In recent years, many freight customers have downsized or outsourced their shipping departments, says Chip Kraft, director of operations planning at Transportation Economics & Management Systems Inc., a Frederick, Md.-based consulting firm. Those companies are now counting on railroads to provide more services that are easier to access.
Union Pacific is working to address those types of requirements in NetControl, which is in the third year of a multiyear design effort and about 30% complete. For instance, more than 99% of the railroad's customer orders are generated electronically over the Web and through EDI feeds, says Linda Brandl, vice president in charge of Union Pacific's 400-person national customer service center. When freight customers sent electronic orders through the mainframe system, information in the orders didn't always match up with data in Union Pacific's records -- for example, there might have been differences between location codes, says Tennison. When that occurred, customer service representatives had to manually edit the orders.
Union Pacific automated many of those processes in the new platform by applying a rules-based system under an electronic shipment services application that was implemented in August 2004. The system helps catch any disparities and "fix them for good," says Brandl. That application has almost completely eliminated the need for customer service agents to make corrections on orders and bills of lading, says Malley, who is the NetControl project leader.
Pressure to Save
Those improvements alone have saved the company several million dollars annually in labor costs, says Tennison. The system has helped Union Pacific reduce its electronic billing failure rate by 59% since it was installed.
It has also enabled Union Pacific's customer service department to work more efficiently, since it no longer has to delay customer orders while manual corrections are being made, says Brandl.
That kind of automation is critical for transportation companies like Union Pacific, because freight traffic sagged during the recession. In its July 23 quarterly financial report, Union Pacific stated that its year-over-year freight revenue had declined 28% during the quarter that ended June 30.
Such pressures are driving transportation companies to push IT-business projects aimed at generating "significant" ROI through efficiencies and cost controls, says Jack W. Plunkett, CEO of Plunkett Research Ltd. in Houston. Those types of projects include the deployment of Web-based systems to help transportation carriers communicate more effectively with customers "while cutting down on the need for human operators," Plunkett adds.