipper would move the products at the lowest cost, based on the data it had.
"But in some cases the system may have worked too well," said the technician. "One of our customers is FedEx. I supposed they use our products to service their own fleet. Apparently not all the special discounts were entered in the system, because it decided that UPS was the lowest-cost carrier for the shipment to FedEx.
"I guess the FedEx people were not happy to see the brown UPS truck roll up to their dock. Needless to say, account executives were called and the customer-specific freight rates were updated."