Case Study

Implementing OTM Rail

at
Roseburg Forest Products
Jeff Brandt and George Moser

Introductions
Roseburg Forest Products
is one of North America's
largest privately held
companies.

Hitachi Consulting is the

Business and Technology
Consulting subsidiary of
Hitachi, Ltd.

The Company
manufactures a diverse line
of lumber, plywood
(softwood & hardwood),
particleboard, thermallyfused melamine (TFM) and
engineered wood products.

Our Transportation
Consultants have worked in
many transportation
management functions and
average over 12 years
experience; and collectively
have completed multiple OTM
implementations.

An excellent natural
resource base, state-of-theart manufacturing facilities,
experienced associates,
quality products and
superior customer service
are key elements to
Roseburg's success.

Hitachi Consulting helps

clients to transform their
transportation organizations to
achieve positive impacts on
operational and financial
performance across the
enterprise.

Project Goal

The goal of the OTM project is to create the

platform for service improvement, to control
transportation activity and costs and to
become more disciplined in Transportation
Management, with positive ripple effects into
Sales, Manufacturing and Accounting
- Chuck Ulik, COO
Roseburg Forest Products

Roseburg Locations

Transportation Operations
at
Roseburg Forest Products
Transportation Modes Used

TL (Flats, Vans, Maxis), Rail, Intermodal

Total Shipments -- Q1 2011

23,000

Truck / Rail Split by Shipments

65% / 35%

Total Ton-Miles Q1 2011

10,175,411

Truck / Rail Split by Ton-Miles Q1 2011

40% / 60%

Number of Truck Lanes as of Q1 2011

1,500

Number of Truck Rates as of Q1 2011

4,500

Number of Rail Lanes as of Q1 2011

2,500

Number of Rail Rates as of Q1 2011

Number of FTEs in Transportation

10,000 (most with multiple breaks/commodities)

5

Why the OTM Project is Important

Differentiation

Control

Transportation is

in the Top 5
spend categories
at Roseburg

To control

transportation
activity,
Roseburg needs
to use OTM
technology to:
Enable better
business
processes
Standardize
transportation
processes
across a
dispersed
company

Enables

Time Delivery
profitably,
Roseburg needs
to control
transportation
activity very
closely

Requires

Requires

Ship the Week of

to:
Must Deliver No Earlier
Than and No Later
Than
(i.e. On-Time
Delivery)

Profitability

To execute On-

To grow the business,

Roseburg must
differentiate in service
The industry is just
beginning to move
from:

Technology

Controlling

transportation
activity and
costs
inherently
leads to more
profits

The OTM Implementation

Implement OTM for truck and rail across all locations (three timezones), with Go-Live on the same day
Integrate OTM and JD Edwards Enterprise 1; which integration
builds on the seeded integration provided by Oracle plus several
additional interfaces considered mission-critical to Roseburg

Use the seeded integration between OTM and PC*Miler (both

Truck and RAIL) both for rate inquiries, both Buy-Side and SellSide, and for optimization.

Historical OTM Rail Issues

Distance Calculation
Accurate Mileage Calculation
Accessorial cost

Delivering carriers for Rule 11

Routing validation via SPLC code

Roseburg Rail Challenges

E1 Transportation Deficiencies

Rates based on commodities not tracked in E1

Weight breaks not possible
Tariff information not tracked
Switch and carrier information not tracked
Mileage based accessorials not feasible
Rate duplication due to intermodal setups
Difficult maintenance
Hi Cap/ Low Cap Issues (No Equipment in E1)

Roseburg Rate Types

Direct Rate
Missoula, MT Denver, CO (BNSF)

Thru Rate
Missoula, MT Chicago, IL BNSF(CHGO)BCOT

Rule 11
Dillard, OR Portland, ME
UP(CHGO)CN(ESALB)NECR(BRATT)ST

Rule 11 Gateway
Dillard, OR (Customer No) UP(CHGO)CSXT

Typical Roseburg Rate

Origin: Junction City, OR
Destination Region : Wichita, KS
Boxcar Weight Breaks
167K
193K
205K+

Commodity Based
Plywood
Particleboard
Lumber and Engineered Wood

Hi Cap/ Low Cap Issues

Rate Setup
Rates based on commodities for certain carriers

Rate Setup
With Unit Breaks by commodity allowing for correct
freight rate at ship confirm

Itinerary Setup

Utilization of 198 rail junctions overall

Single location profile for all junctions in one failed
miserably (slow bulk plan and RIQ)
Divided US into regions based on source and
destination of regions
Max of eight rail junctions per profile seems to be the
threshold for performance

Itinerary for Tender Leg

Roseburg Challenges
Rates
Conversion of 100K+ rates from E1 into OTM v6.1.3
PCMILER RAIL requires SPLC code for distance
calculation

Locations
Created an agent to populate the SPLC code on location
insert based on the SPLC data from RAILLINC
Imported rail junction codes from RAILLINC and matched
to the waypoints from E1 since E1 owns the location
records
Rule 11 legs begin and end at rail junctions to avoid using
regional rates

Rule 11 Rates
In/Out of Junctions

Serving Carrier to Control Switching

Bills of Lading (EDI 404)

Prior to OTM, Roseburg utilized Biztalk to generate the 404
to send via Kleinschmidt
Extended the existing interface from OTM to Biztalk to
complete the 404 transaction
Additional efforts for Rule 11 and Gateway Rule 11 routings
from OTM

CLM Messages
Roseburg utilizes Ship Express for the CLM Messages
from the railroads
Prior to OTM an interface was created to show the car
location in E1 and was maintained after OTM was
implemented
Future project could create tracking events for the rail cars
in OTM

Primary Disappointment
Sell Rates
Due to the E1 Integration Sell Side Rule 11 rates had to be
converted to single leg rates since the integration can not
handle multi leg rates
Sales required the visibility of the delivering carrier for
validation with the customer.

Rule 11 Buy Rate

Rule 11 Sell Rate

Sell rate is based on delivering carrier (ST) and covers
overall source/destination
Maintenance nightmare

Rule 11 Sell Rate

Route Code

Rule 11 Sell Accessorials

Since the sell rate is a single leg made up of two different
carriers with different accessorial charges, multiple
accessorials were required

Rail Overall
The rail implementation helped us to:
Correctly rate the rail charges at sales inquiry
Recalculate the freight charges correctly at ship confirm based on
commodities and weight breaks
Validate serving carriers via PCMILER Rail
Accurately estimate mileage for accessorials with PCMILER Rail

Results
Informal processes that had the affect of hiding transportation
costs were exposed, enabling better business decisions
Decisions on costing made before OTM have been revisited
since implementation, challenging conventional wisdom
The discipline of having to meet a customer specified delivery
date is beginning to pay off

Lessons Learned

Do not underestimate the level of change

management required
Be cautious of multiple competing initiatives during
an implementation
Enlist the right champions from the business to
drive the process
Remember that poor business processes in a
powerful tool just enable poor decisions quicker