After testing out numerous methods of handling logistics, Pacesetter Steel has found stability through TA Services’ Transportation Management Systems.
Kennesaw, Ga.-based Pacesetter Steel has been in business for nearly 45 years. The company hasn’t employed quite that many methods of managing its logistics, but it could sometimes feel that way.
“We’ve gone through about half a dozen different iterations,” says Tyler Grahovec, Pacesetter’s vice president of operations, outlining how the company has tried operating everything out of its corporate office, to allowing the service centers to run it themselves to managed systems.
Most recently, Pacesetter explored the possibility of leasing a dedicated fleet through Ryder, which was already running two of its trucks at the company’s Sauk Village, Ill., location.
“Our concern was, we could not figure out the backhaul side of it,” Grahovec notes. “A lot of our hauls are long. Figuring out how we were going to get those trucks paid for coming back was a concern, and Ryder and any other dedicated fleet group couldn’t really quell those concerns for us. We didn’t get a satisfactory feeling this was going to work.”Enter TA Services. In 2018, Pacesetter contracted with TA Services to oversee its logistics Grahovec feels this version of logistics operations will be the one that sticks. TA Services, based in Mansfield, Texas, is a Transportation Management Systems operator. It manages all logistics for Pacesetter and a host of other companies in the metals distribution business.
Phillip Skeens, senior director, account management for TA Services, says using a company such as theirs can remove a lot of headaches for a service center operator given the complexities inherent in modern transportation management.
“If you want to do this in-house and be competitive, then you need people on your staff who can utilize the technology of a TMS – rate quoting, rate agreements, master rate contracts. You have carrier contracting on-boarding to make sure you’re not putting the company at risk by using a carrier that doesn’t have sufficient insurance, sufficient requirements,” he says. “You need to have people on your staff who understand the transportation market and what its challenges are.”
Needless to say, most service centers simply don’t have that kind of in-house expertise. “We do all that for them so they don’t have to have all the staff required to do these things internally,” he says.
Pacesetter had previously explored working with third-party logistics companies, but found themselves uncomfortable with the methodology employed. To Grahovec, the business model seemed to be little more than beating up the trucking companies to get the best available rate, which turned off the service center company, citing a specific instance where Pacesetter had already negotiated a very favorable rate to cover a lane only to see the 3PL try to negotiate it down further.
“I discussed it with them. I didn’t want to put the burden back on the carriers,” Grahovec says. “This is a partnership.”TA Services appreciates that perspective. “The first step when we go into a potential client and we’re doing a full-solution, design-scope document, we’re asking, ‘Who are the incumbent carriers that bring you value and you want to continue to do business with?” Skeens asks.
Of course, TA will also want to verify the company’s interests are being protected in this existing relationship. It will run the proper checks to ensure the carrier has the right authority and insurance. From there, “We utilize the customer’s relationship with them to build our own relationship. But we’re always acting on behalf of Pacesetter,” he adds.
That’s always the case. TA Services is part of Birmingham, Ala.-based PS Logistics, a full-service transportation company that maintains more than 3,600 trucks. But, as far as a client such as Pacesetter is concerned, the relationship ends there. “For us, that’s just another carrier. We’re not a broker. We’re not an asset company. Those assets of PS Transportation would be just another contracted carrier for the customer,” Skeens says.
Still, the scope of the operation is a benefit to the customer. TA Services’ size gives it some negotiating power that individual companies may not possess, he notes. Additionally, its size allows its contracted customers to scale up or down depending on need. If a service center such as Pacesetter adds a location in another geography, TA can easily adapt to the greater demands where an in-house operation could be required to add staff to accommodate the change.
In addition to finding the best rates for Pacesetter, TA Services starts with a full analysis of the service center’s operations, identifying weaknesses from start to finish in the transportation process. It helps that TA Services has considerable experience in the metals industry, both as a company and through executives such as Skeens. “My background is 20 years with a steel manufacturer. We bring that knowledge of the steel industry to what we do for Pacesetter,” he says.
Improving internal operations is crucial for any service center to become a shipper of choice, an invaluable designation for any members of the supply chain.
“We want to help you become a place where carriers want to come,” Skeens explains. That’s particularly important “in times like these, where transportation is in chaos because there are not enough trucking companies, not enough drivers,” to meet demand.
Becoming that kind of shipper means a service center is easy to deal with, that its schedule allow for trucks to be loaded and unloaded upon arrival without a lot of waiting. Or, if circumstances do create a situation where the driver and truck are delayed, the company is paying an acceptable detention fee.
And failing to qualify as one of these companies will be costly, particularly in this environment. Either trucking companies will refuse to work with a disagreeable shipper, or it will make them pay extra for their services.
The system works rather seamlessly, as the TMS is linked into Pacesetter’s ERP system. Once an order comes into the ERP and is ready to ship, that information automatically links up with the TMS. At that point, the order is theirs. “We’re contacting the carrier, we’re rate shopping. We’re moving that piece from the time we get the order after production to final delivery,” Skeens says.
Though Grahovec believes the onboarding of the system could have gone better from Pacesetter’s end, the implementation of TA Services’ TMS generated nearly immediate dividends across its operations. Since TA covers all payments and Pacesetter has the single-source payment to TA Services, it’s eased some of the burden on accounting. Similarly, Accounts Payable no longer has to keep up with issues that can result from dealing with the various carriers the company employs. And they’ve found a host of new carriers that Pacesetter likely would have never encountered under their old system.
Most of all, “we’ve been able to reduce our overall freight spend,” Grahovec says.”
And he believes the benefits will continue to accrue. One area where he sees the potential for more gains is through full coordination between in-bound and out-bound freight, utilizing the trucks that deliver steel to Pacesetter to reload them with material and send them back out.
“Two years into the project, I think that’s where our focus is. It sounds really easy, but it’s not as easy as you think,” he says. “That’s one area where we can both benefit from.” Caption: TA Services’ objective for its service center partners it to help make them “Shippers of Choice.” (Photo courtesy Pacesetter Steel)