Offsetting operating costs through e-commerce

COMPANY:

SGT
St. Germain de Grantham, Quebec

OPERATION:

North American truckload carrier
Denis Coderre
President

Problem:

As a dry freight and flatbed truckload carrier serving Canada, the U.S. and Mexico, SGT has grown from 100 tractors when it began operations in 1988 to over 1,400 power units today. However, that aggressive growth path has been hampered in recent years by the industry's overall shortage of qualified drivers.

Given the competitive pressures and razor-thin margins of the truckload market, cost is always an issue. So SGT needed to find a way to offset the higher operating costs brought by the driver issue. And while rate pressure from shippers never seems to decrease, customers are also beginning to evaluate their carriers on performance, quality, business management and information availability, according to SGT president Denis Coderre.

Solution:

In the belief that gradual change is easier for people to accept than a sudden and complete overhaul, SGT devised a long-range plan to build a fully integrated e-commerce system in a series of steps. Determined to do most of the work with an in-house team, the fleet decided to make a major financial investment in information technology, committing about half a million Canadian dollars a year to the transformation, according to Coderre.

Begun in 1998, the in-house e-commerce initiative actually builds on a 1994 investment SGT made in wireless satellite communications for all of its trucks. The fleet realized that it needed to integrate the location and status information generated by the communications system with its operations and accounting systems, and that became the first goal of its IT program.

“Once we got the ball rolling, our strategy reached cruising speed; we had a platform for growth,” says Coderre. “We began to use technology to help offset the shortage of human resources.”

With the internal integration in place, the next step was to make that information available to customers. Realizing that the Internet offered the perfect network to do that cost-effectively, SGT built a web-based interface to the information it already collected for internal use.

That system, dubbed RADAR, was launched last April. Customers quickly began using it to track loads and to update shipping status.

“Now we're encouraging them to use the e-commerce features,” says Coderre. “Our job is to get their load to the delivery point. Our goal is to eliminate invoicing and proof-of-delivery. If a customer needs those documents, they can come into our system and get them. Both sides can save the cost associated with creating, sending, filing and copying all those paper documents.”

While such a technology strategy requires long-term commitment, “it's allowing us to maintain competitive pricing with the profitability we need to survive,” says Coderre. “If you wait too long, you'll be too far behind to ever catch up. Technology has become the backbone of our operation.”